Insurance – application by all defendants to strike out claims by the plaintiff.

[2014]JRC221

Royal Court

(Samedi)

12 November 2014

Before     :		Advocate Matthew John Thompson, Master of the Royal Court
Between	Dr Anthony Haden-Taylor		Plaintiff
And	Canopius Underwriting Limited		First Defendant
	CCV Risk Solutions Limited		Second Defendant
	GAB Robins UK Limited		Third Defendant
	Hon. Susan Rosemary Greenhall		Fourth Defendant

Dr Haden-Taylor appeared on his own behalf.

Advocate N. M. Sanders for the First Defendant.

Advocate L. A. Ingram for the Second Defendant.

Advocate D. P. Le Maistre for the Third Defendant.

Advocate P.C. Sinel for the Fourth Defendant.

 

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1
2.	The parties	2
3.	The plaintiff’s claim	3-8
4.	Insurance arrangements	9-22
5.	The first defendant’s application	23
6.	The second defendant’s application	24
7.	The third defendant’s application	25
8.	The fourth defendant’s arguments	26-28
9.	Factual background	29-30
10.	Events in relation to the claim	31-61
11.	Events in relation to the second claim	62-103
12.	Decision	104
13.	The applicable legal principles	105
14.	Rule 6/13(1)(a) – no reasonable cause of action	106-107
15.	Rule 6/13(1)(b) – the claim is scandalous, frivolous or vexatious	108-109
16.	Rule 6/13(1)(d) – the claim is an abuse of process of the court	110
17.	The first defendant
	A contractual relationship with the plaintiff	111
	The nature of the contract of insurance	112-116
	Liability in tort	117-120
	The relationship between the first defendant, the second defendant and the third defendant	121-125(iv)
	Utmost good faith/good faith	126-139
	A breach of duty of good faith	140-156
	Loss	157-165
	Other aspects of the plaintiff’s claim against the first defendant	166
18.	The second defendant
	The role of the second defendant	167-168
	A contractual relationship with the plaintiff	169-173
	A duty of care in tort	174-178
	The scope of any duty of care	179-184
	The insurance broker acting as agent of the insurer	185-188
	A breach of contract/breach of duty	189-194
	Loss	195-199
19.	The third defendant
	The position in contract between the plaintiff and the third defendant	200-202
	A claim against the third defendant in tort	203-209
	Other claims	210-218
	Loss	219
20.	The fourth defendant	220-226
21.	General issues	227
	Conspiracy	228-229
	Fraud	230
	Gains based damages	231
	Punitive/Exemplary damages	232-236
	The form of discharge	237
	A way forward	238-239

 

judgment

the master:

Introduction

1.        This is an application by all of the defendants to strike out the entirety of the plaintiff’s claims against each of them.  The grounds relied upon are either that the claims brought by the plaintiff disclose no reasonable cause of action, are scandalous, frivolous or vexatious or are an abuse of process. 

The parties

2.        The plaintiff is life tenant of a property now known as Isis House, Route des Genets, St Brelade (the “property”).  The first defendant is an underwriter at Lloyds of London.  The second defendant is a Jersey company and is an insurance broker.  The second defendant is also authorised, as is set out in more detail below, to issue insurance cover for certain types of policies on behalf of the first defendant.  The third defendant is a loss adjuster.  The fourth defendant is the former spouse of the plaintiff and the owner of the reversionary interest of the property. 

The Plaintiff’s claim in summary

3.        The plaintiff’s claim arises out of his occupation of the property and insurance arrangements in relation to the property.  It is common ground that the property was insured by a policy of insurance issued by the second defendant on behalf of the first defendant.  

4.        On 4^th December, 2012, the property was struck by lightning which led to the first claim (the “first claim”).  On 17^th October, 2013, further damage was suffered by the property due to an escape of water which led to a second claim under the policy of insurance, which had been renewed on essentially the same terms since the first claim (the “second claim”).  Various payments were made in respect of both the first claim and the second claim.  However no payments were made for any alternative accommodation.  The plaintiff claims that such payments should have been made and he now seeks to recover damages. 

5.        The order of justice served by the plaintiff in this matter runs to some 102 paragraphs and raises a number of issues.  It is not an easy document to follow in relation to what is alleged against each of the defendants but it appears to contain allegations of misrepresentation, negligence and breach of contract.  Various allegations of dishonest conduct using labels of fraud, conspiracy, deceit and abuse of trust are also made. 

6.        Despite the length of the Order of Justice and the wide ranging allegations made, what is sought by way of compensation by the plaintiff is set out in the Order of Justice as follows:-

“29.1   £50,000 plus interest plus damages for ‘emotional and social stress, loss of amenity, destruction of two Christmas and New Year events and the avoidable dislocation of the relationship and interaction by the plaintiff with children’.

29.2    Exemplary/punitive damages to be assessed for ‘systematic gross misrepresentations, untruths, denials, false and wrongful utterances.”

7.        How the plaintiff has arrived at calculation of the figure £50,000 is set out at paragraph 98 and 99 of the Order of Justice as follows:-

“98. That it is evident that the first, second and third defendants have agreed to enter into some form of arrangement to orchestrate a simple strategy of denial that is an abuse of trust and the belief of fairness contrary to the terms and conditions of the Contract provided by the first defendant.  This concerted dissemination of misinformation has resulted in considerable savings being made by the first defendant and the CCV Risk Ventures Insurance syndicate of the order of some £20,000 during the remediation period for the first insured incident of the lightning strike and some £20,000 during the remediation period of the second insured incident of the water leak and inundation that in aggregate with incidental and accepted insured expenses associated with rehousing, removals and the like would increase this saving or avoidance of a payment for the benefit of the plaintiff of the order of £50,000.

99. That this strategy of denial generated savings for the first defendant in aggregate of close to £50,000 and through this strategy denied both the fourth defendant and the plaintiff from benefit and financial relief that was contractually obligated and to which they were properly entitled and set down within Secton C of the Contract to provide alternative accommodation during building works that in aggregate spanned a period of remediation of close to eight months and to which figure should be added significant removal costs of furniture, beds, chattels and the like from the building to alternative accommodation and the return of those items to the building at the end of the remediation works to which should be combined with costs of installing Internet and relocating telephones that could aggregate to £50,000 plus GST – a considerable financial saving achieved through a combination of denial, untruths and fantasy invented and uttered by the second and third defendants.”

In summary, the claim appears to represent the amount in insurers should have paid had the plaintiff moved to alternative accommodation during the remediation period applicable to the first claim and the second claim.  The plaintiff’s claim therefore appears to be either that he should receive compensation for having to reside in a property when alternative accommodation should have been made available to him or alternatively by reference to the gain the first defendant made by not having to pay out sums under the policy which the first defendant should have paid out.””

8.        In response to criticisms advanced by all the defendants of the plaintiff’s order of justice, the plaintiff has produced a draft amended order of justice.  That amended order of justice although much shorter in length, essentially contains the same allegations but in a more condensed form.  In particular, the plaintiff still seeks to recover the sum of £50,000 on the same basis as set out above and also still claims exemplary/punitive damages. 

Insurance arrangements

9.        To evaluate the plaintiff’s claim it is firstly necessary to set out the relevant terms of the insurance cover in force in respect of the first and second claim.  I also set out the relationship between the first, second and third defendants based on affidavits filed on their behalf. 

10.      The property was first insured by the first defendant through the second defendant in 2009 and was renewed annually.  The essential terms of the insurance policy were contained in a schedule issued to the fourth defendant each year.  While the fourth defendant was described as the Insured, apart from one year, the policy also noted the interest of the plaintiff as life tenant.  The plaintiff’s interest was noted in the schedule to the policy for the two years in question namely 2012 and 2013 when the first and second claims were made under the policy and which have led to the current dispute.  

11.      The schedule to the policy each year appears to have been identical in all material respects and expressly referred to cover for buildings with a figure being inserted.  The figure for 2012 was £737,591.  The figure for 2013 was £759,719. 

12.      The detailed terms of the policy were exhibited to an affidavit sworn by Mr John Delgaty on behalf of the first defendant.  The full terms run to some 32 pages.  The governing law of the policy is the law of Jersey. 

13.      The policy was issued by the second defendant pursuant to the authority granted to it by the first defendant.  The covering page of the policy contains the second defendant’s logo and then states “arranged exclusively by CCV Jersey” and “Insured with certain underwriters at Lloyds”. 

14.      The policy on the first page includes the following statement:-

“The written authority MG1 carrying the seal the |Lloyds Policy Signing Office allows CCV Jersey (the second defendant) to sign and issue the certificate on behalf of the underwriters whose syndicate numbers are given in the authority.”

The only syndicate number given is that of the first defendant. 

15.      In section one relating to buildings at page 11, the policy states:-

“This section of the insurance also covers

C        ……

Additional cost of alternative accommodation substantially the same as your existing accommodation which you have to pay for

while the buildings cannot be lived in following loss or damage which is covered under section one”.

16.      The cover for alternative accommodation did not extend to any claim over 20% of the sum insured for buildings damaged or destroyed.  In other words, the maximum amount of a claim for alternative accommodation was capped. 

17.      “you/your/insured” are defined in the introduction to the policy as meaning “the person or persons named in the schedule and all members of their family who permanently live in the home”.

18.      The definition of “Schedule” is “the schedule is part of this insurance and contains details of you, the premises, the sums insured, the period of insurance and the sections of the insurance which apply.””

19.      The schedules issued each year do not mention that the building cover as defined in the policy wording extends to the cost of alternative accommodation despite the terms of the policy wording.  The plaintiff was named in the schedule for each of the policy years by an endorsement to the schedule noting his interest as life tenant. 

20.      At page 14 of the policy there is a section dealing with the handling of claims.  From the definition section contained in the introduction to the policy, claims were to be handled by the first defendant.  In fact the arrangements for dealing with claims were more complicated.  Firstly under the authority given to the second defendant to issue insurance cover, the second defendant was authorised to settle claims up to £1500 on an ex gratia basis.  Any claims over this amount had to be approved by the first defendant.  However the first defendant outsourced claims handling procedures to a company known as OIM Underwriting Limited (“OIM”).  OIM in turn used a company called Arthur J Gallagher (UK) Limited (“AJG”) which was part of the same group as OIM.OIM/AJG could settle claims up to £50,000.  Settlement of any claims over £50,000 had to be agreed by the first defendant. 

21.      The third defendant was according to an affidavit filed by Mr Graham Burgess, UK Technical director appointed to act as loss adjuster by the second defendant and they reported to the first defendant via the second defendant.  They were only aware of communications between the first and second defendants and OIM or AJD if specifically copied into such correspondence or such correspondence was forwarded to the third defendant.  The matter was handled on a day to day basis by Mr Andrew Burns, a loss adjuster employed by the third defendant (“Mr Burns”). 

22.      I deal later in this decision with the various legal relationships arising from the above and in particular what contractual relationships existed with the plaintiff, what duties formed part of any such contracts and whether the various relationships also give rise to any duties of care in tort. 

The first defendant’s application

23.      In a carefully reasoned skeleton argument running to 24 pages, the first defendant set out why the plaintiff’s claim should be struck out in its entirety.  In summary the grounds relied on are as follows:-

(i)        The plaintiff has not suffered any loss. 

(ii)       A plaintiff cannot show loss simply by arguing that a defendant has failed to pay a claim which a defendant should have paid. 

(iii)      The plaintiff cannot claim for the lost opportunity of alternative accommodation. 

(iv)      The policy does not cover consequential loss. 

(v)       There is no head of loss that can be claimed for an unjustified refusal to pay a claim. 

(vi)      This is not a case that could ever lead to exemplary or punitive damages. 

(vii)     No duty of care in tort is owed by the first defendant in respect of any statements made after conclusion of the contract of insurance. 

(viii)    The first defendant is not responsible for the acts of the second or third defendants. 

(ix)      There is no basis to allege conspiracy or other acts of dishonesty. 

(x)       The effect of the discharge signed by the plaintiff on 7^th December, 2013, means that the first plaintiff in any event cannot bring any claim in respect of the second claim. 

The second defendant’s application

24.      The second defendant generally supported the first defendant’s application save as follows:-

(i)        The second defendant expressed doubt that any claim in tort had been pleaded by the plaintiff and if there was any such claim it was wholly unparticularised. 

(ii)       The second defendant was only a post box for the handling of claims which was a matter handled by the first and third defendants. 

The third defendant’s application

25.      The third defendant argued as follows:-

(i)        It was supportive of the first defendant’s submissions.  In addition it also advanced other grounds in support of its own position as an alternative basis for striking out the plaintiff’s claim. 

(ii)       It was the first defendant’s agent in handling claims.  Accordingly it had no contract with the plaintiff. 

(iii)      Any failure to provide cover was a matter for the second or the fourth defendant.  The third defendant had no role to play in whether or not appropriate cover was obtained. 

(iv)      The plaintiff was not induced to compromise any claim under the policies and therefore there cannot be any claim in misrepresentation. 

(v)       Alternatively, any claim for damages is seriously overstated. 

(vi)      There is no basis to assert dishonesty or conspiracy. 

(vii)     There is no claim as a matter of Jersey law of abuse of trust.  Even if there is, there is no relationship between the plaintiff and the third defendant to give rise to any such duty. 

(viii)    A loss adjuster appointed by a broker on behalf of an insurer cannot owe a duty of care in tort to an insured absent a specific assumption of responsibility. 

(ix)      There is no evidence of any breach of any duty in respect of either the first claim or the second claim. 

(x)       There is no basis to conclude that any claim in contract or tort by the third defendant caused any loss. 

The fourth defendant’s arguments

26.      The fourth defendant’s arguments are very different to those of the first to third defendants.  As noted above, the fourth defendant is the former spouse of the plaintiff and the owner of the reversionary interest in the property.  The plaintiff enjoys a life interest in the property pursuant to divorce arrangements between the plaintiff and the fourth defendant.  This life interest is recorded in a contract passed before the Royal Court on 20^th November, 2009. 

27.      Clause f on pages 5 and 6 of the contract provide as follows:-

“(f)       THAT the Donor will insure at the cost of the Donee with a company of good repute the said buildings forming part of the Property against the dangers of fire, storm, tempest, aircraft and other risks included in a comprehensive insurance policy and this both in her and in the name of the Donee for the true value of the said buildings.  The Donor being obliged to produce to the Donee a copy of the Insurance Policy or the Insurance Premium receipts at all times whenever required.  The Donee will be obliged to reimburse the amount of the insurance premium to the Donor upon request.  It being understood that such insurance policy will include provision for the payment in respect of the re-housing of the Donee, the family or invitees in the event of such damage to the Property as is covered by the policy preventing the Donee, his family or invitees from inhabiting same and for so long as is reasonably necessary, such compensation to be paid to the Donee subject to the terms of sub-clause (g) hereafter.  The Donee will be obliged to reimburse the amount of the insurance premium and any additional insurance premiums incurred by any sub-letting or parting with possession of the property under sub-clause (a) above.” (emphasis added). 

28.      The fourth defendant, apart from criticising the form of the plaintiff’s pleading, contends, firstly, that no relief has been claimed against the fourth defendant and, secondly, that her obligations as regards building insurance were fulfilled.  In particular, the insurer recognised the interest of the plaintiff and the policy and no point was taken that a claim could not be claimed.  Thirdly, the policy provided for alternative accommodation and therefore the requirements of clause (f) of the contract set out above were fulfilled.  Any failure to pay for alternative accommodation was the fault of the first to third defendants not the fourth defendant.  Alternatively, the fourth defendant argues that the plaintiff has suffered no loss for the same reasons as advanced by the first to third defendants.

Factual background

29.      Before I consider the various arguments advanced by each of the defendants, I consider it appropriate to set out the factual background in relation to the first claim and the second claim on a chronological basis.  This factual background is based on a combination of the papers filed in advance of the hearing and a helpful chronology produced at the hearing by Advocate Sanders.  The sequence of events is set out by reference to documents exhibited to affidavits filed on behalf of the plaintiff and each of the defendants or paragraphs of affidavits.  I am conscious that the sequence of events may not necessarily be complete, and, given this is a strike out application, the affidavits filed have not been tested by any form of cross-examination.  Nevertheless, I consider it helpful in evaluating the applications of each of the defendants for the sequence of events that occurred in relation each claim to have been identified.  

30.      To assist the parties, I have identified the relevant exhibit page where any document is to be found by reference to the affidavits of Mr Delgaty (exhibit JD1) sworn on behalf of the first defendant, Mr Sibbald (ADS1) sworn on behalf of the second defendant, Mr Burgess (GB1) sworn on behalf of the third defendant, the fourth defendant (SG1) and the plaintiff (AHT1). 

Events in relation to the first claim

31.      The first claim arose as a result of a lightning strike to the property on 4^th December, 2012. 

32.      On 5^th December, 2012, according to paragraph 53 of the plaintiff’s affidavit, Mr Burns attended at the property.  The plaintiff deposes that he was told by Mr Burns that Mr Burns had received a copy of the policy which did not include any term for alternative accommodation and that any term for alternative accommodation was linked to the contents insurance element of the policy. 

33.      The third defendant through Mr Burns produced a report dated 6^th December, 2012, (JD1/108-111).  Page one of the report records that the first contact took place on 5^th December, 2012, which is consistent with the plaintiff’s recollection.  The report also noted as follows:-

“The huge surge of electrical power from the lightning strike travelled through the properties electrical wiring system causing sockets, lights and switches to blow off the walls and show signs of burning (fortunately there was no fire at the property).  The surge has damaged the mains distribution board, mains power intake in the outside Jersey Electricity Mains metering cupboard, smoke alarm system and intruder alarm system.  It is likely that the property will need to be completely rewired although we will have further clarification once the insured’s electricians have completed their testing of the system which is due to take two days to complete. 

When the chimney broke up following the lightning impact debris was sent flying and this primarily caused damage to the properties roof where approximately 300 slates have been damaged.  Some of the tyvec waterproof membrane has also been damaged as has some of the timber roof batons and the glass in two Velux windows has been smashed.  The property will require scaffolding to be erected in order to facilitate roof repairs and we understand that the insured has arranged for this to be undertaken as soon as possible to mitigate the damage.”

34.      The report also noted that the property was uninhabitable and that alternative accommodation might be required for a 2-4 week period (exhibit JD1/111).  The sum insured for alternative accommodation was described as £73,359.  This was 10% of the insured figure for buildings.  This figure is contrary to the terms of the policy which provide for cover up to 20% of buildings cover as set out at paragraph 16 above i.e. £146,718.  The reserve figure suggested for this head of claim was £3000. 

35.      Under the heading alternative accommodation, the report (JD1/111) stated:-

“..we seek instructions as to whether policy cover would be extended to cover a share (the occupants contents insurers may be able to deal with a share of the accommodation costs) of any accommodation costs and classify the insured as a member of the insured’s family.”

36.      The first report produced by the third defendant was emailed by Sylvia Gould (“Lady Gould”) of the second defendant on 6^th December, 2012, to the Lloyds Broker through whom the second defendant had been given authority to write cover (“the Lloyds Broker”).  Ms Jasmine Willsher of the Lloyds Broker in turn on 7^th December, 2012, forwarded the email on to a Karen Geale of AJG. 

37.      On 11^th December, 2012, the plaintiff emailed the second and third defendants asking “you to advise immediately on the provision of alternative accommodation” [ADS1/58]. 

38.      By an email also dated 11^th December, 2012, sent at 15:18, Karen Geale of AJG replied to the Lloyds Broker.  The second paragraph states as follows:-

“My concern was the unusual arrangement in place for Dr Haden-Taylor to remain in the property, but I understand that you were aware of this.  In the circumstances, even though Dr Haden-Taylor would not strictly be considered as a member of the insurance family underwriters have agreed to consider a contribution to alternative accommodation costs, subject to the contents insurers also agreeing on this basis.” [JD1/113] (my emphasis)

39.      On 12^th December, 2012, this observation was relayed by an email from the Lloyds Broker to Lady Gould [see Exhibit JD1/115]. 

40.      The plaintiff in his affidavit at paragraph 59 deposes that he spoke to Lady Gould on 12^th December, 2012, as follows:-

“In response to the email the Second Defendant telephoned on 12^th December, 2012, to acknowledge receipt and provide information.  (pp. 180 AHT1) She said that she had spoken to the insurers and there was some good news.  I asked her what news?  She said that she had persuaded the underwriters to make an exception and provide accommodation to me without prejudice but as a token of good will and in the light of the efforts I was making in reporting the work and supervising it.  She said that she had negotiated that the underwriters would pay for half of the cost of a modest three-bedroom cottage for Christmas and January.  The condition as that my contents insurers would need to make a 50% contribution and the underwriters would pay the other half.  I told her that it was a hollow gesture, as I did not finalise my contents insurance cover so I did not have an insurance company to pay the half not covered.  She said that she had done the best she could and that she could do nothing if I was not able to secure the other 50% and I would have to make do.  I said that this was a ludicrous situation and that there must be some way that I can be provided with accommodation as I had guests who were about to cancel for the Christmas and New Year and also my girlfriend and her daughter were due over.  She said that I would have to make do but I reminded her that I was eating out as I had no cooking facilities and the heating was not on and I was relying on an electric heater for my study from where I was supervising the works.  She said she could do no more and in hindsight I should have insured the contents with the same underwriter and none of this would be a problem and the whole of the cost of alternative accommodation would be provided.  She said that I should take up the matter with Andy Burns as she could do no more.  Also the policy was very clear that I had to be a full time member of the insured’s family and if I was not then I could not qualify for accommodation.  I said that Annie and Bertie were both resident at my house and they were” full time members of the insured’s family” and I had my interest noted on the policy.  She was adamant that I did not qualify as I was no longer a member of the insured family and therefore would not qualify for 100% of the cost of alternative accommodation.  I said that we needed to make decisions as it was very close to Christmas and the various contractors needed positive decisions to go forward and to approve their quotations otherwise they would be off site and the work would not proceed until well into January.  She said that she would speak to everyone and try and make decisions happen to avoid a down tools.”

41.      The plaintiff recalls this call because he deposed at paragraph 5 of his affidavit that he maintained a daily telephone log of each call he made.  During the hearing I was shown the original log consistent with the explanation at paragraph 5 of the plaintiff’s affidavit and provided with an extract from it for calls made between 17^th and 20^th December, 2012, which I refer to below. 

42.      Also on 12^th December, 2012, the plaintiff emailed the third defendant and Lady Gould by an email sent at 12:41.  In the email he stated:-

“I am informed if this site is cleared tomorrow then no one will return before the New Year and my house is uninhabitable and I will, as part of the terms of the policy, require accommodation for my two children and myself – with either meals allowance or cooking facilities and whatever accommodation there must be internet since I work from home.”  [see Exhibit AHT1/172]. 

43.      On 13^th December, 2012, by reference to paragraph 63 of the plaintiff’s affidavit, the third defendant telephoned the plaintiff.  Page 63 of the affidavit provides as follows:-

“On the 13^th December, 2012, the Third Defendant telephoned the Plaintiff (pp. 171 AHT1) I again asked him about accommodation and for comments on my letter as I was a noted party and it was nonsense that it was limited to a member of Susan’s family as both Bertie and Annie are full time members and I am on the policy.  He said that he had asked several times about the alternative accommodation and had been silenced as it was simply not available, as I had no contents cover.  I said that there was £5,500 of contents and he said that I could not expect that to be a qualifying factor.  With 20% of the insured value of contents, I would only have a little over £1.100 of contributions and in any event I would have to contribute half of the cost if I wanted any place to live.”

44.      At exhibit GB1/page 26, there was produced an email dated 13^th December, 2012, sent at 12:06 from the plaintiff to the third defendant, Lady Gould and the fourth defendant.  Page 2 of this email states as follows:-

“With the relief that most of the appliances do not need replacement it means that I am able to move back into the property.  I propose to do so on Friday 14^th and will therefore be on site full time.  I am informing you that there is no need now to seek underwriter’s permission in respect of alternative accommodation for me and my family.  No doubt that is good news for all!”

45.      The plaintiff did not refer to this email in his affidavit.  It is also not clear whether this email was sent before or after the call referred to at paragraph 63 of the plaintiff’s affidavit. 

46.      However, in a supplemental affidavit filed in response to a question put by me, about why the plaintiff’s first affidavit did not refer to the email of 13^th December, the plaintiff deposed at paragraph 5 by reference to his subsequent communications with Mr Burns that he did not abandon his requirement for alternative accommodation.  

47.      On 14^th December, 2012, Karen Geale of AJG, confirmed that reasonable costs of alternative accommodation should be provided for the period stated by the third defendant namely two to four weeks whilst the electrics were repaired.  [see Exhibit JD1/126]. 

48.      A copy of this email was sent by Miss Willsher of the Lloyds Broker to Lady Gould, also on 14^th December, 2012, at 15:47.  [see Exhibit ADS1/70]. 

49.      Mr Burns was made aware of the first defendant’s position on 17^th December, 2012, by an email from Lady Gould sent at 09:19 a.m. [see Exhibit ADS1/69 and ADS 1/75].  Mr Burns replied a few minutes later at 09.34 [ADS68] stating that no alternative accommodation was needed.  

50.      According to paragraph 64 of the plaintiff’s affidavit, and noted in the extract of the handwritten log provided during the hearing, the third defendant spoke to the plaintiff on 17^th December, 2012.  According to the plaintiff, the third defendant stated:-

“He said that there was no change on the stance adopted by underwriters and that the matter was closed as without a contribution from contents insurers or that had I insured with the same underwriters, then there was no possibility to provide any accommodation for me.  The matter was effectively closed.”

51.      For purposes of this application I am not able to determine whether it is agreed this statement was made.  Initially no evidence had been sworn by Mr Burns.  I did not therefore know whether he accepted the evidence put forward by the plaintiff.  On the second day of the hearing an affidavit was produced from Mr Burns who did not recall any discussions on 17^th December or indeed any later calls with the plaintiff said to have occurred on 19^th and 20^th December referred to below.  He does depose that if such calls had occurred he would have relayed the plaintiff’s position that he still wanted alternative accommodation to the first and second defendants.  However, given this is an application to strike out an order of justice, I have to proceed on the basis that the assertions put forward by the plaintiff are arguably true and therefore that these calls took place. 

52.      On 19^th December, 2012, the plaintiff held a meeting at the property with a Mr Mike McGrath, an employee of the surveyor appointed by the third defendant.  At paragraph 68 of his affidavit the plaintiff records informing Mr McGrath as follows:-

“As a consequence of that email the plaintiff received a telephone call on 19^th December, 2012, from the surveyor appointed by the third defendant who arrived on site (pp. 169 AHT1): I told him that I was very upset with matters as I was having to cancel my Christmas as I had no cooking facilities and that the children could not come over and stay as the bedrooms were in chaos.  He said that the gritty problem was that I did not have the right insurance cover and that had I contents cover as well in the same policy I would be swanning it down at the L’Horizon or in a comfortable house.  I said it was nonsense but he said it was outside of his remit and he did not want to get involved in a fight on this issue but he sympathised with the situation.”

53.      On 20^th December, 2012, the plaintiff wrote to Mr McGrath with copies to the second and third defendant.  [see Exhibit AHT1/165-166].  The letter does not contain any reference to alternative accommodation. 

54.      On 20^th December, 2012, according to the plaintiff’s affidavit he called the third defendant.  Paragraph 70 of his affidavit includes the following statements:-

“I told him that my Christmas was in tatters and I had to cancel everything.  I said it was a really shoddy situation since they had not provided me with accommodation and that I was camping and my ex-wife was away to Japan and my children were staying at her home without supervision because they could not stay at Isis.  He said that he could do nothing about it and it was one of those things.  He had tried his best to get money from the underwriters to pay for a house but had failed because I had not insured my contents with them.  That was largely my fault and not his.  I said it was nonsense.  

………..it would have all been different if I had my contents insured and it was really a mistake of Susan and mine and not anything to do with the insurers or the loss adjusters and his job was only to supervise the work and make sure that the work was done properly at a reasonable price.”  (my emphasis). 

55.      The typed attendance notice in support of this call is dated 21^st December, 2012.  It is not therefore clear whether the plaintiff is alleging this call took place on 20^th or 21^st December, 2012.  According to the handwritten log produced during the hearing, the call took place on 20^th December. 

56.      In relation to this call, whether it took place is also disputed on the same basis as the call on 17^th December, 2012, namely that Mr Burns does not recall the call and would have acted on a request for alternative accommodation.  There is no evidence from any of the first or second defendants that they were informed of such a call.  Again this is not a matter I can resolve on a strike out application. 

57.      No further evidence of any discussion about alternative accommodation was produced to me.  However, I note that the third defendant’s remaining interim reports [see Exhibit JD1/129-33] namely reports 2 to 6 all set out a reserve of £3,000 for alternative accommodation.  It is not in dispute that no payment for alternative accommodation or in lieu of alternative accommodation was ever made in relation to the first claim. 

58.      The only other relevant evidence where the issue of alternative accommodation in relation to the first claim was discussed further was in a call between Mr McGrath and the plaintiff on 13^th March, 2013, where Mr McGrath according to the plaintiff stated:-

“Mike said that he was pleased the issues where agreed but he did not want to get involved on the accommodation issue and all that he knew was that the policy did not provide for alternative accommodation and I should just accept that as a fact.  No point arguing about it or raising it as it was a lost cause as I did not qualify for any relief.”  [see Exhibit AHT1/157]. 

59.      No evidence has been provided from Mr McGrath about whether he made such a statement and if he did, what was his state of knowledge at the relevant time and whether the source of any such knowledge was any of the first second or third defendants. 

60.      According to the plaintiff the remediation work relating to the first claim was completed on 26^th March, 2013, and lasted 117 days.  There is no evidence from any party how long the property might have been uninhabitable while repair work was being carried out. 

61.      It is not in dispute between the parties that monies were paid out under the policy in response to the first claim to repair the property.  The plaintiff also never sought alternative accommodation. 

Events in relation to the second claim

62.      The second claim arose as a result of an escape of water at the property on 17^th October, 2013. 

63.      The third defendant produced a preliminary report dated 25th October, 2013 (exhibitJD1/137-138).  A second report was produced in relation to the escape of water incident dated 4^th November, 2013, (JD1/141-143)  The relevant part of the report provided as follows:-

“The property will be deemed uninhabitable as the ground floor will require to be stripped and cleared in its entirety.  The occupier of the property Mr Hayden-Taylor does not have any contents insurance and has no cover for alternative accommodation.  We recall from the previous claim that there was also no cover for accommodation for the occupier and as no rent is paid by the occupier there is no loss of rent claim.  We seek underwriters’ confirmation that there has been no alteration to the cover to provide accommodation cover which would likely cost in the region of £6,000.”  (emphasis added). 

64.      This extract is consistent with the plaintiff’s recollection of a discussion about alternative accommodation cover with Mr Burns at a meeting at the property on 30^th October, 2013, [plaintiff’s affidavit paragraph 78]. 

65.      On 12^th November, 2013, the second defendant sent to the plaintiff a copy of the insurance policy in respect of the property, following a request from the plaintiff [exhibit AHT1/138]. 

66.      On 13^th November, 2013, Lady Gould of the second defendant spoke to the plaintiff.  His note of the call states as follows:-

“I then asked her about the policy wording.  She said that she knew that Della had sent me a copy of the policy and was there something wrong with it?  I said to her “more than wrong”.  I have been told for close to a year that I was not entitled to accommodation when the policy clearly stated that I was – with £160,000 budget and not a poultry sum of £10,000!  I asked her where she had found the phrase 20% of the contents insured value, but she had repeated to me on several occasions and she also told Susan several times and Any Wellman had told Susan in August when the policy was renewed?

She said that she had not read the policy in detail but had a crib sheet with the main terms.  I asked if she could send me a copy of this note and she said it was an internal document that she used and I reminded her of the policy terms when discussing with clients during a claims process.  I told her that in my view I had been lied to and so had Susan.  Susan did not want to comment and clearly she could understand that I was upset and she was sorry I felt that way.  In a perfect world everything would be fine but it never was!”

67.      However by an email dated 13^th November, 2013, sent at 17:52 [AHT1/136] to Mr Burns of the third defendant, the plaintiff stated he required that:-

“‘alternative accommodation’ clause to be invoked and the alternative accommodation provided”.

The plaintiff estimated the likely rent to be between £3,000 and £3,500 per month and that a deposit of around £3,000 would also be needed. 

68.      Mr Burns replied the same day by an email sent at 18:22 and asked for estimates of reasonable accommodation and stating that underwriters did not fund returnable deposits [AHT1/133]. 

69.      In an email dated 14^th November, 2013, from the plaintiff to the third defendant (exhibit AHT1/130), amongst other issues, the plaintiff complained that he had been lied to when told by Mr Burns that the policy did not cover alternative accommodation.  It is not clear whether this email was a complaint about the first claim or the second claim. 

70.      In an email dated 14^th November, 2013, [AHT1/124] from the third defendant  to the plaintiff at paragraph 4, Mr Burns stated :-

“With regards possible alternative accommodation this has to be reasonable and not on the basis of replacing ISIS house – a cost in the region of £2,200 - £2,700 would be considered reasonable if this item of claim is agreeable by insurers, I am awaiting their response which has been chased by your brokers.”

71.      By an email from Miss Willsher of the Lloyds Broker to Della Roderick of the second defendant also dated 14^th November, 2013, [ADS1/35/36/38], the Lloyds Broker relayed that the first defendant would deal with the alternative accommodation cost in full. 

72.      By an email 16^th November, 2013, (exhibit ADS1/140), the plaintiff challenged the third defendant’s interpretation of an agreed budget in response to the third defendant’s email to him dated 14^th November, 2014. 

73.      By an email from Mr Burns of the third defendant to the plaintiff also dated 18^th November, 2013, sent at 10:38 [AHT1/115] Mr Burns stated:-

“With regards to the accommodation – please advise the completion date for the turnkey solution and I await details of reasonably priced accommodation from you as soon as possible in order that we can agree this aspect of the claim.”

74.      By an email dated 18^th November, 2013, sent at 10:44 from Mr Burns of the third defendant to the second defendant [GB1/38], Mr Burns stated as follows:-

“Insured requesting for reimbursement for accommodation in a 6 bedroom house despite being single occupier. 

I have identified that the rental price for a 4 to 5 bedroom house is £2,200.00 - £2,700.00 however the insured has provided costs far in excess of this value. 

Although the policy confirms that the alternative accommodation will be on a basis substantially the same as the risk address, there is an overriding duty to mitigate any claim and given the insured is a single occupant the insurance market in general would take the approach that something suitable may be a 1 or 2 bedroom flat/house rather than a like for like 6 bed house.”

75.      By an email dated 18^th November, 2013, sent at 15:35 from the plaintiff to Mr Burns, the plaintiff suggested an overall settlement which he described both “more holistic approach” and “a turnkey solution”.  In this email the plaintiff’s proposal was for a settlement of £40,000 plus GST.  In putting forward this proposal the plaintiff said the potential liability to underwriters was £53,000 plus GST which included a £10,000 minimum figure for alternative accommodation. 

76.      A third report dated 20^th November, 2013, was issued by the third defendant. In this report the third defendant stated as follows:-

“The insured who occupies the 6 bedroom property on his own has been seeking suitable like for like accommodation and such a large property is attracting high rental figures for a 3 month let in the region of £10,000 and over.  It is our consideration that a lower value rental could be achieved in the region of £7-9,000 and we consider there are grounds that the insured should mitigate his loss rather than seek like for like accommodation.  We comment on this aspect later in our report.”

77.      In an email dated 22^nd November, 2013, sent at 08:41 [ADS1/46-48] from the plaintiff to Mr Burns copied to the second defendant, amongst other issues, the plaintiff complained about the issue of alternative accommodation being “the subject of gross misrepresentation and untrue statements”.  He indicated he might be making a complaint to the Insurance Ombudsman and to Lloyds of London and that he also required compensation for the lies and deception that he said had occurred. 

78.      Mr Burns replied later on 22^nd November, 2014, by an email sent at 10:21 to the plaintiff [ADS1/46].  In his reply while disputing allegations that the plaintiff was misled, Mr Burns also stated:-

“with regards to accommodation I have already reported to insurers in this regard and we have agreed to this element as recently discussed at our last meeting.”

79.      The plaintiff responded to Mr Burns on 22^nd November, 2013, by an email sent at 14:14 [ADS1/43-44].  In his email the plaintiff noted that liability had been admitted.  He then went on to state that estimated costs for a four-bedroom house were between £4,000 and £5,000 and disputed Mr Burns’ figure of £2,700.  He reserved his rights generally in respect of delaying payment of the claim and for “the ingenious conduct of these two unforeseen insured incidents”.  Finally, Mr Burns was asked to deal with a fair, proper, lawful and equitable settlement. 

80.      Sometime on 22^nd November, 2013, the plaintiff spoke to a Lady Gould of the second defendant [Exhibit GB1/45-46].  During the call, according to his note of that call, the plaintiff again complained about the fact that alternative accommodation, was not provided for the first claim and told Lady Gould that he was going to take matters further.  The note records twice that the plaintiff was told he was wasting his time as the policy wording is linked to accommodation to contents and not buildings and that the plaintiff did not qualify for any relief. 

81.      By an email dated 25^th November, 2013, from Karen Geale, [GB1/50]  at paragraph 2, the first defendant’s position was set out as follows:-

“With regard to alternative accommodation.  Should the insured (ex-partner) not be residing in the premises a property of similar quality can be agreed, whether this is regarded to be 6 bedrooms has to be debatable.  We would be expect to be adequate for needs rather than like for like and loss mitigation should be undertaken.  If the alternative accommodation is not being taken, the payment for a policyholder remaining in the property is an inconvenience payment only i.e. loss of enjoyment and cooking facilities.  This is not a direct cash replacement for 100% of the cost of renting elsewhere and considerable savings are expected.”

82.      Karen Geale’s email was forwarded by the second defendant to Mr Burns of the third defendant [GB1/49 and 50]. 

83.      In an email dated 26^th November, 2013, [ADS1/50-51] sent at 08:46 to Mr Burns copied to Lady Gould, the plaintiff chased for a response.  He also repeated his proposal of £40,000 plus GST for a holistic settlement and again made reference to a figure of £10,000 for accommodation.  Having looked at the figures further, he indicated he was now looking for a settlement of £41,750 plus GST and wanted a “positive and definitive decision on this approach”. 

84.      By an email dated 26^th November, 2013, [GB1/51] Mr Burns of the third defendant in considering an overall settlement suggested to the second defendant to pass onto the first defendant £3,000 as cash in lieu of alternative accommodation, which was said to be something between £900 based on £15 per day allowance times 60 days and £8,000 being the cost of a 3 month let.  The first defendant approved this suggestion [GB1/54-55]. 

85.      Mr Burns, by an email dated 27^th November, 2013, to the plaintiff stated as follows in relation to accommodation costs [GB1/57]):-

“If you require cash in lieu of accommodation settlement then this has to be on an inconvenience, loss of use basis which is £15 per night generally throughout the industry which would make a settlement of circa £900.  It is acknowledged that savings are made by remaining in the property and hence I am instructed that an allowance of £3,000 can be agreed.”

The figure of £3,000 was included in an overall settlement proposal of £35,901.50 plus miscellaneous additions already due to be paid. 

86.      By an email dated 27^th November, 2013, sent at 15:16, the plaintiff replied to Mr Burns copied to Mr Mike McGrath [AHT1/86].  The first four paragraphs of his email are as follows:-

“I do not accept that the sacrifice of my Christmas, with the loss of four bedrooms that are currently being used for storage of chattels can be adequately compensated with £3,000 when the minimum cost for furnished accommodation as an alternative is ranging between £5,000 and £6,000 a month – I would much prefer to move out to alternative accommodation ad thereby fulfil my obligations towards my children on their respective return from boarding school. 

I suggest that the insurers sharpen their pencil as the inconvenience for sacrificing my Christmas holidays when it is my turn for Christmas – with my two children who I see very little of, where supposed to spend it with me.  I cannot now fulfil those obligations and therefore the proposal of £3,000 is just not acceptable and is rejected as you are trying to fob me off with an offer of £3,000 when the insurers have a hard and unavoidable liability to provide me with substantially the same as your existing home of a minimum of £15,000 and in Jersey more likely to be £18,000. 

Both Ms Greenhall and I have been lied to twice by you and CVV about the indemnity for alternative accommodation that was clearly provided for within the policy (costs of using other accommodation, substantially the same as your existing which you have to pay for if the home cannot be lived in because the buildings are damaged or destroyed) yet you and CVV were adamant that no such cover was provided!!! Or if it were, then only when contents cover is provided under the same policy!

This is an appalling and quite unforgiveable travesty and something about which I am considering reporting to the Insurance Ombudsman and I wish to open a dialogue with insurers to make a formal complaint about this matter as I consider that their interests have been preferred over that of the occupier and the insured.  This is the second time of writing that I have requested the contact details of the insurers.  I shall otherwise contact Lloyds Policy Signing Office without further delay.”

He also repeated his proposal of a payment of £41,750 plus GST to settle his claim. 

87.      The plaintiff on the 27^th November, 2013, at 17:09 [AHT1/88/91] also emailed to Mr Boon, a director of the second defendant, complaining about the handling of the first claim by the third defendant and in particular about what he was told about there not being cover for alternative accommodation.  He also complained about the offer of £3,000 as a cash settlement for alternative accommodation for the second claim.  The plaintiff further indicated that he wanted a new loss adjuster appointed and would be making a complaint to the Financial Ombudsman in the United Kingdom unless matters were settled. 

88.      By an email dated 2^nd December, 2013, Mr Peter Maloney, a claims handler of the first defendant, informed Mr Michael White, a claims manager of OIM, that an offer of £41,750 should be put forward “on the sole basis that it is in full and final settlement”.  If this offer was not accepted then settlement would proceed on the basis of £36,000 already on offer including GST. [JD1/149]. 

89.      Also on 2^nd December, 2013, the plaintiff filed his complaint with Lloyds of London [JD1/168]. 

90.      On 2^nd and 3^rd December, 2013, various exchanges of emails took place between the second defendant and the plaintiff about the second defendant’s handling of the plaintiff’s claim [AHT1/59, 52 and 53]. 

91.      On 3^rd December, 2013, the third defendant emailed the plaintiff and stated:-

“I can confirm that insurers are on this occasion able to agree a full and final settlement of all outstanding aspects of the claim in the total sum of £41,750 which includes the interim account issued by the plumbing company in the sum of £9,915.19 which was part of the turnkey operation agreed.”  [AHT1/48]. 

92.      By an email dated 4^th December, 2013, sent at 09:51 to Mr Burns, the plaintiff set out the detailed figures he was seeking which amounted to £44,226.04.  After deduction of the sum due to the plumbing company of £9,915.19 he indicated that the total figure was £34,310.85.  On the final page of his email he stated:-

“There are issues relating to and arising from the complaints that have been made by me to Lloyds of London, G. A. Robins and CCV in London about the conduct of this and the previous insured incident relating to the unfortunate lightning strike and for the avoidance of doubt these matters expressly excluded from this settlement proposal.  Any compensation or otherwise arising from those complaints is an entirely separate matter and is expressly excluded from this settlement proposal.”  (emphasis added). 

93.      In his note of a call dated 4^th December, 2013, [AHT1/30], the plaintiff noted that he had written to reject the first defendant’s proposal and had asked for a cheque for £10,000 so he could move into the Hotel L’Horizon. 

94.      On 5^th December, 2013, the plaintiff had a call with Mr Joseph Dobbins of Lloyds of London in response to the plaintiff’s complaint to Lloyds.  [AHT1/28-30].  The plaintiff noted that according to Mr Dobbins that the first defendant had accepted a mistake had been made in respect of alternative accommodation.  The plaintiff also indicated he was giving underwriters seven days to think matters over, otherwise he would issue proceedings. 

95.      By an email dated 5^th December, 2013, sent at 12:10 from the plaintiff to the third defendant [Exhibit AHT1/26], the plaintiff complained about the lack of transparency in respect of figures as well as complaining about the third defendant’s conduct of the plaintiff’s claim. 

96.      By an email dated 6^th December, 2013, sent at 16:34 to the plaintiff by the third defendant [Exhibit AHT1/25], Mr Burns in the first paragraph stated:-

“I refer to our conversation today and am pleased to confirm that I have received underwriter’s instructions that I am able to conclude the claim with a final payment of £32,786.17.”

97.      No evidence was produced at the hearing as to what was discussed in this call by either the plaintiff or the third defendant.  No evidence was also produced about how the figure of £32,786.17 had been arrived at and what it included.  In particular there was no evidence indicating whether it was part of an overall settlement or whether any claims in respect of alternative accommodation had by this time been excluded. 

98.      By an email dated 7^th December, 2013, [GB1/64] from the plaintiff to Mr Burns, the plaintiff confirmed that a call had taken place on 6^th December and receipt of the third defendant’s email of 6^th December confirming a net payment of £32,786.17. 

99.      On 7^th December, 2013 the plaintiff and the fourth defendant signed a form of discharge in relation to the second claim i.e. the claim arising out of the escape of water on 17^th October, 2013. 

100.   Paragraph 1 of the form of  discharge provides as follows:-

“The insured hereby accepts acknowledges and agrees that payment of the Settlement Sum shall be made in full and final satisfaction of any and all claims the insured may have or may hereafter have against CBC under the Policy in respect of the Claim(s).”

101.   Following on from the affidavits filed, it does not appear that there were any further discussions about either the plaintiff taking alternative accommodation or the first defendant offering any additional payment in respect of alternative accommodation.  It is also not in dispute that the plaintiff never found alternative accommodation and continued to remain in the property while works were carried out in respect of the second claim. 

102.   After the plaintiff’s complaint was investigated by the Market Services Department of Lloyds of London, in a letter dated 20^th February, 2014, [JD1/189-190] Mr Dobbins stated as follows:-

“It would appear, therefore, that any previous denial to alternative accommodation under this policy was done so erroneously.  Underwriters have asked me to extend their apologies and in recognition of the error, have offered a compensatory amount of £750.00.  We recently discussed your case whereby you intimated that you were seeking reimbursement of £20,000 which represented the figure of an alternative rental property comparable to your own over a period of four months.  Neither I nor the underwriters can agree this is justifiable.  Whilst I recognise that the error has caused a significant inconvenience to you, there is no entitlement under this policy to receive monies for alternative accommodation as this would have been paid directly to the relevant company or landlord. 

Therefore, I have to declare that I find the offer of £750.00 to be fair and reasonable in the circumstances.  If you would like to accept this offer, please let me know and I will pass this information to the underwriters.”

103.   The plaintiff did not accept the offer and instead issued proceedings. 

Decision

104.   In view of the fact that I have to deal with strike out applications brought by four defendants in respect of whom I need to address whether they have any contractual relationship with the plaintiff, or whether they owe any duty of care to the plaintiff and what follows from any contract or duty of care, I propose to deal with the position of each of the defendants separately.  In doing so I will address what duties each of them might owe, whether there has been any breach of such a duty and what loss flows from such a duty being breached.  As claims for conspiracy are made against all of the defendants as well as claims for exemplary/punitive damages I will deal with these two aspects of the plaintiff’s claim once I have addressed the position of each of the defendants.  I will also address the applicable legal principles on a strike out application, which I consider first. 

The applicable legal principles

105.   There is no dispute between any of the parties as to the approach I should take in relation to the strike out applications.  All the defendants argued that the plaintiff’s claim disclosed no reasonable cause of action, alternatively no reasonable cause of action which would support the relief claimed, and further that the plaintiff’s claim was scandalous, frivolous or vexatious or was otherwise an abuse of process of the court.  I therefore set out the applicable legal tests for each of the relevant parts of Rule 6/13(1) upon which the defendants rely. 

Rule 6/13(1)(a) – no reasonable cause of action

106.   In Esteem Settlement [2000] JLR 119, Birt, Deputy Bailiff observed that the principles upon which the Royal Court should proceed in such cases were the same as those adopted by the English courts and were clear, namely that it was only where it was plain and obvious that the case could not succeed that recourse would be had to the summary jurisdiction to strike out.  In Alhamrani v Alhamrani [2007] JRC 168 Commissioner Page cited with approval paragraph 18/19/10 of the Supreme Court Practice [1999] (the “White Book”) which required that so long as the statement of claim or the particulars disclosed some cause of action or raise some question fit to be tried by a judge or jury, the mere fact that the case was weak and not likely to succeed was no ground for striking it out.  The same approach was taken by the Royal Court in Trant v AG [2006] JLR 531 which was confirmed by the Court of Appeal in Trant v AG [2007] JLR 241. 

107.   On an application to strike out under sub-paragraph (a) of Rule 6/13(1) evidence is not admissible and the facts as alleged in the order of justice must be taken as being correct. 

Rule 6/13(1)(b) – the claim is scandalous, frivolous or vexatious

108.   In Channel Islands and International Law Trust Company v Pike [1990] JLR 027, in order to strike out a pleading on the ground that it was scandalous required it to be shown that the pleading contained unnecessary allegations or allegations that were unnecessary to the main issues between the parties. 

109.   In Mauger v Batty [1995] JLR Note 8b, the court held that the discretionary power to allow striking out of a frivolous or vexatious action should only be exerciseD in clear cases and taking into account all of the evidence. 

Rule 6/13(1)(d) – the claim is an abuse of process of the court

110.   In Bowen & Anor v Noel Investments Limited [1990] JLR 184, the Royal Court held that for an action to be struck out as an abuse of process required the court to be satisfied that the action was obviously and incontestably bad. 

The first defendant

A contractual relationship with the plaintiff

111.   The first defendant did not seek to argue that there was not a contract between the first defendant and the plaintiff.  Accordingly in reaching my decision I am proceeding on the assumption, without deciding the point, that the plaintiff was a party to the contract of insurance with the first defendant, as far as the first defendant is concerned.  Equally it is right to record that the named insured under the schedule forming the part of the contract of insurance was described as the fourth defendant and not the plaintiff.  It is therefore a matter for trial, as far as the first defendant is concerned, whether someone whose interest is noted on a policy can pursue an insurer for non-payment under the contract of insurance and on what basis.  For the purposes of this judgment, the first defendant accepts it can be pursued by the plaintiff for breach of contract.  I also observe it is not in dispute that the first defendant had made payments direct to the plaintiff in respect of damage suffered as a result of both the first claim and the second claim. 

The nature of the contract of insurance policy

112.   The starting point for the first defendant’s submissions in relation to the plaintiff’s claim is to analyse the effect of the policy of the insurance.  Page 1 of the policy provides as follows:-

“In return for payment of the premium shown in the schedule we agree to insure you subject to the terms and conditions contained in or indorsed on the certificate, against the loss of damage you sustain or legal liability you incur for accidents happening during the period shown in the schedule.”

113.   The cover for buildings covers alternative accommodation as I have set out at paragraph 16 above, was limited to 20% of the total sum insured for buildings in each year.  There is also an exclusion for consequential loss. 

114.   The first defendant therefore contends that the policy of insurance is a contract of indemnity, to hold the insured harmless against a liability or loss.  Upon the occurrence of the loss or the incurrence of the liability, the insurer is in breach of contract and obliged to pay an indemnity against the loss by way of damages.  Although this can mean that an insurer may be in breach of contract before it is aware that any loss or liability has occurred, nevertheless the principle is clear as set out in Insurance Corporation of the Channel Islands v McHugh [1997] LRLR 94.  At page 55 of the transcript provided to me, Mance J stated:-

“As a matter of general legal principle, unless the contract otherwise provides, insurance contracts (whether liability or property insurance) are treated in law as contracts to hold the insured harmless against the liability or loss insured against.  Insurers are therefore, in the absence of contrary provision, in breach of contract as soon as the insured liability or loss occurs.  A claim under an insurance contract is thus commonly for damages for the failure to hold the insured harmless against the relevant liability or loss.”

115.   Similar observations were made by the English Court of Appeal in Sprung v Royal Insurance (UK) Limited [1997] C.L.C. 70, where Bedlam L.J. at page 80 stated:-

“By long standing decisions it is settled that the liability of insurers under a policy arises where the loss occurs and the liability is to pay money for that loss.”

116.   Advocate Sanders contended therefore that the policy was not a policy to pay a stipulated sum occurring upon a specified event.  The plaintiff did not argue otherwise.  I see no reason to consider that the position under Jersey law is different for policies using the sort of wording found in the policy and therefore accept the submission that the policy of insurance in the present matter is a contract of indemnity. 

Liability in tort

117.   While the first defendant did not contend it could not be pursued for breach of contract, the first defendant did argue that no duty of care is owed by an insurer to his insurer in tort.  [see Manifest Shipping Co. Ltd v UNI Polaris Insurance Co Limited [2003] 1 AC 469 at page 504.  While the decision considered the meaning of the doctrine of utmost good faith, which I address later in this judgment, Lord Hobhouse, in relation to the nature of the relationship between insurer and insured, stated:-

“the parties’ relationship is purely contractual, subject to the application of the general law.”

118.   Advocate Sanders contended that generally where insurer and insured are in discussions or negotiations with each other or in dispute they do not owe a duty of care to each other.  For example, he stated that a solicitor will not owe a duty of care to his client’s opponents in litigation (see Al Kandari v J.R. Brown & Co [1988] QB 665 at 675E-F) and that a solicitor does not owe a duty to persons on the other side of a transaction to his client (see Gran Gelato v Richcliff Limited [1992] CH 560 at 570c). 

119.   Finally, he contended that there was no Jersey or English authority which supported any finding of a duty of care owed by an insurer to his insured for statements made in the context of a dispute which had arisen about the insurance. 

120.   No argument was advanced by the plaintiff to suggest that a separate duty of care was owed by the first defendant to him.  Accordingly I agree with Advocate Sanders, for the reasons he gave, that no duty of care is owed by the first defendant as insurer to the first plaintiff as insured.  Any duties only arise under the contract between them. I address what those duties might be below. 

The relationship between the first defendant, the second defendant and the third defendant.

121.   In its skeleton argument filed in advance of the hearing, the first defendant argued that there could be no liability on the part of the first defendant for acts or omissions of the second defendant or the third defendant. 

122.   In relation to the second defendant, the second defendant was authorised to write insurance cover by the first defendant.  To the extent that the second defendant either wrote cover pursuant to such authority or purported to do so then the first defendant is bound by the terms of the cover written by the second defendant on its behalf.  To that extent, the first defendant is liable for the acts of the second defendant because the second defendant as the first defendant’s agent entered into a contract on behalf of the first defendant by issuing the policy. 

123.    As I address in more detail later in this decision, the second defendant is an insurance broker.  Insofar as the second defendant was acting as insurance broker or was under a duty to do so, and did not do so, although the first defendant is bound by cover written by the second defendant, the first defendant is not liable for any acts or omissions of the second defendant as insurance broker. 

124.   In relation to the third defendant, during the course of argument, the first defendant accepted that the third defendant in acting as loss adjuster was agent of the first defendant.  In my judgment the first defendant, through Advocate Sanders, was right to make this concession for the following reasons:-

(i)        The third defendant was nominated as loss adjuster by the second defendant under the authority granted to the second defendant by the first defendant.  The ultimate authority to appoint the third defendant as loss adjuster therefore came from the first defendant. 

(ii)       The third defendant was a loss adjuster approved by the first defendant. 

(iii)      The fees of the third defendant were paid for by the first defendant (see second affidavit of Graham Burgess dated 8^th September, 2014). 

(iv)      The scale of fees payable to the third defendant was also set by the first defendant (see Exhibit GB2 pages 3 and 4 of the second affidavit of Graham Burgess). 

125.   The relationship between the first defendant and the third defendant is important because it has the consequence that the first defendant in law is liable for any acts or omissions of the third defendant while acting as agent of the first defendant.

Utmost good faith/good faith

126.   In Sutton v Insurance Corporation of the Channel Islands Limited [2011] JLR 80, W. J. Bailhache, Deputy Bailiff, addressed both the obligation of utmost good faith in relation to insurance contracts and whether an obligation of good faith is a common understanding of all contracts governed by Jersey law. 

127.   Firstly, he held that all insurance contracts governed by Jersey law are subject to the doctrine of utmost good faith because this was an established market understanding of such contracts and “because, as a practical matter, insurance contracts, of all contracts require that the parties act with good faith towards each other”. (paragraph 15). 

128.   At paragraphs 16-18 of Sutton, the Deputy Bailiff also raised the possibility, without deciding the point, whether an obligation of good faith is a common understanding in all contracts governed by Jersey law as follows:-

“It may well be that an obligation of good faith on both sides is a common understanding in all contracts governed by Jersey law, though we do not decide that in this case as it is unnecessary to do so and we have not had full argument on the point.  There are certainly references to the requirement for good faith in Domat, op. cit., at sects. XII and XIII and Le Gros, Traité du Droit Coutumier de L’Isle de Jersey, at 350 (1943) where, considering “De la Clameur Révocatoire ou Déception d’Outre-Moitié du Juste Prix,” there appears this passage:

“C’est un principe en quelque sorte sacré que la convention fait la loi des parties, mais la bonne foi est une condition essentielle et sine quà non de la convention. 

2011 JLR 89

La raison en est évidente: c’est un principe commun à tous les contrats que les contractants se doivent franchise, sincérité sans voile.”

17       Although it may be that the extract deals only with the issue of good faith in relation to the claim for déception d’outre moitié, the judgment of the majority of the Privy Council in Snell v. Beadle (née Silcock) (11) (2001 JLR 118, at paras. 42–46) in particular may lend some support to the view that the requirement for good faith in the negotiation or performance of a contract under Jersey law may be of wider application than simply such claims. Increasingly, European legislation contains provisions based on the concept of good faith and it is interesting to note that art. 5 of the Supply of Goods and Services (Jersey) Law 2009 introduces a definition of good faith for the purposes of that legislation.

18       On the other hand, it is clear that the English law does not recognize the principle of good faith as having any general application, not least perhaps because English judges have been anxious to avoid creating uncertainty. In Interfoto Pictures Library Ltd. v. Stiletto Visual Progs. Ltd. (5), Bingham, L.J., as he then was, put it this way ([1989] Q.B. at 439):

“In many civil law systems, and perhaps in most legal systems outside the common law world, the law of obligations recognises and enforces an overriding principle that in making and carrying out contracts parties should act in good faith. This does not simply mean that they should not deceive each other, a principle which any legal system must recognise; its effect is perhaps most aptly conveyed by such metaphorical colloquialisms as ‘playing fair,’ ‘coming clean’ or ‘putting one’s cards face upwards on the table.’ It is in essence a principle of fair and open dealing . . .

English law has, characteristically, committed itself to no such overriding principle but has developed piecemeal solutions in response to demonstrated problems of unfairness.””

129.   Notwithstanding these observations, I was not addressed by any of the parties on whether an obligation of good faith formed part of a contract governed by Jersey law.  Rather, Advocate Sanders submitted that, as insurance contracts were governed by an obligation of utmost good faith, and given all insurance contracts in Jersey were insured in England, that the Jersey courts should follow the English approach which does not recognise the principle of good faith as being of general application.  It was also suggested that, if I held that the doctrine of good faith, as distinct from utmost good faith, formed part of an insurance contract, this would have significant ramifications for Jersey’s insurance market because Jersey would be different from England. 

130.   To consider these submissions I need to explore what is meant by the principle of utmost good faith in relation to insurance contracts and its interrelationship with, if any, a doctrine of good faith. 

131.   In Insurance Corporation of the Channel Islands Limited v McHugh to which I have already referred, Mance J described utmost good faith as follows:-

“The duty of utmost good faith in an insurance context operates at different level to equitable obligations (e.g. of confidence) which the law may recognise a rising independent of contract.  The duty, although it arises as a matter of general law outside the contract, gives in the event of its breach a right to avoid the contract. Whether this right originated, as some cases suggest, in equity or whether the common law and Lord Mansfield’s court may not claim some of the credit in some of the classes insurance does not here matter.  It is a right which a party can (and insurers regularly do) exercise without invoking the assistance of any court.  The court’s role, when invoked at all, is now usually to declare that the contract has been validly avoided.  [Page 56 of the transcript]. 

132.   In Manifest Shipping Co Limited v Uni-Polaris Insurance Co case [2003] 1 AC 469, at paragraph 46 page 493D-F, in considering section 17 of the Marine Insurance 1906 (which provides that contracts of marine insurance are contracts based on utmost good faith and that if utmost good faith was not observed that the contract might be avoided by either party) Lord Hobshouse stated as follows:-

“Nor was there any case prior to the Act where the principle was used otherwise than as providing a basis for resisting liability; no case was cited where the principle gave a remedy in damages, as would the tort of deceit or the breach of a contractual term. Whether there was a remedy in damages for a failure to observe good faith was finally and authoritatively considered by the Court of Appeal in Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665, affirmed by your Lordships' House [1991] 2 AC 249, 280 .  In order to answer the question, both Steyn J at first instance ( [1990] 1 QB 665, 699 et seq) and the Court of Appeal (p 773 et seq) examined the basis of the requirement that good faith be observed. Having concluded on the authorities that the correct view was that the requirement arose from a principle of law, having the character I have described, the Court of Appeal held that there was no right to damages.”

133.   At pages 494 – 495, of Manifest Lord Hobhouse at paragraphs 49 to 52 also explored the concept of good faith in the performance of a contract and its interrelationship with the concept of utmost good faith.  He stated as follows:-

“49. Thirdly, both counsel accept and assert that the conclusion of the Court of Appeal in the Banque Keyser case [1990] 1 QB 665 is good law and that there is no remedy in damages for any want of good faith. Counsel also drew this conclusion from the second half of section 17—"may be avoided by the other party". The sole remedy, they submitted, was avoidance. It follows from this that the principle relied upon by the defendants is not an implied term but is a principle of law which is sufficient to support a right to avoid the contract of insurance retrospectively.

50. Having a contractual obligation of good faith in the performance of the contract presents no conceptual difficulty in itself. Such an obligation can arise from an implied or inferred contractual term. It is commonly the subject of an express term in certain types of contract such as partnership contracts. Once parties are in a contractual relationship, the source of their obligations the one to the other is the contract (although the contract is not necessarily exclusive and the relationship which comes into existence may of itself give rise to other liabilities, for example liabilities in tort). The primary remedy for breach of contract is damages. But the consequences of breach of contract are not confined to this. The contractual significance of the breach may go further. It may also amount to a breach of a contractual condition which will excuse or suspend the other party's obligation to continue to perform the contract. It may be a repudiatory breach, or evidence a renunciation, which entitles the other party to terminate the contract and sue for damages. However any such release only applies prospectively and does not affect already accrued rights: Colonial Bank v European Grain and Shipping Ltd [1989] AC 1056 . Ordinarily, the right to the indemnity accrues as soon as the loss has been suffered: Chandris v Argo Insurance Co Ltd [1963] 2 Lloyd's Rep 65 .

51. The right to avoid referred to in section 17 is different. It applies retrospectively. It enables the aggrieved party to rescind the contract ab initio. Thus he totally nullifies the contract. Everything done under the contract is liable to be undone. If any adjustment of the parties' financial positions is to take place, it is done under the law of restitution not under the law of contract. This is appropriate where the cause, the want of good faith, has preceded and been material to the making of the contract. But, where the want of good faith first occurs later, it becomes anomalous and disproportionate that it should be so categorised and entitle the aggrieved party to such an outcome. But this will be the effect of accepting the defendants' argument. The result is effectively penal. Where a fully enforceable contract has been entered into insuring the assured, say, for a *495 period of a year, the premium has been paid, a claim for a loss covered by the insurance has arisen and been paid, but later, towards the end of the period, the assured fails in some respect fully to discharge his duty of complete good faith, the insurer is able not only to treat himself as discharged from further liability but can also undo all that has perfectly properly gone before. This cannot be reconciled with principle. No principle of this breadth is supported by any authority whether before or after the Act. It would be possible to draft a contractual term which would have such an effect but it would be an improbable term for the parties to agree to and difficult if not impossible to justify as an implied term. The failure may well be wholly immaterial to anything that has gone before or will happen subsequently.

52. A coherent scheme can be achieved by distinguishing a lack of good faith which is material to the making of the contract itself (or some variation of it) and a lack of good faith during the performance of the contract which may prejudice the other party or cause him loss or destroy the continuing contractual relationship. The former derives from requirements of the law which pre-exist the contract and are not created by it although they only become material because a contract has been entered into. The remedy is the right to elect to avoid the contract. The latter can derive from express or implied terms of the contract; it would be a contractual obligation arising from the contract and the remedies are the contractual remedies provided by the law of contract. This is no doubt why judges have on a number of occasions been led to attribute the post-contract application of the principle of good faith to an implied term.”

134.   The principle utmost good faith therefore permits a party to avoid a contract where it has been breached.  It is a separate principle from any notion of good faith arising during performance of the contract which can give rise to a claim for damages. 

135.   I accept under English law that there is no stand-alone concept of a duty of good faith giving rise to a cause of action in damages. [See HIH Casualty and General Insurance Limited & Ors v Chaseman and Bank [2001] EWCA Civ.1250] at paragraph 49. 

136.   That does not mean however that a party cannot be subject to an obligation of good faith during the performance of the contract.  As Lord Hobhouse noted at paragraph 52 of his judgment in Manifest Shipping, English law has recognised an obligation of good faith during performance of a contract on the basis of a post contract application of the principle of good faith to an implied term, at least on a case by case basis. 

137.   In my judgment, this is not so far from an obligation of good faith applying to performance of all obligations under a Jersey law contract.  While no party chose to cite to me any further customary law authorities on the obligation of good faith, I note in Pothier there are several references to good faith being owed by one party to a contract to the other in terms of specific types of contract.  Article 1134 of the French Code Civil which has been in place since inception of the code in the third paragraph also provides that contracts “doivent être exécutées de bonne foi”.  While care has to be taken in considering provisions of the Code Civil in evaluating the law of Jersey (Public Services v Maynard [1996] JLR 343 at 350-351), it is not unarguable that this provision reflects how Jersey law might develop. 

138.   The view I have reached therefore is it is arguable that an implied term of good faith exists between parties in relation to performance of the obligations under a Jersey law contract including a contract of insurance.  I also consider it is arguable that such an implied term is not inconsistent with the obligation of utmost good faith.  The obligation of utmost good faith allows a party, normally insurers, to avoid a contract where proper (and material) disclosure has not been made.  This allows insurers to set aside a contract where they have set a premium and decided to offer insurance cover on the basis of material produced by the insured.  I do not see that a requirement to perform an insurance contract with good faith as being inconsistent or opening the flood gates.  At the time insurers have decided to honour an indemnity in principle, insurers generally no longer seek to invoke the doctrine of utmost good faith to set aside a contract unless they later discover a non-disclosure which has been deliberately concealed. 

139.   I also do not see why a “principle of fair open dealing”  to adopt the words of Ralph Gibson L.J. in Inter-Photo Pichers Library Limited v Stiletto Visual Programmes Ltd cited in Sutton causes any significant difficulties in the context of dealing with insurance claims.  Such an obligation does not require insurers to provide an indemnity for claims where the amount sought is in excess of the actual loss or where mitigation should have occurred but has not.  In this day and age parties are also encouraged by the courts to mediate to try to resolve their differences rather than resort to litigation.  A principle of good faith might be said to be consistent with the court’s approach in encouraging parties to resolve their differences through alternative means.  What is clear is that such issues are certainly arguable and a long way from requiring me to strike out the case or to conclude that a principle of good faith cannot form part of a party’s obligation in relation to performance of an insurance contract.  

A breach of duty of good faith

140.   Given my conclusion that it is arguable that an implied term of good faith forms part of the contract of insurance under Jersey law, I now turn to consider whether any breach of duty of good faith by the first defendant has occurred. 

141.   In relation to the first defendant, by reference to the chronologies set out above in respect of the first claim and the second claim, the first defendant in both claims agreed to meet the cost of alternative accommodation for the plaintiff.  Although initially in respect of the first claim, the first defendant only offered a contribution (see paragraph 37 above), by 14^th December, 2012, the first defendant had confirmed it would meet the reasonable costs of alternative accommodation for the period sought by the plaintiff (see paragraph 46 above). 

142.   However, in respect of the first claim, the first defendant’s decision on 14^th December, 2012, was never communicated to the plaintiff.  I address, in considering the position of the third defendant, what this might mean for the third defendant.  However, as far as the first defendant is concerned, its agent, the third defendant, failed to inform the plaintiff of the decision taken by the first defendant on 14^th December, 2012, namely that the first defendant would meet the reasonable costs of alternative accommodation.  I consider this to be an arguable breach of the implied duty of good faith because the first defendant did not place its cards on the table.  I accept in reaching this decision that any arguable breach has occurred as a result of the actions of the third defendant and not through any apparent fault of the first defendant.  However, the first defendant is liable for the acts of its agent. 

143.   In addition, the plaintiff was never told of the terms of the policy.  I do not know why that was and whether the first defendant or the third defendant was aware of the terms of the policy.  These are not matters that can be resolved on a strike out application.  However, again the failure to inform the plaintiff of the terms of the policy also gives rise to an arguable claim of a breach of the implied term of good faith because there was not fair dealing with the plaintiff in terms of informing him that he was covered under the policy for alternative accommodation. 

144.   In relation to the second claim, the position is different.  Firstly the plaintiff was aware of the terms of the policy because a copy had been sent to him on 12^th November, 2013, by the second defendant (see paragraph 65 above).  Secondly, the first defendant agreed to meet the costs of alternative accommodation (see paragraph 71 above).  This was also communicated to the plaintiff via the third defendant (see paragraph 78 above). 

145.   In respect of the second claim I do not therefore consider that any arguable breach of duty of good faith can be formulated against the first defendant because the plaintiff both knew of the terms of the policy and because the first defendant had agreed, in principle, to meet such alternative accommodation. 

146.   I further do not consider that any claim for breach of an implied term of good faith can be made out in respect of the failure to agree a sum payable for alternative accommodation or to agree a cash alternative if the plaintiff chose to remain in the property.  In respect of the former, the chronology I have set out above illustrates no more than unsuccessful negotiations between the plaintiff and the third defendant.  In respect of the latter, the first defendant was never obliged under the policy to make a cash payment for the plaintiff remaining in the property.  There is nothing in the chronology which I consider justifies a trial on this aspect of the plaintiff’s claim which can be said to amount to a breach of an implied term of good faith. 

147.   In reaching this view I have taken into account the fact that both the first defendant and the third defendant suggested that any alternative accommodation was subject to a duty to mitigate.  While in my judgment those statements were in error, because the duty to mitigate was only in respect of like for like accommodation and did not require the plaintiff to take accommodation that was not like for like, there is nothing in the evidence put before me to suggest that such a view was not held in good faith.  In any event the plaintiff knew what the position of the first defendant and the third defendant was.  It was a matter for him whether he accepted that view.  The plaintiff’s claim against the first defendant in respect of the second claim is therefore struck out. 

Loss

148.   The main thrust of the first defendant’s argument was that the plaintiff has suffered no loss as he did not incur alternative accommodation costs and therefore cannot claim an indemnity. 

149.   I was informed that the defendant’s position has been considered a number of times under English law.  In relation to the application before me, the first defendant (and the other defendants) relied on the case of Sprung v Royal Insurance (UK) Limited [1997] C.L.C. 70.  At page 10 of the transcript Evans L.J. stated:-

“The question which arises is whether the plaintiff nevertheless can claim substantial damages from the defendants for their refusal to accept liability at that stage or for failing to say, ‘Go ahead if you wish to do so and are so advised.  In my judgment it is impossible to say that any such breach, even to the extent that it was a breach of contract, would carry with it a right to substantial damages representing the claim which is now put forward.  What has to be said, however hard, it may seem to say, that in such circumstances the cause of loss which the plaintiff suffered must be regarded as the consequences of his own decision not to proceed with the power or reinstatement whether that decision is voluntary or not.  In other words if, unfortunately, through his own financial circumstances he is unable to do so without assistance from the defendants, he cannot allege that the defendants were in breach of contract by failing to accept liability at that stage.”

150.   Bedlam L.J. stated at page 11 of the transcript:-

“By long standing decisions it is settled that the liability of insurers under a policy arises when the loss occurs and the liability is to pay money for their loss.  That the insurers have the option themselves to reinstate and pay for the property damage under the terms of the policy, does not alter the essential nature of their liability, which is pay the sum of money as damages.  Plus the failure to pay is a failure to pay damages and by decisions binding on this court an assured has no cause of action for damages for non-payment of damages.  To compensate to plaintiff under such circumstances Parliament has provided that the court should be able to award interest on damages which the court eventually assess.”

151.   Bedlam L.J. therefore also dismissed the appeal with reluctance. 

152.   The binding authority referred to in Sprung is the decision of Firma C-Trade v NPIA (The Fanti) [1991] 2 A.C. 1 at line 35 F where Lord Goff stated:-

“I accept that, at common law, a contract of indemnity gives rise to an action for unliquidated damages, arising from the failure of the indemnifier to prevent the indemnified person from suffering damage, for example, by having to pay a third party.  I also accept that, at common law, the cause of action does not (unless the contract provides otherwise) arise until the indemnified person can show actual loss: see Collinge v Heywood (1839) 9 Ad. & E. 633.  This is, as I understand it, because a promise of indemnity is simply a promise to hold the indemnified person harmless against a specified loss or expense.  On this basis, no debt can arise before the loss is suffered or the expense incurred.”

153.   In President of India v Lips Maritime Corp [1988] 1 AC 395 and Italia Express (No.2) [1992] 2 Lloyds LR 281, the English law position was confirmed namely that there is no cause of action in damages for late payment of damages. 

154.   However, in Sprung, Evans L.J. at page 7 of the transcript also stated:-

“But on the other hand, if as a matter of law the plaintiff is able to show that the defendants have committed some other and separate breach of contract, and if specifically he can show that the defendants were in breach by failing to accept liability or to approve of the reinstatement at an early stage, then the recovery of damages would not be restricted to the discretionary award of interest which exists in the other case.” (my underlining)

155.   I observe at this point that the English position is one that is not followed in a number of other common law jurisdictions.  In Scotland, if an insurer wrongfully refuses to pay the claim the insured may sue for losses caused, as a result of such a refusal (see Strachan v Boat Owners Weekly Insurance Association) [2010] SC 367.  In Australia, section 13 of the Insurance Contracts Act 1984 implies a contractual duty of good faith into every contract of insurance which goes beyond the principle of utmost good faith.  This led to the Australian courts allowing damages for losses caused by wrongful rejection of claims by insurers.  In Canada, Canadian insurance law recognise specific duties implied into the contract of insurance by virtue of the principle of good faith and if the principle of good faith is breached the insured may claim damages. 

156.   While the authorities of the English courts are often followed in this jurisdiction, given that other common law jurisdictions have not taken the same approach and given that it is arguable that an implied duty of good faith forms part of the insurance contract as a matter of Jersey law, I consider it is also arguable that the approach taken in Sprung and the other cases I have referred to does not reflect the position under Jersey law.  I note in that regard that both Evans L.J. and Bedlam L.J. in Sprung felt constrained to reach their decision.  The Royal Court is not constrained in the same manner and it is open to the Royal Court to follow the approach taken in other common law jurisdictions.  It is also open to the Royal Court to distinguish Sprung on the basis that a breach of a separate obligation has occurred namely the implied duty of good faith. 

Loss

157.   I now turn to consider whether any loss is claimable by the plaintiff, assuming in his favour that the Royal Court would not follow the English authorities referred to me.  I deal first with the second claim. 

158.   In relation to the second claim, if I am incorrect in my conclusion that no breach of any duty of implied term of good faith has been established, I am also of the view that no loss has been established.  In respect of the second claim, the plaintiff was aware of the terms of the policy, and entered into negotiations with the third defendant about what sums might be paid by the first defendant under the policy.  Ultimately, these discussions did not lead to agreement.  However, the failure to agree does not establish a loss.  The plaintiff, in respect of the second claim, knowing of the existence of the terms of the policy and the first defendant’s decision in principle to meet the cost of alternative accommodation, could have moved out and could have then made a claim for an indemnity under the policy.  He chose not to do so.  I have therefore reached the conclusion that he has not been able to show that any loss exists, claimable from the first defendant, in respect of the second claim. 

159.   The position is not the same in respect of the first claim.  In respect of the first claim, the plaintiff was not aware of either of the terms of the policy or that the first defendant was willing to meet suitable alternative accommodation costs.  He was not therefore able to make an informed decision.  The effect of this was the plaintiff remained in the property even though the property, as a result of the incident that led to the first claim, had been described by the third defendant as uninhabitable (see paragraph 34 above). 

160.   I consider the position the plaintiff found himself in respect of the first claim to be analogous to the position in Watts v Morrow [1991] 1 WLR 1421. At page 1445 of the judgment Ralph Gibson L.J stated as follows:-

“Damages for distress and inconvenience

A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy.

But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall within this exceptional category.

In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort. If those effects are foreseeably suffered during a period when defects are repaired I am prepared to accept that they sound in damages even though the cost of the repairs is not recoverable as such. But I also agree that awards should be restrained, and that the awards in this case far exceeded a reasonable award for the injury shown to have been suffered. I agree with the figures which Ralph Gibson L.J. proposes to substitute.”

161.   In my judgment the plaintiff has an arguable claim for the physical inconvenience and discomfort for not being told either about the policy terms or that alternative accommodation was going to be met by insurers and mental suffering directly related to that inconvenience and discomfort.  This is by reference to the final paragraph of Watts v Morrow referred to above.  However, the amount of damages on this basis does not include damages for loss of enjoyment due to the property being said to be uninhabitable over the Christmas and New Year period.  Such a loss is a loss falling within the first two paragraphs of Watts v Morrow set out above.  The amount of damages in terms of how much and for what period is a matter for the Jurats. 

162.   The amount of damages is not however a claim for damages due to loss of pleasure, such as contracts for holidays.  An insurance contact, unless it states otherwise in its express terms, or is clear from these terms is not a contract to provide pleasure or relaxation.  The policy is not such a contract. 

163.   I wish to stress also that the amount of damages might be recoverable does not equate to the rent the plaintiff would have paid had he moved out of the property.  The plaintiff did not incur those costs.  To order damages equal to the rent the plaintiff might have paid would be to compensate him for expenditure he did not incur.  Such an approach would therefore represent a windfall for the plaintiff.  Finally, I observe that the likely amount of damages, while for the Jurats to assess, is likely to be modest, as noted in Watts v Morrow. 

164.   I am not therefore prepared to strike out the plaintiff’s first claim against the first defendant, albeit the amount of damages claimable is limited on the basis set out above.  I address later in this decision how I consider the parties should take forward this part of the claim. 

165.   Advocate Sanders also contended that the plaintiff’s claim was for consequential loss which was excluded by the terms of the policy.  I disagree.  The amount of damages recoverable by reference to Watts v Morrow is direct damage for physical inconvenience.  This is different from the situation in Sprung where what was claimed was lost opportunity to sell a business which was worth £75,000.  In the present case the plaintiff does not advance any lost opportunity claims which I agree with Advocate Sanders would fall under the heading consequential loss.  

Other aspects of the plaintiff’s claim against the first defendant

166.   In respect of claims for gains based damages, punitive and exemplary damages and allegations of conspiracy, all these allegations are made against all the defendants.  I will therefore deal with those aspects of the plaintiff’s claim against the first defendant once I have considered the position of the other defendants. 

The second defendant

The role of the second defendant

167.   As noted at paragraph 13 above, the policy, the subject matter of the dispute was issued by the second defendant pursuant to the authority granted to it by the first defendant.  To that extent the second defendant was the first defendant’s agent, able to bind the first defendant in terms of policies issued by it, either with the actual or apparent authority of the first defendant.  However, this was a matter between the first defendant and the second defendant.  As far as the fourth defendant is concerned, the second defendant was her insurance broker.  This is consistent with firstly the policy wording which states on the covering page “arranged exclusively by CCV Jersey” and which describes the policy as being insured with certain underwriters at Lloyds.  Secondly, at paragraph 8 of Mr Sibbald’s affidavit filed in support of the second defendant’s application, the second defendant is described as “a Jersey based insurance broker, which procures the sale of insurance products.”

168.   The second defendant was also authorised by the first defendant to settle claims up to £1,500.  In light of this limited authority, Advocate Ingram contended in relation to the handling of the claims that the second defendant’s role was simply to act as a post box and to pass on messages from the first defendant to the third defendant who was handling claims on the first defendant’s behalf.  I therefore turn to consider the second defendant’s role and responsibilities in light of the plaintiff’s allegations. 

A contractual relationship with the plaintiff

169.   I start by reference to considering whether or not there is a contract between the plaintiff and the second defendant for the provision of insurance broker services.  It is clear by reference to the schedules issued by the second defendant that the insured was the fourth defendant.  It is also clear from the affidavit of the fourth defendant, in particular paragraph 41, that she procured the insurance policy through the second defendant.  The plaintiff at paragraph 4 of his order of justice also claimed the insurance policy was “sold and promoted by the second defendant to the fourth defendant” for the property.  However, the fourth defendant was also to procure the insurance policy as being in her name and the name of the plaintiff (see paragraph 26 above) by reference contract passed before the Royal Court on 20^th November, 2009, between the plaintiff and the fourth defendant. 

170.   In Café de Lecq v R.A. Rossborough (Insurance Brokers) Limited [2012] 1 JLR 245, the issue of a plaintiff’s right to sue was considered by the Royal Court.  The plaintiff’s claim in that case related to a failure by the defendant either to inform the plaintiff of a relevant warranty in the insurance policy or, alternatively, the defendant failed to sufficiently bring the relevant warranty to the attention of the plaintiff.  One of the issues in the case was whether the plaintiff, company could sue on the insurance policy.  This was because the policy had been taken out in the name of a Mr Ruellan trading as Café de Lecq.  At paragraphs 93 to 110 of the judgment, the court explored whether the plaintiff could bring a claim.  It concluded that Mr Ruellan was acting as agent for the plaintiff and was entitled to be regarded as a party to the contract with the defendant and to sue for breach of contract (paragraph 108).  Alternatively, the court concluded, as between Mr Ruellan and the insurers, the policy written was one designed to provide cover for the full value of the café and not just Mr Ruellan’s 25% interest in the business.  Any recovery made under the policy of insurance would be held on trust for the owners of the café and therefore Mr Ruellan was entitled to recover up to full value provided by the insurance policy.  The court then continued at paragraph 110 which stated:-

“The same goes for any contractual rights that Mr Ruellan might have in relation to Rossborough.  It follows, then, that with the assignment by Mr Ruellan of those rights to the plaintiff, the latter became legally possessed of all the necessary ingredients of an enforceable claim for damages against Rossborough: the right to assert breach of a contractual duty of care and the appropriate standing as the entity that had, as a result of that breach, suffered loss.”

171.   I also note at paragraph 111 that the Royal Court in Café de Lecq did not explore whether Rossborough owed any non-contractual duty of care to the plaintiff as well as a contractual duty to Mr Ruellan. 

172.   Having regard to the approach of the Royal Court in Café de Lecq, I consider it is arguable that the plaintiff is entitled in contract to pursue the second defendant.  At paragraph 12 of Mr Sibbald’s affidavit, he states as follows:-

“The court will note that the plaintiff’s interest has been endorsed on the insurance policy throughout the period of 14^th August, 2009, to 14^th August, 2010, and again on 14^th August, 2011, to 14^th August, 2014.  An administrative error omitted the plaintiff’s interest from the schedule of 2010 – 2011 period, however the interest is shown and detailed in the insurers files (see SIC which I take to mean the second defendant’s files) and therefore the plaintiff’s rights and interest were protected throughout that period.  The interest was endorsed as a direct result of the instructions provided by the fourth defendant, with the policy holder of the insurance policy in accordance with a life tenancy agreement which I understand formed part of the settlement from divorce proceedings between herself and the plaintiff.”

173.   It is clear from the above extract that the second defendant was aware that insurance was being procured for the benefit of the plaintiff as well as for the benefit of the fourth defendant.  It was the second defendant, in writing the insurance policy, who noted the interest of the plaintiff on the policy.  The interest was also recorded in the second defendant’s files.  In light of this evidence, I consider it is arguable that the plaintiff has a right to sue the second defendant in contract because it is open to the Royal Court to conclude that the fourth defendant in procuring insurance was acting on behalf of the plaintiff as well as in her own interest.  Alternatively, to the extent that the fourth defendant recovered any monies pursuant to a claim under the insurance policy, she held such monies in part on trust for the plaintiff given his life interest in the policy.  This may be why the first defendant chose not to contest that the plaintiff had a right to sue the first defendant.  Such an argument is in my judgment not one that is capable of being struck out as either disclosing no reasonable cause of action or alternatively one which is frivolous or vexatious or an abuse of process. 

A duty of care in tort

174.   If I am incorrect in my analysis that there is an arguable claim for breach of contract that the plaintiff might bring against the second defendant, I consider now whether the plaintiff can bring a claim in tort against the second defendant. 

175.   The starting point for my analysis is Caparo Industries Plc v Dickman [1990] 2 AC 605.  The head note summarises the majority of the House of Lords stating as follows:-

“Whilst recognising the importance of the underlying general principles, common to the whole field of negligence, the law has now moved in the direction of attaching greater significance to the more traditional categorisation of distinct and recognisable situations as guides to the existence, the scope and the limits of the various duties of care which the law imposes.”

176.   In Punjab National Bank v De Boinville [1992] 1 WLR 1138, the head note at paragraph 3 on page 1139 states as follows:-

“That the relationship between an insurance broker and his client fell within a recognised category of case in which it had been held that a non-contractual duty of care to avoid economic loss existed, so that in advising the client who employed him and carrying on other professional activities in relation to him, the broker owed the client a duty to exercise the standard of skill and care appropriate to his professional status and would be liable for all losses which the client might suffer by reason of any breach of that duty; that it was a justifiable increment to an existing category to hold that an insurance broker owed a duty of care to a specific person, not being a client, who he knew was to become an assignee of an insurance policy, at least where, to the broker's knowledge, that person had actively participated in giving instructions for the insurance”.

177.   In the circumstances of the case, the individual brokers (who were never in a contractual relationship with the plaintiff bank) were found to owe a duty care to the plaintiff bank. 

178.   The present facts are slightly different from the Punjab National Bank case because, in that case it was contemplated that the bank would take an assignment of the policy of insurance.  In the present case, what was agreed between the plaintiff and the fourth defendant, which appears to have been known to the second defendant, was that insurance was being taken out by the fourth defendant for her own benefit and for the benefit of the plaintiff.  I regard it as open to the Royal Court to recognise a duty of care owed by the second defendant to the plaintiff as a person whose interest is noted on the insurance policy is a justifiable increment to an existing category where a duty of care is owed.  The plaintiff therefore has an arguable cause of action against the second defendant and such a cause of action is not one that is frivolous or vexatious or an abuse of process.  In reaching this view I wish to make it clear that I am simply concluding that such a duty of care is arguable.  It is also a matter of the Royal Court, if it concludes that there is such a duty of care, what the scope of that duty is and the extent of any justifiable increment.  For the purposes of this decision I am simply concluding that the increment extends to an individual with a significant interest in real property where that interest is known to the defendant.  Whether a duty of care is owed to anyone else for whom the insurance cover is taken out is therefore a matter for another day. 

The extent of any duty of care

179.   In the case of the second defendant it is necessary to consider the extent of any duty of care owed by the broker.  I start by reference to the well-known statement of Lord Bridge of Harwich in Caparo case at page 619 said:-

“In advising the client who employs him the professional man owes a duty to exercise that standard of skill and care appropriate to his professional status and will be liable both in contract and in tort for all losses which his client may suffer by reason of any breach of that duty.”

180.   In Punjab National Bank at page 1152 line H the English Court of Appeal held that the above quotation “applies as much to insurance brokers as to those who exercise any other professional calling, and to other professional activities which they carry on, besides giving advice”.  The level of expertise required is that of a reasonable general insurance broker (see Clerk & Lindsell 20th Edition paragraph 10-216).  If a broker acts in accordance with a reasonable broking practice then he will escape liability.  What is reasonable broking practice is likely to lead to expert evidence being placed before the court to assist the Jurats. 

181.   These general statements however, do not define the precise extent of a brokers’ responsibilities.  Much of the commentary in texts focuses on the brokers’ duty when insurance cover is being taken out.  That is not surprising, given the ability of insurers to avoid cover if a breach of the principle of utmost good faith has occurred.  Where such a breach is a result of a failure by a broker in the performance of its duties, a claim can then be made against the broker.  That is what occurred in Café de Lecq. 

182.   There is little authority however, on what is the role of the insurance broker in relation to claims.  Clerk & Lindsell does not address whether or not an insurance broker is under a duty in respect of claims.  Charlesworth & Percy on Negligence 29th Edition at paragraph 8-122 states:-

“The usual scope of an insurance broker’s business includes in appropriate instances to give all necessary assistance to his client to formulate and pursue claims against the insurers involved.”

183.   While no authority is cited in support of this statement, I consider it open to the Royal Court to reach a conclusion that an insurance broker does owe such a duty.  This can be tested by a straightforward example.  An individual takes out fully comprehensive policy of insurance for a car.  The insured is then involved in a minor road traffic accident resulting in damage to the car.  The insured is highly likely to seek guidance from the insurance broker on what is covered by the policy and what is required to make a claim.  The broker will give guidance on forms to be completed and what evidence is required.  It may refer the insured to specialist approved repairers.  Depending on the extent of the damage, the damage may need to be inspected by a loss adjuster appointed by the insurer.  The insurer in those circumstances is relying on the knowledge and skill of the insurance broker.  When acting and giving such advice, why should it be said that an insurance broker is not under a duty of care whether in contract or in tort.  The limit of any such duty is of course a matter for the trial court to determine having heard evidence from the insured, the insurance broker and, where relevant, expert evidence.  However, determination of whether a duty of care is owed by the insurance broker in relation to the handling of claims, for a person whose interest is noted on a policy of insurance in this case is not suitable for a strike out application.  It is a matter that is plainly arguable. 

184.   In reaching this conclusion, I recognise that there is a distinction between the responsibilities of an insurance broker and a loss adjuster.  Again however, it is a matter for trial as to the scope of duties owed by an insurance broker, given that any duty would not require an insurance broker to act as a loss adjuster.  An insured however has its own remedies, if it is dissatisfied with any loss adjuster appointed by an insurer.  It is always open to an insured to appoint its own loss adjuster to assist it in presenting its claims.  The precise relationship between the duties owed by a broker in relation to handling claims and the role of a loss adjuster for the insurer by an issued and whether there is any overlap is also not appropriate to determine on a strike out application. 

The insurance broker acting as agent of the insurer

185.   In the present case, notwithstanding the second defendant was acting as insurance broker, the second defendant was also writing cover on behalf of the first defendant and also had a limited authority to settle claims.  It is as a result of this limited authority that the second defendant argues that it was not under any duty to the plaintiff, assuming a contractual or tortious duty exists generally, other than to pass on information to the loss adjuster.  Its role was simply a post box. 

186.   In Callaghan v Thompson [2000] C.L.C. 360 at page 9 of the transcript, David Steel J. addressed this issue and stated as follows:-

“It follows, that in conducting business under such an arrangement, Manson’s status was as agents of the insured, both in respect of placement of risk and collection of claims; Rozanes v Bowen (1928) 32 LI L Rep 98; Pryke v Gibbs Hartley Cooper Ltd [1991] 1 LI Rep 602 and Johnston v Leslie & Godwin Financial Services Ltd [1995] LRLR 472.  This status remained unaffected by the existence of the binder which rendered by special *368 agreement Manson the agents of the defendants for some limited purposes: see Pryke v Gibbs Hartley Cooper Ltd and Deeny v Walker [1996] LRLR 276. 

Nor is it to the point that Mansons were used by the defendants to instruct and obtain reports from the loss adjusters acting for the underwriters.  This practice has been roundly criticised by the courts: see Anglo-African Merchants Ltd v Bayley 1 QB 311 and North & South Trust Co v Berkeley [1971] 1 WLR 470.  The basis of the criticism is not to the effect that the brokers thereby have to be treated as agents of the insurers but in accepting such instructions, the brokers are in breach of their retainer by the insured given the conflict of interest that thus arises.”

187.   In my judgment the above analysis applies equally to the argument advanced by the second defendant.  The fact that the second defendant was authorised to write insurance cover and only had limited authority to settle claims, does not remove or alter any arguable duties owed by the second defendant as insurance broker and agent of the insured.  At best it means that the second defendant became agent of the first defendant for some limited purposes.  Those limited purposes were not however relevant to this claim because the amount claimed by the plaintiff in respect of the first and second claim exceeded significantly the authority granted to the second defendant to settle claims.  The second defendant therefore remained agents of the insured and an insurance broker with an arguable duty of care in relation to the handling of the claims owed to the plaintiff. 

188.   In addition, the relationship between the second defendant and first defendant created a conflict of interest.  That conflict existed at the time the policies were written or renewed.  The second defendant, as insurance broker acting on behalf of the fourth defendant and for the purposes of this judgment the plaintiff, was transacting with itself as agent for the insurer, the first defendant, in writing the policy of insurance.  Such conflicts can of course be addressed by an appropriate disclosure and consent.  It is however, not clear in this case whether that occurred or whether the plaintiff or the fourth defendant knew that the policy was in fact being written by the second defendant rather than the first defendant.  A similar conflict of interest would exist if the claim had been within the limit permitting the second defendant to settle claims.  I refer to these conflicts as examples only.  No allegation of a conflict of interest is made in the present case by the plaintiff and based on the facts as pleaded this conflict does not give rise to any issue required to be tried by the Royal Court.  Rather I refer to it to illustrate why I do not accept the second defendant’s argument that its obligation was only to act as a post box. 

A breach of contract/breach of duty

189.   I now turn to consider whether the plaintiff has a claim for breach of contract or duty of care against the second defendant, on the assumption that the second defendant owes the plaintiff duties in contract and in tort which duties extended to formulating and pursuing a claim against insurers. 

190.   I propose to deal with the second claim first.  In respect of this claim, the second defendant provided the plaintiff with a copy of the policy when asked for (see paragraph 65 above).  This meant that the plaintiff in relation to the second claim knew that he was covered for alternative accommodation.  In principle therefore he was able to formulate a claim.  He was also able to decide whether or not to incur the costs of such accommodation and then reclaim it from the first defendant. 

191.   By reference to the chronology of events set out above in respect of the second claim, the second defendant also passed on emails received from the third defendant to the first defendant and the responses of the first defendant.  The position of the second defendant was that it was for the third defendant to then pass on these communications to the plaintiff as the third defendant was acting as loss adjuster for the first defendant.  In my judgment, this approach ignores the fact that the second defendant was insurance broker for the fourth defendant and arguably for the plaintiff.  The second defendant, in order to give all necessary assistance to the plaintiff to enable the plaintiff to formulate a claim, should therefore have ensured that the plaintiff was aware of the first defendant’s decision to provide cover for alternative accommodation.  In respect of the second claim, the second defendant did not make the plaintiff aware that alternative accommodation would be provided.  It is therefore arguable that it failed in its duty in not passing on to the plaintiff information on an issue as important as whether or not underwriters would provide cover for by aspect of the plaintiff’s claim that was clearly important to the plaintiff. 

192.   The position in respect of the first claim however is different.  Firstly, the second defendant at no time informed the plaintiff of his ability to claim for alternative accommodation.  This is despite the fact that such information was known to the second defendant because the second defendant had written the insurance policy as agent for the first defendant.  The second defendant was also aware that the plaintiff was claiming for alternative accommodation.  It received copies of the third defendant’s reports which it transmitted to underwriters (see paragraph 36 above).  The plaintiff also asked for advice on the provision of alternative accommodation (see paragraph 37 above).  The plaintiff also alleges that he spoke to Lady Gould of the second defendant on 12^th December, 2012, about his claim for alternative accommodation (paragraph 40 above).  At no time did the second defendant, in respect of the first claim, ever advise the plaintiff that he was entitled to claim for alternative accommodation under the terms of the policy.  I consider this is a matter that gives rise to an arguable claim for a breach of a duty of care.  It is certainly not appropriate to strike out such a claim on any of the grounds advanced. 

193.   I also consider that the second defendant arguably failed in its duty of care by failing to ensure that the plaintiff was aware of the underwriter’s decision taken on 14^th December, 2012, that the first defendant would meet the reasonable costs of alternative accommodation (see paragraph 47 above). 

194.   The second defendant was aware of the first defendant’s position on 14^th December (see paragraph 48 above) and although the second defendant passed the information onto the third defendant, the information was not passed onto the plaintiff.  It may be this was because of the email sent by the plaintiff on 13^th December, 2012, (see paragraph 44 above) where he stated that there was no need to seek underwriter’s permission in respect of alternative accommodation.  However, I also note that Lady Gould of the second defendant on 17^th December, 2012, passed underwriter’s instructions on to Mr Burns of the third defendant (see paragraph 49 above).  Again noting that Mr Burns’ reply stated that no alternative accommodation was required, I still consider to be a matter for trial whether a reasonably and competent insurance broker would have informed the plaintiff the first defendant’s position as at 14^th December. 

Loss

195.   In respect to the second claim, I consider that the plaintiff cannot establish any claim for loss against the second defendant whether in contract or in tort for the same reasons that the plaintiff cannot establish loss against the first defendant addressed at paragraphs 148-164 above, namely in respect of the second claim the plaintiff was both aware of the terms of the policy and that in principle the first defendant would provide alternative accommodation.  It was therefore a matter for the plaintiff as to whether he wished to incur the costs of such accommodation and recover it from the first defendant.  The plaintiff was not therefore denied any opportunity of taking such a step by virtue of the second defendant either failing to inform him of the terms of the policy or the underwriters in principle would meet the cost of any such claim. 

196.   Again the position is different in respect of the first claim.  In Café de Lecq Limited v R.A. Rossborough (Insurance Brokers) Limited [2012] (1) JLR 254, the complaint against Rossborough was one for damages for loss of opportunity to recover money contractually payable by a third party, namely to recover under the policy of indemnity, as stated at paragraph 54:-

“As a matter of law this means that the plaintiff must demonstrate, as a matter of causation, that on a balance of probabilities there was a real or substantial chance, as opposed to a fanciful or speculative one, that but for the non-compliance of the deep fat fryer AXA would have accepted the plaintiff’s claim (Allied Maples Group Ltd. v. Simmons & Simmons (1)). The plaintiff submits that there is no reason to suppose that this would not have happened.”

197.   The present case is slightly different because the first defendant had in fact accepted that it would meet the plaintiff’s claim in principle, but this was never communicated to the plaintiff.  In my judgment as a result of this failure, the plaintiff suffered the same physical inconvenience I have referred to at paragraphs 159-162 above, by reference to the Watts v Morrow case.  It is therefore arguable that the plaintiff can claim damages for breach of contract against the second defendant by reference to the physical inconvenience suffered. 

198.   I further consider such damages are also recoverable in tort.  In Rebours v Jersey Electricity Company Limited [1984] JJ 67, the Court of Appeal accepted the damages for breach of duty could cover inconvenience and distress caused in remedying the original breach.  Such damage does have to occur as a direct consequence of an act of negligence (see Troy v Michael Voisin & Co [1998] JLR N 1).  In this case I consider it arguable that the physical inconvenience of having to reside in a property that is arguably uninhabitable is recoverable as a head of damage in tort and is arguably a direct consequence of a finding of negligence against the second defendant.  As for the amount of any claim against the second defendant in tort, any damages are of course a matter for the Jurats although again I consider that any such damage is likely to be modest. 

199.   Such a head of damage will not therefore represent the rent that the plaintiff could have claimed had he chosen to move out of the property and incur the cost of alternative accommodation.  In that sense the present case is different from the Café de Lecq case because in that case damage in respect of which an indemnity sought had occurred, namely the destruction of the café.  In the present case the plaintiff did not incur the cost of alternative accommodation.  However, in my judgment that is not a bar to him recovering damages for the physical inconvenience of having to live in a property where he lost the opportunity, for the first claim, to claim the benefit of an indemnity for alternative insurance cover. 

The third defendant

The position in contract between the plaintiff and the third defendant

200.   As noted above, the third defendant is a loss adjuster and is agent of the first defendant.  The third defendant argued therefore that there was no direct contractual relationship with the plaintiff.  It further argued by reference to paragraph 5 of the order of justice that the plaintiff had conceded that there was no contract relationship between the plaintiff and the third defendant.  Paragraph 5 provides as follows:-

“That for avoidance of doubt the plaintiff has no direct contractual relationship with the first, second or third defendant, save that he is a named in the contract and identified as the sole and authorised document to the building I can only rely upon the contract that exists between the fourth defendant and the plaintiff in the form of a life tenancy agreement and the effect of breach of contract in not securing insurance that is fit for purpose and this is through that contractual relationship that provides plaintiff with legitimate relationship and link with the first, second and third defendants enables this litigation to be properly found.”

201.   As noted above the first defendant did not contend that it could not be sued for breach of contract by the plaintiff.  I have also addressed the position of the second defendant by reference to the Café de Lecq judgment.  What is pleaded in paragraph 5 of the order of justice in my judgment arguably falls within the principles set out in Café de Lecq as to the basis upon which the plaintiff can arguably pursue the first, second and third defendants.  I do not therefore accept that the plaintiff was conceding that he could not sue in some manner the third defendant in contract. 

202.   However, I do not consider that the plaintiff has any claim for breach of contract with the third defendant because, even if he can establish title to sue in some manner by reference to the Café de Lecq decision, there is no contract with the third defendant to sue upon.  Firstly, the third defendant is agent of the first defendant.  As can be seen from the chronology the third defendant (via the second defendant) reported to the first defendant, received instructions from the first defendant, was approved by the first defendant and paid by the first defendant.  All of these matters are inconsistent with any contract existing between the plaintiff and the third defendant.  Secondly, the fourth defendant through whom the plaintiff might acquire a right to sue has no contract with the third defendant.  Her contract was with the first defendant.  The plaintiff cannot therefore be in a better position than the fourth defendant.  Accordingly, to the extent that the order of justice alleges a claim for breach of contract by the plaintiff against the third defendant such a claim is struck out because there is no contractual relationship upon which the plaintiff might sue. 

A claim against the third defendant in tort

203.   In relation to the claim in tort, the third defendant argues that there is no basis in law for a duty of care in tort, absent any specific assumption of responsibility, by a loss adjuster, appointed to act on behalf of insurers, towards an individual whose interest is noted on the policy. 

204.   The third defendant firstly referred me to the English case of Graham v Entec Europe Ltd [2013] EWCA Civ 1177.  Although the loss adjuster in that case accepted in evidence that he owed a duty of care to the policy, Potter L.J. at paragraph 34 stated:-

“In acknowledging that loss adjusters owe a duty of care to the policyholder when acting in the course of their retainer for the insurance company, Mr Handford was making a concession which was neither necessary to the issues nor, as yet, recognised by English law: c.f. the view of the New Zealand Court of Appeal in Mortenson v Laing [1192] 2NZ LR 282 and the discussion in Clarke: The Law of Insurance Contracts (3rd ed) pp 842-845.” 

205.   In Mortenson v Laing itself, Cooke P., firstly, considered whether, applying the Caparo test there was sufficient proximity between the investigators and the insured so that a duty could exist at page 300 line 17 to 31, as follows:-

“What is plainly at the forefront of the factors telling in favour of a duty is the close proximity between the investigators and the insured.  True the contract of the investigators is only with the insurer, but by entering into the contract of insurance the insured has placed himself in a position where he must submit to investigation by the insurer’s representatives in the event of a claim.  Inevitably an honest insured has to rely to a considerable extent on the probity and carefulness of the insurer’s investigators.  The element of reliance is thus present.  In turn those representatives must be well aware that a report by them adverse to the insured is likely to be seriously damaging to the interests of the insured.  Certainly the insurer will not necessarily decline liability if there is an adverse report, but the risk for the insured is high.  In agreement with the Master I regard the risk as so obvious and so serious as to point unmistakably towards a duty.”

206.   In my judgment, I consider it is also arguable that there is sufficient proximity between a person whose interest is noted on an insurance policy and a loss adjuster, for the same reasons that I have concluded it is arguable that a duty of care in this case is owed by the second defendant as insurance broker to the plaintiff. 

207.   However, Cooke P. also evaluated factors for and against recognition of the existence of a duty of care.  At paragraph 303 line 51 to 304 line 17 he stated as follows:-

“Last it is most important to bear in mind that the insured has his ordinary remedy against the insurer if liability is wrongly declined as a result of a report by investigators.  Possibly negligence on the part of investigators could give rise to certain heads of damage not recoverable from the insurer, such as damages for delay and vexation.  I will assume, without deciding, that such is the position.  Nevertheless the basic remedy against the insurer remains.  The history of Laing v Mortenson suggests that a negligence action against the investigators could be used as a means of attempting to avoid determination between the insured and the insurer of the central issue: whether the insured was privy to the lighting of the fire and has made a fraudulent claim.  That indirectness should be discouraged by the Court.  The proper vehicle for determining responsibility for the fire is a proceeding between insured and insurer.  Such a proceeding provides the insured with a reasonable, even if not entirely comprehensive, remedy.

In the end I do not think that there can be much doubt about the result of the weighing exercise.  Although between the insured and the insurer’s investigators there is a high degree of proximity, and although in effect it has been legislatively recognised, the factors telling against a duty of care are cumulatively almost overwhelmingly strong.  The balance of public interest embodied in the detailed rules of law as to defamation, malicious prosecution, witness immunity and evidential privilege would be unjustifiably disturbed by superimposing the claimed duty of care.”

208.   Clarke on the Law of Insurance Contracts at chapter 30 reviews Mortenson v Laing and concludes as follows:-

“… the adversarial relationship between adjuster and claimant is no less true in England than in New Zealand.  It is the very vulnerability of the claimant to the honesty and carefulness of the adjuster, which prompted the New Zealand court to point up the proximity between them, that has prompted the rise in England of investigators to act for the claimant; David can now pay his own warrior to meet Goliath and keep his distance.

In conclusion, although there are differences in the weight given to policy factors in New Zealand and in England, there is little reasons to think that, when they are placed in the balance, the verdict of the court in England is likely to be different.  The more so because, like some courts in the USA, the English court could not live comfortably with the holding that no duty of care is owed to the insured by the insurer and at the same time hold that such a duty was owed by the insurer’s agent, the adjuster.  Subsequently, this view, that such agents did not owe a duty of care in these circumstances, was confirmed by the Court of Appeal in Graham v Entec Europe.”

209.   No authority was produced to me by the plaintiff to suggest why Graham v Entec Europe and Mortenson v Laing and the passage in Clarke do not represent the law of Jersey.  In my view they do and there is no argument that has been suggested to me otherwise which indicates that the Royal Court should be required to determine this issue.  As Clarke observes, if the plaintiff did not like the views being expressed by the third defendant as loss adjuster appointed by the first defendant, he was free to appoint his own loss adjuster.  This is an option open to anyone making a claim where they are in disagreement with the views being expressed by a loss adjuster retained by an insurer.  For these reasons I strike out any claim in tort made by the plaintiff against the third defendant. 

Other claims

210.   The above analysis is, however, not the end of the matter.  The plaintiff complains vigorously that he was misled by the second and third defendants about not being able to claim for alternative accommodation in respect of the first claim.  The sequence of events from 13^th December, 2012, to 20^th December, 2012, referred to at paragraphs 42 to 55 above amount to a factual dispute between the plaintiff and the third defendant as to what discussions took place between the plaintiff and Mr Burns of the third defendant on 17^th December, 2012, (see paragraph 49 above) and on 20^th December, 2012, (see 53 to 55 above). 

211.   In particular, the statement said by the plaintiff to have been made to him by Mr Burns on 17^th December, 2012, did not reflect the actual position of the first defendant.  By that time the first defendant had agreed to meet alternative accommodation costs.  Whether that was known to the third defendant depends on whether the email sent to him informing him that underwriters would meet alternative accommodation costs was received and read by him before or after his call with the plaintiff.  If the call took place at all and if it took place after the email setting out underwriter’s position had been seen by the third defendant, then the plaintiff’s allegations are serious because on his case he has been misled. 

212.   If the email setting out underwriter’s position was only received after the call between the plaintiff and Mr Burns on 17^th December, then on one construction of the plaintiff’s affidavit evidence, the position had simply not changed since the previous week.  However, it is right to observe that another construction of the conversation is that the underwriters had confirmed that they would not change their mind.  There is no evidence that underwriters had made such a statement or that it had been communicated to the third defendant.  Equally there is also no evidence that Mr Burns relayed the plaintiff’s change of position to underwriters.  These are not matters I can resolve on a strike out application. 

213.   In relation to the discussion on 20^th December, 2012, I note that no evidence has been produced showing that the plaintiff was ever informed of the first defendant’s decision to provide reasonable accommodation taken on 14^th December, 2012, known to the second defendant by 14^th December and Mr Burns of the third defendant by 17^th December, 2012.  This may be because of the plaintiff’s email of 13^th December stating that alternative accommodation was no longer required. 

214.   I also have to conclude, on the assumption, in the plaintiff’s favour, that his call with Mr Burns referred to at paragraph 70 of the plaintiff’s affidavit took place on 20^th December, 2012, which I have to stress can only be an arguable assumption because this is a strike out application, the statements said to have been made in that call, if they were made by Mr Burns, have to be construed as being untrue. 

215.   I wish to make it clear in that this is an inference I am drawing only on the basis of the information as put before me.  I am not in a position to conclude whether a call was actually made, whether Mr Burns actually made the statements the plaintiff alleges he made and if he did whether he was aware of underwriter’s position as communicated to him on 17^th December (see paragraph 40 above).  Rather, I am simply proceeding on the arguable basis that the call took place and that, in the absence of any other evidence, it is arguable that statements which were untrue were made to the plaintiff. 

216.   In my judgment, these complaints give rise to an arguable claim in deceit by the plaintiff against the third defendant.  I considered what was meant by deceit in MacFirbhisigh & Anor v C.I. Trustees and Executors Limited & Ors [2014] JRC 033 at paragraphs 33 to 35 as follows:-

“Deceit

What is meant by deceit was considered by the Court of Appeal in Pell Frischmann v Bow Valley [2008] JLR 311 where the Court of Appeal summarised the different economic tort claims brought by the plaintiff in that case.  While Pell Frischmann was varied on appeal in relation how damages might be assessed, the Court of Appeal’s comments on economic torts were not reviewed by the Privy Council. 

In relation to deceit, the Court cited with approval Clerk & Lindsell on Torts 19th Edition at paragraph 18-01 as follows:-

“Where a defendant makes a false representation, knowing it to be untrue, or being reckless as to whether it is true, and intends that the clamant should act in reliance on it, then insofar as the latter does so and suffers loss the defendant is liable for that loss.”

217.   I therefore consider that whether or not the requirements for the claim for deceit are met are matters for the Jurats to determine.  The issue is not capable of being determined on a strike out application.  I wish to make it clear in reaching this view that I am not concluding that an act of deceit has occurred.  Rather I am simply concluding on the assumption that the plaintiff’s assertions are established at trial that a claim in deceit may lie. 

218.   In relation to the other claims advanced by the plaintiff against the third defendant for misrepresentation and abuse of trust I deal with these relatively briefly. 

219.   Firstly, in relation to misrepresentation, this can apply in one of two ways.  Either an allegation can be made to set aside the policy on the basis of a misrepresentation, more properly described as an erreur (see Sutton).  There is no such allegation made in this case.  Secondly, a claim of negligent misstatement can be made by reference to the case of Hedley Byrne & Co Limited v Heller & Partners Limited [1964] A.C. 465.  In my judgment I do not consider it is arguable that the third defendant voluntarily assumed responsibility to the plaintiff which is required to establish a Hedley Byrne type liability.  The third defendant simply acted as a loss adjuster retained by the first defendant.  Something more is required to take a loss adjuster out of the ordinary relationships I have found exist in an insurance claim neither of which create a remedy in contract or tort for the plaintiff.  Otherwise a loss adjuster could potentially always be sued for statements made in the course of assessing a claim for insurers.  That would lead to the potential imposition of liability when a duty of care does not arise and no contract exists between the plaintiff and the third defendant.  The plaintiff’s remedies in this case for the first claim are therefore either for breach of the implied term of good faith against the first defendant due to the actions of the third defendant in respect to the first claim, or a claim in deceit. 

220.   In relation to a claim of abuse of trust, if this is meant to be suggesting some form of breach of fiduciary duty, I consider there is no basis to conclude that the third defendant owed any form fiduciary duty in the sense of an obligation of loyalty (see In Re Bird Charitable Trust [2008] JLR 1) to the plaintiff.  Given that the third defendant does not owe any duty as in contract or tort, I cannot see how any arguable claim that any form of fiduciary duty is said to arise. 

221.   To the extent the reference to a claim of abuse of trust is an allegation of fraud or dishonesty, I deal with this later in this judgment. 

Loss

222.   The third defendant argues that no loss had been suffered by the plaintiff in any event, for the same reasons advanced by the first and defendants.  However, in my judgment, if deceit is established against the plaintiff, it is open to the plaintiff to argue that he has suffered damages for the physical inconvenience and distress associated with such inconvenience for living in an uninhabitable property when he did not need to do so.  I accept as part of that argument all the defendants may well assert that the plaintiff would not have moved out of the property in relation to the first claim because he chose not to do so in respect of the second claim.  That is still a matter for the Jurats to assess and to be determined at a trial, not on a strike out application.  

The fourth defendant

223.   The fourth defendant’s obligation to the plaintiff was to procure a contract of insurance for the value of the property occupied by the plaintiff under a life interest.  The obligation was specifically to cover alternative accommodation if the property could not be inhabited. 

224.   In my judgment, this obligation was fulfilled.  The terms of the policy for both 2012 and 2013 when the claims were made provided for alternative accommodation.  The first defendant, both in respect of the first claim, and the second claim agreed in principle to meet the cost of alternative accommodation.  The policy was not therefore ever avoided by the first defendant. 

225.   I accept the plaintiff’s contention that the policy was not in joint names as required by clause f of the life tenancy agreement.  However, this does not assist the plaintiff.  This is because the first defendant has accepted that the plaintiff has a right to sue the first defendant for breach of contract.  There is therefore no issue that the first defendant will not recognise the plaintiff’s right to sue the first defendant.  The plaintiff is therefore in exactly the same position as if he were a joint assured on the policy. 

226.   I also agree that no relief is sought in the order of justice against the fourth defendant which is therefore defective.  Even if such relief was allowed to be pleaded, this would not save the plaintiff’s claim against the fourth defendant, because there is no arguable breach of the first defendant’s obligation to the plaintiff to procure insurance. 

227.   The fourth defendant is also not responsible for the actions of the first, second and third defendants.  Even though I have found in respect of the first claim that the plaintiff has arguable claims against each of those defendants, those are matters between the plaintiff and each of those defendants.  They do not concern the fourth defendant.  The fourth defendant is simply another individual who also has the right to sue the first defendant under the policy and the second defendant as her broker.  However the fact she has not chosen to do so does not lead to a case against her.  In respect to the policy, the first defendant accepts that the plaintiff is entitled to sue.  In respect of the second defendant, assuming in the plaintiff’s favour that the fourth defendant has a cause of action against the second defendant, it is a matter for the fourth defendant whether she exercises such a cause of action.  However, the plaintiff has no right to require her to do so.  The same analysis applies to any claim she might have against the third defendant.  This is so even if no duty of care is owed to the plaintiff by the second and third defendants.  On the matters put before me, I should make it clear that nothing has been set out why the fourth defendant might have claim against either the second or third defendants.  My observations are simply on the assumption, in the plaintiff’s favour, that such claims exist.  Their existence however does not mean that the plaintiff has a claim against the fourth defendant if such a claim is not pursued. 

228.   The position of the plaintiff is also not capable of being saved by amendment.  There is no basis to argue that the fourth defendant is in breach of the contract which has caused the plaintiff loss.  It was for this reason that at the conclusion of the hearing I immediately struck out the claim against the fourth defendant.  This part of the judgment therefore represents my reasons for doing so. 

229.   The fourth defendant also adopted the submissions of the other defendants in relation to loss.  My conclusions are the same as those for the other defendants.  However, the point does not arise because the plaintiff does not have a claim against the fourth defendant. 

General issues

230.   I now turn to deal with the claims made against all of the defendants for conspiracy/dishonesty, and claims for punitive/exemplary damages. 

Conspiracy

231.   The requirements to assert conspiracy in a civil claim context was touched upon by the Court of Appeal in Pell Frischmann Engineering Limited v Bow Valley Energy Limited & Anor [2008] JLR 311.  At paragraph 45 Beloff J. A. stated:-

“The key to this tort turns on the distinction “. . . between the case where the object is the legitimate benefit of the combiners and the case where the object is deliberate damage without any just cause.”

232.   By reference to the chronologies for the first claim and the second claim I have set out above, I do not consider that there is a basis to plead an allegation of conspiracy.  Looking at the sequence of events as a whole, what occurred here was the normal handling of an insurance claim and communications between a loss adjuster, a broker and the insured.  While arguably mistakes may have been made in respect of what was communicated to the plaintiff, that is very different from drawing inferences that all the three defendants intended to deliberately damage the plaintiff without any just cause.  There is nothing in the factual chronology which in my judgment allows any such inferences to be drawn or to require such an allegation to be referred to the Jurats for determination in a full trial before the Royal Court.  Even the fact of an arguable claim of deceit does not change this conclusion.  That is simply a claim against the third defendant only.  It does not mean that allegations of conspiracy can be made against the first or second defendants.  All such allegations are therefore struck out. 

Fraud

233.   Insofar as the plaintiff’s pleading or amended draft pleading suggests fraud, I also strike out such allegations.  No such allegation is properly particularised and by reference to the chronology of events in relation to both claims, no such allegations are capable of being pleaded for the same reason that no allegations of conspiracy are sustainable.  Accordingly I also strike out all allegations of fraud against all of the defendants.   The same applies to claims for abuse of trust, which is emotionally an alternate allegation of dishonesty. 

Gains based damages

234.   I also strike out any claim for gains based damages.  The only amount of damages the plaintiff can claim against the first, second and third defendants are on the limited basis I have set out above.  The fact that the plaintiff did not incur accommodation costs and did not move out of the property which meant that insurers did not make a payment that they would otherwise have made had such costs had been incurred does not entitle the plaintiff to recover damages.  This would be a claim for monies insurers would not be obliged to pay out.  Such claim is unsustainable and is therefore also struck out. 

Punitive/Exemplary damages

235.   In relation to the claim for punitive/exemplary damages the Royal Court in West v Lazard Brothers [1993] JLR 165 recognised the possibility of such damages but refused to order the same on the facts that the case (see page 320 lines 10-14).  Then Royal Court summarised exemplary damages by reference to the House of Lords decision of Rookes v Barnard [1964] A.C. 1129 as follows:-

“It would appear from a close reading of that case that there are now only limited cases where, in England, an award is authorised by statute.  That is, in the case of oppressive, arbitrary and unconstitutional action by servants of the government or where the defendant’s conduct has been calculated to make a profit for himself which might well exceed the compensation payable to the plaintiff.  A well-tried example of that would be where a publisher put out a book in the knowledge that his profits would cover and well exceed any general damages that would be awarded against him for the defamatory and scurrilous material contained in the book. 

Exemplary damages are therefore to punish and deter and require exceptional circumstances.”

236.   In Kuddus v Chief Constable of Leicestershire [2002] 2 A.C. 122, at paragraph 63 Lord Nicholls stated as follows:-

“On occasion conscious wrongdoing by a defendant is so outrageous, his disregard of the plaintiff's rights so contumelious, that something more is needed to show that the law will not tolerate such behaviour. Without an award of exemplary damages, justice will not have been done. Exemplary damages, as a remedy of last resort, fill what otherwise would be a regrettable lacuna.”

237.   At paragraph 68 Lord Nicholls also stated:-

“the essence of the conduct constituting the court's discretionary jurisdiction to award exemplary damages is conduct which was an outrageous disregard of the plaintiff's rights.”

238.   I do not consider that there is any arguable basis requiring a trial to show that such circumstances might be made out.  What occurred in this case in relation to the first defendant was, through no fault of its own, a failure in respect of the first claim to advise the plaintiff of the terms of the policy.  In relation to the second defendant, the complaint is that the plaintiff was not told of the terms of the policy.  There is also an arguable claim in deceit against the third defendant.  However, these matters, if established in my judgment amount to no more than mistakes being made by the first and second defendants.  Even a claim of deceit that is arguable does not cross the threshold of outrageous conduct to justify exemplary damages.  The fact that there were disagreements between the plaintiff and the third defendant about the amount claimable from insurers also does not take this case into the arena of exemplary or punitive damages.  What occurred were negotiations about what the underwriters would pay.  If parties were taking a strong position in negotiations, that does not give right to exemplary or punitive damages, even where that position turns out to be in breach of contract or leads to a breach of a duty of care.  Despite the extensive material put before me and the length of the plaintiff’s pleading, I have seen nothing to justify an award of exemplary damages.  There has been no outrageous disregard of the plaintiff’s rights.  Rather what the plaintiff has against the first, second and third defendants is a modest claim for damages for the physical inconvenience of living in uninhabitable property when he in fact had an option of claiming for alternative accommodation.  This very far from the sort of cases where exemplary damages are awarded or considered. 

239.   The first defendant quite properly drew to my attention the Canadian case of Whiten v Pilot Insurance Company [2002] SCC 18 where punitive damages were awarded against an insurer who made an allegation of that was wholly discredited at trial and where there was no basis to make such an assertion.  In my judgment that case is wholly different from the present case.  While I understand the plaintiff’s frustration at not being informed in respect of the first claim that he could have claimed for alternative accommodation and that underwriters had agreed to this, I do not regard the conduct of any of the defendants as being high handed, malicious, arbitrary or highly reprehensible or far below ordinary standards of decent behaviour. 

The form of discharge

240.   The first, second and third defendants also raised the argument that the plaintiff had signed a form of discharge on 7^th December, 2013, which purported to be a settlement of the whole of the second claim.  By reference to the chronology of events leading to execution of the form of discharge, I am not able to determine whether or not claims for alternative accommodation were finally excluded from any settlement.  I accept that the initial discussions about a settlement contemplating an overall or holistic settlement.  However, from the evidence put to me it is not clear what discussions took place between Mr Burns, the third defendant and the plaintiff immediately prior to the settlement.  This is because the plaintiff appears to have made a proposal to settle claims, excluding alternative accommodation.  I have not been provided with details of what it is the first defendant thought it was settling through the actions of the third defendant.  In particular, I have not seen any evidence of either a final discussion between Mr Burns and the plaintiff or any discussions between the third defendant and representatives of the first defendant which led to the form of discharge being executed and payment being made.  I therefore consider it is arguable that a form of discharge does not cover the plaintiff’s claim in respect of the second claim.  However, the point does not ultimately arise because I have already concluded that no loss arises in respect of the second claim as the plaintiff chose to remain in the property.  Nevertheless I have set out my conclusions for the sake of completeness. 

A way forward

241.   In light of the conclusions contained in this judgment, clearly there is a need to completely rewrite the order of justice, for the plaintiff to start again on the much more limited basis I have permitted.  The order of justice is presently drafted contains many allegations I have struck out and is also difficult to follow.  Even the amended order of justice needs considerable work.  In relation this I was referred by Advocate Sinel to Papadimitriou v Quorum Management Limited [2004] JRC 142 where Birt, Deputy Bailiff, at paragraph 36 stated as follows:-

“36. However, I do not consider that the order of justice is in a fit state to allow the real issues to be focused on both by the parties and by the Court.  I consider that a fair and efficient trial of the matter would be inhibited if the order the justice were to remain in its present form.  It is simply not possible to ascertain with clarity what the nature of the plaintiffs’ case against each defendant is.  I will hear the parties on the exact form of any order but I have in mind to direct that the plaintiffs should file an amended order of justice within a specified period setting out in a proper and satisfactory manner the facts and matters relied on and the nature of each plaintiff’s case against each of the defendants.  The amended pleading will need to explain the circumstances in which Lane makes a claim as well as Mrs P and the grounds upon which that is made.  The pleading will also need to set out with clarity the exact nature of each duty (distinguishing between those owed in tort, contract or as a result of a fiduciary obligation) said to be owed by each defendant to Mrs P or Lane.  It must then go on to set out any facts and matters relied upon to support the existence of that duty in the normal way.  It must then move on in a logical manner to set out the respects in which it is alleged that each defendant has breached the duty owed by it or him to one or more of the plaintiffs.  As I have said earlier, responsibility for preparing an adequate pleading rests ultimately upon the advocates for the plaintiff.  They may well find it more satisfactory if they (or any counsel instructed on their behalf) start completely afresh rather than try and patch amendments on to the existing pleading. ”

242.   However, I have concluded that what is left in this case is a very modest claim for damages for physical inconvenience against the first, second and third defendants only for the short period that the plaintiff was in occupation of the property when it was uninhabitable.  While the amount of such damages, if the plaintiff is successful at trial on liability, is a matter for the Jurats, the claim is not going to be significant.  The costs will inevitably far exceed any sums awarded.  Accordingly, in exercise in the discretion vested in me by Rule 6/28 of the Rules I am therefore going to stay this matter until the week commencing 5^th January, 2015, to enable the parties to resolve their differences by mediation.  I am exercising my discretion in this manner because otherwise the costs of this litigation will, if they do not already, exceed what is at stake.  There have already been two days of argument in relation to this application which has resulted in a lengthy and complex judgment.  There will be further complexities in relation to the issues I have found to be arguable.  The costs of these will outweigh significantly what is at stake.  I therefore encourage all parties to make every effort to mediate and to resolve their differences.  I consider, in particular, a mediator is required as I am concerned that direct negotiation will not prove successful, given the history between the parties in relation to this matter.  In making this order I wish to make it clear it does not apply to the fourth defendant whose claim has been struck out and who is therefore discharged from these proceedings.  It is only if mediation is unsuccessful will the plaintiff have to re-plead his case by reference to the approach defined in Papadimitriou. 

Authorities

Esteem Settlement [2000] JLR 119.

Alhamrani v Alhamrani [2007] JRC168.

Supreme Court Practice [1999] (the “White Book”) 18/19/10.

Trant v AG [2006] JLR 531.

Trant v AG [2007] JLR 231.

Channel Islands and International Law Trust Company v Pike [1990] JLR 027.

Mauger v Batty [1995] JLR Note 8b.

Bowen & Anor v Noel Investments Limited [1990] JLR 184.

Insurance Corporation of the Channel Islands v McHugh and Royal Hotel Ltd [1997] 1 LRLR 94 (QBD).

Sprung v Royal Insurance (UK) Limited [1997] C.L.C. 70.

Manifest Shipping Co Limited v Uni-Polaris Insurance Co case [2003] 1 AC 469.

Sutton v Insurance Corporation of the Channel Islands Limited [2011] JLR 80.

Marine Insurance 1906.

HIH Casualty and General Insurance Limited & Ors v Chaseman and Bank [2001] EWCA Civ.1250].

Watts v Morrow 1991 1 WLR 1421.

Café de Lecq v R.A. Rossborough (Insurance Brokers) Limited [2012] 2 JLR 155.

Caparo Industries Plc v Dickman [1990] 2 AC 605.

Punjab National Bank v De Boinville [1992] 1 WLR 1138.

Callaghan v Thompson [2000] C.L.C. 360.

Café de Lecq Limited v R.A. Rossborough (Insurance Brokers) Limited [2012] (1) JLR 245.

Graham v Intec Europe [2013] EWCA Civ 1177.

Pell Frischmann Engineering Limited v Bow Valley Energy Limited & Anor [2008] JLR 311.

West v Lazard Brothers [1993] JLR 165.

Rookes v Barnard [1964] A.C. 1129.

Kaddus v Chief Constable of Leicestershire [2002] 2 A.C. 112.

Papadimitriou v Quorum Management Limited [2004] JRC 142.

Insurance Contracts Act 1984.

Clerk & Lindsell 20th Edition.

Charlesworth & Percy on Negligence 29th Edition.

Rebours v Jersey Electricity Company Limited [1984] JJ 67.

Troy v Michael Voisin & Co [1998] JLR N 1.

Mortenson v Laing [1192] 2NZ LR 282.

Clarke on the Law of Insurance Contracts.

MacFirbhisigh & Anor v C.I. Trustees and Executors Limited & Ors [2014] JRC 033.

Hedley Byrne & Co Limited v Heller & Partners Limited [1964] A.C. 465.

In Re Bird Charitable Trust [2008] JLR 1.

Whiten v Pilot Insurance Company [2002] SCC 18.