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Mina Heung, barrister of Whitestone Chambers secures costs award against Bott & Co on grounds of acting unreasonably in bringing claims that were bound to fail.

In the cases of Ebdon, Duffy and Liddle v KLM Royal Dutch Airlines[1], District Judge Trigg made a wasted costs order against Bott & Co Solicitors, a Flight Delay Compensation company.    The judgement provides an object lesson on the dangers of pursuing a futile case and for failing to challenge your opponent’s evidence.

This article looks at the question of burden of proof in a flight delay compensation claim under the EU Regulation EC 261/2004 and how Bott & Co was met with defeat and ordered to pay for the Defendant’s wasted costs for failing to deal with litigation reasonably.

The Case

EC 261/2004 requires airlines to compensate passengers when flight delays or cancellations result in passengers reaching their final destination more than three hours later than originally scheduled, unless the airline can establish on the defence in Regulation 5(3) which states that: “An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.”

The Claimants brought actions against KLM for a cancelled flight, proceedings were issued on 11 May 2018.  KLM’s defence argued that the flight in question was cancelled at the request of Air Traffic Authorities.  On 23 August 2018, the claims were stayed by Liverpool County Court pending the appeal of Blanche v EasyJet[2].  On 6 February 2019, the Court of Appeal handed down its decision and ruled that disruption(s) caused by an Air Traffic Management Decision is deemed to be an extraordinary circumstance and that the Courts are not required to look at the reason behind the decision, meaning all airlines have to prove is the decision was made by the Air Traffic Control.  This is of course not the end of the matter,  as in order to rely on air-traffic management decisions under Regulation 5(3), airlines would still have to show that all reasonable measures had been taken to avoid the delay caused by the impact of the decision.

Following the decision in Blanche, KLM submitted direct evidence from Amsterdam Air Traffic Control Authority detailing the reason for the flight cancellation.  KLM further provided evidence to show that after considering a number of solutions, the claimants were put on the first available flight to their final destination, thereby discharging their duty on the “reasonable measures” requirement under the Regulation.

Notwithstanding the outcome of Blanche , the Claimants & Bott & Co still decided to argue the unarguable and prosecute the claims to trial by ignoring KLM’s evidence and counsel’s skeleton argument served ahead of the trial.  Bott & Co then elected to be absent at the trial on 7 October 2020 and pursued a written argument that runs contrary to the Court of Appeal’s decision in Blanche and contrary to the evidence provided by KLM, which was somewhat surprising as Bott & Co was the firm that represented Mrs. Blanche in her appeal to the Court of Appeal and lost.

The claims were eventually dismissed on the grounds of Bott & Co’s “audacious” legal arguments and the fact that KLM’s evidence regarding reasonable measures was not challenged at all – the claimants’ written submissions simply said that “the defendant has failed to support its contentions that reasonable measures were taken”.

An application for a wasted costs order pursuant to CPR 46.8 and section 51(6) of the Senior Courts Act 1981 against Bott & Co was immediately made by counsel at the conclusion of the trial.  At the costs hearing, Bott & Co admitted they were negligent in submitting and applying the wrong law but maintained that they were not wrong in pushing the claims to trial because despite the extraordinary circumstance arguments, KLM would still have to demonstrate they had taken all reasonable measures to minimise the delays caused to the passengers.  Whilst KLM accepted that they had to satisfy the “2-limb test” in order to successfully establish a defence under the Regulation, in the absence of any rebuttal evidence from the claimants and the fact that Bott & Co chose not to instruct representatives to attend the hearings and challenge KLM’s written and live evidence, the conclusion was inevitable given that the Court would only have KLM’s unchallenged evidence to rely on when making a finding.

In awarding wasted costs to the defendant’s, District Judge Trigg stated:

“With regard to the wasted costs order being sought against the legal representative, I have to consider whether the legal representative acted improperly, unreasonably, or negligently.  I take the view that they have acted unreasonably.

The answer to the question, “Has the conduct caused a party to incur unnecessary costs?” is “yes” and it is the costs of the hearing.  In answer to the question, “Is it just to order the legal representative to pay?”, the answer is “yes” to that as well.  There are consequences for failing to deal with litigation reasonably. “

There are a number of important lessons here: (i) know the law (ii) if you put a party to strict proof, do not just leave it here, unchallenged evidence will be accepted by the court (iii) know when to stop!  Even though you do not bear the burden of proof, examine the evidence before deciding to go to trial to avoid pursuing a hopeless case and facing a costs order.

© Mina Heung

Whitestone Chambers

[1] In the County Court at Staines, 4^th December 2020

[2] Daniel Blanche v EasyJet Airline Company Limited [2019] EWCA Civ 69

Mina Heung, barrister of Whitestone Chambers secures costs award against Bott & Co on grounds of acting unreasonably in bringing claims that were bound to fail.

In the cases of Ebdon, Duffy and Liddle v KLM Royal Dutch Airlines[1], District Judge Trigg made a wasted costs order against Bott & Co Solicitors, a Flight Delay Compensation company.    The judgement provides an object lesson on the dangers of pursuing a futile case and for failing to challenge your opponent’s evidence.

This article looks at the question of burden of proof in a flight delay compensation claim under the EU Regulation EC 261/2004 and how Bott & Co was met with defeat and ordered to pay for the Defendant’s wasted costs for failing to deal with litigation reasonably.

The Case

EC 261/2004 requires airlines to compensate passengers when flight delays or cancellations result in passengers reaching their final destination more than three hours later than originally scheduled, unless the airline can establish on the defence in Regulation 5(3) which states that: “An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.”

The Claimants brought actions against KLM for a cancelled flight, proceedings were issued on 11 May 2018.  KLM’s defence argued that the flight in question was cancelled at the request of Air Traffic Authorities.  On 23 August 2018, the claims were stayed by Liverpool County Court pending the appeal of Blanche v EasyJet[2].  On 6 February 2019, the Court of Appeal handed down its decision and ruled that disruption(s) caused by an Air Traffic Management Decision is deemed to be an extraordinary circumstance and that the Courts are not required to look at the reason behind the decision, meaning all airlines have to prove is the decision was made by the Air Traffic Control.  This is of course not the end of the matter,  as in order to rely on air-traffic management decisions under Regulation 5(3), airlines would still have to show that all reasonable measures had been taken to avoid the delay caused by the impact of the decision.

Following the decision in Blanche, KLM submitted direct evidence from Amsterdam Air Traffic Control Authority detailing the reason for the flight cancellation.  KLM further provided evidence to show that after considering a number of solutions, the claimants were put on the first available flight to their final destination, thereby discharging their duty on the “reasonable measures” requirement under the Regulation.

Notwithstanding the outcome of Blanche , the Claimants & Bott & Co still decided to argue the unarguable and prosecute the claims to trial by ignoring KLM’s evidence and counsel’s skeleton argument served ahead of the trial.  Bott & Co then elected to be absent at the trial on 7 October 2020 and pursued a written argument that runs contrary to the Court of Appeal’s decision in Blanche and contrary to the evidence provided by KLM, which was somewhat surprising as Bott & Co was the firm that represented Mrs. Blanche in her appeal to the Court of Appeal and lost.

The claims were eventually dismissed on the grounds of Bott & Co’s “audacious” legal arguments and the fact that KLM’s evidence regarding reasonable measures was not challenged at all – the claimants’ written submissions simply said that “the defendant has failed to support its contentions that reasonable measures were taken”.

An application for a wasted costs order pursuant to CPR 46.8 and section 51(6) of the Senior Courts Act 1981 against Bott & Co was immediately made by counsel at the conclusion of the trial.  At the costs hearing, Bott & Co admitted they were negligent in submitting and applying the wrong law but maintained that they were not wrong in pushing the claims to trial because despite the extraordinary circumstance arguments, KLM would still have to demonstrate they had taken all reasonable measures to minimise the delays caused to the passengers.  Whilst KLM accepted that they had to satisfy the “2-limb test” in order to successfully establish a defence under the Regulation, in the absence of any rebuttal evidence from the claimants and the fact that Bott & Co chose not to instruct representatives to attend the hearings and challenge KLM’s written and live evidence, the conclusion was inevitable given that the Court would only have KLM’s unchallenged evidence to rely on when making a finding.

In awarding wasted costs to the defendant’s, District Judge Trigg stated:

“With regard to the wasted costs order being sought against the legal representative, I have to consider whether the legal representative acted improperly, unreasonably, or negligently.  I take the view that they have acted unreasonably.

The answer to the question, “Has the conduct caused a party to incur unnecessary costs?” is “yes” and it is the costs of the hearing.  In answer to the question, “Is it just to order the legal representative to pay?”, the answer is “yes” to that as well.  There are consequences for failing to deal with litigation reasonably. “

There are a number of important lessons here: (i) know the law (ii) if you put a party to strict proof, do not just leave it here, unchallenged evidence will be accepted by the court (iii) know when to stop!  Even though you do not bear the burden of proof, examine the evidence before deciding to go to trial to avoid pursuing a hopeless case and facing a costs order.

© Mina Heung

Whitestone Chambers

[1] In the County Court at Staines, 4^th December 2020

[2] Daniel Blanche v EasyJet Airline Company Limited [2019] EWCA Civ 69

March 2021 marks the 30^th year anniversary for Stansted Airport since it’s opening in 1991. It’s been a long time since the conception of the airport and the pandemic has made those days of carefree travel seem even more distant – but it is still a cause for celebration!

Boasting a rich history, Stansted Airport may have only opened in 1991 but it’s operations have been running for more than 81 years. The first terminal dates back to 1942 and was involved in the major D-day bombings, helping military air force lead more than 600 craft over the beaches of France. Fast forward 40 years and Stansted was just starting construction on it’s new airport in 1986 – at the time the government enquiry accepted the construction on the grounds of bringing in 15 million passengers yearly. That number has grown over the years since it’s conception, with more than 100 million passengers passing through its gates in 2018. While the airport is now home to a wide range of carriers and crafts, some of its very first flights consisted of domestic services running to Glasgow as well as some Air France flights across the border.  Though the airport is known for its passenger and commercial travel above all, it is worth remembering that they also hold special importance for their involvement with the Air Force One and security airspace divisions. Its runways have seen Boeing-747s carrying space shuttles to assist Air Force One while also serving as the designated point for terrorist-diversion related incidents in airspace.

While its reputation as a low-cost airport has made it popular among travellers, COVID and subsequent lockdowns have taken its toll. Passenger levels have dipped dramatically during the pandemic, sometimes even down to double digits. However, with a lockdown exit plan starting to take shape the airport is confident it will be able to get back to its post-COVID numbers – and predicts that there will an uptake in the number of travellers once overseas travel is given the greenlight. The 30^th anniversary of Stansted then comes as a bittersweet celebration but the airport is hopeful that bigger and better is yet to come. They may not be able to celebrate properly this month or welcome passengers back immediately, but they are on a road to recovery. Steve Griffiths, Stansted’s managing director, cited this cause for hopeful celebration in his comment to the press:

“We can’t wait to welcome back our passengers to begin the next 30 years of Stansted’s story, and we are confident the airport has a very bright and successful future once people are able to start planning for their well-deserved getaways.”[1]

[1] https://www.airinternational.com/article/london-stansted-marks-30th-anniversary-official-opening

© Whitestone Chambers

The popular self-styled ‘stock market for football’, now in administration and subject of a suspension by the Gambling Commission, enraged thousands of participants by reducing the share price of players leading to mass panic, financial losses and accusations that the company is nothing more than a ‘Ponsi’ scheme.

Football index describes itself as ‘the place to buy and sell shares in footballers for real money’. In practice, the platform was an extension of fantasy football but with real cash investments and real cash returns. Participants would buy ‘shares’ in footballers which would fluctuate in value depending on the performances of the players in games and by the demands of the market. By way of an example, if a participant bought 100 shares in a player for £1 each and that player later went on to have a great run of form, their share price might increase to £5 a share and said participant could then sell his 100 shares for £500 making a tidy £400 profit. As well as share prices, another feature of football index was cash dividends, summarised by joey d’Urso in his piece for the Athletic[1] as

“rather like fantasy football points but with real cash; pennies and pounds in the bank for owning shares in players who score goals or rack up assists and clean sheets. Dividends are also paid out for a player’s “media buzz’, quantified by mentions in mainsteam press outlets’.

Over recent years the popularity of football index has increased to the point where football index was a highly credible organisation sponsoring two championships football teams and advertised and discussed on many credible sports news outlets.  This seemingly upward trajectory of Football Index all changed last week however. In a post on their website on 5 of March football index posted the following:[2]

“To date, our Traders have enjoyed some phenomenal dividend increases year-on-year which have brought some incredible payouts. Continuing this trend is only possible in a buoyant market and the reality is we do not have that at the moment. In consultation with our legal and financial advisors we have had to make the very difficult decision that in order to ensure the long-term sustainability of the platform we simply must reduce dividends. As such, in accordance with our terms, we are giving 30 days notice regarding this change.”

 As a result of the announcement, share prices plunged. As panic set in and some participants decided to cut their losses and sell up, the share prices dropped further. Whilst football index markets itself as the ‘football stock market’, it is regulated by the Gambling Commission. Therefore, the risks involved are the same as any other gambling endeavor. In this case however the key difference is that people have not lost money because of gambling choices they have made, eg buying shares in a player that didn’t perform, but rather by the actions of the company and the subsequent reaction of the platform users who, in many cases, rushed to sell their shares fearing that their value was going to fall even further.

What has further infuriated users is that Football Index allowed new shares to be released allegedly at the same time that the company knew they were experiencing financial hardship with 300,000 new shares issued across the exchange in February. The announcement that the “phenomenal dividends” were to be reduced and that “Continuing with this trend (of phenomenal dividends) is only possible in a buoyant market and the reality is we do not have that at the moment” was taken by some to imply that dividends were paid using money brought in by new users. This led to the comparisons with a Ponsi, or pyramid, scheme where a constant supply of new money is needed to pay people higher up the pyramid which has a devastating effect then the new money at the bottom stops coming in.

After a week of panic and frustration, Football Index announced yesterday that they would enter administration. In a Company announcement released late last night, the company stated:[3]

“After much difficult deliberation we must now issue the following update.

 The Board of BetIndex Limited has consulted with external legal and financial advisors, and the UK and Jersey Gambling Commissions. The decision has been made to suspend the platform.

 The dividend restructure announced on Friday was a necessary step in a business recovery plan to seek the long-term sustainability of the platform. However, it is clear that this has not been well received and we need to find a more agreeable way forward.

 We are pursuing a restructuring arrangement to be agreed with our stakeholders including, most importantly, our community.  We are preparing this through an administration with insolvency practitioners Begbies Traynor, to seek the best outcome for customers with the goal of continuing the platform in a restructured form.”

Throughout today further news has emerged regarding the fate of Football Index. Queens Park Rangers announced on their website that they will no longer have the name of Football Index on their shirts, effective immediately. CEO Less Hoos said “As a football Club we entered into a one year agreement with Football Index in good faith. In light of recent events, the front property of QPR’s home and away strips will no longer spirt the football index logo”.[4] Nottingham Forest are expected to follow suit but no announcement has been made at this stage.

Also today, the Gambling Commission announced that they had suspended Football Index’ operating licence. The Commissions stated:

“The Gambling Commission has decided to suspend the operating licence of BetIndex Limited (t/a Football Index) pursuant to section 118(2) of the Gambling Act 2005.

The suspension follows an ongoing section 116 review into the operator, as we had concerns activities may have been carried on in purported reliance on the licence, but not in accordance with a condition of the licence, and that Football Index may not be suitable to carry on with licensed activities.

We have made it clear to the operator that as the investigation progresses, we expect it to focus on treating consumers fairly and keeping them fully informed of any developments which impact them.”[5]

This news will come as a massive blow to users of the gambling platform with sales and purchases now suspended.  Whilst the company went on to say in their statement that the administration and suspension of the platform was an interim step” to ensure that everyone’s rights are preserved in relation to funds held by BetIndex Limited.”, users will worry that there is no way back, particularly in light of the Gambling Commission suspension, and that their funds, in many cases amounting to life changing sums or lifetime Savings, will now be permanently lost.

[1] https://theathletic.com/2437087/2021/03/10/the-football-index-crash-more-akin-to-a-ponzi-scheme-than-betting-platform/

[2] https://trade.footballindex.co.uk/marketupdate-050321/

[3] https://trade.footballindex.co.uk/company-announcement-110321/

[4] https://www.qpr.co.uk/news/club-news/club-statement-football-index-120321/

[5] https://beta.gamblingcommission.gov.uk/news/article/information-notice-suspension-of-licence-betindex-limited

© Whitestone Chambers

 

Born from a long tradition of seeing military aircraft at play, the Royal International Air Tattoo (RIAT) is an annual event treasured by many. With the first air-show dating back to 1971, the RIAT holds a rich history and continues to appeal to many from aircraft enthusiasts and pilots alike. Despite its rich success and far-reaching appeal, COVID seems to have brought the event to a halt; a blow to many in the aerospace industry.

It was announced yesterday that the 2021 RIAT was cancelled and would be rescheduled to 2022.

“It is with great regret that the Directors of RAF Charitable Trust Enterprises have taken the difficult decision to cancel this summer’s Royal International Air Tattoo, which was due to take place at RAF Fairford, in Gloucestershire on July 16-18.”

One of many of COVID’s victims, the RIAT had been looking forward to its original 2021 date after an arduous 2020 of on and off lockdowns. However, the respite for celebration turned out to be a little too hopeful as the announcement curbed the RIAT from taking place for another year. Originally inspired by two air-traffic controllers, Tim Prince and Paul Bowen, the RIAT holds a special place in many people’s hearts. Growing to an event with a 3,500-volunteer stronghold with the help of the RAF, the RIAT brings a military air experience to its fans unlike any other. The groundswell of support and admiration for the air-show spans a wide range of people from aerospace industry experts, pilots, air-show enthusiasts to members of the RAF. News of the cancellation, therefore, came as a blow as hundreds were left to face the bleak reality of lockdown. For years, the event has provided an outlet for communities to get together and understand the military aerospace industry and has inspired many to work towards a military or aerospace career. The absence of RIAT in 2021 not only blows away opportunities for networking and development, but it also impacts all the other sectors involved with the show.

Providing hundreds with on-site jobs in catering, hospitality and event management, the cancellation of RIAT puts many economic benefits on hold until 2022. While it comes as a significant blow to all those involved in the show and the fans, it is important not to forget how important the RIAT could have been to the economy and employment status of many. If the show had taken place it would mark RIAT’s 50^th anniversary in the military aerospace industry; a feat that now has to celebrated virtually. Despite the RIAT’s efforts to create a COVID-secure show complete with social distancing and masks, the Board eventually concluded that it was still too high of a risk to continue on. The RIAT provided a statement to the press on the cancellation due to safety measures:

“Whilst we understand that this decision will be met with disappointment by our many supporters, we know they recognise the responsibility we have, to all our stakeholders, to stage a safe and successful event. We hope that taking the decision now will provide clarity to all those involved in the air-show including our incredible army of volunteers, our loyal ticketholders, our valued suppliers, corporate guests and sponsors as well as the many military air arms from around the world who were hoping to join us in July to celebrate our 50th anniversary. We look forward and are determined to provide opportunities for this important milestone in the Air Tattoo’s history to be celebrated in 2021 including building on the incredible success of last summer’s Virtual Air Tattoo, details of which to follow.”

While the RIAT’s cancellation comes as a disappointment to many, it is for the greater good of the health and safety of the community. Many are positive that 2022 will signal a return to a new normal, perhaps even a better normal, where communities will be able to meet up again and take part in events like the RIAT that showcase the military might of Britain and its rich history.

© Whitestone Chambers

 

It has been more than a year since the first outbreak in Wuhan and many of us still remain in lockdown around the globe. The vaccine rollout is starting to happen across some countries – namely the US, UK, and Israel but doubts have arisen regarding its effectiveness. The vaccine itself may protect you from getting seriously ill but it is still unknown whether you can be a spreader and pass the disease on. You also need more than one dose to be sufficiently protected. This, along with the many variants of the disease starting to crop up, has led some to question if life will ever return to normal?

It is clear that the world has entered a new normal of some sorts; where masks, social distancing and periodic lockdowns have become a reality. It is unlikely masks and social distancing will be stopped anytime soon but there is a growing desire to get closer to answers regarding lockdown. When it will be lifted? How many more periodic lockdowns will be set in place? How long can economies and the mental health of people go on in this state? The vaccine seems to be only the route out but it is important to remember that variants of the disease will continue to mutate and that it is highly unlikely we will ever rid the planet of COVID completely. Some see the possibility of vaccination passports as the answer to returning to normality; being able to track who has been “protected” could open up bars, restaurants, and the leisure industry. Talk among airlines has already circulated about the possibility of barring future customers from travelling if they have not been vaccinated. This raises some ethical concerns, however, since limiting people’s movements based on whether they have had a vaccine or not could be seen as an infringement on personal freedoms. It is unlikely that this would pass without opposition so it would have to be done with careful consideration to those who are against the idea. If vaccination is our route out there is also always the question of time and money. The vaccination rollout in the UK and many other countries is primarily aimed at targeting the elderly and vulnerable first, leaving other groups to wait a little longer. In some ways this move makes sense – the death rate among the elderly and vulnerable is higher compared to those with no pre-existing conditions. However, it has been found that the super spreaders are the young and healthy which leads some to question the government’s stance on the vaccine rollout. Surely the vaccine should be given to the super spreaders first, especially since they are the ones most likely to mix and mingle outside their household? The majority of the vulnerable and elderly are aware of the risk and are shielded which could be a good reason to start vaccinating other groups early too.

Experts at London School of Hygiene and Tropical Medicine have also suggested that at least 50% of the population needs to be vaccinated before measures can be relaxed. With the vaccine rollout requiring multiple doses it is unlikely that the process will be a simple or a quick fix to freedom. The majority of scientists agree that the vaccination of the elderly does not mean an end to lockdown – it simply means a step in the right direction. Once the majority of the population has been vaccinated measures can start to be relaxed but even then it is a dangerous game. Stephen Evans, professor of pharmacoepidemiology at the London School of Hygiene highlights this concern and the need to remain vigilant. “I think if people take these seriously, then it’s possible for various economic activities to go ahead, but you have to make sure that you are keeping to the non-medical interventions, being aware and behaving as if every person you contact has got the virus.”[1] It is a sad but sobering truth; we are still a long way off before normality returns. However, the resilience that the human race has shown in spite of these difficulties goes to show our strength and ability to overcome obstacles. Masks and social distancing may stick around for quite some time, even after the pandemic, but the economy cannot stay closed forever. As well as the risks to mental health and the global economy, tension will begin to mount if an exit strategy is not outlined soon. There has to be other measurers of success and failure in place with regards to the virus and not just a focus on case numbers and causalities. There has to also be a greater focus on the economy, impacts on businesses, the welfare and education of our children as well as the broader impacts on mental health.

[1] https://www.sciencefocus.com/news/covid-19-vaccine-uk-when-will-life-go-back-to-normal/

© Whitestone Chambers

COVID 19 has caused a major change in the way people now handle money. Banks have had to transform their services to adapt to the new normal and many shops refuse cash payments altogether. The idea of a cashless society is not new but there has never been a more apt time to make the switch. Though it is unlikely cash will be phased out completely Whitestone predict that society will see a rise in the number of cashless payments being made. The pandemic has caused a shift in our attitudes towards cash with the WHO advising the public to use cashless/contactless methods to reduce the spread of the virus.[1] It is likely that these attitudes will “stick” long after the pandemic but is the world really prepared for a cashless society?

The benefits of going cashless have risen in the past 10 months with many believing that handling cash could increase the risk of transmission. The idea that money could be contaminated with the virus has led to consumers making the switch. Especially for the new plastic notes in the UK. Even before the pandemic, however, cashless payments were seen as a quick and efficient alternative to handling money. The only problem lies with security and potential fraud problems. As long as the public are using PINS and two-factor authentication methods then the risk posed remains low but the move towards contactless payment could change this. Physically entering your PIN on a card-reader holds a hygiene risk and in our new normal this will not keep up. This has led many to use contactless payment but this puts the user at a greater security risk. There is concern that contactless payment lacks the basic two-factor authentication to provide enough security to users. To combat both these concerns many card companies are looking into biometric technology to provide authorisation with a focus on hygiene. Visa is one of many companies that are trialling this technology by using biometric fingerprint cards that are fast and efficient.[2]

Despite the acceleration of cashless payments, it is unlikely cash will be phased out altogether anytime soon. Our world still is not ready for a cashless society with 1.3m people still unable to access a bank account.[3] Developed countries could probably make the transition but would still face opposition as consumer companies warn that the move could result in the marginalisation of certain groups. These could include those who are retired or low-income earners who have limited access to digital payments. COVID 19 might have changed the way we handle cash forever but it is unlikely that it will disappear. Morten Jorgensen, director of RBR, echoes a similar sentiment in his statement, “Cash is not going to disappear, but it will continue to decline, and Covid is accelerating that trend.”[4]

[1] https://www.pymnts.com/safety-and-security/2020/world-health-organization-cautions-against-cash-usage

[2] ttps://usa.visa.com/visa-everywhere/security/biometric-payment-card.html

[3] https://www.accesstocash.org.uk/media/1159/interim-report-final-web.pdf

[4] https://www.nytimes.com/2020/07/06/business/cashless-transactions.html 

© Whitestone Chambers

The Financial Conduct Authority (Appellant) v Arch Insurance (UK) Ltd and others; appeals to provide clarification over losses resulting from the COVID-19 pandemic.

Presided over by justices: Lord Reed (President), Lord Hodge (Deputy President), Lord Briggs, Lord Hamblen, Lord Leggatt. Judgment 15 January 2020.

Background to appeal:

The Financial Conduct Authority, (FCA), brought proceedings to court under the Financial Markets Test Case Scheme following an agreement made with eight insurance companies. The agreement set out to resolve issues of general importance on which immediately relevant English law was needed to aid guidance. The FCA proceeded to represent two policyholders with the main aim to use appeals to clarify whether a variety of insurance policy wordings cover or do not cover business interruption losses resulting from the COVID-19 pandemic and public health measures taken by UK authorities.

In response the court considered 21 sample insurance policy wordings and accepted most of FCA’S arguments about the effect of such wordings. However, not all of FCA’s appeals were accepted leading to six insurance companies appealing against the decision of the court on such matters and also responded to FCA’s appeal. Such companies included: (UK) Ltd (“Arch”), Argenta Syndicate Management Ltd (“Argenta”), Hiscox Insurance Company Ltd (“Hiscox”), MS Amlin Underwriting Ltd (“MS Amlin”), QBE UK Limited (“QBE”) and Royal & Sun Alliance Insurance Plc (“RSA”). The importance of the issues raised has led the appeals to proceed directly to the Supreme Court; bypassing the Court of Appeal.

The Supreme Court addressed the issues of appeals as follows:

1. The interpretation of “disease” clauses (which cover business interruption losses resulting from any occurrence of a notifiable disease within a specified distance of insured premises);

Ruling – Lord Hamblen and Lord Leggett accepted the insurers arguments that each case of illness sustained by a person as a result of COVID-19 is a separate “occurrence” and (ii) the clause only covers business interruption losses resulting from cases of disease which occur within the radius and that other disease clause wording should be interpreted in the same way.

2. The interpretation of “prevention of access” clauses (which cover business interruption losses resulting from public authority intervention preventing access to, or the use of, business premises) and “hybrid clauses” (which contain both disease and prevention of access elements) ;

Ruling: The Supreme Court rejected the court’s interpretation as to narrow and held that an instruction given by a public authority may amount to a restriction imposed if it carries the imminent threat of legal compulsion or is in mandatory and clear terms and indicates that compliance is required without recourse to legal powers. In relation to the Hiscox wording, which provided cover where business interruption loss is caused by the policy holder’s “inability to use” the insured premises, the Supreme Court agreed that inability rather than hindrance of use must be established but held that this requirement may be satisfied where a policyholder is unable to use the premised for a discrete business activity or is unable to use a discrete part of it’s premises for it’s business activities. The Supreme Court interpreters wording requiring “prevention of access” to the premises in a similar manner.

3. The question of what causal link must be shown between business interruption losses and the occurrence of a notifiable disease (or other insured peril specified in the relevant policy wording);

Ruling: It is sufficient for a policyholder to show that at the time of any Government measure there was at least one case of COVID-19 within the geographical area covered by the clause.

4. The effect of “trends” clauses (which prescribe a standard method of quantifying business interruption losses by comparing the performance of a business to an earlier period of trading)

Ruling: Held that these clauses should not be construed so as to take away cover provided by the insuring clauses and that the trends and circumstances for which the clauses require adjustments to be made do not include circumstances arising out of the same underlying or originating cause as the insured peril.

5. The significance in quantifying business interruption losses of effects of the pandemic on the business which occurred before the cover was triggered (“Pre-Trigger Losses”) .

Ruling: The Supreme Court rejected the court’s approach. In accordance with the interpretation of the trends clauses, adjustments should only be made to reflect circumstances affecting the business which are unconnected with COVID- 19.