Tuesday 19 December 2017
In the latest saga of the Premier Motor Auctions Ltd case v Price Waterhouse Cooper and Lloyds Bank. Judges Longmore, Kitchen and Floyd overturned the previous ruling that Mr Justice Snowdon had allowed, which in effect accepted the ATE Insurance as acceptable security for opponents costs.
The previous ATE insurance, which was provided through another Insurance broker, structured a multi-tiered policy worth £5m. This was a mixture of A rated (QBE & DAS) and non-rated insurers (Elite & Acasta). No deed of indemnity was put in place behind these Insurance Contracts.
In the latest hearing of 7th November 2017, Lord Justice Longmore raised the issue that the policies did not give protection to the defendants that they could not be voided for several reasons;
Lord Justice Longmore disagreed with Mr Justice Snowdon’s assessment who said it was something of a leap to conclude that disbelief of (the witness) on the part of a judge would provide grounds for insurers to avoid the policies.
Lord Justice Longmore went on to say, of course it does not follow that Insurers would void, but the difficulty is that neither the defendants nor the court has any information with which to judge the likelihood of such avoidance. He cited the 2010 case of Persimmon v Great Lakes Insurance.
The trial Judge also raised the fact that even though the insurance proposals were made by professional insolvency office holders, Lord Justice Longmore said “The best professional advice cannot cater for cases of non-disclosure of matters which the professionals did not know”.
Lord Justice Longmore further cited that he was “not particularly impressed that the claimant had declined to procure a deed of indemnity”.
He concluded that “It is enough to say that the existence of those rights give sufficient reason to believe that the [claimants] will not pay the defendants’ costs if ordered to do so”.
He ordered that the claimants put a total of £8m security (2 x claimants = 2 x defendants each); a very costly outcome for the sake of not having put a Deed of Indemnity in place at the outset.
Deeds of Indemnity are widely offered by A rated Insurers and recommended where a Security of Costs application is likely to be sought. A Deed of Indemnity can be provided by differing means, but resulting in the insurers having a non-voidable clause.
This is standard practice for Maxima, to ensure the best financial strength of insurance capacity is sought, together with a Deed of Indemnity.