Insolvency ‘tidal waves’ and Twitter storms
By Matthew Pascall, Senior Underwriting Manager
(Estimated reading time: 3 minutes 51 seconds)
As in previous years, I’ve looked at some key areas of litigation where we might see some developments and trends in the year ahead.
I have met with many IPs in recent months. Opinion seems divided on whether we are going to see an upsurge in insolvency-related litigation. My impression has been that, given the apparently solid recovery of many businesses over the last few months (notwithstanding Omicron), the ‘tidal wave of insolvencies’ predicted by some is unlikely.
However, there are signs of an increase. Registered company insolvencies in November 2021 were 88% higher than the November 2020 total – driven largely by CVLs. It is interesting to note that the November 2021 statistics recorded a fall in individual insolvencies with 33% fewer bankruptcies in November 2021 when compared with November 2020.
Of course an increase in corporate insolvencies does not necessarily mean an increase in related litigation but, at the very least, it suggests we might see an increase. It goes without saying that Temple works directly with firms and in partnership with our broker colleagues and is well placed to provide market leading ATE insurance cover for IPs.
At some point this year I think we will start to see the extent to which Manchester Building Society v Grant Thornton has led to any fundamental change in the way courts approach professional negligence claims when trying cases. As an underwriter I have done my best to try and apply the decision to cases I have been asked to assess. It is undoubtedly complex and I’m always glad to have the assistance of expert counsel with an excellent grasp of the case.
We continue to see professional negligence claims brought by groups of foreign buyers against solicitors who ad advised them when exchanging contracts to purchase flats ‘off-plan’, having paid very significant deposits. On the whole, these have been successful claims but are not always straightforward and can involve complex PII coverage issues.
In a recent case – Various North Point Pall Mall Purchasers v 174 Law Solicitors Limited, Key Manchester Limited (formerly Amie Tsang and Company Limited)  EWHC 4 (Ch) – investors relied on alleged breaches of the stakeholder agreements under which deposits were held, rather than allegations of professional negligence; the buyers’ claims were dismissed at trial. This case illustrates these actions can go wrong and the importance of ATE insurance to protect claimants.
Media – Twitter storms continue to rage
Our national press can still be relied on to defame the great and the good as well as the ordinary person in the street. There is no such thing as a typical defamation case, but I’m pleased to say we continue to insure significant numbers of them.
The phone hacking litigation continues but the issue of limitation may well become a significant issue in the months ahead. The resolution of this may well involve some complex but fascinating arguments both of broad principle and around the detailed specifics of each claimant’s personal knowledge and circumstances.
The decision in Riley v Murray  EWHC 3437 (QB) provides an interesting and very thorough analysis of almost all the key principles at play in defamation cases – and yet the case was confined to a remarkably short exchange of tweets.
At Temple we are exploring insuring a range of financial mis-selling claims, working with several experts in the field. Motor finance claims may well become an important part of the work we do insuring large volumes of relatively low value claims on a delegated authority basis. You can read more about our approach to these types of case here.
Has there been a Covid effect? At the risk of misrepresenting the Government’s statistics for the number of claims issued in the Business and Property Courts, the Q3 (July to September) figures for 2018 through to 2021 make for interesting reading: –
- 2018 – 4,795
- 2019 – 4,108
- 2020 – 2,586
- 2021 – 2,262
On the assumption that we have either seen the worst of Covid or are learning to live with it, I suspect we will start to see an overall increase in business back to pre-Covid levels. This may well coincide with a downturn in the economy that tends to drive-up litigation. If the economy does take a turn for the worse, those issuing claims will need full adverse costs protection and the means to provide security for costs.
We are here to help. If you would like more information on our litigation insurance and disbursement funding products for professional negligence, or you have any other legal expenses insurance query, please email firstname.lastname@example.org or call him on 01483 514428.
Matthew was called to the Bar in 1984 and joined Guildford Chambers two years later. Spending more than 30 years in practice there, he was listed as a Legal 500 Tier One barrister.
He joined the commercial team at Temple Legal Protection as Senior Underwriting Manager in 2017.
Matthew was appointed to Temple’s Board in December 2022 as Legal Director and Head of Commercial.
His knowledge of the commercial legal sector and litigation practice is invaluable to the business and our clients, providing specialist experience to lead the commercial litigation insurance team.
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