News
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Submitted by // K Bowers, Partner; M Withington, Partner
19 June 2018


Reimbursement of Defence Cost if Claim Not Covered by Policy

Oldham v QBE Insurance (Europe) Ltd [2017] EWHC 3045 (Comm)

Introduction

In the English case of Oldham v QBE Insurance (Europe) Ltd [2017] EWHC 3045 (Comm), the Court considered whether an insurer was entitled to the reimbursement of defence costs which it had funded after it was determined that the claim was not covered under the policy. The Court found in favour of the insurer and held that an insured who is unsuccessful in showing that the claim is covered under the policy must reimburse the insurer for the advanced defence costs.

Facts

The Insured, Mr. Oldham, is an accountant and insolvency practitioner. He had taken out a professional indemnity insurance policy with QBE Insurance ("QBE") which was subject to the minimum indemnity requirements of the Institute of Chartered Accountants in England and Wales ("ICAEW"). Mr. Oldham was sued by the liquidators of a company for which he had acted as a joint administrator.

QBE declined cover on the claim on the ground of late notification, and Mr. Oldham disputed this. This dispute was referred to arbitration pursuant to the terms of the policy. Pending the coverage dispute between Mr. Oldham and QBE, QBE accepted that it had to fund the defence costs by virtue of Clause 10.2 of the policy, which provides that if there is a coverage dispute between the insured and the insurer, the insurer will advance defence costs "pending resolution" of such dispute. QBE advanced over £40,000 in defence costs.

In the arbitration, the arbitrator found in favour of QBE, and determined that Mr. Oldham’s claim was not covered under the policy and that QBE should be entitled to the reimbursement of the defence costs. He also ordered Mr. Oldham to pay the costs of the arbitration, which were significant.

The Court took as a starting point the fact that the insurer is only liable for defence costs if there is coverage under the policy. It held that Mr. Oldham's arguments would alter the meaning of Clause 10.2, such that defence costs would be covered for ineligible claims provided they were incurred prior to the resolution of the coverage dispute. This would be an "unbusiness-like consequence". The Court similarly rejected the argument that the lack of an express claw-back provision prevented QBE from claiming reimbursement. It held that it was clear that the payment of defence costs was provisional and subject to reimbursement. If there is no coverage, then the defence costs do not fall within the scope of what is indemnified, and have to be repaid.

Mr. Oldham was successful in one respect, which was that the arbitrator's decision to award the costs of the arbitration against him was remitted back to the arbitrator for reconsideration. The Court held that Mr. Oldham had not been given a fair opportunity to advance an argument that might have convinced the arbitrator to rule differently. Mr. Oldham challenged the arbitration award in the High Court on grounds that QBE did not have a right to repayment as this was not expressly provided for under the policy and that the interpretation of "pending resolution" under clause 10.2 should mean "until resolution".

Decision

The High Court held that QBE was entitled to the reimbursement of the defence costs. It was necessary for the Court to consider the minimum indemnity requirement, which took precedence over the policy terms. The Court also observed that where wording is drafted by a regulator setting minimum terms (as is often the case with mandatory professional insurance), there will be a balance between protecting the public versus the cost and availability of cover.

Comment

This decision confirms that, even in the absence of an express right to seek reimbursement of defence costs following a determination that the claim is not covered, an insurer will be able to be reimbursed. The case turns to some extent on the specific wording of the policy in question, but this kind of wording is not unusual in professional indemnity policies. Of course, it is preferable for insurers to include an express claw-back provision in the policy. Insurers should also consider including in their initial coverage letter a statement to the effect that defence costs are subject to coverage being confirmed, and that any defence costs paid in advance may have to be repaid.

This case also illustrates the difficulties that insureds can face when dealing with a coverage dispute whilst defending a claim. QBE's costs of the arbitration (which the arbitrator ordered Mr. Oldham to pay) were greatly in excess of the defence costs that were in issue.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; intellectual property; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.


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Submitted by // K Bowers, Partner / Solicitor Advocate
25 May 2018


The importance of exclusive control in adverse possession

Cheung Kwan Yin (張坤炎) and another v Santa Fong Co Ltd [2018] HKCU 1512

This case involves an application for possessory title over land on the basis of adverse possession.

Facts

This case concerned an application by the Plaintiffs for possessory title of Lot Nos. 482 & 520, Demarcation District 3, Tung Chung ("Lots"). The Plaintiffs claimed that they had had continuous and exclusive possession of the Lots from late 1992 to August 2015, and that during this period of exclusive possession, the Lots were used for agricultural purposes.

The Defendant had been the registered owner of the Lots since 1980. The Defendant made a counterclaim for declaratory relief of its entitlement to possession of the Lots, and an injunction preventing the Plaintiffs from entering the Lots.

Elements of adverse possession

In order to establish a case of adverse possession, the Plaintiffs needed to prove:-

1. factual possession of the Lots for a continuous period of 12 years;
2. exclusive physical control of the Lots by dealing with the land in the same way an occupying owner would be expected to; and
3. requisite intention to possess and exclude the world at large, including the owner, from the land.

It was the Plaintiffs' case that they had possession of the Lots from 1992 until 2015, during which time they used the Lots for the plantation and cultivation of lychee trees. The Plaintiffs also claimed that they had the requisite intent to possess and exclude "the world at large" despite the lack of fencing around the Lots.

Finding

The Plaintiffs claimed that although the Lots were not fenced off, certain actions had been taken to exclude other people from accessing the Lots, one of which was planting trees so that they formed a barrier around the Lots. It was the Plaintiffs' case that only they could pass through this 'tree barrier'. When the Plaintiffs were asked to explain why they were the only ones that could pass through the 'tree barrier', no proper answer could be given.

The Court found that the Plaintiffs had lied when giving evidence and could not be relied upon at all. The Plaintiffs' application was dismissed because they failed to prove the requisite intent and physical control of an exclusive nature over the Lots. The Defendant was granted declaratory relief of its entitlement to possession of the Lots, and an injunction preventing the Plaintiffs from entering or using the Lots.

In setting down the requisite intention of exclusive possession, the Court cited Gotland Enterprises Ltd v Kwok Chi Yau & Ors CACV 260 / 2015, a case which held that fish and duck rearing inside ponds without physical barriers from adjoining land did not amount to exclusive possession and unequivocal intent to exclude the world. The Court of Appeal also made the observation that the growing of fruits on a piece of open land does not automatically support the assertion of exclusive occupation of the land. In the absence of physical barriers (fencing) set up to exclude others from entering the land, the Court will examine the steps taken by the person claiming exclusive occupation to exclude others from the land.

When considering a claim for adverse possession, it is important to remember that although the normal civil burden of proof (i.e. on the balance of probabilities) is still applicable, given the serious consequences of finding that the holder of the paper title no longer owns the land, the evidence of exclusive possession and intention must be compelling. The Court will not lightly assume that the paper title holder has foregone its interest in the land. 

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

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Submitted by // K Bowers, Partner / Solicitor Advocate; P Yeung, Partner
23 May 2018

 

Not only is it anti-competitive, it's illegal! 

On 9 April 2018, the Competition Commission issued an advisory bulletin on the potential risks that could arise under the Competition Ordinance (Cap 619) in the employment context. 

Employment Marketplace

It is the Competition Commission's view that Hong Kong's free market economy depends on a healthy competitive environment, whereby employees benefit from competitive rivalry in the marketplace (just as consumers do). Competition among employers to hire employees often leads to better employment terms such as higher salaries and better benefits, thereby leading to increased opportunities for employees.

Contravention of the First Conduct Rule

The Competition Commission considered that employers are more likely to breach the First Conduct Rule of the Competition Ordinance. Specifically, the First Conduct Rule prohibits anti-competitive agreements, under which market participants collude with their competitors on key competitive parameters. Employers should therefore refrain from entering into an agreement or engaging in concerted practices regarding terms of employment or hiring of employees.

The Competition Commission has identified the following practices between employers as being at risk of contravening the First Conduct Rule:

(1) Wage-fixing agreements: Employers that have an agreement on any element of compensation for employees are fixing the price of labour. The definition of compensation is not limited to salaries, but also other benefits and allowances that may be offered to employees.

(2) Non-poaching agreements: Employers that have an agreement in relation to the solicitation or hiring of each other's employees. An example given by the Competition Commission is an agreement between employers to refuse to hire each other's employees.

(3) Exchange of sensitive information: The sharing of competitively sensitive information between employers about their intentions regarding employees' compensation or hiring, be it reciprocal or unilateral, and whether done directly or through a third party.

In accordance with the Commission's guidelines, the term "agreement" is defined broadly and can include any arrangement, understanding, promise or undertaking, whether express or implied, written or oral, and whether or not enforceable or intended to be enforceable by legal proceedings.

Contravention of the First Conduct Rule could result in financial penalties (as high as 10% of the company's turnover for a maximum of three years), director disqualification orders, or other sanctions.

Practical considerations

To ensure compliance with the Competition Ordinance, employers should independently determine their hiring and compensation policies. Human Resources personnel should avoid communicating with other employers in this regard or coming to any form of an agreement or understanding that would restrict competition amongst the employers. They should also avoid sharing any kind of information as to their future intentions with respect to salaries and benefits. Information in relation to employment practices, compensation and benefits should be kept entirely confidential.

The Competition Commission encourages all parties to report suspected anti-competitive arrangements related to employment. 


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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Submitted by // H Rogers, COO
02 May 2018


HWB is delighted to announce that Patricia Yeung and Eviana Leung became partners of the firm with effect from 1 May 2018.

Patricia Yeung: Patricia has focused on employment law since qualifying as a solicitor. Patricia advises employers and employees on all aspects of employment law, with an emphasis on contentious matters (particularly in the financial services sector). She is ranked by Legal 500 as a Next Generation Lawyer (2017) and by Chambers Asia as an Associate to Watch (2015-2017). Patricia is also listed in the Labour and Employment section of Who's Who Legal (2017-2018).


Patricia Yeung
T +852 2803 3748
F +852 2803 3608


Eviana Leung: Eviana has experience in both contentious and non-contentious maritime, commercial, contractual and international trade matters with a particular emphasis on marine policy coverage disputes. She acts for more than 10 marine liability insurers and is known within the marine insurance circle as a solution-driven lawyer who provides sound practical advice. 

Eviana Leung
T +852 2803 3687
F +852 2803 3608

 

Patricia and Eviana's promotion brings the total number of HWB partners to 25. The firm also has 4 senior consultants. Total headcount is approximately 180.

 

About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; and financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

 

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