Collapsed Erinaceous subsidiary Dunlop Haywards (DH) has won a £10m legal dispute over inadequate professional indemnity insurance.
Following a five-week High Court trial, Hamblen J allowed the claim brought by DH against former fellow subsidiary Erinaceous Insurance Services (EIS) for £10m in damages for the latter’s failure “to exercise reasonable care and skill” in arranging the insurance.
The main dispute began after DH notified its excess insurer of its potential liability under a series of claims arising out of allegedly negligent and/or fraudulent valuations undertaken by DH’s former City office head, Ian McGarry.
The excess insurer informed DH that because the claims related to valuations, it would not be covered under the terms of the insurance policy.
DH sued EIS, which in turn joined the excess insurer and the placing broker in the action.
The claim against the excess insurer, MSI Corporate Capital, was dismissed, while a claim by EIS against the placing broker for breach of duty was reduced by 80% to reflect EIS’s contributory negligence.
Ruling on the dispute, Hamblen J said: “I have no doubt that, both in terms of blameworthiness and causative potency, the primary responsibility for failing to obtain the required cover rests with [EIS].”
Dunlop Haywards Ltd and others v Barbon Insurance Group Ltd (formerly known as Erinaceous Insurance Services Ltd formerly known as Hanover Park Commercial Ltd) and others Commercial Court (Hamblen J) 19 November 2009.
Alistair Schaff QC and Michael Holmes (instructed by Fulbright & Jaworski International LLP) appeared for the claimants; Adam Fenton QC and Julia Dias QC (instructed by Cayton & Co) appeared for the first defendant; David Railton QC and Sioban Healy (instructed by Kennedys) appeared for the second to seventh defendants; George Leggatt QC and Nicholas Craig (instructed by Simmons & Simmons) appeared for the third party.
