Sutherland Professional Funding Ltd v Bakewells (a firm) & Ors [2011] EWHC 2658 (QB) (27 September 2011)

Sutherland Professional Funding Ltd v Bakewells (a firm) & Ors [2011] EWHC 2658 (QB) (27 September 2011)

Bakewells' liability to Sutherland under clause 5.1 of the Agreement is not covered by the professional indemnity insurance policies because it is excluded by the trade debts/guarantee exclusion. The liability arises from a contractual guarantee or indemnity in connection with the provision of finance to the insured, not from private legal practice or the provision of legal services to a client. The claim is not a claim for civil compensation or damages for professional negligence owed to a client, but a business liability to a third party financier. Accordingly, the insurers (Chartis and RSA) are not liable to indemnify Bakewells in respect of Sutherland's claim.

Citation
[2011] EWHC 2658
Parties
Claimant: Sutherland Professional Funding Limited; Defendant and Part 20 Claimant: Bakewells (a Firm); Defendant and Part 20 Claimant: Mark Cadell Collins; Defendant and Part 20 Claimant: Martin Gerard Jinks; Defendant and Part 20 Claimant: Andrew Robert Murfin; Third Party: Chartis Insurance (UK) Limited; Fourth Party: Royal & Sun Alliance Insurance PLC
Jurisdiction
England and Wales
Judgment Date
27 September 2011
Procedural Posture
Part 20 Proceedings (insurance Coverage Dispute) / Judgment on Preliminary Issues
Outcome
Claim for indemnity against insurers dismissed on preliminary issues; insurers not liable to indemnify Bakewells for Sutherland's claim.
Legal Topics
Solicitors' Professional Indemnity Insurance, Trade Debts Exclusion, Scope of Civil Liability Cover, Guarantee and Indemnity, Third Party Claims, Minimum Terms and Conditions (solicitors)
Insurance Law Contract Law Professional Negligence Solicitors' Professional Indemnity Insurance Trade Debts Exclusion Scope of Civil Liability Cover Guarantee and Indemnity Third Party Claims +1 more

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Parties

Sutherland Professional Funding Limited

Claimant

Bakewells (a Firm)

Defendant and Part 20 Claimant

Mark Cadell Collins

Defendant and Part 20 Claimant

Martin Gerard Jinks

Defendant and Part 20 Claimant

Andrew Robert Murfin

Defendant and Part 20 Claimant

Chartis Insurance (UK) Limited

Third Party

Royal & Sun Alliance Insurance PLC

Fourth Party

Procedural Posture

Part 20 Proceedings (insurance Coverage Dispute) / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether Bakewells' liability to Sutherland arises from private legal practice and is covered by the professional indemnity insurance policies (AIG and RSA)
  2. 2 Whether Sutherland's claim constitutes a 'Claim' for the purposes of the policies
  3. 3 Whether the trade debts exclusion applies to exclude cover for Bakewells' liability to Sutherland

Ratio Decidendi

Bakewells' liability to Sutherland under clause 5.1 of the Agreement is not covered by the professional indemnity insurance policies because it is excluded by the trade debts/guarantee exclusion. The liability arises from a contractual guarantee or indemnity in connection with the provision of finance to the insured, not from private legal practice or the provision of legal services to a client. The claim is not a claim for civil compensation or damages for professional negligence owed to a client, but a business liability to a third party financier. Accordingly, the insurers (Chartis and RSA) are not liable to indemnify Bakewells in respect of Sutherland's claim.

Court Disposition

Claim for indemnity against insurers dismissed on preliminary issues; insurers not liable to indemnify Bakewells for Sutherland's claim.

Orders

  • Bakewells' Part 20 claim for indemnity against Chartis and RSA dismissed.
  • No indemnity is due from Chartis or RSA to Bakewells in respect of Sutherland's claim.