Elite Insurance Company Limited v (i) BCR Legal Group Limited

On an application for strike out or summary judgment, the court must distinguish between a claim that has no reasonable grounds or realistic prospect of success and one that is merely more likely than not to fail. The court should hesitate before finally disposing of a fact-sensitive claim where disclosure or evidence reasonably expected at trial may affect the outcome.

Where contractual duties and tortious damage depend on the operation of an unusual insurance arrangement, unresolved factual questions may make summary determination inappropriate. A pleading may disclose reasonable grounds even if its contractual basis could have been stated more clearly. The court may permit withdrawal of a concession where new evidence gives a sound basis for investigation and no material prejudice is shown.

The claimant insurer, in administration, brought claims against an insurance agent concerning a General Binding Authority for latent defect insurance. It alleged that the agent had exceeded the authority, miscalculated premiums and issued certificates without the required inspections.

The first defendant applied to strike out parts of the claim or obtain summary judgment. The principal issues concerned limitation, whether the inspection claims disclosed reasonable grounds and had realistic prospects, withdrawal of a limitation concession, and the costs arising from joining a further defendant.

1. Strike out and summary judgment. The court applied the principles governing Civil Procedure Rules 1998, rule 3.4(2)(a), and summary judgment. The court must not conduct a mini-trial and should consider evidence reasonably expected to be available at trial. It should hesitate where fuller factual investigation may affect the outcome.
2. Limitation. The defendant’s case that breach and damage arose when impermissible insurance business was quoted and premiums accepted was strong. Exposure to a contingent obligation to insure could amount to damage. However, the documents and evidence from the intermediary most closely involved in the transactions were absent. The unusual insurance structure and unresolved question whether developers could be insured meant that the claimant’s prospects were not merely fanciful. Summary judgment was therefore refused on the claims concerning properties exceeding £5 million, non-residential properties and premium miscalculation.
3. Inspection claims. The pleading alleged that the required inspection process was a direction or requirement under the General Binding Authority. Although this could have been stated more expressly, it disclosed reasonable grounds. Whether inspections fell within the delegated regulated activities, and whether the intermediary acted on its own account, were factual and contractual questions requiring trial. The contractual and tortious inspection claims were not struck out or summarily determined.
4. Withdrawal of concession. Under paragraph 7.2 of PD 14, the claimant was permitted to withdraw its concession that claims relating to certain units were time-barred. New evidence concerning possible backdating of certificates provided sound grounds for investigation, there was no evidence of prejudice, and the application was made at an early stage.
5. Costs. The third defendant had been joined because the first defendant’s letter directed the claimant to sue that company. The first defendant was therefore ordered to pay the claimant’s wasted costs of joining it.

First-instance decision. No appellate history was stated in the judgment.