B2/2001/2375
Neutral Citation Number: [2002] EWCA Civ 1457                 
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION) 
ON APPEAL FROM TORQUAY AND NEWTON ABBOT COUNTY COURT
(MR RECORDER MOXON‑BROWNE)
Royal Courts of Justice 
Strand 
London, WC2 

Friday, 4th October 2002
 
B E F O R E:

LORD JUSTICE LAWS 

SIR MURRAY STUART SMITH 

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MR CHUNG TAK LAM
Appellant/Claimant 

‑v‑

FEDERATION OF SMALL BUSINESSES 
Respondent/Defendant 

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MR LAM APPEARED IN PERSON.  

MR. A. VAITILINGHAM (instructed by Messrs Weightman Vizards, Chancery Lane) appeared on behalf of the Respondent

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J U D G M E N T
1.	LORD JUSTICE LAWS: This is an application with permission to appeal given by myself on 28th January 2002 against the decision of Mr Recorder Moxon‑Browne made in the Torquay and Newton Abbot County Court on 25th September 2001 when he dismissed the appellant's claim against the respondent Federation to recover money said to be due to him pursuant to the contract by which he had become a member of the Federation. The claim on its face was for £19,000 odd plus exemplary damages. 
2.	In granting permission to appeal I gave an outline description of the facts, in part by reference to the Recorder's judgment as follows: 
“In 1992 the applicant joined the respondent Federation, as he says, on the basis of promises about a range of benefits including, as the Recorder described it. 
'... access to legal advice 24 hours a day, seven days a week, and various other types of legal and accountancy support, including what was described in an advertising leaflet as “payment of legal and accountancy costs up to £50,000 in dealing with in‑depth Inland Revenue investigation.' 
2. In fact, as he acknowledged, the Recorder was there quoting from a later leaflet. It seems that the money limit for this benefit in 1992 was put at £35,000.
3. In 1994 and 1995 the applicant was the subject of an in‑depth investigation by the Inland Revenue. In consequence he laid out expenditure on accountants and tax consultants. He made a claim through the respondents in accordance with the rules of the scheme. The scheme in question was administered by a company called Abbey Legal Protection Ltd ('Abbey') on behalf of various Lloyds syndicates. Abbey first declined to meet the applicant's claim at all, relying on a provision in the insurance policy, but then paid out some small sums. However, they continued to reject the major part of the claim, now relying on a different exclusion provision. 
4. Rather than go to arbitration (which I think was provided for) the applicant sued the respondent Federation. As the Recorder said, there was only one issue in the case: did the applicant have a contract with the Federation such that the Federation were to support him in relation to any Inland Revenue in‑depth investigation to the tune of £35,000 or £50,000 or was the respondent Federation's obligation limited to arranging insurance cover of the sort that was put in place? If the latter were right then the claim as formulated against the respondent would be misconceived.”
3.	As the Recorder found, the insurance element in the scheme was set out in a certificate of insurance headed “Federation of Small Businesses Legal Protection Insurance”. That shows the respondent as the policy holder and contains this statement or promise by the underwriters: 
“Now we the underwriters hereby agree to the extent and in the manner herein provided to indemnify on behalf of the assured at the request of the policyholder legal expenses as specified in this Certificate and its Schedule in connection with the business activity of the Assured.”
4.	The assured is defined as being each member of the Federation, therefore including the appellant. The Recorder concluded thus: 
“In my judgment these arrangements can be analysed as a matter of law by reference to a contract between insurers and the Federation, whereby insurers bind themselves to provide members with the insurance described on payment of the requisite premiums, and secondly, a contract between the insurers and each member, whereby the insurers bind themselves to indemnify the members in terms of the policy. See Swain v The Law Society, 1982, Appeal Cases, 598, to which I was referred by counsel on behalf of the defendants, where at page 616, letters F‑H Lord Brightman said this, 'My Lords, it appears to me that once the master policy is in force and certificates of insurance are issued, the legal position can be analysed as follows. One, the master policy is a contract between the insurers and The Law Society under which the insurers bind themselves to provide solicitors with insurance on the terms of the certificate of insurance on payment of the appropriate premium, and to provide insurance for all solicitors without payment of premium. The certificate of insurance evidences a contract between the insurers and the named solicitor under which the insurers bind themselves to indemnify the solicitor and all others who come within the definition of the assured.'In my judgment, if the position of the Law Society is changed to the position of the Federation and the position of the solicitor is changed to the position of the member, that analysis applies aptly to the situation that we have in the present case.” 
5.	So it was that the Recorder rejected the appellant's case which was to the effect that the respondent was bound by a contractual promise which was unqualified to provide up to £50,000 or £35,000 worth of support in the event of an Inland Revenue investigation. 
6.	In his grounds and skeleton argument the appellant refers to an earlier judgment given by His Honour Judge Overend on 12th January 2001. I should refer briefly to this, though I indicated in granting permission that the point that Mr Lam seeks to make in relation to Judge Overend was misconceived. He dealt with it in the skeleton and it is only fair that I should explain what the position was. On 12 January 2001 Judge Overend said this in the course of giving a judgment in circumstances that I will explain in a moment: 
7.	“His only avenue is as against the federation, and in my judgment, for the District Judge to say that the extent of the obligation is merely to introduce Mr Lam to an insurance policy is wrong both in law and in fact and for those reasons the appeal is allowed. So therefore the claim is reinstated.”
8.	The reference to the district judge was to District Judge Meredith who on an earlier occasion had acceded to an application by the respondent Federation for an order to strike out the claim. The proceedings before Judge Overend were constituted by the appellant's appeal against that order. The appellant now seeks to reinstate Judge Overend's judgment contending, as I understand it, that the Recorder had no business reaching a conclusion which was at variance with him. This is entirely wrong. Judge Overend was not called upon to give any final judgment in the case. He was only concerned to hear the appeal from the District Judge's strike out order. He was not dealing with an application for summary judgment or anything of that kind. So far as he expressed a concluded view he went beyond his remit. The effect of his order setting aside the strike out was only that the action would have to be heard on its merits by another judge on another day, as indeed it was before the Recorder. 
9.	There are references in the grounds and skeleton argument to certain articles in the European Convention on Human Rights but there is nothing in any of those. The only question here, as the Recorder said, was as to the terms of the contract between the appellant and the respondent. 
10.	It is, as I understand it, common ground that the appellant completed an application form to join the Federation on 18th February 1991. Before that, as the Recorder accepted, he would have seen a leaflet or flyer advertising the benefits of “payment of legal and accountancy costs up to £50,000 in dealing with an in‑depth Inland Revenue investigation”. His first subscription as a member of the Federation was £40 per annum plus a joining fee of £10. It is clear that on joining, if not before, the appellant would have received a full copy of the insurance policy wording stating the benefits available. This is updated from time to time. Specifically on 11th August 1992 a letter was issued to all members setting out changes to the existing scheme, including “the legal expenses insurance.” When the appellant made his claim to recover his expenses incurred in the course of the Inland Revenue investigation, he completed a standard form legal expenses insurance claim form. 
11.	There are plainly niceties in the relation between the insured and the insurance company in the context of a group insurance scheme, such as that provided for in this case. There may be difficulties for example in treating the Federation as agent for members who are not ascertained at the time the insurance policy is entered into as between the Federation and the insurer. I make it clear that in this case no such difficulty arises. For my part I am entirely content to accept and indeed would accept that the appellant would have been entitled to make a claim against the insurers, subject of course to the merits of any such claim. He was one of the principals on whose behalf the respondent had entered into the relevant insurance contract. There is no difficulty in relation to the time of his joining the Federation or anything of that kind. That said, however, I am entirely clear that the words of the flyer or leaflet which the appellant saw before joining the respondent did not give rise to a contractual obligation on the respondent to indemnify the appellant without qualification against any expenses incurred by him in the course of the Inland Revenue investigation.
12.	My reasons are briefly these. First, the words of the flyer are themselves not inconsistent with an intention to provide insurance services rather than an unqualified indemnity. Secondly, and perhaps more importantly, the provision to the appellant of what was plainly insurance documentation at the time of his joining the respondent demonstrates that his membership was on terms that that was the benefit involved. He cannot reasonably have supposed that he enjoyed some additional free‑standing right to an indemnity which may have rendered the insurance provision itself redundant. We are not concerned here with whether or not the insurance company was entitled to rely on this or that exclusion provision or exclusion clause. We are only concerned with the claim to recover without qualification all of the expenses that had been incurred in the course of the Inland Revenue investigation. That would require him to establish a contract of a kind that is not made out on the documents here. 
13.	I have had regard to the various materials to which Mr Lam, who has addressed us in person and with great courtesy, has drawn our attention. Not least there is some relatively recent correspondence showing that as of this year, 2002, should Mr Lam choose to renew his membership of the Federation he would do so without benefit of the legal protection scheme. It is not necessary to enter into the rights and wrongs of that position being taken by the Federation. It obviously relates to a period later in time than the relevant events in this case. 
14.	In the result, and for all the reasons I have given, this claim was not well founded. Mr Recorder Moxon‑Browne was right to dismiss it for the reasons that he gave. For my part I would dismiss the appeal.
15.	SIR MURRAY STUART SMITH: I agree. 

Order: Appeal dismissed with costs assessed in the sum of £4,500 including VAT.