(Re)insurance Weekly Update 26- 2018

A summary of recent developments in insurance, reinsurance and litigation law

Pavilion Property v Urban & Civic Projects: Judge considers without prejudice privilege issues

http://www.bailii.org/ew/cases/EWHC/Ch/2018/1759.html

The main issue in this case was whether a meeting between the parties was "without prejudice". The judge decided, on the evidence, that the meeting had not been expressly agreed to be without prejudice. However, he went on to find that both the meeting and communications between the parties after the meeting were without prejudice because they were negotiations aimed at settlement.

It made no difference that one of the parties did not think that the meeting was conducted on a without prejudice basis: "The "without prejudice" rule did not apply by agreement .... However, the cases show that "without prejudice" protection of negotiations genuinely aimed at settlement is founded on public policy as well as on agreement and, in some cases, where there is no agreement express or implied, rests only on public policy". It is open to the parties to agree that discussions are to be open or to jointly waive the protection in subsequent litigation, but neither of those options was taken up here.

On the facts, the judge also concluded that no exceptions to the rule applied. In relation to the exclusion which applies where an issue has arisen as to whether a "concluded compromise agreement" (as per Robert Walker LJ in Unilever v Proctor & Gamble [2000]) has been reached, the judge commented that "Robert Walker LJ is not writing statute law when setting out these exceptions" and so the exception applies to "any concluded and legally enforceable agreement".

COMMENT: This decision follows the Court of Appeal's decision in Muller v Lindsey & Mortimer [1994] which held that the WP rule has two justifications: (i) the public policy of encouraging parties to negotiate and settle their disputes out of court and, (ii) an implied agreement arising out of what is commonly understood to be the consequences of offering or agreeing to negotiate without prejudice. Accordingly, it was held that even if neither party wanted the privilege to apply, it can still apply just by virtue of the fact that the parties are negotiating (in the absence of an express agreement to the contrary).

Pinkus v Direct Line: Court finds road traffic accident claim was exaggerated and dismisses entire claim

http://www.bailii.org/ew/cases/EWHC/QB/2018/1671.html

The claimant claimed £850,000 for personal injury damages following a road traffic accident. Liability for the accident was admitted by the defendant, the other driver's insurer. However, the insurer believed that the claim was worth no more than £2-3,000. Various issues arose in the case, including the following:

1) Was the allegation of fundamental dishonesty pleaded too late? The defendant pleaded this in a counter-schedule which was only signed with a statement of truth on the first day of trial. The judge applied the recent decision in Howlett v Davies & Anor (see Weekly Update 39/17), in which the Court of Appeal held that "the mere fact that the opposing party has not alleged dishonesty in his pleadings will not necessarily bar a judge from finding a witness to have been lying" and that "The key question in such a case would be whether the claimant had been given adequate warning of, and a proper opportunity to deal with, the possibility of such a conclusion and the matters...