Amtrust Europe Limited v MD Insurance Services Limited & Anor

Summary judgment is inappropriate where the existence and operation of a relevant duty depend on disputed facts, incomplete documentation and evidence likely to emerge at trial. An arguable duty of care may arise where surveyors knew that negligent certification would trigger insurance cover and expose the insurer to loss, particularly where the contractual and operational arrangements indicate a close relationship.

Under Civil Procedure Rules 1998, r 17.4, an amendment after limitation requires analysis of whether it pleads a new cause of action and, if so, whether it arises from the same or substantially the same facts already in issue. Similarity is insufficient. The court must compare the facts requiring investigation under the existing and proposed pleadings, and may refuse amendments where they introduce extensive new factual and evidential issues.

AmTrust Europe Limited brought claims against MD Insurance Services Limited, its coverholder, and MD Warranty Inspection Services Limited concerning alleged inadequate underwriting, surveying and claims handling under latent defect insurance schemes. It sought to amend its Particulars of Claim and add MD Warranty Support Services Limited as a proposed third defendant.

MD Warranty Inspection Services Limited applied for summary judgment or strike out on the basis that no duty of care was owed. The defendants opposed amendments on limitation grounds. The central issues were whether the pleaded duty was sufficiently arguable, and whether the proposed amendments introduced new causes of action outside the limitation period or arose from the same or substantially the same facts as the existing claims.

1. Summary judgment and strike out. The application by MD Warranty Inspection Services Limited was dismissed. The court applied the summary judgment approach stated in Easyair Ltd v Opal Telecom Ltd and approved in AC Ward & Sons Ltd v Catlin (Five) Ltd. The precise operation of the scheme was uncertain, the documentation was incomplete and relevant factual disputes were likely to require witness evidence. Those matters made determination at trial appropriate.
2. Duty of care. The pleaded case was sufficiently arguable. The surveyors knew of the Rules of Registration and that negligent surveying followed by a Certificate of Approval would trigger the issue of an insurance policy and could cause loss to AmTrust. The Rules stated that the surveyor was employed by the underwriter, while the operating procedures described the service as being provided for the insurer. It was also arguable that MD Insurance Services Limited acted as AmTrust’s underwriting agent. On that footing, a duty of care between the insurer and surveyors would follow.
3. The objective approach in Williams v Natural Life was relevant. The absence of direct dealings or subjective intention was not decisive. The objective relationship and the parties’ knowledge were material.
4. Amendments. The principles under Civil Procedure Rules 1998, r 17.4 required consideration of limitation, whether a new cause of action was pleaded, whether it arose from the same or substantially the same facts, and whether permission should be exercised. The relevant date was when the amendment was actually made. The claimant bore the burden of showing that the limitation defence was not reasonably arguable.
5. A different duty or materially different breach generally indicates a new cause of action. The comparison must be made at a high level of abstraction for that issue, but the “same or substantially the same facts” question requires a careful and more granular comparison of the investigations and evidence required. Broad similarity is insufficient.
6. The amendments concerning four properties, MD Insurance Services Limited’s supervision of surveyors, and alleged acceptance of an inadequate settlement introduced new causes of action and substantially new factual investigations. The court therefore lacked jurisdiction to permit them and would in any event have refused them in its discretion. Uncontroversial amendments could be dealt with by agreed order, and joinder of the proposed third defendant was not opposed.