John Wyllie & Ors v Liberty Insurance Europe SE

A statement of case must identify a coherent cause of action, the breaches relied upon, causation and properly particularised loss. Evidence cannot substitute for pleading. Strike out is a serious last-resort remedy, but is appropriate where, after a clear opportunity to amend, the pleading remains incoherent, discloses no reasonable grounds, or obstructs the just disposal of proceedings. Claims for damages must identify loss legally flowing from the alleged breach. Speculative benefits that would have arisen only if invalid insurance policies had been valid are not recoverable. A pleaded claim may also fail where a contractual or set-off position necessarily eliminates the alleged loss.

The claimants sued Liberty, the professional indemnity insurer of Arc Finance Group Ltd, after Arc was dissolved. They alleged contractual breaches, negligence and misrepresentation concerning life insurance policies and claimed wasted premiums, sums assured, future commissions and other substantial losses.

HHJ Pelling previously struck out the original Particulars of Claim but allowed a final opportunity to replead. The claimants served revised Particulars of Claim. Liberty applied to strike them out and dismiss the claim under CPR Part 3.4. The central issues were whether the revised pleading disclosed coherent causes of action and legally recoverable loss, and whether the court should dismiss the claim after striking it out.

1. Strike out and dismissal. The revised Particulars of Claim were struck out under CPR Part 3.4, and the claim was dismissed and certified totally without merit. Strike out is a serious step and a last resort, but the controlling question is what is just and proportionate in the circumstances.
2. Pleading requirements. The claimants had been given clear guidance on the need to plead, for each claimant, the legal basis of the claim, the relevant contract or duty, the breach, causation and properly particularised loss. The revised pleading still failed to identify specific contractual breaches, negligent acts or omissions, or the representations, falsity, reliance and loss required for misrepresentation. Bare allegations of fraud were particularly inadequate because fraud must be clearly pleaded and particularised.
3. Loss. The wasted-premium claim was bound to fail because the pleading did not allocate premiums and commissions between claimants or overcome Liberty’s potential set-off defence. The claim for sums assured could not exceed the amount recoverable under valid policies and lacked particulars and evidence of insurable interest. The claim for future commissions and policy benefits was inherently speculative and assumed that all future insured lives would die during the policy period. No particular wasted expenditure caused by any misrepresentation was pleaded.
4. Third claimant. Because Arc had no direct contractual relationship with the Third Claimant, any direct tortious duty required a specifically pleaded voluntary assumption of responsibility. Reliance on an agreed sales process was not sufficient because it had not been pleaded.
5. Further proceedings. Security for costs became moot, and the application to stay execution was withdrawn. Fresh proceedings might theoretically be possible if a sustainable claim were formulated, but the claimants would likely need to address whether a second claim would be an abuse of process.

This was a first-instance decision on Liberty’s renewed strike-out application following HHJ Pelling’s earlier order allowing the claimants one final opportunity to amend their pleading.