Haven Insurance Company Ltd v EUI Ltd (t/a Elephant Insurance) [2018] EWHC 143 (Comm)

[2018] EWHC 143 (Comm)Case No CL-2017-000093
IN THE HIGH COURT OF JUSTICE
THE BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
In the matter of the Arbitration Act 1996
And in the matter of an arbitration
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31/01/2018
Before
MR JUSTICE ROBIN KNOWLES CBE
Between
HAVEN INSURANCE COMPANY LIMITEDClaimantEUI LIMITED (t/a ELEPHANT INSURANCE)Defendant
Andreas Gledhill QC and Alexander Wright (instructed by Flint Bishop LLP) for theClaimantHoward Palmer QC (instructed by Horwich Farelly) for DefendantHearing Hearing dates: 23-24 October 2017
Judgment Approved

Introduction

[1]The parties are both insurers. Each is a member (or to be treated as a member) of the Motor Insurers Bureau (the “MIB”).[2]The Memorandum and Articles of Association of the MIB (“the Articles”) provide for disputes between members to be resolved by a Technical Committee (“the Committee”). The Articles have been amended from time to time. Those relevant to the present case are in the form amended on 7 June 2012.[3]In 2015, following a car accident in which catastrophic injuries were caused, a dispute between the parties was referred to the Committee. At a meeting of the Committee on 13 February 2015 the Committee heard representations from the parties, discussed the dispute and reached decisions by voting after that discussion.[4]Under the Articles an insurer - an “Article 75 insurer” - may nonetheless be required to meet the loss caused by a car accide nt in circumstances where no insurer is liable in contract or under statute. The Committee reached a series of 5 decisions in this connection. Among other things the Committee decided that Haven Insurance Limited (“Haven”) had no statutory liability. It decided that EUI Limited, trading as Elephant Insurance (“Elephant”) was liable solely as Article 75 insurer.[5]The Articles allowed for an appeal to an arbitrator against a decision of the Committee. On 30 April 2015 Elephant gave notice to initiate an appea l. Haven contends this was out of time.[6]Mr Christopher Hancock QC was appointed in connection with the appeal. The parties were agreed that he should first decide, as an issue going to his jurisdiction, whether the appeal process was initiated within the time allowed.[7]By an Award on Jurisdiction dated 3 November 2016 Mr Hancock QC decided that the appeal process was initiated in time. Haven challenges that decision before this court under section 67 of the Arbitration Act 1996 (“the Act”).

The time allowed to initiate an appeal

[8]At the time the relevant provision in the Articles was in these terms: “The Member wishing to appeal shall give to the [MIB] written notice within 30 days of the Member’s MIB representative being notified of the decision of the … Committee”.[9]The basis for an appeal is, so far as material, put in these terms by the Articles:
“The arbitrator may decide that the decision of the [Committee] was, having regard to this Article 75 and in particular the principles and objectives set out in paragraph (1) of this Article, reasonable or that it was not reasonable. The arbitrator may make no other finding in relation to the decision of the [Committee]. If the arbitrator shall decide that the decision was reasonable, the decision shall stand. If the arbitrator shall decide that the decision was not reasonable, he shall determine the matter and his determination shall replace the decision of the [Committee] in relation to that matter.”
[10]Both Elephant and Haven were present at the meeting of the Committee on 13 February 2015. It so happened that the representative of Elephant was a member of the Committee. Given the interest of Elephant in the decisions the Committee had to reach, that representative did not vote.[11]By attending the meeting on 13 February 2015 both parties in fact knew of the decisions reached by the Committee at the time those decisions were reached. The meeting was open throughout and all present at the meeting would also know the content of the discussion that preceded the decisions reached on a vote.[12]In his Award, Mr Hancock QC referred (at paragraph 45(1)) to his understanding that “it is not always the case that all members of the Committee or MIB’s membership will be in attendance at the meetings of the Committee”. I do not question that understanding, but would add two riders for completeness. First, where members of the Committee did not attend, decisions of the Committee were still made by those who were present (Article 69). Second, any member who was a party to the dispute was free to be present at the meeting.[13]Elephant received an email from MIB on 18 February 2015 setting out the decisions reached on 13 February 2015. This contained an error which was corrected by an email on 24 February 2015. Neither of the emails gave reasons for the decisions.[14]Elephant later received from MIB minutes of the meeting. The minutes were received on 31 March 2015, a date that was more than 30 days after the meeting. They were placed on MIB’s website the next day. It appears that a draft of the minutes had previously been circulated to the Committee. Even in the form sent to Elephant on 31 March 2015 the minutes were in one respect not final: they would not formally be approved by the Committee until its next meeting. Its meetings tended to be six months apart.[15]Mr Hancock QC considered it unlikely that the draftsman of the Articles had in mind that the reaching of the decisions at the meeting itself were, without more, intended to commence the running of time for an appeal. I respectfully agree. In my view this is apparent from the requirement that a member’s MIB representative be “notified of the decision”.[16]Mr Hancock QC further considered that, in the context of the commencement of the period within which an appeal may be brought, the requirement that Elephant’s MIB representative be “notified of the decision” was for notification in writing. I need not express a view on this because I accept that the notification would follow the meeting and on the facts the communications that followed the meeting were in writing.[17]It follows that the possibilities for the commencement of the 30 day period within which an appeal was to be initiated are narrowed to the emails of 18/24 February 2015 (the appeal would be out of time) or, at the earliest, receipt of the minutes on 31 March 2015 (the appeal would be in time). I say “at the earliest” because the minutes received were not yet formally approved by the Committee.[18]The choice between these possibilities turns on the answer to the question whether the reference in Article 75 to notification of the decision of the Committee required notification of the reasons for the decisions and not just the decisions themselves.[19]Mr Hancock QC addressed this question as follows:
“The appeal process involves the service of an initiating document with grounds for appeal, which will then (along with any later submissions) form the basis for the arbitrator to consider the reasonableness of the Committee’s decision. In my view, this indicates quite clearly that the notificat ion to the MIB representative must be one which sets out the reasons for the decision with sufficient clarity and finality to ensure that the MIB member can then draft a document setting out the reasons why it is said the Committee acted unreasonably. … … [I]n my view the legitimate expectation of a party would be that reasons would be provided (as was the case here) and that that party would thus not expect to have to appeal until it was provided with such finalised reasons, or at least told that no further reasons would be provided.”
[20]I can fully accept the good sense of a scheme for appeals that Mr Hancock QC describes. However I respectfully cannot accept that it is the scheme the members of MIB had agreed under Article 75. This is not because reasons were not required. It is because on the particular decision making scheme provided by Article 75 such reasons as there were, were given at the meeting. The use of minutes was not as a means of expressing reasons that had been arrived at with the benefit of s ubsequent deliberation, as in a reserved decision. The minutes were a record of the reasons - such as they were - that had been expressed on the day. The fact that minutes (as here) would contain a summary by the minute-taker of the discussion that preceded the decisions does not take the point further.[21]Mr Hancock QC refers to “clarity and finality” of reasons and “finalised reasons”. But when the committee (and under the Articles the Committee could be as many as 50; 18 sat on the Committee at the 13 February 2015 meeting) voted on the matters for decision its reasons for doing so were not for subsequent clarification or finalisation. Those reasons were, there and then, good or bad, sufficient or insufficient, clear or unclear, available to the parties, just as they were to the minute taker.[22]Instead the decision making scheme involved discussion among a committee of some size, and a decision by a vote, all in minuted proceedings with the relevant parties present (unless they chose not to be). The accuracy of the minutes would depend on the skill of the minute taker in making a record of the meeting.[23]I do not overlook that the decision makers, the Committee, were given the later opportunity to review the minutes. However this would be in order to confirm their accuracy as an account of what happened, not to revisit what had happened. The Committee (the membership of which could change) would be invited to approve the minutes at its next meeting, and when they did, those attending or contributing then would be considering them as a record of what happened. When the chairman signed he would be signing a record of what had happened at the meeting.[24]I accept it may be difficult for the party looking to isolate reasons for the purposes of an appeal, to do so from what was heard at a meeting. In the present case the minutes are not so clear either. These are unsurprising results when the model is one of discussion and then a vote by a Committee of some size. They reflect the “theoretical difficulties of establishing the reasoning process of a corporate body which acted by resolution. All one knows is that at the second that the resolution is passed the majority were prepared to vote for it. …”: R v Poole BC, ex parte Beebee [1991] 2 PLR 27 at 31.[25]The minutes refer to individual views expressed in the course of discussion. They do not, presumably because the meeting did not, record agreement on the essential point or points that provided the basis for each decision reached. This may be why Mr O’Connell of Haven said in his witness statement dated 28 November 2016, in a paragraph accepted by Mr Judd of Elephant in his witness statement of 2 February 2017 as “generally correct”, that “[n]o reasons were given by the [Committee] for each of the decisions made”. If that was the position at the meeting, minutes of the meeting would not improve on it.[26]In the circumstances, I must respectfully disagree with the conclusion reached by Mr Hancock QC on the question whether the appeal was in time. I do not do so lightly. But in my view the time allowed to initiate an appeal began to run by 24 February 2015 at the latest. It was expired before the end of March, whilst the required written notice to commence an appeal was not given until 30 April 2015.

Extending the time allowed to initiate an appeal

[27]This leaves the question of extending the time within which the appeal could be brought. Mr Hancock QC concluded that the Articles did not give him that jurisdiction. I respectfully agree, for essentially the reasons he gave. He noted that the Court did have jurisdiction to extend time. The Court’s jurisdiction arises under the Act and Elephant asks the Court to exercise it.[28]The request was first made in Elephant’s acknowledgement of service to Haven’s appeal (brought by arbitration claim), rather than by a fresh arbitration claim. This procedural course is challenged by Haven, and Elephant accepts that it requires permission to bring the claim in the way it does. The rules in question are primarily case management rules in nature, but Elephant has certainly taken a risk by not communicating with Haven or the Court so as to reserve its position in one of the manners reviewed by Mance J (as he then was) in Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (“The Seki Rolette”) [1999] 1 WLR 708 at 718C-719G.[29]I am nonetheless content to consider the request on its merits. The procedure adopted has not affected the substance of the matter. It has not caused any lack of clarity about Elephant’s position. There is no prejudice to Haven.[30]The Court’s power to make an order enlarging time for bringing arbitral proceedings arises, so far as relevant to the present case, if the circumstances “are such as were outside the reasonable contemplation of the parties when they agreed the provision in question” and “it would be just to extend the time”: see sectio n 12 of the Act. Respect for party autonomy means that any exercise of section 12 powers in the present case “must be fully justified”: SOS Corporacion AlimentariaSA v Interco Trade SA [2010] 2 Lloyd’s Rep 345 at [48] per Hamblen J (as he then was); see also Grimaldi (above) at 722G-H per Mance J.[31]Haven argues that the fact that a party has failed to meet a contractual time limit because it has misunderstood the legal position does not amount to a circumstance “outside the reasonable contemplation of the parties”. Indeed, says Haven, there is no evidence as to either party’s “contemplation” when they became members of MIB.[32]In Grimaldi (above) Mance J pointed out that “… section 12(2)(a) may on its face be thought to start from the position that the parties have agreed whatever they have in law agreed, and invite consideration of other circumstances” (at page 723B-C). He reserved his judgment “on the possibility of applying section 12(2)(a) … in a case of reasonable misapprehension about the need to commence arbitration within a particular time” (at page 723H). As he observed:
“The construction of a contract is a matter on which even courts can hold very different views, sometimes only resolved at the highest level. To take an example from legal history, if one supposes that, prior to the House of Lords decision in Adamastos Shipping Co Ltd v Anglo-Saxon PetroleumCo Ltd [1959] AC 133, the generally accepted view in commercial circles was shown to have been that accepted by the Court of Appeal in that case, viz that the Hague Rules were inapplicable to regulate the relations of owner and charterer under a clause like clause 43, or to have been (in common with Devlin J and two members of the House of Lords) that the application of the Hague Rules must be confined to cargo-carrying voyages, it seems to me at least arguable that a party acting on that view might be able to show that the interpretation subsequently adopted was outside his reasonable contemplation within the meaning of the section.”
[33]In my judgment in the present case the points made by Haven are well met in the following quite exceptional circumstances. MIB itself (by its Mr Armstrong) wrote to Elephant shortly after the meeting of the Committee that “it might be best to await the minutes”. Elephant believed, reasonably if wrongly, that to be in accordance with the procedure required by the Articles. Its belief was in line with a widely, if wrongly, accepted interpretation, shared by MIB itself, of the relevant time provision in Art 75. Indeed, as Mr Judd says, when Haven took the point that the appeal was out of time MIB wrote:
“It has always been the [Committee’s] custom and practice to allow 30 days from the date of final minutes. The final minutes were released to all members on 1 April 2015, allowing 30 days from that date.”
In the particular context it would not, in my judgment, have been within the “reasonable contemplation of the parties” “when they agreed” the Art icles that the time for appeal would be other than that which MIB was, when asked, prepared to state.[34]MIB employees were not lawyers, points out Haven. However they were the employees involved in administering the Article 75 process. And, in terms, Article 75 (which I do not set out in full) does not contemplate that lawyers will be engaged throughout the process.[35]I do not overlook the fact that Mr Judd of Elephant accepts that he was aware from minutes of an earlier meeting of the Committee on 6 June 2013 that a Working Group had identified that the wording of the Articles was insufficiently clear to show that the time for appeal started to run upon the date when the minutes were published. Elephant therefore knowingly took some risk. But this knowledge is in my view eclipsed by the later encouragement from MIB to await the minutes.[36]Haven also contends that it would not be “just” for time to be extended. On the facts of this case, Elephant could have taken legal advice long before it did, argues Haven. Elephant has long known, points out Haven, what the Committee had in fact decided and the discussions that led to the decisions that it was planning to appeal. There has been, says Haven, what it would term an inordinate delay by Elephant in making an application to the Court under section 12 of the Act.[37]Haven also draws attention to the fact that shortly after 15 March 2015, and apparently by 26 March 2015, Haven released its retention in good faith and based on the correct construction of Article 75(6)(a), and did so having confirmed with the MIB secretariat that no appeal had been filed.[38]On the other hand it is still material to keep in mind that the appeal was initiated within 30 days if measured from the date of the minutes, and that the minutes were little over a month after the 24 February 2015 email giving notice of the decision. The length of extension required is from 26 March 2015 (when the time in which to initiate an appeal expired) to 30 April 2015 (when the appeal was initiated). All this, again, against the backdrop of MIB’s position on the time for initiating an appeal.[39]I take the development in relation to the release of retention into account but do not consider it should cause Elephant to lose the opportunity to appeal through an extension of time. The release of the retention at that early date was a judgment made by Haven at the time. It appears to have been made without allowing for the jurisdiction of the Court to extend time. No later than 35 days after the retention was released, Haven was clear that Elephant was seeking to appeal, and that has continued to be clear ever since. Elephant has long made clear that if needed it sought an extension of the time, even if that request was directed to the arbitrator and only more recently to the Court.[40]I do not overlook the time that has passed in this matter before the application to extend time was made to the Court, rather than the arbitrator. I have nonetheless reached the conclusion that in the present case it would be just to exercise to extend time in the limited degree required.

Conclusion

[41]Whilst I do not agree in full with the Award on Jurisdiction dated 3 November 2016, I do consider that time should be extended by the Court to allow Elephant to pursue an appeal from the Committee and before Mr Hancock QC.[42]The precise form of order will be a matter for discussion by the Court with Counsel. I am grateful for the thorough submissions I received in writing and orally.