Lagan Construction Group Holdings Ltd v McArdle

• Jurisdiction: Ireland
• Judge: Ms. Justice Costello
• Judgment Date: 30 June 2017
• Neutral Citation: [2017] IEHC 427
• Docket Number: 2015 No. 8144P
• Court: High Court
• Date: 30 June 2017

[2017] IEHC 427

THE HIGH COURT

COMMERCIAL

Costello J.

2015 No. 8144P

BETWEEN:

LAGAN CONSTRUCTION GROUP HOLDINGS LIMITED, LAGAN CONSTRUCTION GROUP LIMITED. LAGAN CONSTRUCTION LIMITED

AND

CHARLES BRAND

AND

BEN MCARDLE LIMITED

AND BY ORDER

CITYNET INSURANCE BROKERS

Defendants

Insurance – Practice & Procedures – O.31, r. 20(3) of the Rules of the Superior Courts – Compulsion for swearing an affidavit – Procurement of professional indemnity insurance

Facts: The first defendant sought an order for further and better discovery and an order under o.31, r. 20(3) of the Rules of the Superior Courts to compel the second defendant to swear an affidavit in relation to a disputed document. The plaintiffs had asked the first defendant/insurance broker to place two layers of excess policies on a certain market. Since the first defendant was not listed on that market, it instructed the second defendant/insurance broker to place those two layers of policies, of which only one layer was placed by the second defendant. The second named defendant contented that the application filed by the first defendant was vague as it did not specify the exact document that was sought to be discovered.

Ms. Justice Costello refused to make an order for discovery. The Court held that the documents sought were not relevant and necessary for the fair disposal of the issues. The Court noted that the second defendant knew that the disputed document was the ‘endorsed coverslip,’ and therefore, it made no difference if the first defendant did not specifically name the document that was required to be disclosed. The Court granted an order that an affidavit would be sworn by the second defendant to explain as to whether the required insurance endorsed cover slip was in the possession of the second defendant, and if yes, when the second defendant parted with it and what had become of that cover slip.

JUDGMENT of Ms. Justice Costello delivered on the 30th day of June, 2017

Introduction

1 In this case, the first named defendant made an application for an order for further and better discovery and for an order pursuant to O. 31, r.20 (3) of the Rules of the Superior Courts to compel the second defendant to swear an affidavit in relation to a document which is central to this dispute. O. 31, r.20 (3) states: -

‘ The Court may, on the application of any party to a cause or matter at any time, and whether an affidavit or list of documents shall or shall not have already been ordered or made, make an order requiring any other party to state by affidavit whether any one or more specific documents, to be specified in the application, is or are, or has or have at any time been in his possession or power; and, if not then in his possession, when he parted with the same, and what has become thereof. Such application shall be made on an affidavit stating that in the belief of the deponent the party against whom the application is made has, or has at some time had, in his possession or power the document or documents specified in the application, and that they relate to the matters in question in the cause or matter, or to some of them.’

Background

2 Prior to the 1st October, 2013, the plaintiffs instructed the first named defendant (who are insurance brokers) to procure for the plaintiffs and their subsidiaries, including the third and fourth named plaintiffs, a policy of professional indemnity insurance in respect inter alia of their civil engineering business. The plaintiff required two layers of excess policies to be underwritten on the Lloyds market. The first named defendant is not licensed on the Lloyds market and so used a second insurance broker who was licensed to Lloyds, the second named defendant to place these insurance policies.

3 The Primary Layer was placed by the first named defendant as the plaintiffs' broker with Royal Sun Alliance Insurance plc. The first named defendant instructed the second named defendant to place both excess layers on the Lloyds market for the period from the 1st October, 2012 to the 30th September, 2013. The second named defendant placed the first layer but failed to place the second layer with CNA Insurance Europe Limited (‘CNA’)

4 After October, 2012, the plaintiffs changed brokers and appointed Lockton Companies LLP (‘Lockton’) to be their new brokers. On the 10th April, 2013, Lockton emailed the second named defendant looking for a cover slip for the second excess layer. This was said to have been placed with CNA.

5 The second named defendant placed cover with CNA on the 18th April, 2013, but this was not retrospective and the policy was endorsed to that effect. Thus, there was no cover on this policy for the period 1st October, 2012 to the 18th April, 2013. It appears that the second named defendant sent the first named defendant a copy of the coverslip on the 18th April, 2013, but it was not dated or endorsed to show that there was no cover in place prior to the 18th April, 2013.

6 In the course of their business, the plaintiffs designed and constructed a number of windfarms. On the 23rd January, 2013, the first named plaintiff became aware that there were allegations of damage in respect of one of these developments which could give rise to a claim against some or all of the plaintiffs. The first named plaintiff duly notified Lockton of the fact that a claim may be made on the policies. Subsequently it notified Lockton of four other possible claims in respect of other windfarms it had designed and constructed.

7 On foot of these notifications of possible claims by some or all of the plaintiffs on the policies, the gap in the layers of insurance cover came to light and the plaintiffs instituted these proceedings against the first named defendant for failing to arrange for one of the two layers of excess insurance for the year the 1st October, 2012, to the 30th September, 2013, as instructed, with the result that the plaintiffs were not fully covered in respect of a number of claims.

8 A serious discrepancy came to light in respect of the CNA cover slip of the 18th April, 2013. The plaintiffs' solicitors wrote to the first named defendant on the 17th June, 2014. The letter stated that CNA provided the plaintiffs with a cover slip. The slip was dated the 18th April, 2013. The slip was endorsed: -

‘… CNA Insurance Europe Limited will not be liable for any claim or notification which has been notified to the primary insurer before 18 April 2013.’

9 Previously a cover slip had been furnished by the first named defendant to the plaintiffs, but it was undated and was not endorsed. The first named defendant said this cover slip was furnished by the second named defendant. This document appeared to show that cover was in place from the 1st October, 2012 to the 30th September, 2013. In fact, it was not. How this came about and who is responsible are hotly contested issues for the trial of the action.

10 The first named defendant sought discovery from the second named defendant. The second named defendant agreed to make discovery of three categories of documents, provided it was to be limited from the date of the initial communication of instructions in respect of the policy year 2012-2013 up to the 17th June, 2014, the date of the letter of claim. This offer was accepted by the solicitors for the first named defendant and discovery was made on this basis.

11 The different categories of discovery were: -

‘Category 1

All documents relating to the instruction by the First Named Defendant to the Second Named Defendant with respect to the placing of Policies of Insurance for the Plaintiff for the 2012 to 2013 and all documents relating to the placing or attempted placing by the Second Named Defendant of the said policies of insurance and in particular all documents in relation to the placing of the first and second excess layers of the Plaintiff's professional indemnity insurance.

Category 2

All documents in relation to the process whereby the Second Named Defendant actually placed the second excess layer including, but strictly without prejudice the generality to the foregoing, all documents in relation to the alleged representations made by the First Named Defendant to the Second Named Defendant in respect of the Plaintiff's claims experience and all documents in relation to the calculation and payment of the premium referable to the second excess layer.

Category 3

All documentation in relation to all subsequent interactions and discussions between the First Named Defendant and the Second Named Defendant in relation to the placing of second excess layer and in particular all documentation howsoever referring or relating or referring to the First Named Defendant or the Plaintiff raising any issue in relation to the placing of the second excess layer.

The affidavit of discovery for the second named defendant was sworn in September, 2016.

12 Subsequently, disputes developed in relation to the scope of the discovery and the adequacy of the discovery and the first named defendant issued the motion heard by me on the 31st May, 2017.

13 There are three grounds of complaint:

• The second defendant discovered the cover slip which was undated and unendorsed but not the dated coverslip with the endorsement. The first named defendant required the second named defendant to swear an affidavit explaining whether the endorsed dated slip is or had at any time, been in its possession or power and if not then in its possession when it parted with it and what has become of it under the provisions of O. 31, r. 20 (3).

• It wanted to expand the time limit in respect of which the second defendant had made discovery in respect of the agreed three categories.

• It raised complaints about the adequacy of the discovery actually made. At the hearing of the motion, this was reduced to the complaint about the dated and...