Commercial Disputes Weekly – Issue 2074 June 2024

Insurance
The Court of Appeal has confirmed the position in relation to the application of recoveries in layered insurance policies. Textainer, a container lessor, had in place container lessee default insurance that consisted of a primary policy and five excess layer policies. When one of its lessees went bankrupt, it received an insurance payment that used up the primary and four of the excess layers and part of the fifth layer. When it received money in the bankruptcy, Textainer claimed to be entitled to retain the entire sum to put towards its uninsured losses. The insurers asserted that the recovery should be distributed proportionately. The Court of Appeal agreed with the lower court that the correct approach was a ‘top down’ application of the recoveries. This matched the structure of the insurance, namely that a loss is only covered by a particular layer of excess policy as the loss reaches each limit. Anything which reduces the loss means that it will not have reached that particular limit to be covered by the next layer of policy. It was therefore appropriate to apply the recoveries first to the uninsured losses and then work downwards from the excess fifth layer.
Royal & Sun Alliance Insurance plc and others v Textainer Group Holdings Limited and others [2024] EWCA Civ 547, 22 May 2024

Adjudication
The Technology and Construction Court held that a developer was not prevented from commencing a second adjudication by the settlement of the first adjudication as they dealt with different issues. The first adjudication decided that the contractor was in repudiatory breach of the contract, the second related to the developer’s losses from that breach. There was no overlap of issues. The settlement agreement referred to “these proceedings” and the parties should have specified if they wanted to also settle all potential related future claims but did not (and they did have legal advice).
Dawnvale Cafe Components Ltd v Hylgar Properties Ltd, [2024] EWHC 1199 (TCC), 20 May 2024

Maritime – Tort
The Privy Council has concluded that a marina owner did not owe a duty of care to the owner of a yacht to prevent its theft. Following the theft of the vessel, the yacht insurer settled the insurance claim and then brought a subrogated claim for negligence against the marina owner. The marina did not assume responsibility to use reasonable care to guard against arrest of the vessel. No key for the yacht had been left with the marina so the vessel release and identification procedures were not in play. Even if the provision of the security system and guards indicated an assumption of responsibility, there was no evidence of breach of that duty, nor a causal connection with any breach and the vessel theft. Further there was no contractual duty of care in the lease agreement.  
Great Lakes Reinsurance (UK) Plc v RAV Bahamas Ltd [2024] UKPC 11, 21 May 2024

Building Safety Act 2022
The Upper Tribunal has provided guidance on the extent to which leaseholders are liable for service charges which include remediation of cladding and insulation defects. The guidance related to section 122 and schedule 8 of the Building Safety Act 2022, which provide protection for leaseholders where their landlord was the original or associated developer of the building. The Upper Tribunal acknowledged the complexity of the statutory provisions but said that the tribunal was required to consider all relevant statutory provisions to assist with determination of the service charge, not just those raised by the leaseholder. It also set out a series of questions for the decision maker to address. The leaseholder here did have protection from the demanded service charge and the First Tier Tribunal decision was overturned.
Lehner v Lant Street Management Co Ltd [2024] UKUT 135 (LC), 17 May 2024

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