AXA INSURANCE LTD V AKTHER & DARBY SOLICITORS

[2009] EWCA Civ 1166, Court of Appeal, Lady Justice Arden, Lord Justice Longmore and Lord Justice Lloyd, 12 November 2009

Insurance (after the event) - Claims against solicitors by ATE insurers - Allegation of negligent selection of risks and of negligent conduct of cases - Limitation of actions - Applicable limitation period to tort claims - Limitation Act 1980, section 2

Axa's predecessor in title, NIG, offered ATE insurance through the defendant solicitors. Policies were issued on behalf of NIG in those cases where the solicitors were satisfied that the prospects of success were at least 51 per cent and that the damages awardable would be at least £1,000. NIG was involved in the scheme from October 2000 to August 2003, and in that period issued about 40,000 ATE policies in respect of claims conducted by some 170 panel solicitors. The scheme proved to be a disaster for NIG. On 17 June 2008 Axa commenced proceedings against 89 firms of panel solicitors, alleging breach of contract and negligence in respect of some 26,000 claims, giving rise to losses of about £65 million. Axa's assertions were that the solicitors had failed to adhere to the initial criteria of a 51 per cent success rate and a minimum of £1,000 damages in accepting risks (vetting breaches), that they had failed to notify NIG of the need to withdraw indemnity where the prospects of success fell below 50 per cent or where it became clear that damages would not exceed £1,000, and that they had failed to conduct claims with reasonable care and diligence (conduct breaches). The losses constituted the amount of claims paid by NIG. The solicitors asserted that the claims in tort were time-barred by section 2 of the Limitation Act 1980. The Court of Appeal, Lloyd LJ dissenting, held as follows.