In Chubb European Group SE v Hiscox Insurance Co Ltd and Hawkins and Associates Ltd, the Technology and Construction Court (TCC) was called upon to deal with a “without notice” application for an order for the preservation of evidence pre-action. The application was brought under section 33 of the Senior Courts Act 1981 (SCA 1981) and CPR 25.1.
Urgent pre-action applications for orders for the preservation of evidence are not common, and therefore it is interesting to look at the TCC’s jurisdiction and its approach to this recent application for the preservation of evidence, which was said to be relevant to causation concerning an insurance claim in relation to damage caused by flood and fire in two properties.
The powers of the court in relation to urgent applications for interim relief, including the preservation of property, are laid down in the following provisions:
Section 33(1)(a) SCA 1981 provides:
“(1) On the application of any person in accordance with rules of court, the High Court shall, in such circumstances as may be specified in the rules, have power to make an order providing for any one or more of the following matters, that is to say—
(a)the inspection, photographing, preservation, custody and detention of property which appears to the court to be property which may become the subject-matter of subsequent proceedings in the High Court, or as to which any question may arise in any such proceedings; and…“
CPR Part 25.1(1)(c)(i) provides:
“(1) The court may grant the following interim remedies –
(c) an order –
(i) for the detention, custody or preservation of relevant property;…“
As to the timing of such applications for interim relief, CPR 25.2 provides:
“(1) An order for an interim remedy may be made at any time, including –
(a) before proceedings are started; and
(b) after judgment has been given.
(Rule 7.2 provides that proceedings are started when the court issues a claim form)“
The right to make applications for interim relief is, however, limited by the conditions in CPR 25.2(2), which states:
“(2) However –
(a) paragraph (1) is subject to any rule, practice direction or other enactment which provides otherwise;
(b) the court may grant an interim remedy before a claim has been made only if –
(i) the matter is urgent; or
(ii) it is otherwise desirable to do so in the interests of justice; and“
In this case, the applications were made on a without notice basis. Although informal notice of both applications had been given to the respondent parties, they did not appear, and were not represented.
CPR 25.5 applies where a person makes an application under section 33 SCA 1981 (as here). CPR 25.5(2) provides:
“(2) The evidence in support of such an application must show, if practicable by reference to any statement of case prepared in relation to the proceedings or anticipated proceedings, that the property –
(a) is or may become the subject matter of such proceedings; or
(b) is relevant to the issues that will arise in relation to such proceedings.”
In determining the application, the court adopted the approach taken in the case of Smith v Secretary of State for Energy and Climate Change. The first point is that when considering whether to make an order pre-action, the court will consider the merits of the application and not the merits of any following proceedings. In order to deal with that issue, the court in Smith stated: “I would prefer to ask whether the applicant has shown some reason to believe he has suffered a compensatable injury; and, if so, with what degree of likelihood…”. The evidence therefore needs to address those criteria.
The court in the instant case concluded that the application was both urgent and that it was in the interests of justice for it to entertain the application. I pause to note only that the court, under the rules, was entitled to proceed to consider whether to exercise its discretion to make an order if it had been satisfied that either of the conditions precedent had been met. It also concluded, on the evidence, that the evidence identified for preservation is or may become the subject matter of anticipated proceedings or at least in issue in such proceedings. The court was therefore satisfied on the evidence before it that “…Chubb, as principal for their insured clients, may have suffered a compensable injury, with a reasonable or realistic degree of likelihood.”
The standard applied by the court here was thus that of “reasonable or realistic degree of likelihood”.
The court then asked whether it would be appropriate to make the order sought, and in particular, whether the evidence identified by the applicant was “relevant property” as required by CPR 25.1(1)(c)(i). The property is “relevant property” if it meets the requirements of CPR 25.5(2) so that it is either the subject of a claim or as to which any question may arise on a claim.
Absent satisfactory undertakings from the respondents, the court granted the order deeming it appropriate to preserve the property at least until the court had had an opportunity to hear full submissions from both parties. Pending full submissions, the court was not prepared to go so far as to order the respondents to deliver up the property.
Given the legislative and regulatory provisions underpinning the court’s jurisdiction, and by reference to the relatively straightforward factual background to this case, the reader can see that the courts are well equipped to deal with urgent applications for the preservation of property which is relevant to anticipated legal proceedings. The procedure by which such applications are brought, and the nature and strength of the evidence which will be required to support them, is also clear.
The courts have the facility to act with speed and decisively to prevent the premature destruction or transfer of property relevant to anticipated legal proceedings. So before leading with their chins, parties intent on making life as difficult as possible for prospective opponents in litigation should consider carefully the potential consequences of their behaviour, in terms of costs, and also in terms of their ability to keep control over property or assets which are potentially relevant to proceedings, if they threaten to destroy them or put them beyond the reach of the court.
In relation to arbitration, section 44 of the Arbitration Act 1996 (the 1996 Act) sets out the powers of the court exercisable in support of arbitration proceedings which, in relation to the matters listed in section 44(2), are the same as those it has in relation to legal proceedings. Section 44(3) of the 1996 Act makes it clear that its powers extend to making urgent orders for the preservation of evidence or assets in anticipated arbitration proceedings. However, the court’s powers may be excluded in whole or in part by agreement of the parties to an arbitration, and even if its powers are not limited by the parties, the court can only act “if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively” (section 44(5)).
Readers will appreciate that most modern arbitration rules adopted by parties in arbitration, be they domestic or international arbitrations, include provisions for the arbitral tribunal to make orders for the interim preservation of property or assets which are or which may be the subject of or in issue in anticipated arbitration proceedings.
It may therefore be of interest to practitioners to compare and contrast the powers of the court, as exercised in this case, to those of an arbitral tribunal, likely an emergency tribunal, appointed for the purpose of pre-arbitration preservation of property applications, or other interim measures of protection.