Mode Management Limited & Anor v AXA Insurance UK PLC

On an application under Civil Procedure Rules 1998 rules 3.4 and 24.3, claims should be disposed of summarily where there is no real prospect of success and no compelling reason for trial. A claimant cannot use specific performance in equity to circumvent limitation of a common-law insurance claim. An insurer’s option to pay an indemnity or reinstate property does not create a separate, later-accruing contractual obligation. Specific performance will not be ordered where damages are adequate. Laches may defeat equitable relief where delay is unexplained and prejudicial. For Financial Services and Markets Act 2000 purposes, carrying on business is construed broadly. A claimant relying on the representative-trustee exception must plead and evidence the statutory conditions.

Mode Management Limited and Gary Tregunno claimed declaratory relief, specific performance and statutory damages arising from a fire which damaged insured industrial units. AXA had purported to avoid the policy. On AXA’s application, the court proceeded on the assumption that the claimants’ case on avoidance was correct.

By the hearing, the common-law damages claim, the claim under section 13A of the Insurance Act 2015, and damages in lieu of specific performance had been abandoned. The remaining issues concerned specific performance of the insurance obligation, a claim under section 138D of the Financial Services and Markets Act 2000, and Mr Tregunno’s claim under section 83 of the Fire Prevention (Metropolis) Act 1774.

1. Under Civil Procedure Rules 1998 rules 3.4 and 24.3, the court may strike out a claim or grant summary judgment where the claimant has no real prospect of success and there is no compelling reason for trial. Difficult or developing legal issues may sometimes be unsuitable for summary determination, but that did not assist these claims.

2. The policy was an indemnity contract operating on the hold-harmless principle. The insurer’s primary obligation arose when the insured loss occurred. Its secondary obligation was to pay common-law damages for breach. The policy’s option to pay or reinstate did not postpone accrual, create a fresh contract, or provide a separate route to avoid limitation.

3. Specific performance could not be used to circumvent the fact that the indemnity and common-law damages claims were time-barred under section 5 of the Limitation Act 1980. Even if specific performance were theoretically available, damages were an adequate remedy. Enforcing the alleged secondary obligation in equity would be inconsistent with the common law and would effectively prevent contractual claims from becoming time-barred. The claim also had no real prospect of defeating laches: the delay was unexplained and AXA would suffer prejudice.

4. For the FSMA claim, the relevant question under regulation 3 of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 was whether Mode was carrying on business of any kind. That is an expansive test. Mode owned and operated the property as a business and claimed rental income, so it had no real prospect of establishing that it was not carrying on business.

5. Mode also had no real prospect of relying on regulation 6. Although trustees might in general qualify as private persons, the issue was fact-sensitive. The pleadings did not rely on regulation 6, the evidence did not adequately explain the trust’s creation and operation, and the proposed remedy could not readily be shown to be exclusively for the benefit of a private person.

6. Mr Tregunno’s claim under section 83 of the Fire Prevention (Metropolis) Act 1774 was dependent on Mode obtaining specific performance. Since that claim failed, his claim failed too. The entirety of the claims was struck out and/or summary judgment was granted for AXA.