John Wyllie & Ors v Liberty Mutual Insurance Europe SE [2023] EWHC 718 (Comm)

[2023] EWHC 718 (Comm)Case No CL-2022-000344
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Venue 7 Rolls Building,, Fetter Lane,Date 16 March 2023
London,
EC4A 1NL
Before
HIS HONOUR JUDGE PELLING KC
Between
(1) JOHN WYLLIEClaimants(2) WYLLIE FINANCIAL SERVICES LIMITEDClaimant(3) A’ SCOTTISH NEWS LIMITEDClaimantLIBERTY MUTUAL INSURANCE EUROPE SEDefendant
THE FIRST CLAIMANT appeared In Person for in personMR ANDREW NEISH KC and MR ELLIOTT COOK (instructed by DAC Beachcroft LLP) for Defendant
APPROVED JUDGMENTIf this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person.This Transcript is Crown Copyright.  It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority.  All rights are reserved.Digital Transcription by Marten Walsh Cherer Ltd.,2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.Telephone No: 020 7067 2900. DX 410 LDEEmail: info@martenwalshcherer.comWeb: www.martenwalshcherer.com
[1]This is the hearing of an application by Liberty Mutual Insurance Europe SE for orders that:(1) it be joined as a defendant in place of Arc Finance Group Limited (hereafter “Arc”) pursuant to CPR rule 19.2;(2) an order that the claim continue as a Part 7 claim pursuant to CPR rule 8.1(3); and(3) an order that this claim be struck out pursuant to CPR rule 3.4(2).[2]Liberty is Arc’s professional indemnity insurer for the relevant year of account. Arc has been dissolved in the circumstances I refer to in more detail below but, nonetheless, Mr Wyllie, who appears in person and is the first claimant in these proceedings, opposed Liberty being substituted as opposed to merely being joined. Rather than take up time with the issue during the hearing when the main issue to be decided was whether the particulars of claim should be struck out and this claim dismissed, I ordered that Liberty be joined as a defendant at the start of the hearing, something that Mr Wyllie did not oppose.[3]However, I can now deal with the substitution issue. Arc are no longer in existence because Arc has been dissolved. It cannot therefore be sued or sue unless and until it is restored to the register. Mr Wyllie maintains Arc must remain a party because he wishes to establish that Arc had a civil liability that he can then recover under the Financial Services Compensation Scheme. In my judgment, it is neither necessary nor appropriate for Arc to remain a party for that purpose. Whether Arc had a relevant civil liability sufficient to enable Mr Wyllie to recover compensation under the Financial Services Compensation Scheme does not depend on a non existent company continuing as a nominal defendant to these proceedings. That is exclusively an issue to be determined either by the scheme or in these proceedings in which Liberty is the only defendant. In those circumstances, I direct that Liberty be substituted for Arc as defendant to this claim.[4]I also directed that this claim should continue as a Part 7 claim for reasons I gave at the time. This had been opposed by Mr Wyllie on the ground that none of the facts on which he relied were in dispute. This submission was unarguable for the reasons I gave at the time when deciding that this claim should continue as a Part 7 claim without prejudice to the application to strike out.[5]I now turn to the strike out claim. In order to do so, it is necessary that I set the claim in its correct context by summarising the facts that led to the commencement of this claim. I do so principally by reference to the narrative set out by Liberty’s solicitor in his witness statement in support of the application because, in large part, it is not controversial and because, unfortunately, the narrative set out in Mr Wyllie’s particulars of claim is in many respects incoherent. I refer to that issue later in this judgment. I have also had regard to a letter before action drafted and served on behalf of Mr Wyllie and the other claimants by a barrister acting on Mr Wyllie’s instructions under the Direct Access Scheme dated 18 March 2019 and, to a lesser extent, a further letter before action of 30 November 2020.[6]Prior to its dissolution, Arc carried on business as a specialist life insurance broker. Mr Wyllie is the ultimate beneficial owner of the second and third claimants. The third claimant was a start up company which Mr Wyllie formed, ostensibly for the purpose of carrying on business as a newspaper publisher and media platform provider. Liberty’s case is that by an agreement made in or about January 2018 between the second claimant and Arc, alternatively the first claimant and Arc, it was agreed that in consideration of insurance business to be introduced to Arc by or in the name of the first and/or second claimant, Arc would pay one or more of the claimants 60 percent of the net commission it received in respect of such business, of which 10 percent was to be retained and paid quarterly in four tranches in arrear. The agreement was or agreements were subject to a clawback facility by which any commission paid to or to the order of whichever claimant was entitled to receive it was repayable in the event that the policy in respect of which commission had been paid was cancelled, or the payment of premiums in relation to that policy ceased.[7]The business introduced by either the first, or the second claimant was principally life insurance on the lives of persons apparently employed by the second claimant but mainly the third claimant. The commission that was anticipated was substantial. In the 19 March 2019 letter before action it was described in these terms:
“The expected amount of net commission generated for WFSL from the policies of 71 employees of ASNL was £1,704,000. This is calculated as to 71 employees at a £2,000 premium per employee equalling £142,000 at a commission rate of £1,000 per £50 of premium which equals £2,840,000. The commission rate under the agreement was 60 percent which comes to £1,704,000. The overall commission received was £688,685.69. Of this amount, £243,304 was subsequently apportioned to ASNL accounts leaving an outstanding amount of £1,015,314.31…”
It is common ground that this is accurate and the second claimant received at least £688,000 odd in commission under this arrangement before the arrangement came to an end in the circumstances I refer to below.[8]Following the introduction of the third claimant by the second claimant to Arc, Arc applied for various forms of insurance policies, including principally life policies on the lives of individuals who were ostensibly employees mainly of the third claimant. The beneficiary of the policies was intended to be the third claimant. A feature of the presentation was that the claimant sought life insurance on a so-called “key man” basis for all the third claimant’s apparent employees and did so for very substantial sums.[9]Liberty’s solicitor, Mr Briggs, says at paragraph 11 of his witness statement, and Mr Wyllie does not dispute, that he intended to fund the set up costs of the third claimant on the basis of the commissions paid to the first and/or second claimant under the arrangements set out above. Aside from the treatment of all employees of the second claimant as “key” employees, multiple applications for cover were made on behalf of the second claimant in respect of the same employees. The effect of this was in some cases to generate multiple commissions in respect of the same employee. I should make clear that it was said by Arc’s directors that some or all of these events were the result of processing errors on the part of Arc.[10]It is now necessary I say something about insurable interest under life policies. Although regarded by some commentators at least as outmoded, the issue is one that remains governed by the Life Assurance Act 1774, section 1 of which provides that:
“… no business shall be made by any person… on the life or lives of any person or persons… wherein the person… on whose account such policy… shall be made shall have no interest…”
[11]Although Mr Wyllie maintained in the course of his submissions that there was some mystery around the degree to which an employer might have an interest in the life of an employee which justified insuring employees for substantial sums, in my judgment that is wrong. An employer has an insurable interest in the life of his employee to the extent of the value of the employee’s services during such time as he is under a legal obligation to serve his employer - see MacGillivray on Insurance Law(15th edn) at paragraph 1-071, the Scottish cases of Simcock v Scottish Imperial Insurance [1902] 10 SLT 286 at 288 and Turnbull v Scottish Provident Institution[1896] 34 SLR 146 and by analogy Hebdon v West [1863] 3 B&S 559, which concerned the insurable interest an employee had in the life of an employer.[12]It follows that an employer has no insurable interest in the life of an employee beyond the value of the services which can be provided by that employee in the notice period leading to the termination of any contract of employment. It follows, for example, that if someone is employed and has a notice period of one week, that will, at any rate, provide a strong prima facie guide as to what the insurable interest in that employee is. Although this might be thought inconsistent with modern business practice, it is difficult to see how a different result can be achieved as long as the 1774 Act applies - see MacGillivray ibid at paragraph 1-072.[13]I return to the background facts of this dispute. In March 2018 one of the underwriters approached by Arc began to suspect that the scheme was fraudulent being based on non-existent employees. What followed is described by Liberty’s solicitor on the basis of information supplied by Arc’s directors in these terms:
“14. I understand from Arc’s former directors that, because so many policies were being placed for each of ASNL’s employees in or around March 2018, one of the insurers – AIG – began to suspect the whole scheme was based on non-existent employees and began to ask Arc questions about the scheme and Mr Wyllie. In the course of AIG’s investigations, it came across a newspaper article reporting on Mr Wyllie’s conviction for assaulting his girlfriend and which also referred to an earlier (seemingly spent) conviction for what was described as embezzlement which had been referred to in court. It would seem that AIG then circulated its concerns about the claimants and the scheme through other insurers using an industry-wide information-sharing database. 15. From documents my firm has so far been able to review, the fall-out from the above appears to have been essentially two-fold. 15.1 Some insurers (though I cannot yet be sure how many or who) cancelled all or some of their policies involving employees of ASNL from inception, as well, it seems, as some earlier policies related to Mr Wyllie or his companies. Of those, some decided to return the premiums paid in respect of those policies to the bank account from which they were paid (though others did not). I also note, however, that it would appear that some policies (even some ASNL related policies) were not in fact cancelled and simply lapsed after a period of time for non-payment of premiums. 15.2 Insurers who had cancelled policies clawed back 100% of the commissions they had paid to Arc in respect of those policies. I am informed by Arc’s directors that this essentially forced Arc into insolvency, in part caused by the fact that Mr Wyllie or WFSL failed, in breach of the 2017 agreement and/or the superseded agreement, to repay to Arc the commissions under the clawback provisions in those agreements. I am told by Arc’s former directors that, at the time of its dissolution, Arc was owed approximately £462,000 by Mr Wyllie and/or WFSL.”
[14]Mr Wyllie maintains that in the result, the claimants suffered very substantial losses. One of the reasons why Liberty maintains the particulars of claim should be struck out is because it fails to set out what loss was suffered by which claimant, or is alleged to have been so suffered. Aside from various alleged consequential losses summarised in paragraph 69(10) and following of the particulars of claim, the principal losses claimed are pleaded in these terms at paragraph 69 of the pleading:
“ 69 Losses Premium and sums assured By action of ‘the firms’/defendants negligent mis-selling, advising and arranging policies and failures of the firm executing the commercial agreement, the claimants have suffered and continue to suffer, loss and damage in relation to policies incepted, to which we now turn. 1) Loss of premium paid for all claimants incepted policies (deducing insurer refunds received) - £160,508. 2) Loss of sum assured for all WFS policies incepted - £32,075,000 (inclusive of £7,250,000 of cover for Adrian McCallum’s death). 3) Loss of sum assured for income protection policies for WFS - £59,553 per month (average 37 years). 4) Loss of sums assured for all ASN policies - £267,310,000 (average 30 years). 5) Loss of sum assured for income protection policies - £43,782 per month. Expected commissions 6) Loss of commission for 800 ASN employees in Scotland - £18,956,646 (incorporating £243,304 commission received to date). 7) Loss of commission for 5200 ASN employees across the remainder of the UK - £124,800,000. Loss of chance for sum assured 8) 800 employees for Scotland - £9,400,000,000. 9) 5200 employees for the rest of the UK - £61,100,000,000.”
Premium and sums assured Expected commissions

Loss of chance for sum assured

[15]It was against that background that Mr Wyllie sought compensation from the Financial Services Compensation Scheme. That claim was rejected initially and then on appeal on the basis that it was not satisfied that the claimant was owed a civil liability by Arc, essentially by reference to the concept of insurable interest in relation to employees or a subset of those known as key employees. Mr Wyllie then sought a judicial review of that decision with leave to continue the proceedings being refused both on paper and then by Fordham J on oral renewal.[16]Having noted that Mr Wyllie maintained, as he does in these proceedings, that a total of £160,000 was due in respect of premiums paid for cancelled policies and £7.25 million was claimed in respect of the death of Mr McCallum, who it was alleged should have been but was not insured at the date of his death in that sum and, thirdly, for what Fordham J called “expectation” losses, being the large figures to which I referred a moment ago, the judge rejected the challenge to the Scheme’s decision concerning insurable interest.[17]Fordham J then turned to the damages claim that had been rejected by the Scheme. He rejected the challenge to the conclusions reached in respect of each of the heads of loss on the basis that the decision-maker was entitled to reach the conclusion he or she did in relation to the issues raised. However, in relation to the narrow £160,000 claim for the return of the premium for cancelled policies,

the judge said this at [27] of his judgment:

“I have already said that loss and damage really breaks down into three categories. I have described them and I will deal with each of them in turn. The narrowest of the categories, in my judgment, takes the claimants nowhere. That is for this reason. If one focuses simply on the question of the premiums that had been paid and not been recovered, and does not look more broadly at the ‘expectations’ (which is category three), the question is whether there is any loss or damage as to premiums unrecovered, when one takes account of commissions received. The defendant concluded that it was not satisfied that there was such a shortfall. Mr Wyllie, very fairly and candidly, has recognised that, leaving aside his broader categories and leaving aside arguments as to why he said commission should be ignored, he accepts that the premiums that have been unrecovered are a lower figure than the commissions that have been received. It is quite impossible, in my judgment, on this narrowest first category to see any arguable basis on which the defendant has acted unlawfully unreasonably or unfairly on the conclusion in relation to loss and damage…”
[18]This analysis is relied upon by Liberty as a reason why not merely should the particulars of claim be struck out but that the claim should also be dismissed since, it maintains, the only potentially plausible course of action available to the claimants is in relation to unreturned premium in the sum of £160,000 odd and that is irrecoverable for the reasons identified by Fordham J in the section of his judgment set out above. Mr Neish KC on behalf of Liberty maintains that the only viable claim available to the claimants therefore is one which on proper analysis goes nowhere and therefore leads to the conclusion that the claim should be dismissed. I return to this point later in this judgment.[19]Mr Wyllie sought permission to appeal from Fordham J’s order. Carr LJ rejected that application by an order made on 12 August 2020 on paper. She concluded her reasons in these terms:
“Finally, I consider this application to be totally without merit. I have therefore considered whether or not it would be appropriate to make a civil restraint order (in accordance with CPR 52.20(6)). I do not consider it appropriate at this stage, although I note that Mr Wyllie has recently indicated that he has commenced a ‘criminal investigation’ against the respondent and its lawyers and the increasingly threatening tone of his communications. Mr Wyllie and/or the applicants should be aware that they may be at risk of such an order in the future as a result of this certification.”
[20]On 1 July 2022 the claimants started these proceedings using the Part 8 claim form referred to earlier. As I have explained, that was wrong but has now been, corrected. Particulars of claim followed on 8 July 2022. The application I am now considering was made by an application notice dated 16 August 2022.[21]Mr Wyllie maintained I should dismiss this application because Liberty had failed to use form N244(CC) that is to be used in Commercial Court proceedings. That point is wholly without merit. There is no difference between the N244 general form and the N244(CC) form that is material and no prejudice is even alleged to have been caused by the failure to use the (CC) variant. That that ground of challenge to this application fails as a result.[22]It was also submitted that I should dismiss this application because Liberty had filed an acknowledgement of service one day late. That point too is wholly without merit. First, I do not accept that the acknowledgement of service was served one day late as alleged but, in any event, failing to serve an acknowledgement of service in Part 8 proceedings within time merely precludes the defendant from being heard at the substantive disposal of the Part 8 claim (see CPR rule 8.4(2)) and then only unless the court gives permission. It does not preclude the defendant from issuing an application in the Part 8 proceedings such as has been done in this case, at any rate once an Acknowledgement of Service has in fact been filed, much less does it require that such an application be dismissed in limine on the basis that the acknowledgement of service has been served late. That challenge therefore also fails.[23]I now turn to the substance of the application. In doing so, I repeat the point I made in the course of argument which is that the remedy of strike out should be regarded as a remedy of last resort; see Michael Wilson & Partners v Sinclair [2015] EWCA Civ 774. This is particularly so where, as in Sinclair, the effect of the strike out in that case was to lead automatically to the end of the appeal that had been brought by the appellant who was under challenge in those proceedings. As Lord Clarke emphasised in Summers v Fairclough Homes [2012] UKSC 26, [2012] 1 WLR 2004, where the Supreme Court refused to strike out a highly overstated personal injury claim:
“The test in every case must be what is just and proportionate.”
[24]In this case, striking out the particulars of claim does not lead automatically to the dismissal of the claim unless an order to that effect is also made applying CPR rule 3.4(3). Making such an order is logically and legally a separate exercise from a decision to strike out the Particulars of claim. In my judgment, it is much more likely that such an order will be made if a strike out order is made pursuant to CPR rule 3.4(2)(a) on the basis that the claim as a whole and however it is put is unarguable than if the particulars of claim are struck out on the grounds that they are technically deficient, however fundamental those defects may be.[25]I am entirely satisfied that the particulars of claim in its current form is so defective that there is no sensible course open other than to strike it out in its entirety. In coming to that conclusion, I have considered whether it could be amended by the claimant with professional assistance. I am satisfied however, that if this action is to continue at all the most appropriate and proportionate way to proceed is by starting with entirely new particulars of claim. As I explain below, the defects are too numerous and too fundamental to merit attempting to save what is a fundamentally defective pleading. Mr Wyllie has had advice in the past from Direct Access Scheme barristers. In relation to whether a properly drawn pleading could be provided if such an opportunity was given to the claimants, when I suggested that as a possible course to Mr Wyllie, Mr Wyllie did not suggest that was impractical or impossible but only that it would take some four weeks to achieve.[26]My reasons for concluding that the particulars of claim should be struck out in their entirety are as follows. Firstly, the document read as a whole is over lengthy, discursive, largely incoherent and contains significant amounts of entirely irrelevant material.[27]I can start with pages 2 to 6 of the pleading. This contains a list of allegedly interested parties. The concept of interested parties is one unknown to private law litigation and on that ground alone it is an abuse of the court’s process to include such a list. The sheer breadth and length of the list greatly aggravates this point because the list includes, amongst others, her late majesty, Queen Elizabeth, bizarrely Mr Wyllie himself even though he is the first claimant in these proceedings, the Lord Chief Justice, the Master of the Rolls, three high court judges, Lady Justice Carr, the Prime Minister, both First Ministers, the leader of the NHS, Scottish TUC, the Ambulance Service and culminating at paragraph 3.2 with what is described as:
“…every residential and commercial property address worldwide…”
This is vexatious and abusive to a high degree and is not something that Mr Wyllie even attempted to justify at the hearing.[28]All that said, if that was the only complaint, I accept that that part of the pleading could be struck out leaving the rest intact if the remainder was otherwise satisfactory. Regrettably, it is not. The next section of the pleading is entitled, “Introduction”. Aside from an entirely general and unparticularised claim to damages linked to the summary of sums claimed at the end of the pleading, this part of the pleading, which runs from page 6 to page 12, contains a sustained criticism of the reasoning and conduct of the judges who determined the application for permission to continue the judicial review claim and the appeal from the refusal of permission to continue those proceedings and, in addition, Lord Leggatt, who responded to an attempt by Mr Wyllie to appeal from Carr LJ’s decision to the Supreme Court, an attempt which was bound to fail for want of jurisdiction, as Lord Leggatt explained.[29]All this is abusive and vexatious to a high degree as well. Not merely does this court not have jurisdiction to review or set aside the decisions of the Administrative Court or the Court of Appeal but the issue that arose in the Administrative Court proceedings was entirely different from that which arises in a private law claim for damages such as the present proceedings. I would add that I have read in detail the judgment of Fordham J, the order and reasons given by Carr LJ for the order she made and the letter to Mr Wyllie from Lord Leggatt and I am bound to say that I see nothing in any of them that merits the express or implied criticism to which Mr Wyllie subjects them in this section of the pleading.[30]This part of the pleading must be struck out both on the basis that it is plainly abusive but also because it places the defendant in the invidious position of having to decide how to respond to this material and, thus, the material is likely to lead to avoidable and unnecessary cost, it is likely to obstruct the fair disposal of the claim and it is likely to lead to the use of court resources in a way which would be entirely avoidable. This material is also apparently a collateral attack on the final decision of the Administrative Court and/or the Court of Appeal and on that basis is an abuse as well. Finally, as I have explained, the issue that arose in the JR proceedings was different from and can have no impact on the issues that arise in these proceedings, so this part of the pleading would have to be struck out as well on the basis that the material discloses no reasonable grounds for bringing the claim.[31]Again, I accept that if the remainder of the pleading was unobjectionable, an order striking out this part of the pleading but leaving the rest intact would have been proportionate. However, that is not the position. What follows in the pleading is a lengthy, discursive and prolix narrative that in almost all cases however fails to provide relevant particularisation where obviously that is required and fails in any way at all to set out the basic ingredients of the causes of action on which the claimants apparently rely. There are three claimants. On no view for example can each have suffered all the loss that is summarised in paragraph 69 of the pleading. That however is how the claim has been pleaded.[32]What was required in relation to each claimant separately was to set out:(1) whether the claim was brought under a contract or for breach of a tortious duty;(2) to plead the contract or facts and matters said to give rise to the duty relied upon;(3) in each case the facts and matters said to constitute a breach of whatever contractual or other duty was relied upon;(4) how the alleged breaches allegedly caused whatever loss it is alleged the relevant claimant has suffered; and(5) in each case a properly particularised summary of the loss and damage which is alleged has been caused to the relevant claimant by the alleged breach of contract or duty relied on. No attempt has been made to address any of these basic points.[33]In those circumstances, the pleading fails to achieve its primary purpose which is to inform the defendant of the case it must meet - see King v Steifel [2021] EWHC 1045 (Comm) per Cockerill J at145. In consequence, it fails also to achieve the secondary purpose of a pleading, which is to ensure the parties can properly prepare for trial and avoid incurring unnecessary costs - see King v Steifelibid at146. The result of the claimants’ approach to the pleading has been to defeat also the tertiary purpose of the pleading, which is to act as a checklist for the pleader to ensure that each claimant has pleaded a complete cause of action. If the pleading focuses only on the essential facts and addresses them in the order that I have set them out above, then that purpose will be achieved. Plainly it has not been here for the reasons I have attempted to summarise.[34]Mr Wyllie has set out in the pleading a summary of the effect which dyslexia has had on him. I understand the difficulty and I hope I have taken that into account when considering the allegations of prolixity and discursiveness made by Liberty. However, the point is not so much that what is set out is prolix and discursive, but that it is either irrelevant or fails to set out coherently each cause of action that each claimant asserts against Arc, and therefore Liberty, and therefore fails to inform Liberty of the case it must meet and therefore prevents it from identifying answers it has to deploy if it is to defend the claim and the evidence it has to adduce if it is to defend the claims made against it.[35]All these factors lead me to conclude that the particulars of claim as a whole must be struck out under CPR rule 3.4(2)(b). It must also be struck out under CPR rule 3.4(2)(c) because the particulars of claim as drawn do not constitute a concise statement of the facts on which the claimant relies contrary to CPR rule 16.4. The real issue that remains is whether the claim should also be dismissed. That depends on Liberty’s case that not merely should the pleading be struck out on the grounds so far considered but should also be struck out on the basis that the claimants have no realistically arguable claim available to them, however these claims might be pleaded.[36]This argument was advanced primarily by reference to the heads of loss first identified by Fordham J in his judgment in the JR proceedings - that is:(a) the claim for premiums paid for policies cancelled;(b) the claim for an alleged loss of £7.25 million not recovered by the third claimant following the death of Mr McCallum; and(c) the loss of the income stream described by Fordham J as the “expectation loss” being the income that the claimants allege would have been received by the claimants, or at any rate the second and third claimants in the future.[37]Turning to the first of these claims, Mr Neish submits that the maximum value of this claim is about £160,000. I agree. That is the figure pleaded in paragraph 69(1) of the particulars of claim as being the sum paid by all the claimants in respect of premiums for policies that have been cancelled although without distinguishing who paid what. That this is the maximum value of any claims available to the claimants is consistent too with the sums referred to in the 19 March 2019 letter before action at page 2 where, however, the sums are broken down as to:(1) the sum allegedly paid out by the first claimant of £23,400 odd;(2) the sums allegedly paid out by the second claimant of £89,300 odd; and(3) the sums allegedly paid out by the third claimant of £47,700 odd.[38]Mr Neish submits that Arc had, and therefore Liberty has, an unanswerable defence to this claim on the basis that there was commission repayable by one or more of the claimants in a total sum that far exceeds the value of the £160,000 claim for premiums paid out for cancelled policies. There would appear to be no dispute that the total commission received by the various claimants collectively and not repaid exceeds the value of the premiums claimed by the claimants collectively by a very substantial margin. Mr Neish maintains this give rise to an unanswerable set off defence as foreshadowed by Fordham J at [27] of his judgment set out above.[39]In my judgment, however, some care is required in relation to this point at this stage and on the evidence that is currently available. If set-off is to be available that must be on the basis that the sum claimed by a particular claimant from a defendant is equal to or less than a sum claimed by the defendant from that claimant. There is a debate, which is entirely unresolved for understandable reasons at this stage in the litigation, as to who was contractually entitled to (and therefore who is obliged to repay) commission and who was and is not. It is in dispute as to whether it was Mr Wyllie or the second claimant - see paragraph 10 of Mr Briggs’ witness statement). That is not an issue that I can or should attempt to resolve on an application of this sort. Each of the claimants is a legally separate entities and no legally justifiable basis has been identified by Liberty for aggregating the claimants’ premium claims on the one hand and the repayable commissions on the other. What is apparent, however, is that if the premium breakdown in the 19 March letter is correct, then set-off will be available in relation to the premium claim of one or possibly two claimants but not all of them. On this basis, I cannot conclude that the wasted premium claim is so obviously without merit that it can be rejected out of hand on an application of this sort and at this stage. In light of this conclusion, I can deal with the remaining heads more shortly.[40]Turning first to the £7.25 million claim, being the sum supposedly lost by the third claimant on Mr McCallum’s death, I am satisfied that on the information currently available that claim is entirely irrecoverable. I assume for present purposes that Mr McCallum was indeed employed by the second claimant as a business consultant at a salary of £300,000 per annum (although no evidence to that effect has been adduced) but even on that basis, it is inherently improbable that the second claimant could have had an insurable interest applying the principles referred to above that quantified out at in excess of £7 million. The eleven policies that named Mr McCallum as the life assured were cancelled more than twelve months before his death and Mr Wyllie had said in the FSCS internal Appeal that he (or the second claimant) was unable to obtain insurance on Mr McCallum’s life because the claimant had then been “blacklisted” by AIG, as explained earlier. The question that arises therefore is whether the second claimant would have had a realistic chance of obtaining insurance in the sum claimed but for the blacklisting that had occurred. There is no basis on which that is shown to be plausible.[41]In relation to the expectation loss claims, It is inherently improbable that sums of the sort referred to in the particulars of claim could ever have become payable to any of the claimants but for any alleged breach of duty or conduct on the part of Arc. Aside from that, Paragraphs 69(2) to (5) appear to assume that all persons whose lives were assured would die. It is entirely unclear how many people would have to be employed and at what salaries to yield the sorts of benefits identified. Similar considerations apply to paragraph 69(6) to (9).[42]I accept however, that if the claimants are able to establish that they were actionably misled by Arc into thinking that they could insure the lives of employees at the levels apparently being contemplated then it may be that the claimants would be able to recover expenditure wasted in reliance on such advice. I accept that in principle such a claim might be advanced on that basis for at least some of the items identified at paragraph 69(10) to (23) of the Particulars of Claim by one or more of the claimants but I consider that most, if not all, of the others are disguised future loss claims. As things stand at present, those are not even arguably recoverable on any basis that has been identified for the same reasons the sums referred to in paragraph 69(2) to (5) of the pleading are not recoverable.[43]In those circumstances, provisionally what I propose to do is as follows. Firstly, I propose to strike out the particulars of claim for the reasons given. Secondly, I propose to give the claimants liberty, if so advised, to file and serve a fresh particulars of claim, providing it is filed and served, again subject to any further submissions concerning timing, by no later than 4pm on 14 April 2023 which gives the claimants the month Mr Wyllie indicated in the course of submissions he would require. I will include within the order a default provision that unless new particulars of claim is served within that time limit, the claim be dismissed. I do so because the failures that have occurred to date are too serious and too widespread and the time that has elapsed since the events with which notionally this claim is concerned too long to allow these proceedings to drift any further. Finally it may be that with proper advice Mr Wyllie concludes that the sums that are properly recoverable in these proceeding does not merit continuing further with the claim. If that is so, then the defendant should not be exposed to the further cost of having to return to court to obtain an order dismissing the claim. Finally, given that Mr Wyllie has indicated an intention to obtain professional assistance in the drafting of the replacement particulars of claim, it seems to me that Foxton J’s order giving permission for a longer particulars of claim than is normally permitted in the Commercial Court can safely be revoked but again I invite further submissions on that point.[44]I will give liberty to the defendant to apply to strike out the replacement particulars of claim, if so advised, providing it applies to do so by no later than 14 days after service of any revised particulars of claim. In the event of any such application, these proceedings would then be stayed other than for the purpose of enabling that application to be determined. There will also be liberty to the defendant, if so advised, to restore the application for security at any time after expiry of the time given to it to apply to strike out the replacement particulars of claim and there will otherwise generally be liberty to apply. (Discussion re costs follows) ------------------------ (This Judgment has been approved by HHJ Pelling KC.) Digital Transcription by Marten Walsh Cherer Ltd 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Telephone No: 020 7067 2900 DX: 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com

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