A summary of recent developments in insurance, reinsurance and litigation law.
Armes v Nottinghamshire County Council: Supreme Court again considers the nature of the relationship required to find a defendant vicariously liable
http://www.bailii.org/uk/cases/UKSC/2017/60.html
Vicarious liability requires (1) the necessary relationship between the defendant and the wrongdoer, and (2) the necessary connection between that relationship and the wrongdoer's conduct. Weekly Update 9/16 referred to the Supreme Court decision of Cox v Ministry of Justice, in which the first issue was discussed. The Supreme Court referred to Lord Phillips' earlier judgment in Catholic Child Welfare in which he laid down five criteria for establishing a relationship which is "akin to that between an employer and employee", and which therefore can give rise to vicarious liability. The Supreme Court held that those five factors are not all equally significant. The 3 most important factors were: (1) the tort will have been committed as a result of activity being taken by the tortfeasor on behalf of the defendant, (2) the tortfeasor's activity is likely to be part of the business activity of the defendant, and (3) the defendant, by employing the tortfeasor to carry on the activity, will have created the risk of the tort committed by the tortfeasor. There was also no need for the defendant to be carrying on activities of a commercial nature.
The issue in this case was whether a local authority can be vicariously liable for the torts committed by foster parents against children placed with them while in care. The Court of Appeal (deciding the case before the Cox ruling) had held that the local authority did not exercise sufficient control over the foster parents for vicarious liability to arise. The Supreme Court has now overturned that decision by a ruling of 4 to 1.
The Supreme Court held that the foster parents provided care as part of the local authority's organisation of its child care services. That in turn created a relationship of authority and trust between the foster parents and the children "in circumstances where close control cannot be exercised by the local authority, and so renders the children particularly vulnerable to abuse". It was concluded that: "although the foster parents controlled the organisation and management of their household to the extent permitted by the relevant law and practice, and dealt with most aspects of the daily care of the children without immediate supervision, it would be mistaken to regard them as being in much the same position as ordinary parents. The local authority exercised powers of approval, inspection, supervision and removal without any parallel in ordinary family life. By virtue of those powers, the local authority exercised a significant degree of control over both what the foster parents did and how they did it, in order to ensure that the children's needs were met".
The Supreme Court went on to note that "More fundamentally, it is important not to exaggerate the extent to which control is necessary in order for the imposition of vicarious liability to be justified" (something which the Supreme Court also said in Cox).
Lord Hughes gave the dissenting judgment, arguing that although the local authority made decisions about where the children should live, the daily lives of the children were not thereafter managed by the local authority. The foster carers provide an upbringing as part of a family and so "It seems to me to follow that if vicarious liability applies to "ordinary" foster parents, on the basis that they are doing the local authority's business, then it must apply also to family and friends placements with connected persons. What of placements with parents? These too may be in the interests of the children, and even after a care order has been made. If they are, it is desirable that they are encouraged, as at present consideration of them is encouraged. It would, however, be artificial in the extreme to say of such placements that the parent's care was given on behalf of the local authority, or that it was integrated into the caring systems of the authority". The majority disagreed with that argument, though, on the basis that the parents or other family members had not been "recruited, selected or trained by the local authority" in order to perform their child care functions.
COMMENT: This renewed confirmation by the Supreme Court that a lack of control over day to day activities, and an absence of commercial activity need not preclude a finding of vicarious liability might lead to a concern, especially amongst liability insurers, that further relationships may fall within the first test in future. That is especially so because, as Lord Hughes pointed out, although this case involved deliberate wrongdoing and abuse, vicarious liability can also arise in respect of negligent acts or omissions.
PJSC Taftnet v Bogolyubov: Court of Appeal holds that English court can allow addition of a claim which is time barred by the governing law identified by Rome I or Rome II
http://www.bailii.org/ew/cases/EWCA/Civ/2017/1581.html
CPR r17.4 gives the English courts jurisdiction to allow the addition of a new claim to proceedings after the expiry of a time limit under "(i) the Limitation Act 1980; (ii) the Foreign Limitation Periods Act 1984; or any other enactment" (if the new claim arises out of the same (or substantially the same) facts which are already in issue). The issue in this case is whether CPR r17.4 applies where a claim is time barred under the governing law identified by the Rome I or Rome II Regulations.
As mentioned above, CPR r17.4 refers to a limitation period under the Foreign Limitation Periods Act 1984. That in turn provides that section 35 of the Limitation Act 1980 (the statutory provision to which CPRr17.4 gives effect) is disapplied where the law applicable to limitation is determined by Rome I or Rome II. The Court of Appeal noted that if the result was that the English court could no longer allow a new claim governed by foreign law under the Rome Regulations to be added, there would be "a lacuna", for no reason which is discernible from the statutory materials.
Although it only needed to decide the point on an obiter basis, the Court of Appeal held that claims where the governing law is identified by Rome I or Rome II do fall within CPR r17.4, on the basis that they fall within the scope of "any other enactment" under the rule. This construction allows all proceedings before the English court to be dealt with consistently.
Lungowe v Vedanta Resources: Court of Appeal confirms Owusu is correct
http://www.bailii.org/ew/cases/EWCA/Civ/2017/1528.html
Since 10th January 2015, the EU courts have had a discretion to stay their proceedings in favour of a non-EU court if the non-EU court was first seised (under the re-cast Brussels Regulation (1215/2012)). The previous position was that the English courts had no discretion to stay English proceedings if a defendant was domiciled in England even if a non-EU jurisdiction was clearly the more appropriate forum (as confirmed in the ECJ decision of Owusu v Jackson). It continues to be the case, though, that if (as was the position in this case) an English court is first seised of proceedings against a defendant domiciled in England, it cannot stay proceedings in favour of a non-Member State court.
There has been criticism of Owusu and at first instance in this case Coulson J was invited by the defendant to find that Owusu is a case on its particular facts and has no application in this case. He declined to do so and found that he was bound to follow the decision, although he agreed that there was force in the submission that the ECJ's reasoning is "suspect".
The defendant appealed from that decision and the Court of Appeal has confirmed that Owusu is correct: "I reject the suggestion that either the position is somehow unclear, or that the ECJ did not intend that jurisdiction was mandatory in the present type of case, or that there should be a reference. The wording in article 4 of the Recast Regulation is materially the same as article 2 of the Brussels Convention. In my view, [the defendant] is seeking to argue points that are no longer open to EU domiciled defendants. In the words of Professor Briggs, the position since Owusu v. Jackson is clear 'and the debate has moved on', see Briggs, Civil Jurisdiction and Judgments (6th edition) §2.304".
A working group of the Civil Justice Council has produced recommendations on ADR
A working group of the Civil Justice Council has recommended that "the Court should promote the use of ADR more actively at and around the allocation and directions stage. We think that the threat of costs sanctions at the end of the day is helpful but that the court should be more interventionist at an earlier stage when the decisions about ADR are actually being taken". However, the group did not go as far as recommending that ADR should be a mandatory condition of being able to issue proceedings. A link to the report can be found here:
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