The growing problem of a lack of standing to bring a third party claim arising from insurance claims?

Typical example

“A” decides to purchase an asset. They buy it on finance and “B” (the financier) holds an interest in the asset. Transfer of ownership from B to A only happens after completion of the final payment.

What happens if the asset is damaged in the period when B owns it, but A is leasing it?

The typical situation described above sees the asset covered by insurance. It is often the case that one party is named, but sometimes the interest of the other party is noted on the policy.

So what happens next?

The insurance company checks to see if the incident was caused by a third party. If there is a right of recovery they will instruct solicitors to exercising their right of subrogation.

The issue is that the insurer can only pursue the claim based upon stepping into their policyholder’s shoes. This means that any agreement between A and B relating to finance has to remain in play. It cannot be side stepped. Therefore if a third party is pursued, they should look at whether either A or B has standing to bring the claim.

What’s the problem?

For a more detailed explanation, look at Complex Loss Structure/Theory, but in short there is a serious risk that only pure economic loss may apply. This, in light of the Spartan Steel decision, means the right of recovery maybe lost to insurers. Party A might only have an insurable interest,and B will not have suffered loss in most situations as the finance agreement normally means they receive insurance monies or full payment in the event of destruction of the asset.

Why is this a problem?

Nobody owns anything!! There is so much financing in the market, few people are owning assets they use. Even Fernando Torres was bought for Liverpool by the Royal Bank of Scotland! These issues with claims are only going to be on the rise. Keep an eye out on this.

Over and out.

Legal Orange.

The “Hatton Garden Heist” and the legal position of recovering losses

So I saw a “solicitor” on the news commenting on this who looked like a muppet and gave incorrect advice.  I felt obliged to correct them with this article.

The Hatton Garden “heist”

We all saw it on the news. A break-in by sophisticated thieves across the bank holiday weekend. Security boxes taken and a CrimeWatch segment. All round it is a fun read, but tragic to those who suffered losses.

So what is the legal position?

Well those with insurance can make a claim against their policy. It may not be straightforward as they will need to persuade the loss adjuster of the extent of their losses. If you kept something expensive in there, I hope you have some proof in support of your loss. I can only hope they declared the high value items within their policy schedule.

What about those without insurance?

There are 3 potential targets:

1. The thieves (haha – good luck with that!!)
2. The police (hmmmm, good luck with that, you have better prospects than the criminals – but it’s still under 51%)
3. The security company (this is worth a punt)

Bailor/Bailee law

Without seeing the contract, only general advice can be provided here. It would also help to know the alarm records, maintenance, etc.

It seems the security company relied upon (i) internal security; (ii) additional internal security; and (iii) external security. This is a fairly good measure. Expert advice from those in the industry would be needed, but it seems the measures taken by the security company appear to be standard for high value items.

The standard of care is difficult. There is nothing in the media to suggest that anybody asked for their items to be stored in a particular manner. However, while the parties may have been free to negotiate terms to that effect in the contract (for incorporation) I expect standard-form contracts were used by all of the customers.

Absent any contractual agreement that these goods would be stored in a certain manner, the common law duty of care of a bailee is to take reasonable care of a bailor’s goods. In determining what is reasonable, case law is clear that it does not look at the value of the items in isolation. It is determined by circumstances of each particular case. These tend to include:

1. The vulnerability of the commodity
2. Proper and convenient measures for expeditious working
3. Visibility of the equipment to the public
4. The surrounding area
5. Risk of detection and apprehension

So what would the claimant need to establish?

– the value of the item was attractive to thieves

– the normal storage of items within the industry

– the location of the premises was at risk of an elevated level of criminal activity

– the security measures were lax (e.g. activation of the alarm(s), CCTV, etc) and not a deterrent.

What is a big issue?

The response to the alarm activation is likely to be a contentious issue. If all the security company had to do was alert the keyholder(s) and the police – and this happened – then it may be hard to establish a claim. One would however think that a further enquiry would need to be made with the keyholder/police to follow up on what they identified from their attendance at site. If not, and there was an opportunity to prevent the theft, then there may have been a want of reasonable care. As the theft covered across days, this is where mileage maybe gained. It is not simply a case of a “smash and grab” where the window of time to respond is very short (e.g. 2-3 minutes) and a rapid responding police car would not have been able to prevent it.

Playing devil’s advocate this claim may be defended. It would be useful to know whether the security company  simply rented office space in the building. If so, this would prevent them from controlling some of the external and communal areas. They may also not have responsibility for the keyholder/police response.  Again, the paperwork would help to establish this.

Anyway, as always, email me if you want to formally instruct!

Over and out.

Legal Orange.

20 pieces of advice for trainees

Training contracts are not fun. Anybody who claims otherwise is either extremely lucky, or being mendacious.

4 rotations at 6 months per seat allows you a small period of time of time during which to learn enough to qualify.

My personal view is the best trainees turn out to be those who have previously spent time as a paralegal.

What trainees need to know

1. Your trainee supervisor may hate trainees. Try not to take it personally and don’t take it home with you. The issue is likely to be with them rather than you. Whatever you do, don’t cry in the office.
2. Be aware that other trainees in your cohort will lie to you. They are your competitors rather than your colleagues. Do not place much weight on their views. The people who really know what is going on will be the secretaries in the office.
3. Use precedents as much as possible but make sure you spend time learning how to amend them appropriately so you don’t spend your career addicted to standard form templates.
4. It’s ok not to want to qualify into any of your 4 seats. If you are desperate just to qualify and then go into something you like, you don’t need to commit to an area you hate.
5. Ask questions. Don’t suffer in silence. Nobody thinks you are the finished article yet. Just don’t ask the same question twice.
6. It’s ok to take notes (it doesn’t matter if you’re no longer in university).
7. Get to know the solicitor accounts rules. It’s almost more important than knowing the law at some firms!
8. If you have a chance, spend time in a compliance seat. It’s underrated. You will get to understand “good practice”. This will prevent you from allowing standards to slip and may help you avoid a professional negligence claim in the future.
9. Conveyancing is bloody boring. Get your non-contentious seat in employment instead (if you have an opportunity).
10. Never ask anybody over 40 in your department how they are. Their answer will only depress you.
11. Attend Junior Lawyer Division events. You may spend your career with these career. Try not to get drunk and make a fool of yourself at any dinners.
12. Set up a modest LinkedIn profile. You’re a trainee and haven’t achieved anything yet. Just explain what you have done so far. A down-to-earth profile is much better to read than a “trumpet blowing” profile. Don’t name drop a case you merely paginated a bundle for as one of your achievements.
13. Moving upon qualification is ok. Not everybody will presume you were not kept on. The goal is qualification. You have decades of work in front of you, so don’t over analyse the impact of moves you make so early into your career.
14. Don’t qualify into a dying area. Those moving into low value personal injury or asbestos claims are likely to be short careers.
15. Criminal law is the most interesting area of law, but remember at the trainee end you will be dealing with the dregs of society, as much relates to addiction related offences (e.g. the theft/burglary charges linked to addiction).
16. Get to your feet where possible. Even if it’s a tiny procedural application of an infant approval hearing. There is nothing worse than a lawyer who never attends court speculating on how a Judge is likely to decide. If your supervisor won’t let you speak then at least attend and watch other advocates in action.
17. The number of hours you are in the office will not automatically equate to how good people think you are. Don’t suffer from “presenteeism” and make sure you maintain a social life. Pulling a 14-18 hour day on a regular basis normally means a person cannot manage their work correctly.
18. Bring your old LPC textbooks in to work if you recently completed the course. You can use these to double check and reference as a comfort blanket.
19. Attend CPD courses. Some maybe useful, but it’s a good way to get out of the office. It also helps you with networking at a junior stage of your career. See number 2 above – trainees at these events are likely to be more honest with you about how their TC is going.
20. Brown nosing works. Everybody knows exactly what is going on, but for some reason it still ends in success. Just make sure you park your self-respect at the front door before the start of each day.

Over and out.

Legal Orange.