In a recent case the Commercial Court declined to order disclosure of details of a third party's liability insurance.
In a decision that runs contrary to the judgment in Harcourt v FEF Griffin (2007) the court held:
- Disclosure was not relevant to the pleaded issues
- The court did not have jurisdiction to order disclosure
of the insurance details.
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In a decision reached earlier this week, the Commercial Court ruled that a party to litigation was not entitled to have access to details of a third party's insurance cover.
The decision runs contrary to the decision in Harcourt v FEF Griffin last year, where the court ruled that, in certain circumstances, a claimant was entitled to have access to a defendant's insurance cover in litigation. For further details of that decision, click here.
Background
The issue arose in the context of proceedings concerning the explosion at the Buncefield oil depot in December 2005.
Total is seeking a contribution from a third party, TAV, in respect of any liability that Total may incur in the proceedings. The contribution is being sought on the ground that TAV designed, manufactured or supplied a component that failed to operate, allowing an overflow of fuel to occur, which led to the explosion.
In its defence, TAV sought to rely on a limitation of liability clause in the standard terms and conditions of its contract to supply the switch. This clause limited TAV's liability to 5% of the contract price of the switch – approximately £21. Total challenged the clause as being unreasonable under the Unfair Contract Terms Act 1977. In assessing the reasonableness of a limitation of liability clause under the Act, the court must consider the resources available for meeting the liability (should it arise), and also the insurance cover available at the time. Total therefore sought an order from the court that disclosure of TAV's insurance details was relevant to the pleaded issues.
Although TAV later amended its defence to remove reference to the cost of the switch and to its standard terms and conditions, Total continued to seek an order for the release of TAV's insurance details, not least because, in its submission, disclosure was necessary for the efficient case management of the proceedings.
Total relied on Part 18 of the Civil Procedure Rules (CPR), which allows the court to make an order for a party to clarify any matter that is in dispute in the proceedings or to give additional information in relation to any such matter. It argued that, in the absence of liability insurance, TAV would be unable to contest the litigation and pay any damages. Therefore, it argued that the nature and extent of TAV's insurance position was key in determining whether continuing the litigation served a useful purpose from the perspective of Total and/or the court.
Total cited the judgment of Irwin J. in Harcourt v FEF Griffin (see previous Law-Now). It argued that the circumstances of the present case provided a paradigm example of the necessity of disclosure sought so as to discover whether the action against TAV was a waste of Total's money, and a waste of the court's time.
TAV made a number of arguments against disclosure, including that Harcourt had been wrongly decided, since it was made without reference to the relevant authorities.
Decision
Steel J. ruled as follows:
- He dismissed Total's argument that disclosure was
relevant to the pleaded issues, on the ground that it had no
connection with the alleged causative conduct of TAV.
- He held that he did not have the jurisdiction to make the
order sought by Total, and TAV was not therefore required to
disclose its insurance details.
The judge said that he had considered the overriding objective of the CPR and in particular the need for the court to manage cases in a cost-efficient and expeditious manner, but believed that to order disclosure under Part 18 of the CPR would require a rewriting of both the rule and the practice direction. He drew attention to a number of pre-CPR cases that supported his view that the insurance policy should not be disclosed, under the overriding objective or otherwise.
The judge also considered the Law Commission Paper on 'Third Parties – Rights Against Insurers', which was referred to by TAV in its arguments against disclosure. He endorsed the Paper's sentiments that information about insurance cover held by a solvent insured should not be made available to a claimant unless it was volunteered, since details of cover were a private matter between an insurer and an insured, production of which would encourage speculative 'deep pocket' litigation. In short, the judge said, a claimant must take a defendant as he finds him.
Comment
The judge made no secret of the fact that his decision was contrary to the view of Irwin J. in Harcourt. He conceded that he reached his contrary view "with some considerable hesitation", bearing in mind that the trend is strongly towards an open approach to litigation. However, he was not prepared to deviate from the provisions of the CPR, and he did not believe that Part 18, however liberally interpreted, has led to a significant change in law and practice.
Steel J. endorsed TAV's view that, in Harcourt, certain material, including the Law Commission Paper on 'Third Parties – Rights Against Insurers', was not drawn to Irwin J's attention. He said he believed that had it been presented, it would have had some bearing on the judge's interpretation of Part 18.
Rather than openly disagree with the principles underlying Irwin J's decision, it might have been easier for Steel J. to distinguish Harcourt on the basis that it was a personal injury case, with a particularly extreme set of facts, whereas the Total case was a commercial dispute. However, he avoided doing so, and erred towards a different reasoning to that adopted by Irwin J. It is difficult to equate the two judgments, and it remains to be seen which approach will be adopted in future cases. Most practitioners believe that Harcourt was an unusual decision, with an unusual set of facts, which suggests that the reasoning in the Total decision will be followed in future cases.
Further reading: West London Pipeline and Others v Total UK Ltd and Others [2008] EWHC 1296
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 13/06/2008.
