Factual and Procedural Background
The present ruling concerns multiple proceedings involving Plaintiffs, including Company A, Company B, and others, against Defendant insurers including Company C and others, relating to insurance policies ("the Policies") covering leased aircraft. The dispute arose following the Russian invasion of Ukraine on 24 February 2022, which allegedly resulted in the loss of numerous Western leased aircraft. The Plaintiffs sought to exclude the proposed expert testimony of Mr. Farmer, a retired insurance broker and underwriter, who prepared a detailed expert report on market practice and understanding relevant to the Policies. The application was heard on days 69 and 70 of the proceedings, and the court was asked to decide in advance whether Mr. Farmer’s evidence should be admitted or excluded without hearing his oral testimony.
Legal Issues Presented
- Whether the court should exclude the expert evidence of Mr. Farmer a priori, before any oral testimony, on the basis that it is inadmissible.
- Whether evidence of "market practice" or "market understanding" is admissible as part of the factual matrix for interpreting the Policies.
- The extent to which subjective views or understandings of market participants, including experts, are relevant or admissible in the interpretation of insurance contracts.
- Whether the particular section 8 of Mr. Farmer’s report, addressing the phrase "in the course of repossession," is admissible evidence.
Arguments of the Parties
Plaintiffs' Arguments
- The interpretation of the Policies is solely a matter for the court and must be objective; expert evidence on subjective market understanding is irrelevant and inadmissible.
- Mr. Farmer’s references to "market understanding" amount to subjective opinions improperly influencing the court’s interpretation of the Policies.
- Any market practice evidence must be notorious, universal, and certain to be admissible; Mr. Farmer’s suggested market understandings fall short of this standard.
- Limited portions of Mr. Farmer’s report (sections 4 and 9) might be admissible regarding premium differences and availability of other insurance products, but the remainder should be excluded.
- Materials relating to endorsements AVN67B and AVN67C may be instructive historically but cannot aid construction of the Policies.
- There is no need for expert evidence; the court should interpret the Policies based solely on their language and legal submissions.
- Distinguished relevant authorities by emphasizing that market "practices" differ from "understandings," and argued that the latter do not justify admissibility.
Defendants' Arguments
- Mr. Farmer’s evidence does not seek to introduce subjective intent or understanding of the parties but rather provides objective background on market practice relevant to the niche insurance market.
- Notoriety is not the test for admissibility; market understanding can assist the court as part of the surrounding circumstances.
- It is inappropriate to exclude Mr. Farmer’s evidence without hearing it, especially given the plaintiffs have already relied on expert evidence from Mr. Hughes responding to Mr. Farmer’s report.
- Expert evidence on market practice is common and accepted in the interpretation of specialized insurance contracts, as supported by authoritative texts.
- There is no bright-line distinction between market practice and market understanding; both may be relevant to the factual matrix.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Analog Devices BV v Zurich Insurance [2005] IR 274 |
Permitted consideration of standard industry exclusions as background in policy interpretation. |
Referenced by plaintiffs to accept limited admissible expert evidence on market availability of insurance products. |
| Chartbrook v Persimmon Homes [2009] 4 All ER 677 |
Recognition that parties may use words in an unconventional sense, supported by evidence of habitual usage ("private dictionary" principle). |
Acknowledged by plaintiffs as allowing for customary market meanings differing from ordinary meaning. |
| Crema v Cenkos Securities Plc [2011] 1 WLR 2066 |
Expert evidence on market practice short of trade custom may be admissible as factual background for contract interpretation. |
Heavily relied upon by defendants to support admissibility of expert evidence on market practice; plaintiffs sought to distinguish. |
| Aspen Insurance v Adana [2015] EWCA Civ 176 |
Evidence of market understanding inadmissible if it is merely subjective views without settled trade usage. |
Referenced by plaintiffs to argue inadmissibility of Mr. Farmer’s evidence; court noted evidence had been heard and tested in that case. |
| Barlee Marine Corporation v Trevor Rex Mountain [1987] 1 Lloyd's Rep. 471 |
Rejected evidence attempting to influence contract construction subjectively by market practitioners' opinions; admissibility limited to established custom or shorthand meanings. |
Used by plaintiffs to argue against admissibility of market understanding evidence. |
| Hyper Trust v FBD [2021] IEHC 78 |
Confirmed courts interpret contracts objectively, excluding subjective intention evidence; expert evidence admissible only if it forms part of factual matrix. |
Applied by the court to guide approach on admissibility and to justify hearing evidence with later assessment of weight. |
| Prenn v Simmonds [1971] 1 WLR 1381 |
Contracts must be interpreted in the context of the factual matrix known to parties, excluding negotiations. |
Invoked in Crema and this ruling to support admissibility of background evidence excluding subjective intent. |
Court's Reasoning and Analysis
The court began with the well-established principle that contract interpretation is an objective exercise focused on the language used and the factual matrix known to the parties at the time of contracting. Subjective intentions or understandings, including those of expert witnesses, are generally inadmissible.
The court acknowledged the dispute over the admissibility of Mr. Farmer’s expert evidence on market practice and market understanding. While the plaintiffs argued that most of Mr. Farmer’s evidence was inadmissible as it introduced subjective market views, the defendants contended that such evidence provided relevant background on a highly specialized insurance market and was not aimed at interpreting contractual terms subjectively.
The court examined relevant authorities, notably Crema, which permits expert evidence on market practice short of trade custom to assist in understanding the factual background, and Aspen, which cautions against admitting evidence of mere subjective market understanding. The court also considered Irish authority in Hyper Trust confirming the objective approach.
The court found that Mr. Farmer’s report often conflated "market practice" and "market understanding," which may have different admissibility implications. Given the plaintiffs had already presented expert evidence (Mr. Hughes) responding to Mr. Farmer’s report, the court considered it fair and efficient to hear Mr. Farmer’s oral testimony to test the evidence fully rather than exclude it a priori.
However, the court identified section 8 of Mr. Farmer’s report, which addressed the phrase "in the course of repossession," as self-evidently inadmissible. This section went beyond describing market practice to interpreting contract language and was based on hypothetical assertions unsupported by any market experience. Consequently, this section was excluded without oral testimony.
The court also noted the practical complications and inefficiencies that would arise from partially excluding Mr. Farmer’s evidence in advance, including re-examining the evidence of Mr. Hughes and the joint memorandum between the experts.
Overall, the court emphasized that admissibility and weight of expert evidence would ultimately be determined after hearing and testing the evidence, including cross-examination and legal submissions.
Holding and Implications
The court’s final decision is as follows:
Mr. Farmer is permitted to give oral evidence on his expert report except for section 8, which is excluded as inadmissible a priori.
The exclusion of section 8 necessitates the removal of paragraph 7.3 from Mr. Hughes’ report and section 9 of the Joint Memorandum, both of which comment on section 8 of Mr. Farmer’s report.
The court did not accept the plaintiffs’ application to exclude the entirety of Mr. Farmer’s evidence without hearing it, emphasizing fairness, efficiency, and the need to test expert evidence through oral testimony and cross-examination.
No determination was made at this stage on the ultimate admissibility or weight of Mr. Farmer’s evidence beyond section 8; the parties remain free to make legal submissions on these issues following the evidence.
The ruling does not establish new precedent but applies existing principles on contract interpretation and expert evidence admissibility in the context of complex insurance litigation involving specialized market practices.