CASE NO: HC07C02999
Neutral Citation Number: [2008] EWHC 2858 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Date: 14th November 2008

Before:
HIS HONOUR JUDGE BEHRENS
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B E T W E E N:
(1) GILLIAN WADE
(2) GILLIAN WADE
(Executrix of the Estate of Andrew Wade deceased)
Claimants
AND
ACTIVE NAVIGATION LIMITED
Defendant
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JUDGMENT
1.	Introduction
1.	This claim arises out of the unfortunate death of Mr Andrew Wade. Mr Wade died on 29th September 2003. At the date of his death he had been employed by Active Navigation Limited (“Active”) for just over a year as its Sales Director on an annual salary of £94,233 plus benefits. One of those benefits was the right to participate in an insurance backed death in service scheme. It is Mrs Wade’s case that the benefit under the scheme should have amounted to four times his annual salary or £376,932.
2.	Following his death Active paid Mrs Wade (either in her own right or as executrix of his estate) the sum of £260,000 pursuant to that scheme. £260,000 represents four times £65,000 and is the sum that the insurer – Legal & General Assurance Society limited (“L & G”) has actually paid out to Active. £65,000 is the maximum salary acceptable to L & G on which they will pay death in service benefits without completion of a Member’s Declaration Form and the agreement by Active to pay any relevant additional premium.
3.	It is common ground that Mr Wade completed the Member’s Declaration Form and that it was submitted to L & G. It is also common ground that L & G were willing to provide death in service benefits based on Mr Wade’s full salary of £94,233 and quoted an additional premium for so doing. L & G, however, despite sending a reminder to Active’s insurance broker, Mr Bevan, a partner in C P Nicholls Investment Management (“CPN”) contend that they never received the agreement of Active to pay the increased premium. In the result the cover in respect of Mr Wade remained based on the salary of £65,000. Accordingly L & G only paid out £260,000 based on a salary of £65,000.
4.	In these proceedings Mrs Wade claims the difference between £376,932 and £260,000 or £116,932 plus interest. She puts her case in 3 ways – negligence, breach of contract and breach of trust. It will be convenient to consider her detailed allegations later in this judgment after setting out the detailed facts. Active denies all the allegations. It contends that it did all that was required of it to put in place cover based on four times Mr Wade’s actual salary. In so far as the cover fell short it was not as a result of any negligence, breach of contract or breach of trust.
2.	Representation
5.	Mrs Wade was represented by Ms. Michelle Menashy instructed by Collyer Bristow LLP of 4 Bedford Row London WC1R 4DF. Active was represented by Mr. Richard Mott instructed by Dorsey & Whitney of 21 Wilson Street, London EC2M 2TD. Both counsel produced very full and extremely clear skeleton arguments. I am most grateful to them.
3.	Witnesses
6.	There was, in fact, a substantial amount of agreement as to the facts most of which can be gleaned from the documentation. The principal areas of disagreement related to the fate of two letters dated 8th November 2002 and 22nd January 2003. In the event there were only 2 witnesses who gave live evidence before me - Mrs Wade and Mrs Andrews, the Financial Controller of Active at the relevant time. Mrs Wade, not surprisingly, was not able to give any direct evidence about the 2 letters. In the result her evidence was largely uncontroversial. Mrs Andrews accepts that she received the letter of 8th November 2002. She believes she countersigned it on behalf of Active and returned it to L & G. Mrs Andrews contends that Active never received the letter of 22nd January 2003 and thus accepts that she did not respond to it.
4.	The Facts
4.1.	Mr Wade
7.	Mr Wade was born on 30th August 1950. He had a heart condition known as congenital aortic stenosis. As a result he had had heart surgery when he was 16. He had had further surgery including a bypass operation in 2001. According to Mrs Wade his heart condition did not give rise to any physical limitations. However he was aware that he might have a shorter life expectancy because of it. In fact, however, his death was caused by pneumonia and not, as I understood it, from his heart condition.
8.	Mr and Mrs Wade met in the early 1980s in Cheltenham. Mrs Wade was then a sales executive in the television industry. They were married in 1983. Mrs Wade continued working until her first child was born. There were 4 children of the marriage now aged between 20 and 8. One of the children, Oliver had meningitis when he was 3 months old. He has brain damage, severe epilepsy and learning difficulties and is in need of 24 hour care.
9.	Mr Wade was employed as a sales or marketing manager or director in the software industry.
4.2.	Active
10.	Active was formed in 1991 by a group of former employees of IBM. Its business is in software development and the marketing of management information solutions. Its product (“the Active Navigation Server”) enables customers to find, analyse and categorise the content of unstructured textual electronic information. 
11.	Active has varied in size from between 5 and 20 employees. Although small in size it had plans and a budget to grow large. It was therefore eager to have adequate facilities and benefits in place to recruit the best staff.
4.3.	The Death in Service Scheme
12.	On 5th September 2001, Active set up the Scheme with L & G. There are three documents that constituted the Scheme:
1.	the Declaration of Trust dated 5th September 2001 (“the Declaration of Trust”);
2.	Life Assurance Benefit Group Policy No. 90992 dated 15th August 2002 (“the Policy”);
3.	The Rules of the Active Navigation Limited Death in Service Scheme dated 15th August 2002 (“the Rules”).
13.	The Scheme provided, in the event of the death of a qualifying employee, for payment of a sum of four times the employee’s salary. This was subject to a salary cap of £65,000 (“the Free Limit”). 
14.	If Active wished to obtain full cover for an employee for a salary above this level (“full salary cover”), L & G required that employee to complete a Member’s Declaration form. Having reviewed that form, Legal & General could, if they wished, impose further conditions or obligations on Active in exchange for granting full cover. Indeed, L & G could refuse to grant full cover entirely. 
15.	Ms. Menashy relies on Rule 8 of the Rules as the foundation of the breach of trust claim which provides:
“The premiums required by the Insurer to secure the benefits of the Scheme shall be paid to the Insurer by the Principal Employer as and when they fall due …”
16.	Ms. Menashy also referred me to the definition of benefits which means:
“… in relation to an Insured Member at any given date, subject to the provisions of Rule 12 and the Eligibility Provisions, an amount equal to 4 times his Scheme Earnings at the date of death, or such higher amount as may have been agreed between the Principal Employer and the Insurer.”
17.	Active utilised the services of Mr Bevan of CPN in relation to its negotiations with L & G over the premiums payable under the policy.
4.4.	Mrs Andrews
18.	Mrs Andrews has been employed by Active since September 1998 when she joined as financial controller. Her main duty has been to prepare Active’s financial records and present monthly management accounts to the board of Directors. She is a qualified Chartered Accountant. 
19.	Mrs Andrews is employed on a part time basis working some 15 hours a week split over two days. Her daily routine involves a range of tasks including checking the post, opening the post, stamping the post, dealing with e-mails, checking the bank accounts, paying suppliers, preparing management accounts and attending Board Meetings.
4.5.	Mr Wade’s contract of employment
20.	On 1st July 2002 Active wrote to Mr Wade offering him employment as, in effect, Sales Director. As already noted the salary offered was £94,233 per annum.  Reliance is placed on the second paragraph of the letter which includes:
“The remuneration offered is a base salary of £94,233 per annum plus an on target, performance related bonus of £70,000 per annum … In addition to other benefits, the Company operates a company pension plan, private health insurance cover and death in service benefits. All benefits are currently under review and will be upgraded post the forthcoming funding round. … You will receive a Contract of Employment which will need to be agreed and signed.”
21.	Mr Wade duly countersigned the letter as an acceptance and commenced his employment on 1st August 2002. Despite the contents of the letter and its statutory obligations Active did not provide Mr Wade with a written Contract of Employment with the result that the letter of 1st July 2002 is the only evidence of Mr Wade’s terms of employment.
4.6.	The 2002 Scheme renewal
22.	The policy with L & G was due for renewal on 5th September 2002. On 20th July 2002 L & G wrote to Mr Bevan about the forthcoming renewal. The letter required the provision of information in order to enable L & G to calculate the premium payable after the renewal. L & G required payment of a provisional premium of £292.68 from the renewal date until the actual premium had been calculated. At that time there was cover for 18 employees. 
23.	The relevant documents were completed and signed by Mrs Andrews on 14th August 2002. Amongst the information provided was that Mr Wade had joined the Company and the scheme on 1st August 2002 and that the Scheme Earnings were £94,233. When she gave evidence Mrs Andrews said that she had made a photocopy of the documents and placed them on the file. She regarded the documents as being important. It had taken work to produce them. If, for some reason, the documents got lost she had a photocopy that would enable her to provide the information again very quickly.
24.	Mr Bevan duly returned the relevant forms to L & G on 6th September 2002. On 16th September 2002 L & G wrote to Mr Bevan pointing out that Mr Wade’s earnings were in excess of the free limit of £65,000 and requested that he complete a Member’s Declaration Form.
25.	Mr Bevan forwarded the request to Mrs Andrews. It is common ground that Mr Wade duly completed the form and that Mrs Andrews returned it to Mr Bevan on 26th September 2002.
26.	On 6th November 2002 L & G wrote to Mr Bevan enclosing what was described as “an accurate statement of account”. A number of points can be made about this document:
1.	Partly because the number of members within the scheme had reduced from 18 to 15, the annual premium reduced to £2,370.08 or £197.51 per month. 
2.	Mr Wade was included as one of the members on risk. He is shown as being entitled to benefit of £376,932 at a yearly cost of £889.34
3.	Adjustments were made to reflect the fact premiums had been collected in respect of members who had left Active. As a result a refund of £1,252.72 was due to Active.
27.	On the same date L & G wrote to Mrs Andrews informing her that there would be a change in the Direct Debit payments of the premiums to £197.51 from January 2003.
The letter of 8th November 2002
28.	On 8th November 2002 L & G wrote to Mr Bevan about Mr Wade. The letter included:
“…we are willing to grant full cover under the above policy on Scheme Earnings of £94,233 for an additional premium of £2,455.57 per annum and is payable for ten years
…If these terms are acceptable, please arrange for one copy of this letter to be countersigned on behalf of the policyholder and returned to us within 30 days. Full cover will then be confirmed, effective from the date we receive the returned countersigned letter. We do not require payment at this time as the additional premium will be incorporated into future accounts.
Cover for this Member is currently based on Scheme Earnings of £65,000, for which no additional premium is being charged…”
29.	It is common ground that Mr Bevan forwarded this letter and the letter of 6th November 2002 to Mrs Andrews. Mrs Andrews accepted that she had seen them. She did not, however date stamp them. It is common ground that the letter of 8th November was not placed on the file.
30.	Not surprisingly she was asked a number of detailed questions about the letter of 8th November 2002. She readily admitted that her recollection of the letter and its contents was hazy. Amongst the answers she gave were:
“I read the letter very briefly. I did not refer to anything. As far as I remember I picked up on the part about signing the letter and returning it but the part about the amount of the premium and the time scale did not actually register at the time
I dealt with it as required. I put it in an envelope and off it went.
That is what I would have done. I do not remember actually doing it
I did have authority to commit Active Navigation to doubling the premium without referring the matter to a Director
At that time it was not too large a sum for the Company to consider paying. The position now is rather worse.
I was not aware that it was a significant increase.
I failed to keep a copy of the letter.
I did notice that there was an additional premium. I did not form any opinion as to whether it was significant. It was just an amount that would be collected by Direct Debit and the Company would pay it.
I cannot remember what I thought at the time
With hindsight I agree that it is a significant increase in the premium
It is possible that I did not read it clearly. It was just a simple action of signing the letter and sending it back. It is the case that letter is not on the file.
I infer I returned it because it is not on the file.
The majority of my evidence as to inference is based on the filing system.”
31.	As already noted there is an issue between the parties as to whether Mrs Andrews returned the letter of 8th November 2002 to L & G. L & G assert they did not receive it. Ms. Menashy invites me to find that it was not returned; Mr Mott invites me to infer that it was.
The reminder
32.	On 19th November 2002 L & G sent a cheque for £1,252 to Mr Bevan in respect of the overpayment of premium. Although Mr Bevan purported to forward this cheque to Active he failed to do so and thereafter lost it. He had to apply for another cheque which did not arrive until 7th February 2003. Active rely on this as evidence of the lack of efficiency of Mr Bevan or CPN.
33.	On 16th January 2003 L & G wrote to Mr Bevan about Mr Wade. The relevant part of the letter reads:
“Following your decision not to accept the terms offered for an increase in cover in respect of the above Member, we confirm that cover under the above policy is restricted to benefit based on Scheme Earnings of £65,000.”
34.	On 22nd January 2003 Mr Bevan spoke to James Walker of L & G and discussed (amongst other things) the position with regard to Mr Wade. On Mr Bevan’s file is a letter that he says was sent to Mrs Andrews on 22nd January 2003.
“Please find enclosed correspondence received recently regarding Mr Wade’s Life Assurance Benefit, this has been sent due to no response from their letter last November regarding cover above the £65,000 free cover limit.
Assuming that you wish Mr Wade to have cover for the whole of his salary, I have agreed with L & G today that you can write a confirmatory note to them and they will alter the direct debit for the premium.”
35.	Mrs Andrews is adamant that the letter was not received by Active. If it had been she would have filed and dealt with it. There is no copy on Active’s file. 
36.	At the trial there was detailed evidence as to the possibility of mail being delivered and going astray. It is to be remembered that Mrs Andrews only works two days a week. It was her evidence though that she deals with all the mail and that if a letter arrives on a day she is not there it is either opened and left in her in tray or (more probably) left in her in tray unopened. She was not aware of any other letters from CPN not arriving or going astray. 
37.	In any event the letter of 22nd January 2003 remained unanswered. It was not chased up by Mr Bevan. As a result Mr Wade remained insured with L & G based on Scheme Earnings of £65,000. Active continued to pay the premium of £197.51 per month without any increase.
4.7.	The 2003 Renewal.
38.	On 15th August 2003 Mr Bevan sent to Mrs Andrews the annual renewal documents for the Scheme. In his covering letter he pointed out that there was a provisional monthly premium of £197.51 – that is to say the same as the existing rate.
39.	Amongst the documents was a list of members for whom evidence of insurability was supplied. Mr Wade was on the list and was shown as having Scheme Earnings of £65,000. Mrs Andrews duly filled in the documents. In manuscript she showed Mr Wade’s earnings at £94,233. She signed the form on 22nd August 2003, made a photocopy that was placed on the file and returned it to Mr Bevan.
40.	In her covering letter to Mr Bevan she raised a question about whether there should be an Evidence of Insurability Form filled in for Mr Crocker (the new CEO who was earning £100,000 per annum). The letter continued:
“Also I could not remember if there was a reason why Mr Wade’s earnings were showing at £65,000. Was this so that he did not have to complete the form above but if so, he is still on that list. His salary has always been £94,233 but you may need to change it back to £65,000.”
41.	Mrs Andrews said that she did not check the file before writing this letter. Ms. Menashy relies on this passage as indicative of Mrs Andrews’ memory in 2003 of the events of the previous November.
42.	In paragraph 48 of her witness statement Mrs Andrews said that Mr Bevan called her on receipt of the letter and informed her that Active had submitted evidence of insurability and that he was surprised that the lower limit of £65,000 was shown.
43.	On 28th August 2003 Mr Bevan sent an urgent letter to L & G enclosing amongst other things Mrs Andrews’ letter. The letter includes the following comment:
“Upon checking my file, we contacted L & G on 22/01 regarding your letter of 16/01/2003 (copy enclosed). We confirmed that the company had specifically requested the benefit. James Walker confirmed the client would have his income covered for the whole 4 times the salary and the direct debit would be amended accordingly. Please can you ensure that his WHOLE salary is covered on the agreed basis”
44.	There is, of course, a crucial difference between this comment and the letter of 22nd January 2003. In the January letter Mr Bevan made it clear that a confirmatory letter was needed from Active. No such letter was ever sent.
45.	L & G did not respond to that letter until after Mr Wade had died. L & G contend that they did not see it until a copy was sent to them in October 2003.
4.8.	Death of Mr Wade
46.	Mr Wade fell ill at the beginning of September. In paragraphs 15 to 19 of her witness statement Mrs Wade sets out in a little detail the progress of his illness. It is not necessary for me to repeat it. Regrettably he died from pneumonia on 29th September 2003. 
47.	Mrs Andrews was aware that he was ill. She had been told that he was on oxygen but believed that he was recovering. She was not aware of how ill he was.
4.9.	Documents following the death of Mr Wade
48.	Ms. Menashy has taken me to a number of documents that came into existence after the death of Mr Wade emanating either from Mrs Andrews or other senior executives at Active. The purpose of this exercise was to demonstrate:
1.	That the documents were inconsistent with the Active’s case that the letter of 8th November 2002 was sent by Mrs Andrews to L & G.
2.	That Mrs Andrews did not suggest that she had returned the letter to L & G until 2006 during an investigation by the Pension Advisory Service.
E-mail – 1st October 2003
49.	This was an e-mail from Mrs Andrews to Mr Bevan shortly after the death of Mr Wade when she was completing the claim form to be submitted to L & G. By this time she had done some research into her files. The e-mail included:
“Andy was first included in the scheme at the renewal date in Sep 02 having joined the company Aug 1 02. On the recent renewal papers that you sent through and queried in my reply letter to you was why Andy’s earnings were limited to the free maximum of £65,000. I think this was because although he completed the evidence of insurability form satisfactorily, we did not return the acceptance letter or pay the increase in premium that was required. Is this your recollection of the cover that is in place before I complete the form incorrectly.” [my emphasis].
50.	Mrs Andrews was naturally asked about this in cross-examination. Indeed it was suggested to her that when she looked at the file the letter of 8th November 2002 must have been there in order for her to realise that it had not been returned. Mrs Andrews did not accept this but was unable to give any satisfactory explanation of why she had said “we did not return the acceptance letter”.
E-Mail from L & G – 28th November 2003
51.	On 28th November 2003 L & G wrote to Mr Bevan to the effect that the payment of the claim would be restricted to 4 times the free limit of £65,000. L & G’s reasons were:
“We never received the acceptance of the higher loading for Mr Wade and consequently cover is restricted to the Free Limit. Our policy is to immediately acknowledge receipt of acceptance of loading in writing. I appreciate that you queried Mr Wade’s cover in your letter of 28 August 2003. However we did not receive a copy of this until October 2003, after Mr Wade’s death.”
Letter - Mr Bevan to L & G – 3rd December 2003.
52.	On 3rd December 2003 Mr Bevan wrote a long letter to L & G in an attempt to persuade them to reconsider their decision. Included in this letter Mr Bevan stated that unfortunately Active forgot to respond to the letter of 8th November 2002. 
53.	Mrs Andrews was asked about this. She said she did not see the letter until April 2005. She said that by that time matters were being dealt with by Mr Crocker. At some time (she could not remember when) she said that the contents of that letter were not true.
E-Mails exchanged between Mr Crocker and Mrs Andrews on 22nd October 2004.
54.	Following correspondence from Mrs Wade’s solicitor Mr Crocker asked for information from Mrs Andrews as follows:
“Phil says that the reason Andy’s coverage was limited to £65k because AN did not formally approve the premium increase associated with the higher salary. Apparently L & G wrote to us twice asking for confirmation. Do you remember or have on file anything showing this?”
55.	Mrs Andrews answered the e-mail within 20 minutes. It is plain she had looked at the file because she refers to the extra cost schedule showing his benefit at the higher amount. The e-mail continues:
I remember seeing the request for confirmation in some copies of paperwork that Phil sent to us (after Andy’s death) but as I said we never received the original and were not expecting anything so did not chase up. If Phil did send us something (which would appear to have been lost in the post) then maybe he should have chased us.
56.	A number of points can be made about this reply:
1.	It is by no means clear what documents Mrs Andrews is referring to in the above paragraph. 
2.	If she is referring simply to the reminder of 22nd January 2003 it is strange that she does not mention the letter of 8th November 2002.
3.	If she is including the letter of 8th November 2002 it is strange that she does not mention that she did receive it and returned it to L & G.
E-Mail from Mr Crocker to a variety of people – 19th January 2005
57.	This is an e-mail from Mr Crocker following another letter from Mrs Wade’s solicitor. It gives another account which puts the blame on Mr Bevan for failing to act on instructions. 
58.	Mrs Andrews was not involved and, to my mind, it takes the matter no further. Mr Crocker was, of course not involved with Active in 2002.
Letter – Dorsey & Whitney to L & G – 27th April 2005
59.	On 28th April 2005 the solicitors for Active wrote to L & G in effect inviting them to pay the £116,932. The letter sets out a version of events based on the contents of the file and does not mention that Mrs Andrews sent the letter of 8th November 2002 back to L & G.
60.	Mrs Andrews said that she was not involved in giving instructions to the solicitors.
Letter 1st August 2006 from Pensions Advisory Service
61.	Some time in 2006 Mrs Wade complained to the Pensions Advisory Service. The matter was dealt with by Mr Skipp. Mr Skipp provided a review on 1st August 2006. In that document he recorded Active’s allegation that the agreement (i.e. the letter of 8th November 2002) was sent.
5.	The issues
62.	As already noted in the introduction Mrs Wade puts her case in 3 ways – negligence, breach of contract and breach of trust. In fact, however, the issues have narrowed very significantly during the course of the trial and it is not necessary to consider much of the detailed law contained in the skeleton arguments.
5.1.	Negligence
Duty of Care
63.	Mrs. Wade alleges a threefold duty of care in paragraph 9 of the Amended Particulars of Claim. In summary, she alleges a duty to use reasonable care and skill:
1.	to obtain full salary cover;
2.	to ensure that the existence or validity of that cover was properly documented and confirmed;
3.	to warn Mr. or Mrs. Wade if full salary cover was not obtained and/or there were grounds for doubting its existence or validity.
64.	All 3 of these allegations were put in issue in the Amended Defence. In those circumstances it was, perhaps, not surprising that Ms. Menashy devoted a significant part of her skeleton argument (paragraphs 39 to 58) to the vexed and frequently litigated question of the existence of a duty of care. 
65.	In his skeleton argument Mr Mott conceded that in all the circumstances of this case Active were under a duty to use reasonable skill and care to obtain full salary cover for Mr Wade. In those circumstances Ms. Menashy elected not to pursue the second and third alleged duties save and in so far as they were included in the first. 
66.	Thus there is no remaining issue between the parties in relation to the duty of care in negligence.
Breach of Duty
67.	There are 5 allegations of negligence. They are conveniently summarised in paragraph 58 of Ms. Menashy’s skeleton argument:
“Active failed to take to exercise reasonable skill and care to ensure that full salary cover in the amount of £376,932 was in fact obtained:
(1)  It failed to sign and return L&G’s offer of 8.11.02
(2) It failed to notice that confirmation, as promised in that letter, was not provided.
(3)  It failed to respond to [Mr Bevan’s] reminder dated 22.1.03.  On the balance of probability, this letter was received.
(4) It failed to pay the increase in premium required to obtain full salary cover or notice that the additional premium was not leaving its direct debit. 
(5) When [Mrs Andrews] received the renewal documents on 18.8.03 she did not act urgently enough, particularly in light of the fact that AW was taken ill and his last working day was 5.9.03.”
68.	It is convenient to deal with the last of these allegations first. Mrs Andrews received the renewal papers on 18th August 2003 and had dealt with them by 22nd August 2003. There can be no serious complaint about that delay. Mr Bevan did not (apparently) forward the papers to L & G until 6th September 2003 who did not deal with them (for whatever reason) until after Mr Wade’s death. It is difficult to see how Active can be criticised for this delay. Although Mrs Andrews knew that Mr Wade was ill she did not know how serious his condition was. She did not appreciate that he might die. In any event, as is well known, a contract of insurance is a contract of the utmost good faith. Mrs Andrews would have been under a duty to disclose Mr Wade’s medical condition. In those circumstances it is extremely doubtful whether L & G would have been willing to increase the cover on Mr Wade’s life on the terms it quoted in November 2002 until his medical condition was resolved. In those circumstances this allegation fails both on the question of breach and causation. In her closing oral submissions Ms. Menashy elected not to pursue this allegation. In my view she was right not to do so.
69.	The first, third and fourth of these allegations are central to the case. 
Did Mrs Andrews sign and return the letter of 8th November 2002 in a correctly addressed envelope to L & G.
70.	A number of points can be made about Mrs Andrews' evidence:
1.	I agree with Mr Mott that Mrs Andrews was an honest witness doing her best to remember what was in her mind at the relevant time. In so far as Ms. Menashy may have suggested that Mrs Andrews may have deliberately removed the letter of 8th November 2002 from the file I reject the suggestion.
2.	Mrs Andrews has however made a number of differing statements about the letter of 8th November 2002 which are inconsistent with Active’s current case. The most important of these are the letter of 22nd August 2003 and the e-mail of 1st October 2003. Mrs Andrews’ suggestion that the reference in the e-mail to not returning the acceptance form was in anticipation of a point yet to be made by L & G was, with respect, unsatisfactory. 
3.	On any view Mrs Andrews’ treatment of the letter of 8th November 2002 was negligent. This was an important letter. It was a contractual document relating to the employment death in service rights of one of the Directors of Active. On any view she ought to have read it carefully and kept a copy for her file. In fact she did neither. I have set out her evidence above. I shall not repeat it.
4.	Mrs Andrews appears to have no real recollection of what happened to the letter of 8th November 2002. She frankly told the court she could not now remember signing or returning the letter to L & G. The differing accounts she has given plainly demonstrate both her lack of recollection and the differing inferences she has drawn at different times.
5.	In all the circumstances whilst Mrs Andrews was an honest witness it was not possible to regard her as a reliable witness.
71.	Mr Mott invites me to infer that Mrs Andrews signed the acceptance, correctly addressed it and sent it to L & G simply from the fact that the letter was not on Active’s file. He sought to get some limited support from the fact that L & G admitted some administrative failures in relation to the letter allegedly sent by CPN in relation to the 2003 renewal.
72.	Ms. Menashy on the other hand submitted that Mrs Andrews was not a careful administrator. She pointed to failures to date stamp some letters, the failure to copy important documents, to her evidence with regard to the reading of the letter of 8th November 2002, to her failure to diarise reminders and thus to follow up on letters sent, and the failure to make any record of the return of the 8th November 2002 letter sent to L & G. She points to the differing explanations given by Mrs Andrews. Finally she made the telling point that L & G had not received the letter.
73.	At my request Mr Mott provided me with a very learned and helpful analysis of the various forms of burden of proof. Amongst other authorities he referred me to a helpful analysis of the legal and evidential burden of proof in the decision of Buckley LJ in Dunlop Holdings Limited’s Application (unreported, Court of Appeal; 1st March 1979),  11C – 12F. I am grateful for the assistance given. 
74.	In the end I prefer the submissions of Ms. Menashy on the point. When I take into account all the factors I am not satisfied that Mrs Andrews countersigned the letter of 8th November 2002, placed it in an envelope correctly addressed to L & G and posted it. Indeed I think it more probable than not that she did not. The fact that L & G did not receive the letter is to my mind significant evidence in support of this.
75.	In my view it was negligent of Mrs Andrews not to ensure that the letter was so returned. Mr Mott did not seriously suggest otherwise.
Confirmation and Payment of Premium
76.	If Mrs Andrews had read the letter of 8th November 2002 carefully she would have realised that a significantly higher premium was required than the £197.51 payable under the 6th November 2002 calculation. Mr Mott suggests that Mrs Andrews was entitled to expect that the additional payment would not be collected until the reconciliation which would take place the following November. Mrs Andrews could not assist on this because she did not read the letter carefully and did not really take in the arithmetic. I cannot accept Mr Mott’s submission. If that is what L & G meant they would have said that the additional payment would be collected on the reconciliation at the end of the year. I think that any fair reading of the letter indicates that there would be an increase in the monthly premium payable.
77.	Mrs Andrews checked the bank statements and kept the books. In my view she ought to have been aware that no increased premium had been collected. She had received no confirmation that L & G had received her countersigned letter of 8th November 2002 and there had been no increased collection of the premium. In my view she ought to have realised that L & G may not have received the letter she says she sent. Thus, if contrary to my view the letter of 8th November 2002 was returned to L & G, I think it was negligent of Mrs Andrews not to follow the matter up after the premium payment in January 2003 was not increased.
The letter of 22nd January 2003
78.	As this letter was not on Active’s file and as Mrs Andrews has no recollection of having seen it Mrs Wade has not satisfied me on balance of probabilities that it was received. I accept of course that it might have been delivered and gone astray in Active’s offices but there is no real evidence to suggest that is what happened.
79.	It follows that this allegation of negligence is not made out.
Loss
80.	In my view Active are vicariously liable for Mrs Andrews’s negligence in relation to allegations 1, 2 and 4. If proper care had been taken cover would have been in place for four times Mr Wade’s full salary. L & G offered to provide such cover and Active were willing to pay the additional premium. L & G repeated the position in the conversation on 22nd January 2003 to Mr Bevan.
81.	It follows that the loss is the £116,932 claimed by Mrs Wade plus interest.
5.2.	Breach of Contract
82.	The allegations in paragraph 7B of the Amended Particulars of Claim overlap with the allegations of negligence and/or breach of trust and thus need not be considered separately. 
83.	The only live issue between the parties in relation to breach of contract is as to the terms of the contract between the parties. Mr Mott accepts that, if it is found that any of the alleged terms were part of Mr Wade’s contract, Mrs Wade would be able to enforce them under the Contracts (Rights of Third Parties) Act 1999.
84.	Mrs Wade alleges that it was an express term of the Contract that Active would provide a death in service benefit of £376,932 or 4 times actual salary. Alternatively she contends that the term should be implied.
Express Term
85.	The only contractual document is the letter of 1st July 2002. The relevant words in that contract are
“In addition to other benefits, the Company operates a company pension plan, private health insurance cover and death in service benefits. All benefits are currently under review and will be upgraded post the forthcoming funding round.”
86.	It will immediately be noted that the letter makes no reference to the amount of benefit payable for death in service. It is thus difficult to see how it is possible to interpret the letter as in effect a guarantee by Active that it would pay benefits of 4 times salary. A more natural construction is that Mr Wade would be able to participate in the benefits provided by the Company.
87.	Ms. Menashy seeks to get round this difficulty in an ingenious argument summarised in paragraph 23 of her skeleton argument:
“The meaning of the offer letter is that a death in service benefit would be provided to [Mr Wade] by Active, if he accepted employment, although the amount of such benefit was not yet ascertained.  The value of that benefit was subsequently ascertained at £376,932, either because Active decided to obtain and L&G agreed to provide full salary cover for this amount, or because this was the value of the Life Assurance Benefit as defined by the Rules (see below).”
88.	There are to my mind a number of flaws in the argument. It is to my mind difficult to interpret the letter as a guarantee by Active to provide the benefit irrespective of the terms of the scheme and the views of L & G. Suppose, for example, L & G had refused to insure Mr Wade for any sum above the Free Limit, it is difficult to interpret the letter as requiring Active to do so. The value of Mr Wade’s Life Assurance Benefit as defined by the rules were four times his scheme earnings or such higher amount as had been agreed between the Employer and the Insurer. In this case Mr Wade’s scheme earnings were the free limit of £65,000 per annum. No higher sum had in fact been agreed even though L & G were willing to agree a higher sum and Active were willing to pay the necessary higher premium required.
89.	In his skeleton argument Mr Mott submits that: 
“It is, however, not accepted that the passing reference to death in service benefits is capable, on a true construction, of constituting any express term at all. It simply lacks the necessary level of detail and specificity required before the parties could agree an enforceable legal obligation;”
90.	For my part I do not find it necessary to decide whether that submission is correct. I am however quite satisfied that the term contended for by Ms. Menashy was not an express term of the contract.
Implied term
91.	A term may be implied into a contract if (a) it is necessary, in the business sense, to give efficacy to the contract, or (b) it was so obviously a stipulation in the agreement that the parties must have intended it to form part of the agreement.  A term will not be implied unless it is in all the circumstances equitable and reasonable. 
92.	In my view it is neither necessary nor obvious that Active agreed in effect to guarantee payment of four times Mr Wade’s salary on death irrespective of its entitlement under the Scheme. Nor is it reasonable to expect them to do so. 
93.	It may well be reasonable to expect Active to allow Mr Wade to participate in the Scheme and to take steps to obtain full cover for an employee earning more than £65,000. If, however, L & G refused the increased cover it would seem to me to be unreasonable to expect Active, a small software company, to underwrite that risk.
94.	I accordingly reject the suggestion that there is an implied term as alleged.
5.3.	Breach of Trust
95.	Many of the allegations of breach of trust were either abandoned during the trial or overlap with other allegations. At one time Mrs Wade alleged that Active, as Trustee, ought to have pursued litigation at its expense against either L & G, or CPN or both. There were formidable difficulties with this allegation and, in my view Ms. Menashy was right to abandon it in her closing submissions.
96.	The only live allegation of breach of trust is that in breach of Rule 8 Active failed to pay the premiums as and when they fell due. In paragraph 31 of her skeleton argument Ms. Menashy puts the matter thus:
“…Active failed to pay “The premiums required by [L&G] to secure the benefits of the Scheme”.  The benefits comprised the Life Assurance Benefit which was defined at Appendix A as “an amount equal to 4 times his Scheme earnings at the date of his death, or such higher amount as may have been agreed between [Active] and [L&G].”  L&G and Active agreed that the benefit would be for £376,932, but failed to pay the extra premium for this benefit”.
97.	Despite the ingenuity of this argument I cannot accept it. The short answer to the point is that the premiums due under the scheme were collected by Direct Debit and paid on the due date. The relevant benefits under the scheme were four times Mr Wade’s scheme earnings or such higher sum as may have been agreed. Mr Wade’s scheme earnings were £65,000. No higher sum had been agreed even though both L & G and Active were willing to agree such a higher sum.
98.	It follows that the claim for breach of trust fails.
JOHN BEHRENS
Monday 11 May 2009