(Re)Insurance Weekly Update 09-14

Co-operative Group v Birse & Ors

Limitation period where main contractor claims against sub-contractor for loss in the event that it is held liable to the employer

http://www.bailii.org/ew/cases/EWHC/TCC/2014/530.html

Clyde & Co (Neil Jamieson, Chris Georgiou and Siobain Creaney) for defendant

The defendant in this action was the main contractor employed by the claimant. The defendant sought to bring actions against its sub-contractors, alleging that breaches by the sub-contractors had placed it in breach of its own obligations to the claimant. The defendant claimed that it will suffer a loss (and time will start running in relation to this claim) only if and when it is held liable to the claimant (and its loss is ascertained) at a future trial.

Stuart-Smith J conducted a review of the caselaw on limitation in relation to contingent liabilities. He rejected the defendant's argument as "unprincipled and unacceptable". The present case fell within both the "damaged asset rule" and the "package of rights rule" (which are two categories of cases in which a possible future liability may cause time to start running– see Law Society v Sephton (Weekly Update 10/06)):

(1) "Damaged asset rule" (where a contingent liability is incurred but does not crystallise into an actual liability until a future date, but where damage occurs for the purposes of the commencement of the limitation period at the time when the transaction is entered into). The defendant's interest in the development and in the benefit of its contractual rights were "assets". Here, the defendant had suffered measurable financial detriment at the date of completion (at the latest) because it had a present liability at that date.

(2) "Package of rights rule" (where there was a bilateral transaction under which the claimant should have received certain benefits but, owing to the negligence of his professional adviser, did not do so). Here, too, it could be said that the defendant's legal position changed to its financial detriment at the time of completion because it became a contract-breaker whose rights under the main contract were devalued by its liability to the employer.

Accordingly, the defendant's claims against its sub-contractors were time-barred.

Bank St Petersburg & Anor v Arkhangelsky & Ors

Whether the surrender of a life insurance policy breached a freezing order

http://www.bailii.org/ew/cases/EWHC/Ch/2014/574.html

One of the issues which the judge considered in this case...