Royal & Sun Alliance Insurance Limited & Ors v Tughans (a firm)

Consequential matters after judgment should ordinarily be resolved promptly and proportionately. Short oral hearings should generally be fixed within 7 to 14 days of hand-down. Where matters are dealt with on paper, the timetable should be completed within the same period and strict page limits should be imposed.

An application for permission to appeal under Arbitration Act 1996, section 69, requires an arguable point of law and, under section 69(8), a point of general public importance. An arbitrator may in an appropriate case permit a party to seek relief not claimed in its pleadings, but must consider fairness, procedural safeguards and any prejudice caused by the late change of position.

This ruling concerned consequential matters following the court’s earlier judgment dated 14 October 2022, reported as [2022] EWHC 2589 (Comm). The parties sought permission to appeal on issues concerning the scope of the arbitration, the meaning of insured loss, construction of Tughans’ Letter of Engagement, and the arbitrator’s treatment of relief which Tughans had previously disclaimed.

The court also determined costs and the terms of the consequential order. The central issues were whether the proposed appeals had a realistic prospect of success or raised a point of general public importance, and how the parties’ substantial success should be reflected in the costs order.

1. Consequential procedure. The court criticised the delay and excessive length of the written submissions. Following the approach discussed in Contra Holdings Ltd v MJC Bamford, judges of the Commercial Court should ensure that consequential matters are resolved promptly and proportionately. Short oral hearings should ordinarily be fixed within 7 to 14 days of hand-down. Paper procedures should be completed within the same period, with strict page limits. This approach was reinforced by the observation in FAGE UK Ltd v Chabani UK Ltd that an appeal should not be used to advance arguments which were not properly run at trial.
2. Permission on the section 67 issue. Permission was refused. The proposed appeal concerned a one-off construction of the Notice of Arbitration against the parties’ prior dealings. The court was not satisfied that there was a realistic prospect of success or justification for compromising the policy of speedy finality.
3. Permission on insured loss. Permission was granted under section 69(8). The issue was an arguable point of law of general public importance, on which there was substantial United States authority but little English authority.
4. Construction of the Letter of Engagement. Permission was refused. The proposed construction was inconsistent with the document’s terms and had uncommercial consequences. Construction could not depend on the benefit which a particular construction might confer on an insurer.
5. Section 68 issue. Tughans had no realistic prospect of success. Although an arbitrator may in an appropriate case permit relief not claimed in the pleadings, the arbitrator had proceeded on the mistaken basis that Tughans had an unqualified right to seek the disputed declaration. The arbitrator had therefore failed to consider whether the late change of position was fair and what safeguards were required to prevent prejudice. The issue of substantial injustice also had no realistic prospect of success.
6. Costs and order. Tughans was substantially successful, but had failed on the section 68 challenge and had lost important arguments concerning its correspondence and statements of case. RSA was ordered to pay 60% of Tughans’ costs, with an interim payment of £72,000. RSA had permission to appeal on the insured-loss issue; all other applications for permission were refused.

The ruling followed the court’s earlier judgment in the same proceedings dated 14 October 2022, reported as [2022] EWHC 2589 (Comm). This judgment determined consequential matters, permission to appeal and costs.