defending subrogation proceedings

[peeta]

we are a small business trying to defend potential proceedings on subrogation.

The premise of the case is Insurers think the contract is frustrated during COVID, but we think it is not as their client kept the order active post COVID.

anyone know any recent cases on this matter or could signpost to any websites or any other resources please?

if they proceedings brought, will it be small claims as the sums in dispute are less than £10,000 ?

thanks

[atticus]

I don't quite understand what the case is about. Can you please clarify.

I think the answer is likely to be whether your customer is entitled to bring a claim. If it is, then its insurers may be entitled to bring a subrogated claim, standing as it were in the customer's shoes. If a claim by the customer would fail, then so would a subrogated claim.

[peeta]

Thanks atticus for the reply.

Summary of the case is this: We are a wedding supplier, had a verbal contract with the customer for services pre Covid, we delivered part of the service, rest was due to take place in June 2020, but due Covid customer postponed the dates (did not cancel it) and then made modifications to the services, then unilaterally cancelled the order, We refused to refund full money, but was willing to accommodate different dates or provide vouchers.

Insurers think the contract is frustrated due to Covid, but we think it is not as, even after Covid, customer made modification and kept the order active and they were the one unilaterally cancelled on us as other Weddings were taking place.

so, would love to read about some recent cases on this or if you have any advice.

thanks

[atticus]

My advice would be to treat this as a claim by the customer. The insurer is standing in the customer's shoes here.

[Huxie]

I don't quite understand what the case is about. Can you please clarify.

Lot more info on a previous thread:
https://legalbeagles.info/forums/for...th-subrogation

[atticus]

Thank you. I had forgotten about that. Perhaps the OP had as well.

[peeta]

think insurers have paid the customer and trying to claim the money from us.. any idea where I can read about similar cases and am I right in thinking in the above scenario

a) proceedings will be in Claims court - so no fee to pay even if we lose
b) the contract is not frustrated in this case ?

thanks

[Pezza54]

The £9k claim with interest at 8% p. a. from the date of the transaction plus allowable legal costs may take the claim over £10k..If so the claim is likely to be allocated to the fast track not the small claims track. The financial risk of losing increases. . ,

[peeta]

ok, but where do we stand on whether the contract is frustrated or not please, Client clearly communicated with us to have the services after COVID and then unilaterally cancelled as a result of which we had to refuse other potential clients as the dates were exclusively reserved for them.

so, I am sure they cannot mask under COVID and claim as a result it is frustrated ? we still remain committed to provide services.

what sort of lawyers would we need to defend proceedings on this case - commercial litigators?

[Pezza54]

The CMA has published government guidelines regarding frustrated contracts and customers entitlement to refunds during Covid-19. You should be able to find the document if you google the subject.
Following this guidance your company would only be entitled to keep reasonable costs for services provided i.e. the preshoot. I assume this involves visiting the venues to determine the best place to take photos.
I believe you will have to prove loss of profit in writing (emails etc), when you turned down other jobs because you were holding rebooked provisional dates free.
If you are still unsure, search for solicitors online for help with business contract claims. There are plenty of firms offering free initial telephone consultation. Make sure you have notes of dates, what was said, emails etc to hand...

[Manxman]

ok, but where do we stand on whether the contract is frustrated or not please, Client clearly communicated with us to have the services after COVID and then unilaterally cancelled as a result of which we had to refuse other potential clients as the dates were exclusively reserved for them.

so, I am sure they cannot mask under COVID and claim as a result it is frustrated ? we still remain committed to provide services.

what sort of lawyers would we need to defend proceedings on this case - commercial litigators?

You need to go back and read your original thread - I think the answers there still stand.

Basically you were trying to retain an advance deposit of £9000 (75% of the total value) in respect of a contract where it was not clear how much - if any - of the contract you had fulfilled prior to Covid lockdowns.

It was suggested that you try to reach a settlement with your client's insurers as the feeling of most people who contributed to the thread was that your standard contract term that all deposits were non-refundable was probably uneneforceable under consumer protection legislation as an unfair term.

The only point that really seemed to be in your favour was that your client's insurer's may not have been aware that it was their insured, and not you, who had cancelled the contract.

Does your firm not retain a solicitor for its normal business needs? If you are in the habit of entering into £12000 contracts without explicit written T&Cs it might be a good idea to retain one.

[Manxman]

Just to clarify my previous post.

You originally told us that the wedding had gone ahead (when it hadn't) and that you had photographed it (when you hadn't). You then changed that to say that only some sort of "pre-shoot" had taken place, and that it had been that that you had photographed.

I seem to recall it was also pointed out that in the case of covid frustrated contracts, the CMA guidance indicated that you could charge for work actually done, but not for work not done. And posters on your original thread felt that taking some "pre-shoot" photos did not justify retaining a deposit of £9000 equating to 75% of the full contrcat value.

Hence the suggestion to negotiate with the insurer. And point out to them that it was their insured - not you - who actually cancelled the contrcat.

[peeta]

thanks for the reply all.

Think there is a slight misunderstanding and just to clarify, a summary:

1. We accept order for Wedding + reception for 12000
2. Client pays 9000 as deposit and we started proceedings like planning + consultations etc
3. Client then imprompto request for pre-shoot which was not in the original order with just a week notice
4. Price was not agreed, but we did the pre-shoot and provided the pics.
5. Due to Covid client postponed the wedding to October 2020.
6. In June 2020, they wanted to cancel and asked for full refund, we said no, but gave other options of doing it on another date.
7. In Jan 2021, Wedding venue went into administration, so asked again for refund, we gave. other options and option to postpone
8. In Feb 2021, They agreed to postpone to 2022
9. In August 2021, client unilaterally cancelled the order

Since the order was active by August 2021, when no COVID restrictions were in place, I think contract is not frustrated and we still ok to provide rest of the services. Pls correct me if I am wrong.

The issue is, since they had Wedding Insurance, they have claimed the money from them now they are after us. But, the client is still a good friend of us.
I guess still the insurers can do it and we have to look at this a coming from a seperate party than the client ? does the client have any say in this ?

thanks

[Manxman]

The issue is, since they had Wedding Insurance, they have claimed the money from them now they are after us. But, the client is still a good friend of us.
I guess still the insurers can do it and we have to look at this a coming from a seperate party than the client ? does the client have any say in this ?

thanks

I'm not certain if you are a good friend of your client if you kept £9000 of their money and only took a few photos?!?!

Some people might think that it looked a bit odd that your firm held on to such a large deposit from a "friend" in respect of a contract that they had cancelled. Didn't they complain? And didn't you listen to your friend's complaints?

I'm sure you both didn't decide that it didn't matter as they could claim off their insurance, but it's possible their insurer might think differently...

Your friend the client gave up any right they had to have a say in this when they claimed on their insurance.

The other thing is this whole blanket policy you have that deposits are non-refundable in any circumstances. You generally can't do that because it will usually be considered an unfair contrcat term. You can keep a deposit to reflect work that you've actually done, but not for work you haven't done. Are you telling us that the pre-shoot photos that you did complete represented 75% of the total contract value?

If you could prove that you'd given up other work to keep the dates open, or if you could show that you'd made reasonable attempts to get other jobs for those dates after cancellation, you might also have been able to keep some profit element from the deposit. But I don't think there's any way you could argue that you are entitled to keep all £9000 of it.

As suggested on your original thread, you probably either need to be making an attempt to settle with the insurer or you need to seek paid for professional legal advice.

(You probably need to get a lawyer to advise you on drawing up proper legal contrcats too)

[Manxman]

Just to add re non-refundable deposits: Cancelling goods or services - GOV.UK (www.gov.uk)


"Businesses can keep your deposit or advance payments, or ask you to pay a cancellation charge, only in certain circumstances


If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their actual losses that directly result from your cancellation (eg costs already incurred or loss of profit).

Businesses must take reasonable steps to reduce their losses (eg by re-selling the goods or services).

Non-refundable deposits should only be a small percentage of the total price.

Cancellation charges must be a genuine estimate of the business’ direct loss."