Posted by Matthew Pascall, senior underwriting manager of Legal Futures Associate Temple Legal Protection [1]
Pascall: Trying to apply Supreme Court ruling
I like to get my crystal ball out at the start of each year and look at what I think may be the key trends in commercial litigation. So here goes.
Insolvency
I have met with many insolvency practitioners in recent months. Opinion seems divided on whether we are going to see an upsurge in insolvency-related litigation.
My impression has been that, given the apparently solid recovery of many businesses over the last few months (notwithstanding the Omicron variant), the ‘tidal wave’ of insolvencies predicted by some is unlikely.
However, there are signs of an increase. Registered company insolvencies in November 2021 were 88% higher than a year earlier – driven largely by creditors’ voluntary liquidations. It is interesting to note that the November 2021 statistics recorded a fall in individual insolvencies, with 33% fewer bankruptcies than a year earlier.
Of course, an increase in corporate insolvencies does not necessarily mean an increase in related litigation but, at the very least, it suggests we might see an increase.
Professional negligence
At some point this year, I think we will start to see the extent to which the Supreme Court’s ruling [2] last June in Manchester Building Society v Grant Thornton has led to any fundamental change in the way courts approach professional negligence claims.
As an underwriter I have done my best to try and apply the decision to cases I have been asked to assess. It is undoubtedly complex and I’m always glad to have the assistance of expert counsel with an excellent grasp of the case.
We continue to see professional negligence claims brought by groups of foreign buyers against solicitors who had advised them when exchanging contracts to purchase flats ‘off-plan’, having paid very significant deposits. On the whole, these have been successful claims but are not always straightforward and can involve complex coverage issues.
In a recent case [3] – Various North Point Pall Mall Purchasers v 174 Law Solicitors Ltd [2022] EWHC 4 (Ch) – investors relied on alleged breaches of the stakeholder agreements under which deposits were held, rather than allegations of professional negligence; the buyers’ claims were dismissed at trial.
This case illustrates these actions can go wrong and the importance of after-the-event (ATE) insurance to protect claimants.
Media – Twitter storms continue to rage
Our national press can still be relied on to defame the great and the good as well as the ordinary person in the street. There is no such thing as a typical defamation case, but I’m pleased to say we continue to insure significant numbers of them.
The phone-hacking litigation continues but the issue of limitation may well become a significant issue in the months ahead. The resolution of this may well involve some complex but fascinating arguments both of broad principle and around the detailed specifics of each claimant’s personal knowledge and circumstances.
The decision in Riley v Murray [2021] EWHC 3437 (QB) provides an interesting and very thorough analysis of almost all the key principles at play in defamation cases – and yet the case was confined to a remarkably short exchange of tweets.
Financial mis-selling
At Temple, we are exploring insuring a range of financial mis-selling claims, working with several experts in the field. Motor finance claims may well become an important part of the work we do, insuring large volumes of relatively low-value claims on a delegated authority basis.
And finally…
Has there been a Covid effect?
At the risk of misrepresenting the government’s statistics for the number of claims issued in the Business and Property Courts, the Q3 (July to September) figures for 2018 through to 2021 make for interesting reading:
2018 4,795
2019 4,108
2020 2,586
2021 2,262
On the assumption that we have either seen the worst of Covid or are learning to live with it, I suspect we will start to see an overall increase in business back to pre-Covid levels. This may well coincide with a downturn in the economy that tends to drive-up litigation.
If the economy does take a turn for the worse, those issuing claims will need full adverse costs protection and the means to provide security for costs