Pine v Das Legal Expenses Insurance Company Ltd [2011] EWHC 658 (QB)
Since July 2004 individuals, companies and firms have been able to instruct barristers directly on a public access basis. Prior to this, clients usually instructed a barrister through their solicitor.
This case considered whether or not legal expenses insurers can restrict the insured's right to instruct a barrister to act for her on a public access basis.
Background
The insured instructed Royds, a firm of solicitors, to represent her in a claim against her former employers. The insured failed to pay the legal fees due to Royds and so, Royds issued proceedings against the insured. The insured brought a counterclaim against Royds alleging that they had conducted the proceedings negligently.
The insured had legal expenses insurance provided by First Assist. First Assist agreed that the insured could instruct a barrister, Mr. Hyams, to act for her on a public access basis in the proceedings with Royds. Unfortunately, the limit of indemnity was reached under the First Assist cover and the insured looked to DAS Legal Expenses Insurance Company ('DAS') to indemnify her in respect of Mr. Hyam's additional fees under a home and contents policy which included legal expenses insurance. DAS did not agree to Mr. Hyams being retained on a public access basis and required that he be instructed through a solicitor.
As a result the insured sought a declaration that she was entitled pursuant to the Insurance Companies (Legal Expenses Insurance) Regulations 1990 (which governs legal expenses insurance in the UK) and under the terms of the policy to choose her own legal representative, namely a public access barrister.
Under the terms of the policy, once legal proceedings had been commenced the insured was "free to choose an appointed representative" and DAS were only entitled to reject that choice in "exceptional circumstances". The policy did not expressly indicate what would constitute an exceptional circumstance.
DAS argued that there were "exceptional circumstances" which justified it rejecting the insured's choice of legal representative. In DAS' view, it was a "document heavy and complex professional liability transaction" which, combined with the fact that the insured was not legally qualified and suffered from chronic fatigue syndrome, would make it difficult for her to provide the instructions and litigation services necessary to support Mr. Hyams.
Decision
The Court concluded that the Regulations do not contemplate any circumstances in which a legal expenses insurer is entitled not to accept the legal representative selected by the insured. As a result any "exceptional circumstances" would have to be "very exceptional" (irrespective of whether or not the insurer is acting in the insured's best interests).
In this case it was held that there were no "exceptional circumstances". The fact that the insured wanted to instruct Mr. Hyams on a public access basis was "nothing like enough" to bring this case within the remit of exceptional, particularly as the Courts are increasingly familiar with litigants in person involved in "substantial" litigation against well funded competently advised defendants. Accordingly, the Court granted the declaration sought and held that DAS could not insist on the appointment of a solicitor as the insured's legal representative and to do so, was a breach of the insured's legal expenses insurance policy.
The Court also inferred that there would be no "exceptional circumstances" where an insured wished to instruct solicitors who were not prepared to enter into a standard form of agreement with the insurer.
On a more positive note, whilst the Court was prepared to grant a declaration that the insured had the right to select a legal representative of her choice; the Court also concluded that an insured in this situation was not entitled to damages.
Comment
This decision confirms the fact that the Courts are proactively applying the Regulations when considering legal expenses insurance policies. Insurers therefore need to be aware that the provisions of the Regulations are clear and do not contemplate restricting an insured's freedom to choose a lawyer of their choice even in "exceptional circumstances". As a result, the Courts are unlikely to be amenable to attempts by legal expenses insurers to rely upon their right to reject the insured's selected legal representative.
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