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UK: Blanket notification of claims where some had not been properly investigated

16 February 2014
In the Court of Appeal in the case of McManus Seddon v European Risk, claimant solicitors applied for a declaration that they had validly notified the defendant professional indemnity insurers of possible claims against them. They had a "claims made" policy covering claims made in the year of policy cover and notified to the insurer on the year of the policy. The claimant had sent a letter to the defendant headed "blanket notification of circumstances which may give rise to claims" in which they referred to 32 files that they had identified as having problems and an estimation of a further 5000 files that they believed would also have problems but which they had not yet dealt with.

The defendants had only accepted liability for the 32 files and not the additional 5000 files. The High Court decided that the defendants had been wrong in its stance in rejecting the notification buy declined to make the declaration on the basis that any declaration would be either too narrow or too broad. The judge awarded the claimants 60 per cent of their costs. The claimants appealed the judge's refusal to make a declaration; the Court of Appeal dismissed that appeal as there was no basis for interfering with the exercise of discretion by the judge to withhold declaratory relief for which she had given a detailed and rational explanation. The defendants appealed against the High Court's costs award; the Court of Appeal dismissed this appeal on the basis that it had been a matter for the judge's discretion and evaluation as to the appropriate apportionment of costs and she had been best placed to assess the position.

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