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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Channon (t/a Channon & Co) v Ward [2015] EWHC 4256 (QB) (12 May 2015) URL: http://www.bailii.org/ew/cases/EWHC/QB/2015/4256.html Cite as: [2015] EWHC 4256 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN''S BENCH DIVISION
EXETER DISTRICT REGISTRY

		12/05/2015

His Honour Judge Cotter Q.C.

Introduction and outline facts

1. The Claimant was a successful and well respected chartered accountant with a private practice, Channon & Co, which had a significant turnover and a loyal client base. At all material times for the purposes of this claim the practice was not registered to give financial advice and the Claimant repeatedly told his clients that he did not give such advice.
2. The Claimant was also personally involved in significant property development projects and was the director of a number of companies. In the run up to 2004 his involvement in property development had brought healthy returns and he had high hopes for the future. He was a director of a company called Mill house Partnership Limited (“"MHP”") together with two others, Mr Bromage and Mr Morris. The company had ambitious plans for purchase and development of property with the aim of no doubt very significant profit, however it required additional funds to put such plans into practice.
3. The Claimant who described himself as an accomplished networker, had as a matter of longstanding practice, referred any clients who wanted investment advice to a friend, Mr Armitage, who was familiar with at least some of the projects undertaken by the companies with which the Claimant had been involved, and I think likely, the significant profits that had been made. In any event he knew of MHP’'s proposed projects and suggested to his then girlfriend, later his wife that she discuss investment in MHP with the Claimant as she had spare capital, having previously been involved in investing in property. A meeting took place at the Claimant’'s home and Mrs Armitage (as she now is) brought along a friend Ms Stevens. Neither Mrs Armitage or Ms Stevens were clients of Channon & Co. or had never previously sought professional advice from Claimant. The Claimant stated that MHP was looking for capital and described what the company was doing. Both Ms Armitage and Ms Stevens decided to commit capital to the projects. A further meeting took place and agreements were subsequently drawn up by Channon & Co on the instruction of MHP and signed.
4. Subsequently five other individuals, who were also clients of Channon & Co, also decided to commit capital to MHP after discussions with the Claimant. Again agreements were subsequently drawn up by the practice on the instruction of MHP and signed. The total invested approached £1 million.
5. Sadly for all concerned and for so many others the financial crisis then hit the property markets. MHP could not honour its commitments under the agreements. Meetings took place between the officers of the company and the investors with heated exchanges. It was clear that the sizeable investments made would not be repaid. The Claimant had also personally lost very significant sums.
6. A decision was taken by Ms Stevens, presumably after legal advice, to threaten to bring an action against the Claimant alleging professional negligence. A letter before action was sent to the Claimant in October 2009.
7. Although he believed that at all times he was acting as director of MHP and not as an accountant the Claimant sent through the details of Ms Stevens’' claim to the Defendant, his long term insurance broker and also a friend, who operated a small “"one man band”" brokerage. The Claimant subsequently received and passed on to the Defendant details of claims from the other individuals, investors in and now creditors of MHP (“"the investors”"), who were then acting as a group. Together they were seeking approximately £1.8million.
8. However, the Defendant had not put professional indemnity insurance cover in place since 2006. The Claimant thought that it was in place for the years following 2006 and the Defendant even supplied policy numbers to the Claimant so that he could enter them on his annual professional returns; this despite the fact that no insurance cover existed. How and why the Defendant came to fail to obtain cover or act as he did is unclear. His wife was seriously ill, subsequently diagnosed with cancer, and it appears that he was under pressure and failing to cope. In any event there was no insurance policy in place and so no insurer to assist the Claimant.
9. The seven individual investors then issued claims against the Claimant. The Claimant defended the claims brought by the investors with some legal assistance. He entered fully pleaded defences, stating that he had never given investment advice, rather only information as to what the company was doing and that in any event at all times he was clearly acting as a Director of the company, as he had told the individuals, and not in his professional capacity as an accountant with Channon & Co.
10. The investors proceeded with the assistance of solicitors, Bynes & Co and Counsel, Mr Adams. The Claimant told the investors that he had very limited funds and produced a schedule of assets. The investors knew by late August /early September 2010 that the Claimant was uninsured, but pressed on. The Claimant did not seek to join the Defendant into the action brought by the investors as a part 20 Defendant seeking a contribution or an indemnity on the basis of a failure to ensure that insurance was in place. However a claim alleging negligence against Defendant was issued on or around 23^rd November 2011.
11. A settlement was reached in the action brought by the investors against the Claimant as set out in a consent order dated 19^th June 2012. By that order judgment was entered for each investor on the issue of liability with damages to be assessed. The Claimant also authorised the investors to pursue the then ongoing action against the Defendant, and agreed to them taking the proceeds of the action, to use his best endeavours to assist with the claims and to indemnify the investors in respect of all costs incurred pursuing the claims and any subsequent claim against the Financial Services Compensation Scheme (“"FSCS”").
12. It is an important feature of this claim that the Claimant has subsequently stated that he believed and indeed still believes that the investors'' claims against him were wholly unmeritorious and that he stands by the content of his defences, but that his financial position was such that he was on the verge of entering an IVA and could not afford to defend the claims so considered settlement his best option, particularly as by virtue of the agreement he was able to continue in practice and was only required to pay a limited sum of £85,000 over a period of time with annual payments of £10,000. So despite the consent agreement the Claimant was and remains adamant that he was not liable to the investors. He did not seek to negotiate on the overall sum sought by the investors, as it was to a large degree academic. He agreed to commit to beast endeavors in an action against the Defendant as there was hope that if a judgment could be obtained against the Defendant, he could then be made bankrupt if, as was overwhelmingly likely he could not pay the sums agreed by the Claimant with the investors (as set out in a further order of 5^th December 2012) and the FSCS would then step in and make payments to the investors.
13. The Defendant, who was clearly struggling in both his personal and professional life failed to respond to the claim against him in time and judgment was entered on 16^th April 2012. He subsequently tried to set judgment aside on 8^th September 2013, principally relying upon his wife’'s serious illness and the effect that it had upon him, but was unsuccessful. Having now had the benefit of considering all the relevant evidence, including oral evidence from the Defendant it was to his benefit that liability was so swiftly concluded as he was almost certainly would have been found liable and he would not have been able to meet the consequential costs bill.
14. Following his unsuccessful application on by what Mr Dyson referred to as “"the skin of his teeth”", the Defendant, who is now well over seventy years of age, managed to avoid a bankruptcy order arising out of his costs liability to Claimant. So the Claimant and the seven individual investor claimants in the original action became aware, if not already well aware, of the Defendant’'s inability to meet any significant judgment, let alone one for £1.8 million. However, as the investors believe that if the Defendant is made bankrupt they will be eligible for payments from the FSCS the claim has been vigorously pursued. As I have set out the Claimant is indemnifying the seven individual investors as to their costs, so there is little or no incentive for them to do otherwise than pursue the action regardless of its merit.
15. It is an usual, and as I stated at the outset of the hearing in my view somewhat worrying, aspect of this case that notwithstanding that there is a Tomlin agreement in force between the Claimant and the investors with subsisting obligations, the Claimant’'s case has been conducted by the same solicitor and Counsel who previously acted and no doubt continue to act for the investors against him in the action leading to that agreement. I shall return to this in a moment.
16. So the position reached in this claim was that the Claimant had a judgment against the Defendant in default of a defence in respect of the claim for breach of duty in failing to ensure that insurance was in place. What remained were the causation and quantum aspects of the Claimant’'s claim. These are the matters that have been addressed in the hearing before me.

The respective cases

17. In essence it is Claimants case, in all practical effects as presented by the investors, that he would have been entitled to an indemnity, if he had been insured, up to a limit of at least £1.3m (the limit as agreed as applicable between the parties). This means that he would not have suffered any loss, whether or not the claims would have been successful, if properly defended, over and above a £1,000 excess in respect of each claim. As a result damages should be assessed as the difference between his total liability under the consent orders, some £1.8m and £7,000 reflecting the excess payments.
18. On behalf of the Claimant, Mr Adams submits that it is the task of the court, as a matter of evaluative judgment, to assess in monetary terms the difference between the position he finds himself in and the position he would have been in if he had been insured (assessed on an expectation or loss of a chance basis). He submitted that in all the circumstances there was little or no prospect of the Claimant having been refused an indemnity under his professional indemnity insurance policy in respect of these claims and from which he therefore ought to have been held harmless. He acknowledges that the judgment recovered is in one respect academic as the Defendant will not be able to meet the judgment, but that obtaining judgment is a necessary step to making a claim for an award out of FSCS.
19. The Defendant’'s case is that the claim is a contrivance and unmeritorious. The Claimant’'s sole objective is to secure the Defendant’'s bankruptcy to act as a conduit to access the FSCS as a source to repay the debts owed to the individual investors by a failed property development company in which the Claimant was director. The Claimant was a property developer and acting as such and the investors, being successful business people, hence their ability to invest have simply “"caught a cold”" as so many others did when the property market crashed. They have looked for any route to recoup losses and have pursued what was in the Claimant’'s own view an unmeritorious professional negligence action against him (as he was not acting qua accountant), and having faced little defence as he was impecunious, obtained a judgment for all sums claimed and forced the Claimant to pursue this action, also unmeritorious, against the Defendant.
20. Mr Dyson submitted that the action is unmeritorious, notwithstanding the judgment entered in default, as had insurance been in place the insurers would have undoubtedly rejected the claim and there would have been no indemnity. This was not a true professional negligence claim as the Claimant has always asserted and would have not fallen within the cover under the policy. Further and in any event exemptions in the policy as to warranties or guarantees in relation to investments and/or in relation to losses caused by trading losses/liabilities of a company managed by the insured would have been raised by the insurer.
21. Somewhat surprisingly in my view no point has been taken by the Defendant about a failure to mitigate, specifically arising out of the failure to contest the allegations and/or the settlement reached whereby the full sums claimed by the investors were conceded. This agreement was reached notwithstanding the Claimant’'s continued assertions, including before me, that these were wholly unmeritorious claims, the content of available documentation which provided some support for his position and the fact that he had some funds and could have defended himself.
22. So the issue between the parties and which falls to be determined is essentially that of causation of loss.

Potential conflict

23. I raised concern at the outset and in open court my concern about the Claimant’'s representation and the role of the solicitor and Counsel who, I was informed, were “"acting for him”". They did so with the individual investor claimants for whom they also acted in the past (and presumably still act) against their current client sat at the back of the court. I stated that I was concerned about potential conflict between the interests of the Claimant, who thought the investors claims were unmeritorious and in effect “"a try-on”" to recover commercial losses by framing a claim in professional negligence, and those individual investors who had the benefit of the Tomlin order and would wish to pursue this action through to the bitter end regardless of cost and the financial interests of the Claimant who was personally liable for the costs and had no real interest in the financial outcome. I raised the issues of what would happen as regards the confidentiality of his instructions and /or if it was thought that settlement should be considered and /or if it was thought that the Claimant was not complying with the terms of the Tomlin order.
24. I was assured by Mr Adams that he saw no conflict but would keep the matter under review. I cannot say that my sense of unease has at any stage disappeared. However there is a limit to how far a Judge can pursue these matters at the beginning of a trial given what he is told by professionals subject to specific codes of practice and the Claimant’'s apparent happiness to proceed having heard what I said in open court. So the matter proceeded.
25. However as the hearing progressed the unusual relationship between the Claimant and his representatives did have a clear effect on matters. Whilst the Claimant obviously sought to comply with his best endeavours to assist with this litigation it was clear to me that his heart was not in the claim. What he really wanted when the investors brought claims against him was some legal assistance and guidance to enable him to defend unmeritorious claims based on professional negligence and he hoped when passing on the details of the claims to the Defendant that the involvement of an insurer would bring this at least initially. In my judgment it is abundantly clear that he did not believe and still does not believe that an insurer or other body should be liable to pay the sums claimed to the investors.

The Issue to be determined

26. The principal issue that remained for determination at the conclusion of the hearing was summarised by Mr Adams as follows; what are the chances that the insurers would have refused to indemnify Mr Channon in respect of the claims either because at all times he was acting in his capacity as a director of MHPL and not as an accountant or relevant exemptions in the policy?
27. Issues of whether the policy limit would have limited the indemnity available because all the claims ""arise from the same cause"" and also whether the Claimant was contributorily negligent on the basis he knew or ought to have known that he was not paying any insurance premium fell away during the hearing.

Evidence

28. I heard from the Claimant and Mr Cowper his office manager, on the issue of contributory negligence. I then heard from the Defendant, again principally on the issue of contributory negligence.
29. I had the benefit of expert evidence from Mr Black, on behalf of the Claimant and Mr Dowlen on behalf of the Defendant. I heard from both experts during the hearing.

Findings of fact

30. I will now set out the relevant facts in respect of the claims against the Claimant, the likely approach of an insurer upon notification and the Claimant’'s likely subsequent steps bearing in mind what an insurer may or would have done. I do so bearing in mind Mr Adams'' submission that what would have happened had there been a policy in place, albeit a matter of speculation, is an evaluative exercise, the object of which is to determine what in fact might have happened. It is in other words a question of fact, not law - as set out by Lord Mance delivering the opinion of the Privy Council in Phillips & Co. (A firm) v. Whatley [2007] PNLR 27 at paragraph 31. Mr Adams'' specific submission was that:

“"In all cases the starting point in the no-negligence world is that there is an insurance policy in place and the claimant makes a claim under it. The question for the court is to assess as a matter of fact what might have happened in that scenario.

I agree.

31. In deciding and analysing the facts I have borne in mind that the Claimant finds himself in a situation which he ought not to be in due to the defendant''s wrongdoing, so the very long standing principle in Armory v. Delamirie [1722] 1 Strange 505 applies, namely there is an evidential presumption in favour of the claimant which gives him the benefit of any relevant doubt (the ""fair wind"" principle) - see Phillips & Co. (A firm) v. Whatley at paragraph 45.
32. My findings are as follows.
33. The Claimant was in practice as a chartered accountant, being a partner, together with his company Totally Taxation Ltd, in the firm Channon & Co. The Defendant was already known to the Claimant when he established Channon & Co in 1991 and he was his insurance broker from the outset, advising him on what insurance he needed, sending him renewal notices and contacting him when he needed information.
34. The Claimant, a self professed networker, was involved in a number of companies involved in property development. Between 2004 and 2007 several individuals were persuaded by the Claimant to loan money to his property development company, MHP. The Claimant was a director, shareholder and company secretary of that company. The auditor of the company, unsurprisingly, was Channon & Co. MHP needed funds to pursue the purchase and development of properties. The Claimant first secured investments from Candice Armitage and Karen Stevens who were introduced to him by the financial advisor he referred people to who wanted investment advice (also being Mrs Artmitage’'s then boyfriend). Neither was a client of Channon & co.
35. Subsequently Mr and Mrs Whitmoor-Pryer, Mr and Mrs Cemm-Evans, Mr and Mrs Hender, Mrs Graham and Mr and Mrs Cross all invested in MHP. With high rates of contractual interest offered the individuals were persuaded and motivated to lend in the expectation of receiving a large profit. By way of example of how the Claimant saw matters he referred in a letter (on MHP letterheading with all the relevant company details) to Mr and Mrs Cross on 14^th March stating

“" I now enclose a signed and witnessed copy of the heads of agreement re your investment in Mill House Partnership… welcome to our investors club – thank you for your interest in this project”"

36. Whereas the individuals were initially investors they eventually became and remained at the time of the issue of their own proceedings against the Claimant, creditors of the company.
37. What nobody involved in the case saw was the impending financial crisis and property price slump. By 2008, possibly earlier, MHP began to fail. The various creditors began to call in their debts and the company could only manage to defer repayment for a limited period, stating that any legal action against MHP would trigger the banks taking possession of the company’'s assets as they were the only truly secured creditors. Various debentures had been issued to certain creditors but not over MHP’'s assets rather in respect of a company called Homebrick Limited which turned out to hold insufficient assets as security.
38. Once the creditors realised that MHP had no money to repay their loans or suitable available assets for security they began communicating with each other. Meetings attended by the Claimant and creditors were convened during 2010 and during those meetings the creditors expressed their concern and anger about the way in which the Claimant had managed MHP. By way of example the creditors were very angry that the Claimant and his co-directors had apparently preferred themselves rather than the creditors upon the sale of one of MHP’'s properties, which had generated a distributable cash surplus.
39. Strategies to avoid impending insolvency by MHP were mooted but rejected as unworkable. The creditors wanted redress for their losses in some form and so looked as to how they might bring a claim against the Claimant. They concluded and/or were advised that by framing their claim against Claimant qua professional accountant they could effectively gain access his professional indemnity insurance cover.
40. On 6th October 2009 the Claimant received a letter of claim from a Ms Stevens, being the first of a number of related claims by the investors, complaining that he had been negligent when acting for and advising an investor in his professional capacity, in connection with an investment. The Claimant notified the Defendant of the claim.
41. The Claimant was able to make obvious points in relation to the first claims in time. Ms Stevens and Mrs Armitage had met the Claimant at his home for details of a proposed investment opportunity as the Claimant was professionally and socially acquainted with Ms Armitage’'s partner; an Independent Financial Advisor who invested in property. Neither was a professional client of Channon & Co. Further, as the heads of agreement subsequently drawn up expressly state, the Claimant represented the company i.e. was acting on behalf of the company. The agreement differentiates between the Claimant and Channon & Co which is referred to as that entity.
42. The Claimant set out in his Defence, as verified by a statement of truth that

“"The Defendant told her that he was a director of Mill House and was acting on behalf of Mill House”"

and

“"( the) sole purpose of the meeting was for the Defendant, as a Director of Mill House partnership to brief the Claimant on the activities of Mill House and Hugh Bromage..it was not a professional consultation and no investment advice was sought or given.”"

and

“" the affairs of Mill House were not part of the Defendants professional practice”"

and

“"it is denied any investment advice was given.. the Defendant steered all of his clients requiring financial advice to Richard Armitage ”"

43. Ms Armitage also brought a claim and the others followed. I shall give brief details of each investor and the relevant facts as alleged.
44. Mr and Mrs Whitmoor-Pryer were clients of Channon & Co. They owned a care home and understood that the Claimant was carrying out some property development. The Claimant introduced Mr Bromage stating that he was a partner in his property business. There was then a meeting in which it was alleged that the Claimant advised/induced them to invest i.e. they say that he gave investment advice. The defence to their claim denied that any professional advice was given and set out that Mr and Mrs Whitmoor-Pryer had previously invested in the property market, had their own solicitor and were in contact with Mr Bromage.
45. Ms Graham was informed by the Claimant that he was involved in a property development company ; she had never been a professional client. Again Hugh Bromage was heavily involved in securing an investment from her.
46. Mr and Mrs Cemm-Evans also owned a care home and were clients of Channon & Co. They had their own Independent Financial Advisor and solicitor Mr Moore who apparently advised in relation to their investment
47. Mr and Mrs Cross owned a care/nursing home and were clients of Channon & Co. Their claim followed a similar pattern to the other investors as did the defence to it. However this claim can be used as an example of how documentation could lend support to the Claimant’'s case that he was not acting in a professional capacity when discussing investments in MHP. A letter of 30^th November 2006 that followed on from a meeting between Mr (Clive) and Mrs Cross and the Claimant and Mr Brommage would have been of obvious significance in any analysis and defence of the claim. It stated

“" At my recent meeting with Clive I did explain that Channon & co are not authorised to give investment advice. Hence, whilst I am happy to discuss with you the opportunities that exist for you to invest with Mill House Partnership and/or Hugh Brommage''s main trading company (Goldhart Properties Limited) I cannot give you any specific investment advice. Clive and I have already discussed this fact and Clive understands that any final investment decisions made are entirely your own to make, you should take professional advice in this matter”"

48. Mr and Mrs Hender were farmers and clients of Channon & Co who had also previously invested in property.
49. So although there were some variations within the Claims the Claimant defended each of them on the basis that he had not given any advice and in any event had not been acting in his professional capacity as an accountant, rather as a director of MHPL.
50. The claims were consolidated and the litigation process abridged when the parties eventually entered into an agreement as reflected in a consent order on 19^th June 2012.
51. I now turn to the findings relevant to the question of whether the an insurer would have refused to indemnify or provide Mr Channon with any assistance in respect of the claims.
52. Firstly it is clear that the Claimant did refer the matter to the Defendant for consideration by the insurer.
53. It is then necessary to consider what the Claimant has said and would have said on the matter alleged against him and other information available to the insurer. In my judgment his overarching position as presented to any insurer would have been that these were wholly unmeritorious. Further the following matter would have been raised ;

(a) Channon & Co was not authorized by the Financial Services Authority (“"FSA”") to conduct FSA business. Clients were expressly told this, as evidenced by its engagement letter such as that sent to Mr and Mrs Hender of 27^th March 2003 which stated

“"We are not authorized by the Financial Services Authority to conduct investment business. If you require investment business services we will refer you to a firm authorized by the Financial Services Authority”"

The Claimant would have stressed that he well knew this limitation and was careful not to give any financial advice. So he would have provided evidence that he specifically warned clients of Channon & Co that the partnership did not give investment advice.

(b) It would have been and still is his case that he did not in fact give any investment advice. As he stated at paragraph 3 of his witness statement of 24^th November 2014

“"I deny that I gave any investment advice whatsoever to the said persons who have claimed against me and who are now my Judgment creditors. I took this stance in my defence and my position has not changed.”"

(c) He would have pressed the insurer to defend the proceedings on the basis that he had not provided investment advice or at any stage acted in his professional role as an accountant (see paragraph 3 of his witness statement of 24^th November 2014). As I have set out he only reluctantly compromised what he believed were unmeritorious claims as he had not got the funds to defend them. I find as fact that his instructions would never have wavered. He would have told any representative of an insurer (including any lawyer) that the claims arose out of disappointment at the losses of a trading company of which he was a director and were nothing to do with his role as an accountant for Channon & Co.

(d ) The first claim in time, so the first to be considered by an insurer, was that of Ms Stevens as notified in a letter of 6^th October 2009. On initial perusal by any insurer or legal representative of an insurer, and given the matters that I have already set out, it would have appeared that the Claimant was on strong ground to, as he put it, “"personally totally and entirely refute the claim”". Taking the claim of Ms Stevens together with that of Ms Armitage, available information would have revealed that

(i) Neither Mrs Armtiage or Ms Stevens had ever been a professional client in any capacity at any time;

(ii) Mrs Armitage was the partner, now wife of an Independent Financial Advisor, Mr Armitage, to whom the Claimant, as part of a long established arrangement, “"steered”" any clients wanting financial advice;

(iii) Ms Stevens was a client of Mr Armitage and a successful investor in property, including with Ms Armitage;

(iv) The first and main meeting took place at the Claimant’'s house at the instigation of Mr Armitage. This was the first time that the Claimant had met Ms Stevens;

(v) The Claimant’'s evidence was that he told them that he was a director of MHP; which was true, and that

“"the sole purpose of this meeting was for the Defendant (as a director of MHP) to brief Ms Stevens on the activities of Mill House and Mr Hugh Bromage”"

and

“"It was not a professional consultation of the defendant as an accountant. No investment advice was sought.”"

and

“"the affairs of Mill House were not part of the Defendant’'s professional practice as an accountant”"

and

“"the defendant told the Claimant he was meeting them in his capacity as a director of Mill House and not in advisory capacity”"

and (in relation to Ms Stevens)

“"it is denied that the defendant agreed to advise (professionally or otherwise) or held himself out as acting for the Claimant”";

(vi) That the offer as accepted was that Ms Stevens invest £100,000 with a return of a guaranteed minimum of 10% (the letter before action stating that Ms Stevens made it clear that she wanted her investment “"guaranteed”"); the return to be repaid by her receiving a penthouse flat up to a value of £165,000. The security for the loan was to be a debenture charge over the company;

(vii) That Ms Stevens rejected the offer to seek independent financial advice and asked the Claimant (acting as director for an on behalf of Mill House to draw up the agreement);

(viii) The loan agreement stated

(a) the Claimant represented MHP

(b) that the agreement was drawn up by Channon & Co on the instructions of MHP

(c ) that the investors had been advised to seek independent legal advice.

54. I take the above matters as underpinning a statement made by Mr Dowlen, the expert instructed on behalf of the Defendant, that when presented with the claims as made and the response and initial evidence provided by the Claimant any insurer’'s likely initial reaction would be that “"the facts stink”". By that he meant that the initial view would be as Mr Dyson described when he set out in his submissions that

“"The third parties have been advised by professional negligence experts to shoehorn their commercial claim against MHP into a professional negligence claim in order to tap into the Claimant’'s PII cover. But it is like trying to squeeze a square peg into a round hole. This is because the true nature of their claim is not one for professional negligence.”"

55. The insurer would also have noted that the Claimant’'s initial reaction to the claim in correspondence had been that he personally and Mill House Partnership Limited would have to appoint solicitors to defend past actions which “"we would do very vigorously indeed”". Indeed in due course and in his own defences, he did just that.
56. So given these matters what would the approach of the insurer have been?

The approach of the insurer

57. To briefly put my findings in context Mr Adams submitted that the question for the court to determine is whether there was a chance that the insurers would have refused to indemnify the Claimant, because they would have taken the view, and succeeded in maintaining such stance in proceedings if necessary, that at all times he was acting in his capacity as a director of MHPL and not as an accountant or that a relevant exclusion applied. He further submitted that the court had to consider the matter as a matter of chance, because what would actually have happened in the hypothetical situation that the Claimant had been insured is a matter of speculation, which in the real world would have depended on a whole host of different matters including the choices made and the exercise of discretion by the third party insurer. He submitted that the question is not whether the insurer could have relied upon its strict legal rights to repudiate the policy or refuse an indemnity, but whether insurers, with standing and reputation to maintain, would as a matter of business have done so i.e. it is a matter of determining the facts as far as it is possible to do so given that a third party is involved.
58. So what would have happened?
59. To answer this question it is necessary to start with the extent of the indemnity under the policy.
60. The parties have approached the matter on the basis that the content of the 2006 policy of insurance with Aviva provides the relevant terms that would have been in force.
61. As for the scope of the cover the policy wording at Clause A.1 of the policy provides as follows:

“"We will indemnify you in respect of any claim arising out of the conduct of your Business, first made against you and notified to us during the Period of insurance...”"

Your Business”" is defined ( 229) as:

“"(1) The provision of advice or Services by you or on your behalf as declared to us in the proposal or shown in the schedule as the Business.

(2) Any individual personal appointment (other than as company secretary or registrar or director) held by You but only in respect of advice or Services shown in (1) above.

(3) Any individual personal appointment as company secretary or registrar or director, but only in relation to the performance of Services.”"

“"Services”" is defined as:

“"All services performed or advice given by you in connection with tax matters, secretarial work, share registration, financial advice to management, book-keeping, management accounting, financial investigation and reports, financial claims (including their negotiation and settlement), company formations, investment advice, insurance and pension scheme advice and computer consultancy.”"

The relevant declaration contained in the Schedule for the purposes of what is “"your business”" made by Claimant in respect of his 2006 insurance policy was “"Chartered Accountants”" .

62. However, the wording of the minimum terms of insurance required by the relevant professional body for accountants ( ICAEW), which the parties agree had to met by the terms of any policy, were wider than the policy terms and required the insurer:

""To indemnify the Insured against any Claim or Claims . . . . in respect of any civil liability whatsoever and whensoever arising . . . incurred in connection with the conduct of any Professional Business"" which is not exhaustively defined, but rather as including ""advice given or services performed irrespective of whether or not a fee is charged.""

63. It is then necessary to consider potentially relevant exemptions.
64. The policy states that indemnity would not be provided in respect of any claim in three relevant respects.

Clause three

“" … loss arising from any express or implied warranty or guarantee relating to the financial return of any investment or portfolio of investments”"

Clause five

“" … loss arising from or caused by you acting as company secretary or registrar or director other than where the claim or loss arises from the performance of services”"

Clause six

“"or loss arising from any trading losses or trading liabilities incurred by any business managed by or carried on by you.”"

65. It is then necessary and important to recognise some matters that were not in dispute before me. As a result of the experts’' analysis the following matters were agreed by the parties ;

(a) that the insurers could not have repudiated the insurance for non-disclosure.

(b) that if the Claimant gave investment advice in the course of his business as an accountant, then claims that such advice was negligent could not be excluded under the ICAEW minimum policy requirements.

(c) that the insurers would have found it difficult to refuse an indemnity on the grounds of fraud or misrepresentation.

(d) That the insurer would have considered the claims as a whole and taken a consistent stance in respect of all of them.

66. I then consider it helpful to briefly set out the rival contentions.
67. At the outset of the claim Mr Adams submitted that even a cursory examination of the particulars of claim in the seven actions brought by the investors against the Claimant would have revealed to an insurer that the complaints were that trust and confidence had been placed in the Claimant as an accountant, who either acted for the claimants, their associates or spouses, and relied upon the advice he had given in that capacity. Further that he had provided his services as an accountant when drafting the relevant agreements. The focus of the insurer could not properly have been on what the Claimant said in defence to the claims, rather than on the nature of the claims as presented. As a result it followed that the insurer would have decided that the Claimant was entitled to an indemnity in respect of the claims whether the claims were well founded or not and even if his defence to the claims was that he was not acting in his capacity as an accountant, but rather as a director of MHP.
68. Although, as I shall set out, neither the lay or expert oral evidence given before me was as Mr Adams had not hoped it would be, his closing submission remained that the finding of fact should be that and insurer would not have sought to argue that there was no right to an indemnity and or that an exemption could be relied on and any defence would have been funded by the Claimant’'s insurers and the maximum extent of his liability would have been the extent of his excess. It appeared to me that given the content of the expert evidence, including evidence that he called, which ran contrary to his case, he was forced to rely very heavily on an argument that, regardless of what the initial view of the insurer might have been, given the size of the claims there would subsequently have been expert legal advice provided and that advice would have ruled out refusing to indemnify or reliance on any exemption clause. As I had no evidence in relation to what legal advice would have been provided to an insurer in 2009 about these matters he then advanced his own interpretations of the meaning and scope of the indemnity and the exemptions.
69. Mr Dyson''s outline submission was that the insurer’'s approach would surely have been that “"the facts stink”" and that the creditors’' true or real claim was against MHP which was not a risk covered by professional indemnity insurance and they had no cause of action against the Claimant qua accountant.
70. He submitted that the court should find that an insurer would have believed that he/she was entitled to look beyond the way in which the claim was framed by the creditors in order to determine its true nature. The true nature of the claim would then have been measured up against the operative indemnity/policy exclusions. The approach must always be objective as for construing any contract, and that this would have been appreciated by the insurer or any lawyer advising the insurer. Put simply the true nature of the creditors’' claim was that it arose out of a commercial transaction with a business that was separate to the Claimant’'s professional role as accountant with Channon & Co and as a result the response of an insurer (in line with the approach taken by the insurer on the facts in Thorton Springer-v-NEM [2000] 2All ER 489 where the question arose of an accountant’'s private business dealings apart from his work for the practice) would have been that it did not trigger the indemnity and/or in any event would fall within a relevant policy exclusion (as a policy exclusion may still operate even if the indemnity is in principle triggered). He submitted that an insurer would have noted that

a) MHP is a property development business it is not a firm of chartered accountants.

b) The Claimant’'s directorship of MHP was not in relation to ‘'Services’' under the policy. The fact that he was an accountant is merely incidental and of little more relevance than if he had been some other form of professional person

c) The Claimant did not give investment advice in respect of MHP. He made representations on behalf of MHP as its director in order to persuade the creditors to lend it money. The rate of interest was a term of the loan agreement and not advice. In fact certain creditors actually specified their own interest rate such as Mr and Mrs Whitmoor-Pryer .

d) All the creditors realised or ought reasonably to have recognised that the Claimant was procuring the loans on behalf of MHP as the loan agreements was signed by the Claimant for and on behalf of MHP and the creditors were either seasoned business owners themselves or were advised/referred by Mr Richard Armitage - a financial advisor. They would have been able to distinguish between the Claimant’'s professional role and the fact that he was a director of a separate property development company;

e) the Claimant generally corresponded with the creditors on MHP headed letters naming him as a director and setting out the company’'s address and details (see e.g. letter of 14^th march 2007 to Mr and Mrs Cross) On the rare occasions he used Channon & Co stationery he used words such as “"The company I am personally involved in, Mill House Partnership Limited is seeking investment funds”"; in such correspondence reference was made by the Claimant to “"our company”" and to discussing matters with his “"fellow directors”"

f) when the creditors realised MHP may be unable to repay the loans a meeting was convened at which they discussed with the Claimant ways in which it could be resolved by MHP trading out of the difficulty through his management. There was no accusation of breach of duty as an accountant at that stage.

71. Although it was for the insurer to consider the matter independently Mr Dyson also relied upon the fact that the Claimant’'s solicitor, referred to by Mr Adams when making submissions as “"an expert solicitor in the relevant matters”", Mr Redfern of Beale & Co considered that the prospects of proving that the Claimant was acting in the course of his profession were “"laughable”" as “"everyone could see he was acting as a director of MHP”" (see attendance note of 11^th April 2011).
72. Mr Dyson also submitted that the insurer would look at the issue of whether the claims arose by virtue of a matter arising from the Claimant’'s profession as an accountant, together with as opposed to wholly separate from the exceptions at clauses 3 and 6 as each may add weight to the other in terms of a route to avoid providing an indemnity or assistance with the defence of the matter. He argued that clause 3 would have been seen to clearly apply as the claims made were that the Claimant had given investment advice or misrepresentation about guaranteed returns on an investment. It was and indeed still is his case that there was no investment advice, however, to the extent that he did give investment advice the clause would obviously bite as the very heart of the complaint was that he negligently gave advice “"when he knew or ought to have known that the investment was speculative”" and that could not adequately be secured.
73. As regards clause 6 the insurer would again obviously note that the losses arose directly from MHP’'s trading liabilities (its liabilities to its creditors incurred whilst trading) which was a business managed by the Claimant who was a director. Again at the heart of the claims were allegations about his actions as a director of MHP, including a failure to provide adequate security.
74. Mr Dyson argued that faced with a claim that was on the Claimant’'s instructions in effect “"a try-on”" i.e. an attempt to “"get at”" professional insurance when no other avenue would bear any fruit and also when the insurer had more than one reason to refuse to indemnify and/or assist the Claimant the overwhelming likelihood would be that it would take a firm line and reputational considerations would play little part.
75. As for assistance short of indemnity Mr Dyson relied upon the fact that the Claimant did not have separate legal expenses insurance. He submitted that it is not in the nature of the ICAEW required policy that it should provide the accountant with a partial indemnity just to cover legal expenses.
76. I next turn to the expert evidence. In light of the central importance of the approach that would have been taken by an insurer both parties had obtained expert evidence.
77. Before I do I should observe that both parties seek to make a point that the other had failed to call a representative from the insurer concerned, Aviva, to give evidence as to its general, or indeed likely specific, approach at the material time, including whether legal advice would indeed have been sought and if so internally or externally. Rather the parties chose to instruct experts. Of course approaching the relevant institution for evidence has risks attached. However the other side of the equation is that expert evidence has its obvious limitations. For the reasons which I shall set out in due course, it is my judgment that it was the Defendant who took much the great risk as he shouldered the relevant burden of proof.
78. In this case I heard from David Black of Fraser Russell who gave evidence on behalf of the Claimant. His principal area of expertise is the investigation of insurance claims and loss adjusting but he is also a Chartered accountant. I also heard from Tim Dowlen on behalf of the Defendant; he is an insurance expert with a principal area expertise in commercial insurance broking and a specialism in professional indemnity insurance. The two experts prepared their own individual reports and prepared a joint statement .
79. As I have set out for the purposes of the joint statement, the experts agreed that the relevant wording to be applied when assessing this claim is that contained in the 2006 version of the Norwich Union (Aviva) policy . They then agreed that:

a) Any insurer would have considered very seriously not indemnifying the Claimant;

b) Although he stated that he did not give investment advice if there was a claim that he had given investment advice it could still be a risk covered by the policy but if so it would still remain subject to any relevant exception or condition under the policy;

c) on the basis of the evidence provided to the experts there would be little basis for rejecting the claim on the basis of fraud (notably this was subject to the level of evidence available to the experts enabling them to conclude whether there was any fraud);

d) it could have taken anything up to 12 months for an insurer to accept or reject a claim under the policy.

80. On paper the experts had disagreed on the following matters:

a) whether or not the Claimant’'s activities would qualify as an insured risk pursuant to the definition of Business and Services;

b) whether the actual Defence raised by the Claimant would have been amended in a material way upon the involvement of the insurer i.e. whether his actual defences as pleaded (although signed with a statement of truth) were relevant (a very curious position having been adopted by Mr Black);

c) whether the creditors’' subjective understanding of the Claimant’'s role would have influenced an insurer’'s liability to accept the claim: that is, whether they (the creditors) believed he was acting as an accountant providing services to them as clients or as a director of MHP raising loan finance;

d) whether the exceptions at clause 3 would apply;

e) whether exception at clause 5 would apply;

f) whether exception at clause 6 would apply.

81. I formed very different views of the experts. I regret to say that I found Mr Black to be a rather unimpressive and unreliable expert witnesses. In his report he appeared to reach a firm conclusion and clearly dismissed what he subsequently had to concede in evidence were obvious matters that required detailed consideration. Specifically

(i) he could not justify his conclusion at paragraph 4.12 that

“"from a loss adjuster’'s perspective I would expect indemnity to (the Claimant) to be given and liability to be admitted in all cases subject to the £1 million policy limit”" (underling added).

This was on my view a wholly unsustainable assertion that provided insight to the way that he had approached his task. His view as set out in his report was that the insurer would accept that it should indemnify and then accept that it was going to have to pay out.

(ii) he failed to adequately consider the potentially relevant exemptions in his main report (he did not deal with exemption at clause 6 at all) and gave confused and confusing explanations as to why he did not think that they would be raised. Then after reflection during his oral evidence he conceded that they would be raised even by a novice insurer

82. In re-examination of Mr Black Mr Adams appeared to me to be commencing down the path of cross-examining his own expert to seek to what to limit what he saw as damaging concessions.
83. Mr Dowlen gave more measured and impressive evidence. Mr Adams tried to question his expertise but it was clear he was experienced in the insurance world and well placed to give an opinion on the only issue that expert evidence could properly assist on; how an insurer would approach the situations such as would have been faced had a policy been in force? Having said that his opinion also altered when giving oral evidence, but nothing like the extent that Mr Black’'s did.
84. At the conclusion of the expert evidence oral evidence there was in my judgment in effect a significant degree of elision with the result that there was in effect agreement on the following matters

(i) the insurer would have approached these cases with considerable caution not just because of the value but also because of a sense that all was far from right with the claims and/or the facts underlying the claims.

(ii) that given all available information the insurer would be looking to avoid liability to indemnify, would have queried why these claims were considered covered by professional indemnity insurance and the “"first reaction would be to avoid it”" ( per Mr Black).

(iii) The experts did not seem to attach any real weight to Mr Adams’' suggestion (that he repeated in closing submissions) that the reputation of insurer would be a very relevant consideration i.e. that an insurer would not want a reputation for refusing to indemnify. It may well be that this has to be seen in light of the first two points and in contra distinction to where a view could be taken that an insurer was taking a technical point to avoid indemnifying in an otherwise straightforward case. In any event neither expert supported Mr Adams'' submission. Mr Dowlen stated “"reputation is not that important when it comes down to the insurer’'s product.”"

(iii) the insurer would have taken time to consider the claims as presented and would not have reached a snap judgment. In the interim it may have given some advice to the Claimant as to how to protect his position.

(iv) the issue of whether indemnity could or would have been refused because the Claimant was not acting in the course of his business for the purposes of the policy was a difficult one to assess. Whilst the Claimant was adamant that he was not so doing and had evidence to support his case, the allegations in the claim were that he was. Had the issue of whether the Claimant was acting in the course of his business been the sole issue for the insurer it would probably have continued to provide assistance, whilst preserving its position as regards indemnity; although this would have been difficult to achieve it was a path sometimes taken.

(v) The insurer would not have relied on the exception at clause 5.

(vi) the insurer, indeed even a novice insurer, would have raised and sought to rely on exemption clauses 3 and 6. Both experts had considerable experience of how the insurance business works and they were both of this view (albeit that Mr Black had failed to deal with clause 3 in any significant way, or clause 6 at all, in his expert report). As regards clause 6, Mr Dowlen stated that he had some experience of this clause, that it must be remembered that it is a professional indemnity insurance policy and that in simple terms the clause was present because the policy was not intended to “"(be) there to cover where there is a muck up on (his) own business”". He said it was “"a very simple exemption”" and would be applied as such. It appeared to me that for the experts it was not just a possibility or even a probability; it would have happened (in his report Mr Dowlen previously stated that these clauses “"would certainly have been given by insurers as reasons to avoid an indemnity”"; paragraph 9.5.6.). As I indicated during the expert evidence this accorded with my own impression when I first considered the policy terms which was that given the facts of these claims these exemptions would obviously have been closely considered given all the relevant facts.

85. Mr Dowlen considered himself “"up stream”" of Mr Black in terms of involvement in the insurance and claims process (Mr Black having a main expertise in loss adjusting) and therefore better qualified to give an opinion having had considerable experience in dealing with insurers when a claim is made on a commercial or professional policy. He was of the view that reliance upon exemptions at clauses 3 and 6 would have emboldened the insurer’'s view as to the option of also seeking to refuse to indemnify on the scope of cover issue. In his report he had arrived at the conclusion that the insurer would have refused to indemnify. He laid emphasis on the fact that it was the Claimant’'s own case, as he would have repeatedly asserted to the insurer, that he was not acting in the course of his business and that the claims as presented were misleading or a “"try-on”" in seeking to advance a claim based on professional negligence. In his oral evidence he very largely stuck to this view and stated that in practice once an insurer has made up its mind it will usually stick with the decision and will seek to reinforce it. In his opinion there was “"not a chance”" that an insurer would not have refused indemnity.
86. So it was Mr Dowlen’'s clear opinion that the insurer would have refused indemnity in this matter on at least two and probably three grounds; the two exemptions and also that the Claimant was not acting in the course of his business. He conceded that the insurer would face a “"theoretical risk”" (he had no experience of such a scenario) that if it relied on the argument that the Claimant was not acting qua accountant and it was found at trial that he had been that the insurer could then face a liability. However the thrust of his evidence was that the insurer would have relied on this argument in addition to the exemptions.
87. Having carefully considered these areas of agreement between the experts, as further expanded upon by Mr Dowlen, I accept that they accurately reflect what would have been the view of an insurer. This means I find that the insurer would certainly have sought to rely on exemptions 3 and 6.
88. I also find that in all probability the insurer would also have relied upon an argument that the Claimant was not acting in the course of his business. In so doing I have found the submissions of Mr Dyson at paragraphs 71-73 above to have force. Whilst that may have been a stance taken on less certain ground I take the view that it would have been used, at the very least, to add ballast or as Mr Adams described (in a slightly different context as I shall set out ) as an additional “"lever”".
89. So it is my finding of fact that the insurer would certainly have been set to refuse indemnity or any further assistance.
90. In his closing submission Mr Adams made three points which I should now address. First, he stated that

“"It is not, however, necessary for the court to resolve the question of construction (both in relation to the scope of the policy and exemptions) as it is only concerned to assess what might have happened as matter of fact, The better view is that the insurers might have used any such argument, in so far as it was available, as a lever in negotiations with the investors in order to drive down a settlement, as advocated by Mr Black in his notional role as investigating loss adjuster - see also Phillips & Co. (A firm) v. Whatley at [32].”"

91. There was nothing in the evidence before me to adequately support this assertion; quite the contrary. I see no reason why the Insurer would not rely on any ground to refuse to indemnify but still raise the arguments. In my view and indeed that of both experts, an insurer would have been raised the grounds and sought to avoid involvement in the litigation.
92. Secondly he submitted that the insurers would consider that there might be obvious “"reputational risks”" in seeking to rely on exclusion clauses, which might be perceived as a technical and artificial device to avoid liability, in the face of a number of investors telling a consistent story of how they had suffered over £1m of losses due to the negligence of their accountant.
93. There was no direct evidence as to the approach of Aviva to “"reputational risks”". I have set out the combined view of the experts which did not support the submission. It was Mr Dowlen’'s view that such risks would hold little force against the ability to avoid significant commercial exposure. As a matter of simple commercial sense and given that these claims concerned significant investments in the property market, not an area likely to invoke considerable sympathy (even though the individual circumstances did vary) I think his view correctly sums up the position. I see no reason to believe that a large insurer such as Aviva would see a significant risk to its reputation and deviate from an available path away from liability.
94. Thirdly Mr Adams submitted that the initial stance of an insurer would have been the subject of, and altered by, legal advice.

Legal advice

95. I had no direct evidence on the issue of legal advice would have been taken or not. Mr Black opined that once initial conclusions had been reached there would probably be a conference between solicitors and insurers to agree on a common response and reasoning (report paragraph 3.64).
96. Mr Dowlen stated that in practice with claims such as these the insurers would consider the matter carefully, and may take time to do so, but once a decision had been taken the insurer would stick with it. However he stated that it would go to a senior person; the claims director.
97. In the absence of direct evidence from Aviva (which is a very large organisation with no doubt many very experienced insurance practitioners) I am not persuaded that Mr Black’'s opinion is right, as the insurer is likely to have considered that the clauses were sufficiently clear and it was on sufficiently strong ground that this was not needed. I also did not see (and neither expert saw) inconsistency with the balance of the policy or any in-built restriction within the clause that raised a question requiring expert legal interpretation.
98. I also find that the reasons why they were relied upon would have been easily communicated to and understood by the Claimant; there was no need for great care in the wording of any letter such that legal input was needed.
99. However there is certainly a possibility that legal advice may have been taken, so I now turn to what such advice may have been. I start with the exemptions.
100. Clause 6 set out that indemnity would not be provided

“"in respect of any claim ...or loss arising from any trading losses or trading liabilities incurred by any business managed by or carried on by you.”"

101. It is also found in the Institute of Chartered Accountant’'s minimum approved policy wording.
102. Firstly it would have been noted by any lawyer that

(a) The losses incurred by the investors/creditors arose as a result of a failure of MHP to be able to meet its financial obligation to them;

(b) The Claimant was a director of MHP with day to day involvement in its management. Indeed the investors complained about his management of the company at the meetings when its difficulties had become apparent.

(c) Any relevant claim under the policy would have to be a claim against the Claimant in relation to loss incurred by reason of advice or conduct.

(d) The clause covers “"any claim”" in relation to “"any business”" and is not limited to a claim by a business managed by the Claimant in respect of loss arising from its trading losses or liabilities.

103. The exemption seems to me to be clear in scope albeit likely to be of limited application for many of those covered by a professional indemnity insurance policy. It is widely phrased in that it concerns claims for losses incurred which arose from the trading losses or liabilities of businesses managed by the accountant (save for claims for negligence in the course of receivership or procedures under the Insolvency Act). On first reading the claims would appear to be caught by this exemption. As Mr Dyson neatly submitted,

“"The loan arrangements were commercial transactions between the Claimant’'s company MHP which he managed with his co-directors and the third parties.”"

104. Mr Adams submitted that the obvious application of this exclusion clause was to claims by a company managed by the insured accountant and its effect was to exclude cover for claims that included claims for compensation for trading losses and trading liabilities. He said that there was an obvious purpose to such clause, as it would be difficult to draw any sensible line between the accountant''s role in providing advice and services qua accountant and his role in managing the business. However I see no reason why a lawyer would advise that there is a limit to what is, on its clear wording, a wide a clause. Mr Adams’' interpretation of a limited scope if it were the true intention could have been easily provided for by different wording. His submission that there was an intention to have a limited effect, without more, cannot override the plain meaning of a clause.
105. Mr Adams also submitted that “"the solicitor would however also point out that … it may be argued that it is difficult to say that the liability of Mr Channon ""arises from"" such trading losses”". Again I see no reason why this would be so. The cause of the Claimant’'s liability, if there was any, was the failure of the company he managed to be able to meet its liabilities as a result of the property crash. If it had met its contractual liabilities to the investors they would have made a very healthy profit upon their investments. That the investors did not deliberately employ him to manage their business is to my mind of no consequence and I cannot see why a lawyer would have advised differently.
106. In my judgment this is, on its face, an unambiguous clause. Accordingly I do not believe there is a significant possibility that advice would have been taken and that such advice would have been advised that this exemption could not be relied upon.
107. Clause 3 set out that

“"we will not provide indemnity in respect of

any claim … or loss arising from any express or implied warranty or guarantee relating to the financial return of any investment or portfolio of investments.”"

108. It is also found in the Institute of Chartered Accountant’'s minimum approved policy wording.
109. The experts stated in the joint agreement that

“" (Mr Dowlen) is of the opinion that this clause would apply in this matter while (Mr Black) is not sure that there is sufficient financial certainty in the outcomes to comply with the requirements.”"

110. As I have already set out Mr Black changed his mind and was of the view that there would have been reliance on this exemption. I did not find this surprising as his view that there was insufficient financial certainty in the promised outcomes was untenable on the facts. The very basis of the claim presented against the Claimant was that he had negligently advised or misrepresented the facts in relation to guaranteed returns albeit of slightly differing forms. As I have set out Ms Stevens'' claim was in relation to an investment £100,000 “"with a return of a guaranteed minimum of 10%”" (the letter before action stating that Ms Stevens made it clear that she wanted her investment “"guaranteed”"); the return to be repaid by her receiving a penthouse flat up to a value of £165,000. The security for the loan was to be a debenture charge over the company.
111. Mr and Mrs Cross’' claim was that they were “"guaranteed a rate of return of 10% of loan interest with 2% net bonus”", Ms Graham was promised 10% compound interest with a 5% bonus, Mr and Mrs Cemm-Evans 10% and profit share, Mr and Mrs Hender a guaranteed rate of 10% plus profits in respect of the agreement with MHP and 12.5% in the agreement with Mr Brommage and Mr and Mts Whitmoor-Pryer a guaranteed 10% return. As one financial advisor pointed out at the time this level of return was way beyond the then current costs of borrowing and in all cases there was to be a guaranteed return of at least 10% on a secure investment.
112. It appeared to me when first reading this clause that the loss of the sums invested was loss arising from an express guarantee relating to the financial return of an investment. The guarantee was that the investment was secure and would produce at a minimum this large return. So my initial view on considering the policy wording was that this exemption applied and I could see no reason why if legal advice was provided it would have given a different opinion.
113. Channon & co were not authorised to give financial or investment advice. The Claimant’'s annual declarations to ICAEW and proposal forms state he did not supply investment advice. However, others the subject of professional indemnity cover may be authorised and the definition of services included investment advice. However I do not see this exemption as inconsistent with general cover. It appears to me that there is likely to be a wide range of potential investment advice that does not require express or implied warranties or guarantees relating to financial return.
114. Mr Adams submitted that the claims (the exemption is that indemnity will not be provided in respect of “"any claim or loss”") were not wholly arising from guarantees relating to the financial return of an investment. Put simply he argued that if the guarantee was a secure investment (as in Ms Stevens'' case of £100,000) with a return of 10% and the whole investment was lost the exemption would only bite in respect of the loss of £10,000, being the guaranteed return, but not the sum invested, despite the guarantee as to security or return of £110,000. He said that the clause was present to make a “"distinction between tortious and contractual loss”". When I asked him who the contracting parties would be he answered that it would be the client and the accountant. I confess I did not follow his reasoning as to why that would be so. Rather I see no reason why a lawyer would have advised that it was necessary to read into the wording the distinction between tortious and contractual loss and to restrict the application accordingly. Again I see an unambiguous clause that means that an accountant who provides investment advice which is itself, or causes reliance upon, a warranty or guarantee relating to the financial return of an investment is not covered by this professional insurance.
115. Accordingly, I do not believe there is a significant possibility that advice would have been taken and that such advice would have been advised that this exemption could not be relied upon.
116. So in my judgment there is no significant possibility that legal advice would have been taken and that it would have steered the insurer away from reliance upon these two exemptions.
117. I now turn to legal advice as to the scope of the indemnity given my finding that an insurer would in all probability have also sought to avoid indemnity on the basis that the Claimant was not acting in the course of his business. I have already set out the reasons why I believe the insurer would have done so.
118. The Claimant was adamant that he provided no investment advice whatsoever and at all times was acting as the disclosed director of a property company. As I have set out I am satisfied that his instructions to the insurer would have been these were clearly not claims arising out of the conduct of his business and were a “"try –on”".
119. However the claims were formulated as a professional negligence claim.
120. In my opinion the overwhelming likelihood is that any legal advice to the insurer would have set out that the first step was to ascertain the true nature of the creditors’' claim in order to determine whether the insurer was obliged to indemnify. I think that any lawyer would have relied upon well know approach outlined by Devlin J in West Wake Price & Co v Ching [1956] 3 All ER 821 at 828

“"I do not think that the underwriters are bound by the way in which the claimant has chosen to formulate his claim. I think the underwriters can properly invite the court at this stage to ascertain the true nature of the claim and to make such inquiry as may be necessary for that purpose.”"

121. The insurer’'s concern as likely expressed would surely have been that professional indemnity insurance is intended to cover the risk of the professional carrying out his professional duties and not to cover liabilities arising out of commercial transactions for the purposes of operating the business side of his practice or especially to cover liabilities for operating a distinct and separate business to that of his professional practice. In my judgment an insurer would have seen the matter as Mr Dyson submitted ; that the creditor/investors had been advised by professional negligence experts to shoehorn their commercial claim against MHP into a professional negligence claim in order to tap into the insurance cover and that the true nature of the claim is not one for professional negligence.
122. It is likely that any legal advice would also have been that the cover under the policy was for civil liability (and the Claimant’'s costs) in respect of any claim “"arising out of the conduct of your business”" and in addition to an indemnity the insurer was liable to pay “"other costs”". In respect of such other costs they were not defined under the policy but the Institute’'s minimum wording was that there shall be an indemnity in respect of all costs and expenses incurred with the written consent of the insurer in the defence or investigation of a claim which “"falls to be dealt with”" under the policy (such consent not to be unreasonably withheld). So if the claim did not fall to be dealt with under the policy there was no obligation to pay towards the costs of defending the claim or to indemnify. So the issue was whether the claim fell to be dealt with under the policy which threw the focus back on whether it was a claim “"arising out of the conduct of your business”".
123. So having ascertained the true nature of the claim the issue was whether the claim in substance was capable of falling within the scope of this requirement.
124. Mr Adams submitted that the obligation to pay defence costs being subject to a power to refuse consent to such costs being incurred, such consent not to be unreasonably withheld or unreasonably delayed meant that there was a risk for the insurers that if they refused an indemnity in respect of costs, then their decision can be challenged on this ground alone. However, I do not see the ground as in any way divided. In my judgment the insurer would have been advised that the trigger for indemnity and the justification for refusal to pay additional costs was one and the same; a claim “"arising out of the conduct of your business”".
125. In so far as Mr Adams argued that the insurer would have been advised that the trigger was simply the actions of the third-party claimant by either making a demand or threatening proceedings against the insured and there was therefore no merits threshold, I reject his submission. In my judgment it is highly likely that any specialist lawyer advising the Claimant would have been aware of Thornton Springer v. NEM. [2000] 2 All ER 486. In that claim the allegations of the claimant in the action in issue were that the accountant had acted as a professional accountant as distinct from in his personal capacity. The insurer refused indemnity in respect of any element of the claim or costs attributable to private dealings; a similar stance to that which I find would have been adopted here. Coleman J concluded that the basic principle of liability insurance is that the required intrinsic character of the eventuality insured against was the true liability of the assured, rather than the alleged liability advanced by the claim. I find that this would have been the advice given the insurer in this claim. I do not accept Mr Adams'' submission for a moment that anticipation and adoption of the reasoning of the Court of Appeal in Rust Consulting Limited –v-PB Ltd ( No2) [2012] EWCA Civ1070 would have taken place.
126. As regards the costs clause in that policy Coleman J stated (at p506 b-e)

In order to ascertain whether the claim is in substance within the scope of the Insuring Clauses it may be necessary to investigate what the basis of the claim really amounts to, as distinct from the manner in which it is expressed in the claimant''s pleadings, adopting an approach similar to that of Devlin J in West Wake Price & Co v Ching, supra, at page 53. In a case where on the face of it the claim is so formulated that it falls in substance partly within the scope of cover and partly outside that scope, Special Condition I has the effect that only to the extent that it falls within the scope of cover can the claim be treated as “"falling to be dealt with”" under the policy. Accordingly, insurers might properly confirm their consent to the assured incurring costs and expenses in respect of the defence or settlement only of that part of the claim which is in substance within the cover. However, this is not required to satisfy a high threshold of substantiality. Thus, if a claim were to be formulated against the Practice for breach of its professional duty and in the alternative against a partner in his personal capacity, relying on the same allegations of fact, there would, in my judgment, be a claim within Special Condition I unless the claim for breach of professional duty was on the face of it so manifestly untenable as to justify being struck out, if it had been pleaded.

I think that this would have been the test referred to in any advice as applicable to the requirement to provide indemnity or assistance with costs.

127. To say that the claims were manifestly untenable on their face is at first blush a high hurdle although, as I have already set out there were obvious areas for attack.
128. However I return to the fact that it was the view of the Claimant himself that at all times he acted as a Director of MHP, that Channon & co did not conduct investment advice and that there was correspondence that clearly supported his position that the creditor/investors well knew this (see generally witness statement of 24^th November 2014). Further his view was fortified by the opinion of his solicitor that it was “"laughable”" to suggest otherwise.
129. This issue exposes the tension in Ms Adams’' submissions. He submitted on behalf of the Claimant that if such threshold did apply, there was ample evidence that the claims were not obviously hopeless: given their nature, the consistency of the accounts between the parties and the contemporaneous and subsequent documentation disclosed, and that they plainly required a substantive response and to be defended (it is to be borne in mind that he pleaded the claims in question and presumably also advised upon them). However, his client, the Claimant had and has a very different perspective and that is the view which would have been advanced to the insurer. Mr Adams failed to recognise that any insurer would be inclined in these circumstances to take the claimant at his own word.
130. I find that if legal advice had been taken, itself only a possibility, the probability is that the advice that would have been was that it was a difficult argument to run with any certainty of success that the claims as presented were manifestly untenable and to a degree the insurer would have been taking a risk in relying on it. However, given the Claimant''s own case it certainly could be advanced as a secondary and backup argument as for him to challenge the ground it would require him to rely upon weaknesses in his own case that he had not acknowledged.
131. I now turn to the Claimant’'s reaction to a refusal to indemnify or to provide any assistance with the Defence of the claim.

Claimant’'s reaction to the Insurer’'s stance

132. The Claimant stated that he had passed on the claims to the Defendant to put before the insurer as “"they were complaints about my firm”" and his hope was that Aviva would take up the issue on his behalf and help him “"sort it”". So much is to a degree understandable. However despite knowing what the issues before the court were and being intelligent, highly articulate and an astute business man he really was at a loss to explain to me, even in general terms, during oral evidence why he thought that the insurance company should have provided an indemnity given that

(i) The claim is that he gave investment advice about the “"guaranteed”" return from an investment, but he knew that Channon & Co was not authorised to give investment advice (as his own correspondence repeatedly stated) and the exemptions in the policy.

(ii) That he was adamant that the claim did not arise out of the fact that he was an accountant, rather at best was a misrepresentation claim when he was acting qua director and in respect of a separate business.

The best he could do was to suggest that I ask Mr Adams.

133. For the avoidance of doubt I should set out that the Claimant could not explain the comment in his witness statement of 29^th August 2013 at paragraph 13 in response to application to set aside Judgment that

“" the real issue is whether exclusions apply…. although I contended that I was not giving investment advice, the allegations that were made that I was and as I have admitted liability I concede that. I believe that any mainstream professional indemnity insurance policy would have to respond to the allegations that were made against me by the Claimants.”"

134. This statement was flatly contradicted by his second witness statement of 24^th November 2014 ( Bp133) which stated that

“"I deny that I gave any investment advice whatsoever to the said persons who have claimed against me and who are now my judgment creditors. I took this stance in my defence and my position has not changed… I would have wanted my insurers to defend proceedings to trial.”"

He also exhibited the letter of engagement to Mr and Mrs Hender to which I have already referred to support the proposition that Channon & co did not give investment advice.

135. The Claimant accepted that the extract in the first statement was plainly wrong. He made no such concession and never would have done. This is important as any concession that the claims were meritorious would potentially be relevant to the question of what he would have told the insurer and as a result the insurers’' likely stance.
136. It is worrying that a statement that was clearly incorrect was used to oppose an application to set aside judgment. I was also concerned by the Claimant’'s initial comment when shown his statement that this is what “"he agreed to sign”". As I have already set out having heard the Claimant I have little doubt that he pursues this case with no passion or indeed clear belief in its merits. This is very far removed from a case in which a committed claimant believes that he should win. I repeat my impression was that he was going through the motions as required by the settlement reached with the investors.
137. So, rather than stating that he firmly believed that he was covered for these claims and expected an insurer to indemnify him, he stated that he passed the complaint onto the insurer because it was a complaint about his firm and he hoped for some help of some form.
138. Further, when asked if he thought that the insurer would have defended the actions on his behalf rather than state that this was of course what he expected he stated that he thought that they would give him “"some legal support and tell him what his best options were”". He also stated that it was on the basis of what the Defendant had told him that he thought that they would help, but when asked why he accepted that the matter would have been “"difficult”" but thought at the time that the insurer would “"support me in some manner”". This was hardly the evidence of someone who would have inevitably taken on the insurer if indemnity and assistance were refused.
139. Although he did state in re-examination that he found the news that he was not insured “"devastating”", and within correspondence had stated that he was “"traumatized”" in my judgment this has to be seen in the context of his immediate appreciation (as can be seen from his actions and contemporaneous documents correspondence, such the attendance note of the Claimant’'s conversation with the Institute of Chartered Accountants on 20^th August 2010) that the failure to have insurance cover in place was a disciplinary matter and therefore he was exposed to regulatory sanction and was advised to “"protect his position”". Indeed he was fined by the Institute in due course.
140. Mr Adams set out in his closing submissions that “" there is no question that Mr Channon would have made a claim”". Of course in so far as he means by this that the matter would have been referred to the insurer then he is of course correct, as the Claimant was hoping for some legal assistance. However in so far as this phrase means that if the insurer has refused to provide indemnity or assistance he would have sought legal advice and /or commenced proceedings against the insurer to obtain what he thought the insurer was contractually obliged to provide then that is quite a different matter.
141. Indeed having heard the Claimant and carefully considered his evidence with the contemporaneous documentation it is my finding of fact that there is no likelihood, let alone certainty, that he would have challenged the insurer''s position. Very far from it. As I pointed out during submissions he was not directly asked what he would have done by Mr Adams. It may be that Mr Adams was uncertain as to the answer he would have elicited, I know not. However had the position truly been that he would have challenged it then he could have given firm evidence to this effect. Mr Adams'' closing submissions as to what a litigant faced with a refusal to indemnify would have done are a very poor substitute for the litigant’'s own evidence on the point a fortiori where it is very far from clear what he would have done given the difficult position he would have faced if he sought to challenge the insurer. Whilst he would have been very disappointed if an insurer chose not to assist him in his battle and indemnify him if he sought to challenge the insurer''s view he would have been fighting on two fronts with all the accompanying costs.
142. My distinction impression is that he would have had some sympathy with the insurer if it had relied on the approach which I believe would have been taken, as it was consistent with his own view of the claims i.e. they were a device to try get around the problem of the company having no money and to get to his professional insurance cover, whereas the true dispute solely concerned what he did or do not do on behalf of a separate company when acting as a director.
143. He would have faced a choice of contesting the insurer’'s decision or focusing his mind on defending what he believed to be unmeritorious claims.
144. Cognisant of the fact that the Claimant had no money to progress litigation, which would have been a very significant hurdle to positive reaction, Mr Adams suggested in his closing submissions (without there being any evidence on the point) that not only would the insurer have been joined into the actions as a Part 20 Defendant, but that the seven investor claimants would have assisted with the funding of this step.
145. I found this a difficult submission to accept given that, as the Claimant made abundantly clear, what he wanted was assistance to fight what he viewed as wholly unmeritorious claims, not a contribution to settlement. As I have set out there was clear evidence that supported the Claimant’'s case and there is no reason to believe that anyone advising the investors would have seen it likely to be anything other than a fully contested matter if the Claimant had the means to fight it. So seeking to arm the opposition before liability was determined would have been a very strange step to take. Further litigation against the insurer would have been a long way from litigation in which success could be seen as highly likely (so easily distinguishable from the merits of the claim against the Defendant based on an apparently obvious breach of duty; I should add that I bear in mind that the Claimant commenced a claim against the Defendant).
146. Whilst I well appreciate that the investors would have liked to see an insurer capable of satisfying any judgment obtained standing behind the Claimant I do not accept that, when carefully considered, they would really have wanted to support the Claimant in a fight with the insurer upon the points set out above in relation to the policy (with consequential costs exposure) with the by-product of fuelling the defence of what would then have become long and expensive litigation.
147. Further and to the extent that it is a relevant consideration I have little doubt that the defendant if consulted would have put up little resistance against the insurer''s decision. He would have seen the force in what the insurer was saying.
148. I remind myself that it is necessary, so far as I am able, to decide the issues of causation and loss of a chance on the facts as I find them on the evidence before me. I can draw inferences from such evidence when considering what may have happened, but speculation without some evidential foundation is just that; speculation. Whilst some degree of speculation can sometimes be necessary in the process of assessing a loss of a chance and the principle in Armory v. Delamirie can put some fair wind in the sails for the Claimant’'s suggested successful voyage to the avoidance of loss considerable care must be taken to recognise what is in reality a rudderless ship on a shoreless sea.
149. The issue for me is not what some reasonable person or indeed specialist lawyer could conceivably have done faced with this situation rather what this Claimant and the insurer concerned would or could have done in the circumstances which would have been faced. In his closing Mr Adams appeared to me to stray too far from the evidence before me, and legitimate inferences from such evidence, into the dangerous waters of reliance upon assertion as to what, in his opinion as recently formed, could have been done. Mr Adams'' views have to be treated with very great caution not the least of the reasons for which is that he would have been the last person to have been advising the Claimant given that he was Counsel acting against him and in any event his opinion of the merits of the investors’' case would not have been, and is still not, accepted by the Claimant.
150. Underlying and colouring my assessment of the evidence and what inferences can be taken from it was the Claimant’'s consistent belief that the claims were unmeritorious, a device, and did not truly concern his practice as an accountant rather his other life as a property developer. Of course if help was available from an Insurer he would have gladly taken it, but it seems to me that the overwhelming likelihood is that he would not have so strongly thought that it was his right as to risk litigation against his insurer if it was refused.

Conclusion

151. I find that the insurer would have refused an indemnity based on three grounds. I also find that the Claimant would not have challenged the insurer’'s approach or that if there had be some challenge that the insurer’'s decision would not have been revoked or reversed.
152. These findings are not just on mere balance of probabilities leaving a significant possibility that matters would have progressed otherwise. Returning to the issue as framed by Mr Adams I do not find that there is a substantial and not merely speculative chance that the end result would have been different had insurance been in place. I am not persuaded by the proposition that there is a substantial chance that an insurer would have provided an indemnity or such a significant contribution as to costs as significantly alter the position that the Claimant found himself in when he was, on his account, effectively forced into a position where he had to compromise the claims of the investors.
153. For the reasons that I have set out the claim fails.
154. Finally, I should make it clear that this is not a case which has been decided because of where the burden proof rested. However, for the avoidance of doubt I should address the issue of who carried the burden as there were rival submissions.

Burden

155. I treated the burden as on the Defendant throughout to establish that the insurer would have refused to indemnify or assist and that this would have not been the subject of challenge and that as a result the chances that the insurers have provided an indemnity and /or assistance were no more than speculative. That burden has been successfully carried and the test met.
156. However given the time spent on argument on the issue I shall set out my reasoning in detail.
157. Mr Dyson submitted that the burden rested at all times on the Claimant. He stated that there is a clear distinction between a claim that prima facie falls within the scope of a professional indemnity insurance policy but is declined as the insured is in breach of a condition precedent and the question as to whether or not a claim falls within the scope of such a policy at all. The latter is for the Claimant to prove and the former depending on the construction of the particular policy potentially for the Defendant to prove.
158. It was Mr Adams’' submission that the burden of proof rested upon the Defendant. He relied upon relied upon Jackson & Powell (Seventh Edition 16-136-140 in particular Fraser-v-BN Furman [1967] 1 WLR 898 and submitted that in all cases the starting point in the “"no-negligence world”" is that there is an insurance policy in place and the Claimant makes a claim under it. The question for the court is to assess as a matter of fact what might have happened in that scenario. As the Claimant finds himself in a situation which he ought not to be in due to the defendant''s wrongdoing, the principle in Armory v. Delamirie applies, namely there is an evidential presumption in favour of the claimant which gives him the benefit of any relevant doubt (the ""fair wind"" principle) - see Philips & Co. (A firm) v. Whatley [2007] PNLR 27... PC). It is only if the Defendant can prove that in no circumstances would the insurers have provided an indemnity that the claim will fail.
159. However in my opinion the position is not as clear cut as either advocate suggested.
160. A convenient starting point is Everett –v- Hogg Robinson [1973] Lloyds Rep 217, a case which turned on the issue of whether a re-insurer would have repudiated by reason of a failure to disclose an adverse claims record had the broker not been negligent. It was held by Kerr J that if a broker relies on a causation defence he must satisfy the court that the insurer would in fact have exercised its rights and declined to meet the claim; if this is established no loss flows from the breach. If it is not established then damages are assessed on a loss of a chance basis i.e. the court will value the chance of recovering a full or partial indemnity. He stated at page 223

"". . . once a plaintiff has proved that as the result of the defendant''s negligence he has lost the benefit of a contract which would have been valid if concluded, but which would have been voidable at the election of the other party, then in my view the burden of proof shifts to the defendant to show that on the balance of probabilities the plaintiff would in any event have lost all or part of the benefit of the contract as the result of the probable action of the other party.""

161. In my judgment this statement, which I have adopted, is in no way inconsistent with the starting point adopted by Mr Dyson that where the insured claims that he has suffered a loss of chance of claiming upon his insurance, then established tortious principles that relate to the hypothetical action of a third party must apply. The Claimant must show that there was a “"substantial and not merely speculative chance that the third party would have taken the action and confer the benefit or avoid the risk”"; see Allied Maples Group Ltd v Simmons & Simmons [1985] 4 All ER 907 (see Stuart-Smith LJ at page 1610G-H and 1614D). I fully accept that the Claimant must establish on the balance of probabilities the causative link between the breach of duty and his loss. However the Claimant’'s path with the burden can be just one step.
162. The first step is whether the Claimant has established the first base of a loss the benefit of a contract which would have been valid if concluded. It is a well settled principle of insurance law dating back to the early 19^th century that an assured has the burden of proving that the loss was caused by a peril insured against. That means that if it is a policy that provides only limited cover the burden remains on the assured to bring himself within the terms of the policy. If there is a qualification of the general risk which covers its whole scope (so that there is no unqualified risk left), the burden is on the insured to prove facts which bring the case within the general risk as qualified. In Munro Brice & Co-v-War Risks Association [1918] 2 K.B.78 Bailhache J set out the principles succinctly and with clarity as follows ^[1] ;

When the promise is qualified by exceptions, the question whether the plaintiff need prove facts which negative their application does not depend upon whether the exceptions are to be found in a separate clause or not. The question depends upon an entirely different consideration, namely, whether the exception is as wide as the promise, and thus qualifies the whole of the promise, or whether it merely excludes from the operation of the promise particular classes of cases which but for the exception would fall within it, leaving some part of the general scope of the promise unqualified. If so, it is sufficient for the plaintiff to bring himself prima facie within the terms of the promise, leaving it to the defendant to prove that, although prima facie within its terms, the plaintiff''s case is in fact within the excluded exceptional class….

When a promise is qualified by an exception which covers the whole scope of the promise, a plaintiff cannot make out a prima facie case unless he brings himself within the promise as qualified. There is ex hypothesi no unqualified part of the promise for the sole of his foot to stand upon. ..

Whether a promise is a promise with exceptions or whether it is a qualified promise is in every case a question of construction of the instrument as a whole.

163. So once the assured has proved that the loss was caused by a general peril otherwise within in the relevant policy, the burden switches to the insurer to bring into play any exception.
164. Turning to the present case it is my view that a burden lay on Claimant to establish that but for the negligence of the Defendant there would have been a policy in existence that covered the claim in question. Ordinarily such a step will not be difficult. Thereafter the burden is carried by the defendant broker if he seeks to establish that the insurer would have repudiated for some reason, whether that be by reason of breach of a condition or exemption.
165. In so as far as reliance upon the exemptions (and the reaction to such reliance) is concerned it seems to me clear cut that the burden lay on the Defendant. Accordingly the risks associated with the failure to call direct evidence from the insurer, and to rely on expert evidence instead, were risks taken on by the Defendant (see the observations of Diplock J in Fraser-v- BN Firman).
166. Whilst I view it as technically the case that as that the general promise was to insure in respect of any claim “"arising out of the conduct of your business”" the burden lay on the Claimant to establish that there would have been a valid insurance contract covering the risk (or more specifically a substantial chance that this would be established or accepted by the insurer), it would be artificial in a case such as this to separate out this element. The reality here, as in many cases when more than one route is available, is that the insurer''s analysis would consider matters in the round and take a view as to whether to indemnify or not taking into account the ability to rely on exemptions or conditions. In such cases it is my view that the appropriate course is to treat the burden as on the Defendant’'s shoulders throughout.
167. I now leave the parties to see if an agreed draft order can be lodged.

Judgment as handed down

His Honour Judge Cotter Q.C.

168. SUP>th May 2015

..

Note 1   Cited with approval by the Court of Appeal in Force India Formula One Team Ltd v Aerolab SRL (an Italian company) and another [2013] EWCA Civ 780 per Lewison LJ paragraph 55     [Back]