Whealing v Royal Institution of Chartered Surveyors

JUDGE HODGE QC: This is my extemporary judgment in the matter of Matthew Whealing (trading as Matthew Whealing Associates) as applicant and the Royal Institution of Chartered Surveyors as respondent, case number 1MA30162. By an application notice in form N244 issued on 25^th March 2011 the applicant, Mr Matthew Whealing, of Matthew Whealing Associates, quantity surveyors and project managers, applies against the Royal Institution of Chartered Surveyors for declarations as follows:

“(1)

That from 1^st April 1998 the defendant required all members of the Institution to obtain their professional indemnity insurance from a listed insurer in accordance with Rule 6.6(1) of the Institute’s Standards and Bye-law 19 (6);

(2)

That as a listed insurer, each insurer agreed to write a member’s policy that was no less comprehensive than the form of the RICS policy wording in force at the time when the policy of insurance was taken out; and

(3)

That the form of the RICS policy wording in force from 10^th October 2000 to 30^th September 2001 was the version dated 10^th October 2000.”

Section 5 of the application notice asked for the application to be dealt with without a hearing. The evidence in support of the application was set out in box 10 of the application notice. A copy of the RICS Standards dated September 1998, which prescribed the requirement for each member to obtain his or her professional indemnity insurance policy from a listed insurer under sub-paragraph (1) of Regulation 6.6, was attached as enclosure 1. A copy of the Prospectus for Listed Insurers to the RICS dated January 2000, which prescribed that a “listed insurer” was an insurer who agreed to write a policy that was no less comprehensive than the form of the RICS policy wording in force at the time when the policy of insurance was taken out by the member, was attached as enclosure 2. A copy of the RICS policy wording dated 10^th October 2000 was attached as enclosure 3.

The application was issued by Mr Whealing as a litigant in person. He attached a form of “Chancery Court Declaration”. It contained four recitals, as originally produced. The first recited that it was made upon an application for a declaration brought by the claimant by CPR Part 23.3 issued on 25^th March 2011. The second recital recorded acceptance by the defendant and agreement to the terms of the declaration sought. The third recital recited an agreement by the parties for the court to deal with the application without a hearing; and the fourth recital recorded that the court had read the written evidence presented by the claimant in the application notice. There then followed three declarations in the terms of the application notice, which I have already set out.

The matter was referred to a district judge for his directions and comments. On 11^th April 2011 the court wrote to the applicant recording that the district judge had made the following comments:

“Where is the agreement of the defendant referred to in the third recital to the draft order for this matter to be dealt with without a hearing?”

The applicant responded on 19^th May 2011. Having confirmed receipt of the court’s letter of 11^th April, the applicant continued as follows:

“Having asked the defendant, I would confirm that they do not agree for this matter to be dealt with without a hearing and, consequently, I would be grateful if you could amend item 5 on the application notice to read that the defendant requires the application to be dealt with at a hearing. So as to avoid the necessity for the defendant to attend in person, I would be happy for the application to be dealt with at a telephone hearing if this would be acceptable to the district judge. In the light of the defendant’s request for the matter to be dealt with at a hearing, I have amended the draft order to remove the third recital, which referred to the agreement by the parties for the court to deal with the application without a hearing.”

A copy of the revised draft order to that effect was attached.

The matter was again referred to one of the district judges who directed that the matter was to be listed for hearing on provision by the applicant of an estimated length of hearing. He indicated that the matter was to be listed before any Chancery district judge, and not by telephone. In due course a hearing notice was issued on 1^st August indicating that the hearing was to take place today, 17^th August 2011, at twelve o'clock before one of the district judges on level 3.

During the course of last week the file was referred to me together with three other files in respect of application notices issued by Mr Whealing. The first of those three was an application, also in the Chancery Division, issued on 3^rd June 2011. Again the application notice was in form N244. On this occasion the respondent was Senior Wright Limited; and the application notice sought a declaration that the insurance coverage provided under a particular policy, with an inception date of 23^rd August 2010, by virtue of the undertaking given by the insurer, as a “listed insurer” under the Royal Institution of Chartered Surveyors’ Listed Insurer Agreement, incorporated the provisions of clause 9.3 (described as the “QC clause”) of the RICS Minimum Policy Wording effective from 1^st April 2008. That application was listed for hearing on 5^th August 2011.

On 28^th July Hiscox wrote to the applicant referring to the named indemnity insurance policy. The letter stated that Hiscox wrote with regards to recent correspondence between Mr Whealing and his insurance brokers, Senior Wright Indemnity Limited, with reference to the policy and the minimum terms and conditions as specified by the RICS. The writer, a development underwriter with Hiscox UK, confirmed that, as per Mr Whealing’s e-mail to Stuart Brown of Senior Wright Indemnity Limited, the provisions of clause 9.3 of the RICS Minimum Policy Wording were included within the above mentioned policy by virtue of the Royal Institution of Chartered Surveyors difference in conditions clause and, therefore, his professional indemnity insurance policy complied with the RICS membership rules.

There were two letters, both dated 29^th July 2011, from Senior Wright Indemnity Limited. The first was to Mr Whealing. Mr Brown wrote with regards to the relevant policy. He stated that Senior Wright Indemnity Limited was in receipt of the notice of hearing of application from the court and in response submitted the letter to which I have just referred from Hiscox that hopefully gave Mr Whealing the clarification he needed with regards to the conformity of the Hiscox policy with the RICS Minimum Policy Wording. The writer, Mr Stuart Brown, a professional indemnity account handler with Senior Wright Indemnity Limited expressly hoped that the letter would negate the need to proceed with the hearing on 5^th August.

On the same day, 29^th July 2011, Senior Wright Indemnity Limited, in the person of Mr Brown, wrote to the court. They asked the court to note that the writer was of the view that the correct defendant should be the insurance company concerned, Hiscox, and not Senior Wright Limited, as it was Hiscox who were the RICS approved insurer. In any event, the court was invited to see the copy of its letter of that day’s date which, in the writer’s view, again gave Mr Whealing the assurance he was seeking.

On 2^nd August Mr Brown for Senior Wright Indemnity Limited wrote again to Mr Whealing. Further to his letter of 29^th July and Mr Whealing’s subsequent reply, Mr Brown confirmed that he would prefer the matter to be settled without the need for a hearing with the court. He expressly hoped that this “satisfied” and that they could now consider the matter closed.

Mr Whealing communicated with the court. On 1^st August he wrote to the court confirming that the matter between the parties under the above application had been settled and that consequently the hearing scheduled for 5^th August did not need to take place. He enclosed a copy of the agreement between the parties and respectfully requested the court’s sealed order as appropriate to bring the matter to a close.

The file relating to that matter was placed before me on 11^th August. I noted that there was no claim form or other originating process in the matter and, therefore, the appropriate fee had not been paid. I noted that the matter had been listed in the applications list on 5^th August but, at the parties’ request, the matter had been taken out of the list because the parties had reached agreement. I was of the view that it was not appropriate that any court order should be issued apart from an order stating:

“By consent of the parties, it is ordered that the hearing listed on 5^th August 2011 is vacated.”

I took that view because the court will not normally make a declaration by consent; and, in any event, there was no consent from the defendant to any court declaration being made: the matter had been resolved by agreement between the parties. I was of the view that the matter did not need to be re-listed, and that the court should write to the parties accordingly. That, I should record, remains my view. The appropriate way of dealing with matter 1MA30269, in respect of which Mr Whealing is the applicant and Senior Wright Limited the respondent, is simply to make an order vacating the hearing that had been listed on 5^th August 2011.

Those two matters had been issued in the Chancery Division. On 1^st July 2011 Mr Whealing issued a third application notice, again in form N244, in the Mercantile Court. On this occasion the respondent was Howden Insurance Brokers Limited. The application notice sought a declaration that the provisions of clause 9.3 (described as the “QC clause”) contained within the insurance coverage provided under a named policy with an inception date of 20^th August 2010 constituted a right conferred by a relevant investment under the Financial Services and Markets Act 2000.

That application was apparently served on Howden Insurance Brokers Limited. It provoked a response by way of a letter to the court dated 15^th July 2011 from Reynolds Porter Chamberlain. As a result of subsequent exchanges of letters between Mr Whealing and Reynolds Porter Chamberlain, on 27^th July 2011 Mr Whealing wrote to the court as follows:

“I write to confirm that the matter between the parties under the above application has now been settled and that consequently it does not need to proceed to a hearing. I enclose a statement detailing the settlement agreed between the parties and respectfully request the court’s sealed order as appropriate to bring the matter to a close.”

On 3^rd August 2011 Mr Whealing sent an e-mail to the court as follows:

“Further to my phone call earlier this afternoon, I am pleased to confirm that I wish to withdraw my application issued under reference 1MA40054. I enclose a letter of confirmation, as directed, together with a copy of the notice of issue for your reference. I trust that you will now be able to close your file on this application.”

The accompanying letter, also dated 3^rd August 2011, was from Mr Whealing to the court and said:

“I write to confirm that the matter between the parties under the above application has been settled and that consequently I would like to withdraw my application”.

That matter was placed before me, again on 11^th August. I indicated that I had noted that there was no claim form or other originating process in the matter and, therefore, the appropriate fee had not been paid. I also noted, however, that the claimant had indicated that he wished to withdraw his application. I therefore directed the court to make an order in my name, which the court duly did. That order recited that upon reading the e-mail dated 3^rd August from the claimant withdrawing his application, and without a hearing, it was ordered that the claimant should pay the defendant’s costs of the application, to be assessed on the standard basis if not agreed.

The fourth and final application notice, again in form N244, was issued in the Mercantile Court on 9^th August 2011. The respondent is Oxygen Insurance Brokers Limited. The declaration sought was that the provisions of clause 9.3, again described as the “QC clause”, contained within the claimant’s insurance policy with an inception date of 23^rd August 2010 constituted an arbitration agreement in respect to any disputes which might arise in relation to the contesting of legal proceedings under the policy, pursuant to section 6 of the Arbitration Act 1996. It was, I think, the issue of that application that caused the court staff to refer all four files to me.

The application was accompanied by a letter from Mr Whealing to the court dated 9^th August 2011. He said that he enclosed an application notice for a declaration from the court in respect of the provisions of the insurance policy. He said that the parties were in agreement on the matter which was the subject of the application and had agreed that the application might be dealt with without a hearing. He therefore respectfully requested the court to deal with the application without a hearing if the court so wished. In relation to that matter, I directed the court to write to Mr Whealing, as it did on 12^th August 2011, as follows:

“The file in this matter has been referred to [me] who had directed that the claim could not be issued without a Part 8 claim form or other appropriate originating process and the payment of the appropriate fee. Since this is an arbitration claim within CPR 62, an arbitration claim form must be used.”

Those three applications are not formally before me. I have referred to them merely because they indicate a common theme underlying all four matters, including the first, the claim against the RICS in claim number 1MA30162, which is formally before me. The common theme is that Mr Whealing has been issuing notices of application in form N244 seeking declaratory relief without having issued any form of originating process, whether a Part 7 claim form or a claim form under the alternative procedure provided by Part 8 of the Civil Procedure Rules. The hearing of this application affords an opportunity for the court to address that situation in the presence of Mr Whealing, who has appeared before me today as a litigant in person. The respondent, the Royal Institution of Chartered Surveyors, is represented by Dr Digby Jess of counsel.

At the outset of the hearing this morning I indicated to Mr Whealing the difficulties as I saw them. They were essentially twofold: first, that he had been issuing application notices in a form appropriate to interim relief, and paying the fee appropriate to an application notice, which prior to 4^th April 2011 was £75 and thereafter was £80; he had not issued any form of originating process, as to which the appropriate fee, prior to 4^th April 2011, was £400, and thereafter was £465 (see the amendment to the Civil Procedure Fees Order 2008 effected by Statutory Instrument 2011 No 516). Secondly, he had been seeking declaratory relief when there was no apparent issue between the parties.

Mr Whealing explained that he had taken the view that he had been acting entirely appropriately. He took me to provisions within CPR 23 and CPR 25, together with the commentary thereon in the 2008 version of Civil Procedure, which was the book from which he had been working. He indicated that what he had been doing was to issue pre-claim applications for relief. The relief he had sought had been declarations underpinning or supporting his legal rights under the relevant insurance policies. He made it clear that what he had been doing was making pre-claim applications for declaratory relief in the hope that such declarations would prevent the need for him to start proceedings subsequently. He indicated that the grant of such declaratory relief would prove beneficial to him in the future.

For the respondent, RICS, Dr Jess made the point that the RICS had only received notice of this hearing last Wednesday. He emphasised that there had been no agreement on the part of the RICS to the terms of the declaration sought, nor had there been any agreement on his client’s part that the application directed to his client should, or could, be dealt with without a hearing. He indicated that he would have made the point that there was no substantive claim form; but the RICS’s principal contention was that there was no purpose to be achieved in granting the declaratory relief sought. He indicated that the RICS had no idea why Mr Whealing seemed to think that he needed a declaration in the terms of his application notice. No legal right had been asserted, prior to today’s hearing, which was in dispute between the parties. Dr Jess indicated that there had previously been four arbitration disputes between the claimant and the Norwich Union, as the claimant’s insurer. The last, which was said to have been before Mr Justice Akenhead, sitting as a commercial arbitrator, had been concluded in 2009 and had concerned the policy for the year 2001 to 2002. I should emphasise that there is no evidence formally before me in support of those matters.

Dr Jess took me to the judgment of Lord Justice Aikens in the case of Rolls-Royce Plc v Unite The Union [2009] EWCA Civ 387 at [120]. That paragraph contains a summary of the principles applicable, the principles to be derived from the cases. Lord Justice Aikens summarised them as follows:

“(1)

The power of the court to grant declaratory relief is discretionary. (2) There must, in general, be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them. However, the claimant does not need to have a present cause of action against the defendant. (3) Each party must, in general, be affected by the court's determination of the issues concerning the legal right in question. (4) The fact that the claimant is not a party to the relevant contract in respect of which a declaration is sought is not fatal to an application for a declaration, provided that it is directly affected by the issue. (5) The court will be prepared to give declaratory relief in respect of a ‘friendly action’ or where there is an ‘academic question’ if all parties so wish, even on ‘private law’ issues. This may particularly be so if it is a ‘test case’, or it may affect a significant number of other cases, and it is in the public interest to decide the issue concerned. (6) However, the court must be satisfied that all sides of the argument will be fully and properly put. It must therefore ensure that all those affected are either before it or will have their arguments put before the court. (7) In all cases, assuming that the other tests are satisfied, the court must ask: is this the most effective way of resolving the issues raised. In answering that question it must consider the other options of resolving this issue.”

Dr Jess submitted that the respondent has no idea what the issue was. He submitted that the present application was completely futile and should be dismissed with a declaration pursuant to CPR 23.12 that the application was totally without merit. I invited Dr Jess to indicate whether the RICS took issue with any of the three matters addressed in the claim for declaratory relief in Mr Whealing’s application notice. Dr Jess indicated that the RICS, at least for the purposes of the present application, had no issue with any of the matters in respect of which declaratory relief was sought, but that the RICS was concerned as to Mr Whealing’s motives and purpose in seeking such declarations. It was concerned about the potential effect of granting such declaratory relief upon third party insurers. He emphasised that there was nothing in dispute between Mr Whealing and the RICS.

Mr Whealing then replied, no doubt with the assistance of Dr Jess’s citation from the Rolls-Royce case. Mr Whealing’s submissions were rather more focused in reply than they had been in opening. He indicated that his concern arose under the Financial Services and Markets Act 2000. He submitted that rights under contracts of insurance are covered by that Act. He indicated that the declaratory relief sought would support the legal rights that he had, as an insured person, with the listed insurers. Those were insurers that he had had to select from the RICS’s pool of approved insurers. He indicated that the declaration sought would establish legal rights under any past, present or future policies of insurance with listed insurers. He cited section 397 of the Financial Services and Markets Act, relating to false or misleading statements or forecasts. He submitted that, in some cases, policies issued to him had not contained relevant wording and might be deficient. The purpose he had in seeking declaratory relief was to support his legal right to have a policy of insurance incorporating the RICS Minimum Policy Terms. If that was not done, he said, there would be a breach of section 397 of the 2000 Act.

He submitted that the RICS were affected by the declaratory relief sought. They were responsible for writing the rules under which members of the RICS were to obtain insurance with Minimum Terms. The RICS was affected as the body responsible for writing the rules, and also selecting, and vetting, the listed insurers, and either drawing up, or at least approving, policy agreements with them. They were also affected in ensuring that the insurance requirements were properly administered. He made the point that the RICS has over 100,000 members. They, therefore, comprise a large body of professional persons, who are bound by the RICS rules. If insurance agreements with listed insurers are found to be ineffective, that could affect large numbers of surveyors. There was, therefore, a wide public interest engaged. The declaration sought would, he said, clarify the situation.

He also made the point that Dr Jess had confirmed that the RICS had no issue with each of the three particular declarations sought. There was therefore nothing to prevent the RICS from accepting the declarations sought. If they did not dispute any of those matters, they should not be concerned about the court granting declarations in those terms, nor should they be concerned as to the future use that might be made of such declaratory relief. He made the point that contracts of insurance import a duty of good faith; and, therefore, those involved in issuing such policies needed to address the matters which they raised.

In a brief reply, justified by the fact that Mr Whealing’s case had only become clear from Mr Whealing’s reply, Dr Jess made it clear that his acceptance of the terms of the declarations sought had been solely for the purposes of the instant litigation. He submitted that what Mr Whealing had said vindicated, and precisely raised, the fears that the RICS had that Mr Whealing might well seek to wave any declaration granted by the court before other entities, and in other litigation. He emphasised that the matters which Mr Whealing had addressed in reply had not been addressed, either in the application notice, or in the supporting evidence. I adjourned over lunch before delivering my extemporary judgment because the submissions had concluded only just before one o'clock.

Mr Whealing has made the present application in form N244. He has not issued any form of originating process. The need for some form of originating process seems to me to be self evident before any relief in the form of a final injunction can be granted. In the case of Refson & Co Ltd v Saggers [1984] 1 WLR 1025, prior to the reforms effected by the Civil Procedure Rules, Mr Justice Nourse said (at 1029 between letters A and B) that in the generality of cases the court had no jurisdiction to grant an injunction, or any other form of relief, before the issue of an originating process. The mere statement of a principle so obvious and fundamental was said sufficiently to demonstrate that it was incapable of elaboration.

It seems to me that the position remains the same after the enactment of the Civil Procedure Rules. CPR 7.2(1) expressly states that proceedings are started when the court issues a claim form at the request of the claimant. In addition to the use of a Part 7 claim form, CPR Part 8 makes provision for an alternative procedure for claims. CPR 8.1(1) makes it clear that the Part 8 procedure is the procedure set out in that Part; and sub rule (2) indicates when a claimant may use the Part 8 procedure. But whether a claim form is issued under Part 7 or Part 8 of the Civil Procedure Rules, it is necessary for an applicant for relief to issue some form of originating process. In certain circumstances, the rules specifically permit the issue of a Part 23 application in order to obtain some form of pre-action relief, such as pre-action disclosure, in circumstances where this is permitted by the rules, either from a proposed defendant or from a third party; but, unless the rules permit, it is not permissible to use an application notice under Part 23 in form N244 to seek substantive relief of a final nature.

The Civil Procedure Fees Order 2008 expressly differentiates between the fees appropriate to be paid for interim applications (see para 2.6) and those in section 1 appropriate to forms of originating process. It is not open to a litigant to seek, effectively, to reduce his fees liability by recourse to an interim application under CPR Part 23, in form N244, when he is effectively seeking final, and substantive, relief. That requires the issue of some form of originating process by way of a claim form, either under Part 7 or Part 8 of the Civil Procedure Rules, and the payment of the fee appropriate to such originating process.

If that were the only matter, it would, of course, be possible for the court to consider the grant of the relief sought by Mr Whealing against an undertaking from him to issue a claim form, and to pay the appropriate fee; but the matter does not end there. Mr Whealing is seeking declaratory relief. The grant of declaratory relief is addressed in CPR 40.20, headed “Declaratory judgments”. That provision simply provides that the court may make binding declarations whether or not any other remedy is claimed. The notes at paragraph 40.20.2, at page 1196 of the current (2011) edition of Civil Procedure, address the jurisdiction to make declarations. They emphasise that the power to make declarations is a discretionary power. As between the parties to a claim, the court can grant a declaration as to their rights, or as to the existence of facts, or as to a principle of law. When considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose, and whether there are any other special reasons why, or why not, the court should grant the declaration.

At page 1198, under paragraph 40.20.3, addressing the issue of declarations without trial, either by way of judgment by consent or default, and summary judgment, reference is made to the Court of Appeal decision in Animatrix Ltd v O’Kelly [2008] EWCA Civ 1415. Amongst the points made by the Court of Appeal in that case was the statement that it was the established practice of the court that declarations would not be granted simply because the parties had agreed to them, although it was open to the court to grant a declaration by consent where that was necessary to do justice between the parties.

In the present case, I do not consider that it is appropriate for the court, in the exercise of its discretion, to grant any declaratory relief. I take that view because there is simply no issue between the parties. The RICS was never apparently asked before the issue of this application notice whether it took issue with any of the three matters raised by way of declaratory relief in the application notice. Dr Jess has indicated that the RICS does not take issue with any of those matters. There is, therefore, no useful purpose to be served by the court granting a declaration as to matters which are not in dispute between the parties. As Lord Justice Aikens said in the Rolls-Royce case, there must in general be a real and present dispute between the parties before the court as to the existence or extent of a legal right between them.

Moreover, it seems to me that the grant of declaratory relief in this case is, on Mr Whealing’s own submission, motivated by a desire to either improve, or to vindicate, his position in relation to third parties who are not before the court, and who have had no opportunity to address it, or to ensure that all relevant matters have been fully and properly put. As Lord Justice Aikens also said in the Rolls-Royce case, the court must ensure that all those affected are before it, or will have their arguments put before the court. Lord Justice Aikens’s ultimate question for the court was whether the proposed way forward, in this case the grant of declaratory relief in the terms of the application notice, is the most effective way of resolving the issues raised.

In my judgment, there are simply no issues raised; there is nothing in dispute. Before issuing the application notice, Mr Whealing should have established, through correspondence with the RICS, whether there was any dispute as to the matters he was seeking to raise; and if, as appears to be the case, there is not, then there is no need for legal proceedings, even apart from the fact that no substantive form of originating process has been issued. So it seems to me that the appropriate order to make in the present case is as follows: upon it appearing that there is no issue between the parties, and that the making of a binding declaration would serve no useful purpose, there will be no order on the application save that provision will need to be made for the costs.

I should make it clear, at the conclusion of this judgment, that what Mr Whealing has been seeking to do is not to obtain any form of legitimate pre-application relief; he has been seeking relief of a final and substantive nature, albeit in the form of declarations. Indeed, that fact was acknowledged by Mr Whealing’s submission that the grant of declaratory relief, as claimed, would prevent the need for proceedings to be started subsequently. If Mr Whealing, or any other litigant, is seeking substantive relief of a final nature, then it cannot be sought by way of an application notice in form N244, or by way of an application under Part 23. It must involve, as a preliminary, the issue of some form of originating process in the form of a claim form under either Part 7 or Part 8 of the Civil Procedure Rules. So, for those reasons, I will make no order on the application, other than addressing the issue of costs.