Chike-C Onyeari v Churchill Limited & Ors

A director cannot recover against a company where the company’s alleged liability is solely attributable to the director’s own acts or omissions in relation to the relevant wrong. The critical question is de facto control of the activity giving rise to the claim, not shareholding, formal directorship, or whether the conduct was deliberate.

A claim may be struck out or summarily determined where the evidence shows no real prospect of success and no trial is required. An order made after misleading the court about the solicitor on the record may be set aside. An insured must not impair an insurer’s subrogated rights. Wilful, blameworthy conduct may remove a co-insured’s immunity from subrogation.

The claimant brought a personal injury claim against his company, alleging negligence and breach of statutory duty. The County Court struck out the claim as disclosing no reasonable grounds and as an abuse of process, and ordered costs against him.

Subsequent steps purported to compromise or discharge the costs liability through a company resolution and a Tomlin order made without notice to the insurer’s solicitors. The insurers sought permission to appeal, to set aside the Tomlin order, to amend their Part 8 claim, and declarations or damages concerning their contractual and subrogated rights.

The central issues were whether the original claim had been properly struck out, whether the Tomlin order was effective, whether the insurers could proceed representatively, and whether the company and claimant had impaired the insurers’ rights of recovery.

1. Permission to appeal refused. The County Court judge was entitled to assess the claimant’s own documents and reject assertions contradicted by contemporaneous evidence. The evidence showed that he was the person in de facto control of the activities giving rise to the alleged negligence. It was unnecessary for the judge to find that he had deliberately flouted the law or to conduct a full trial. The claim therefore fell within the principle in Brumder and was properly struck out under CPR 3.4(2)(a) and (b), with summary judgment also available under CPR 24.2. Delay in making the strike-out application was relevant but not decisive and did not prevent the application.
2. Tomlin order set aside. The notice of change of solicitor had not been served on the company’s solicitor. Under CPR 42.2, that solicitor remained on the record. The court had been misled into treating the parties as acting in person, and the order impaired the insurers’ subrogated rights. This was not a technical irregularity and justified setting aside the order under CPR 40.9 and CPR 3.1(7).
3. Amendment allowed. The insurers were properly before the court through representative parties. CPR 19.8 permits representative proceedings where parties have the same interest; their interests need not be identical or equal, provided there is no true conflict. The amendments caused no prejudice.
4. Part 8 claim. The insurers’ claim was not an abuse of process. They had been entitled to defend the underlying proceedings through the company and were not required to intervene before the claimant later impaired the rights of recovery. The company breached the policy by failing to preserve and enforce the costs judgment and by purporting to compromise it. The claimant knowingly procured that breach for his own benefit. The issues of damages, including assessment of costs and any legitimate cross-claim or set-off, required consequential directions.
5. The claimant was not protected by the co-insured provision in General Condition 8 in respect of liability for the costs of his own unsuccessful claim against the company. Alternatively, commencement and continuation of proceedings certified as totally without merit were wilful and blameworthy acts within the relevant exception. The insurers therefore retained their subrogated rights.
6. The insurers had an entitlement to judgment for breach of contract against the company, with damages to be assessed, and subject to proof of loss, damages against the claimant for inducing breach of contract. Further orders concerning assignment or transfer of the costs judgment and quantum were reserved.

• County Court: HH Judge Lethem struck out the claimant’s personal injury claim on 2 June 2020 under CPR 3.4(2)(a) and (b), and ordered costs on 24 July 2020.
• High Court (King’s Bench Division): Permission to appeal was refused. The Tomlin order was set aside. The insurers’ amendments were allowed and liability was determined in their favour on the contractual and inducement claims, with consequential directions reserved.