The High Court has ruled that Nobil Food Limited must provide security for Campion Insurance Limited’s legal costs while its claim over an avoided insurance policy proceeds. The court has not yet fixed the amount of security or decided the costs of the application.
In a judgment delivered on 28 October 2021, Mr Justice Garrett Simons found that Campion had a prima facie defence and that Nobil Food would be unable to pay Campion’s costs if the defence succeeded. Nobil Food accepted both points but argued that Campion had delayed in seeking security and that its inability to pay resulted from Campion’s alleged wrongdoing.
The underlying claim concerns Campion’s alleged negligence and breach of contract in arranging insurance for Nobil Food’s restaurant premises. Nobil Food alleges that Campion failed to ensure the company’s claims history was disclosed. After a fire in June 2016, Allianz plc avoided the policy for non-disclosure of previous claims. Campion denies liability; its defence pleads that a company director, Mr Nabil Cherif, made a false declaration on the insurance proposal form.
On delay, the judge found that Nobil Food’s dissolution after it was struck off the companies register in March 2019 meant the proceedings could not properly continue until the company was restored in May 2020. Campion notified Nobil Food in June 2020 that it intended to seek security, then issued its motion in September. The judge held that this was a reasonable period and that Nobil Food had shown no prejudice from the alleged delay.
The judge also rejected the argument that Nobil Food’s financial difficulty was shown, on a prima facie basis, to result from the alleged insurance wrongdoing. The company argued that a successful claim could yield about €325,000. But the judge said there was no evidence establishing that likely recovery, including no policy document or valuation evidence for the destroyed fixtures and fittings. The judgment noted that the company had consistently traded at a loss before the fire and had been balance-sheet insolvent in the two preceding financial years.
The defendant’s costs were estimated at €194,909.50. The judge considered security for the full likely recoverable costs appropriate, given the claim’s scope and the company’s financial position. However, Nobil Food may file an affidavit addressing the amount by 1 December 2021. The matter was listed for mention on 8 December, when the court would hear submissions on whether to assess the amount itself or refer it to the Master. The costs of the security application were also left for that hearing.