13/11/2009 - Court of Appeal split on limitation issue

Axa Insurance Ltd v Akther & Darby Solicitors & Ors [2009] EWCA Civ 1166 (12 November 2009)

In an important limitation ruling, the Court of Appeal has held by 2-1 that an insurer's liabilities under policies of after-the-event legal expenses insurance are not ‘contingent liabilities' within the meaning of the House of Lords decision in Law Society v Sephton. The majority consisted of Arden and Longmore LJJ. In a powerful dissenting judgment, Lloyd LJ held that the insurer's liabilities under such policies were indistinguishable from unsecured contingent liabilities within Sephton.

The judgment was given in the  Composite litigation, a £60 million professional negligence claim against 89 firms of solicitors which has been called ‘son of TAG' (after earlier large-scale ATE insurance litigation which settled in 2007). Composite  has been set down for a lead case trial lasting 6-8 weeks beginning in February 2010.

The Court of Appeal exercised its exceptional power to grant permission to appeal to the Supreme Court.