Ozon Solicitors : Nesbit Law Group LLP v Acasta European Insurance Company Ltd
In April 2007 Acasta European Insurance Company ltd (“Acasta”) provided insurance to Ozon’s client, Nesbit Law Group LLP (“Nesbit”), by way of Financial Guarantee Indemnity cover (“FGI”). Acasta insured Irrecoverable Costs Loans in the event of personal injury claims, brought by Nesbit on behalf of lay clients, being unsuccessful. Each agreement related to a loan agreement entered into between Nesbit and Clydesdale Financial Services Limited (“the Bank”) namely the “Umbrella Agreement”. The solicitors encountered financial difficulties and consequently on 31 July 2009 the bank terminated the Umbrella Agreement. In the event a Refinancing Agreement was entered into between Nesbit and the Bank.
On 22 February 2012, Nesbit took steps to claim under the FGI insurance policies, seeking payment in the sum of £1,257,861.53. Acasta rejected the claim and sought to rely on an exclusion clause in the FGI policy which ruled out cover “where the terms and conditions of the Loan have not been strictly adhered to, including but not limited to any agreement entered into by [the solicitors] and [the bank] to repay a Loan“. At first instance, Stuart Brown QC sitting as a Deputy Judge of the High Court gave judgment in favour of Nesbit finding that the exclusion did not cover the Refinancing Agreement. Subsequently, Acasta was found liable to Nesbit and was awarded the sum of £1,195,600.04. Acasta appealed and the matter came before the Court of Appeal on 14th February 2018.
Acasta sought to rely on four grounds of appeal but the two main issues considered by the Court of Appeal were (i) the proper construction of the exclusion clause and (ii) Acasta’s belated application to amend its Defence.
Lord Justice Vos gave the lead Judgment. On point (i) it was held that the exclusion clause did not cover any breaches of the Refinancing Agreement. The Court of Appeal stated “The Refinancing Agreement was a completely new arrangement between [the bank] and [the solicitors] entered into nearly a year after the litigation funding scheme had ended so as to find some means by which [the solicitors] could repay its outstanding debt. There were still outstanding loans and personal injury claims, but no new loans or FGI Policies were being entered into“. Any such future global refinancing arrangement was not envisaged by the parties. This was a significant reminder that the courts, in interpreting contractual clauses, will have regard to the commercial intent and purpose(s) of the parties.
As Acasta failed on point (i), the amendment issue stated in point (ii) above did not formally arise. The Court of Appeal, however, did comment briefly on the issue and confirmed that permission would have been refused in any event. In short, Acasta sought to amend its defence at a very late juncture for the purposes of the appeal itself. The Appeal Court rehearsed the findings of Mrs Justice Carr in Quah Su-Ling v. Goldman Sachs International  EWHC 759 (Comm) whereby she summarised that “There is a heavy burden on the party seeking a late amendment to justify the lateness of the application and to show the strength of the new case and why justice requires him to be able to pursue it. These principles apply with even greater rigour to an amendment made after the trial and in the course of an appeal”. This was a salutary confirmation that a party seeking the court’s indulgence at a late stage to amend a statement of case will only rarely be successful, and that is certainly so if the amendment is sought within the appeal process.
This was a very pleasing result for Ozon and its client in a widely reported case. The firm has once again found itself at the cutting edge of commercial and insurance litigation.
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