Market News > Addleshaw Goddard E-Alert- English Court rules on disclosure
"None of your business": English Court will not order disclosure of the defendant's insurance detail
West London Pipeline and Storage and ors v Total UK Ltd [2008] EWHC 1296
In a decision that will no doubt be welcomed by insurers, a first instance Court has held that in English legal proceedings defendants cannot be compelled to provide detail of their insurance cover to Claimants. This decision is in tune with the generally accepted principle that an insurance contract is a private matter between the insured and it insurer, although it runs contrary to a previous first instance decision on the same legal point: Harcourt v Griffin and ors [2007] (see our E-Alert on this http://www.addleshawgoddard.com/asset_store/document/reinsurance_e-alert_-_show_me_the_money_11128.pdf).
Background
This case relates to the Buncefield explosion. Total UK Ltd ("Total") were the defendant to an action brought by West London Pipeline and Storage for losses exceeding £700 million. Total sought a contribution from TAV Engineering Ltd ("TAV"), the company that designed, manufactured or supplied a switch which failed, causing an overflow of fuel leading to the explosion. The issue was that TAV was a non trading company with only £1,500 worth of current assets. Hence TAV's ability to contest the litigation and pay damages was dependant on its liability insurance. Total had no doubt that such insurance existed and that it was reasonably substantial. Nevertheless, given the amount of damages sought, Total contented it needed disclosure of the insurance coverage to ascertain whether TAV were worth pursuing. Total relied on Civil Procedure Rule 18, which allows Courts to order disclosure of information that relates to matters in dispute in the proceedings, and argued the insurance information was (i) relevant to the issues and (ii) necessary for the purposes of efficient case management.
The decision
The Court disagreed that the insurance information was relevant to the issues in dispute between Total and TAV. The claim by Total against TAV was based on the Civil Liability (Contribution) Act 1978, which raises issues of apportionment, and the Court found the scope of insurance cover could not be said to be material to such issues.
As regards the case management argument, after careful consideration of previous case law and the Civil Procedure Rules, the Court found it had no jurisdiction under CPR 18 to order disclosure of TAV's insurance position. This was because CPR 18 and its related Practice Direction made it clear only information that relates to the issues in dispute is disclosable. As above, the insurance information sought by Total was not directly related to the issues in dispute (it was common ground it was not disclosable under CPR31). Although this was contrary to Harcourt and to the current trend of a more open approach to litigation, the Court felt bound to reach this conclusion because in its view the rules gave no room for CPR 18 to be applied liberally.
Comments
It is clear from the judgment that the Court found the decision on the case management issue difficult, pointing to the need to ensure litigation resources are not wasted. However, TAV argued such advantage would be outweighed by the prejudice defendants and their insurers would suffer, notably in the context of settlement negotiations, if the amount of insurance cover was disclosable.
In our view, the decision of the Court in this instance has to be the correct one for the reasons given both by the Court and by TAV as set out above. Allowing the insurance position of a defendant to be disclosed would also encourage "deep pocket" litigation, where claimants chose to pursue defendants because of their insurance cover rather than because of their blameworthiness. Moreover, we have always believed Harcourt could be limited to its own specific facts: a personal injury tetraplegic case where the defendant's liability and quantum had largely been established, and the defendants were unable to show they would suffer prejudice in consequence of the disclosure. We pointed out at the time we felt it unlikely the Harcourt decision would lead to orders for the disclosure of insurance details being routinely granted.
The Court in this case however has gone further by finding there is no jurisdiction at all for English Courts to order the disclosure of insurance details, which suggests Harcout was incorrect. Given those two diametrically opposed first instance decisions, this is now a matter for Court of Appeal to resolve. In the meantime, insurers can rely on this decision to argue insurance details are not disclosable under CPR 18.
For further information contact Caroline Bell, Professional Support Lawyer at Addleshaw Goddard +44(0)20 7788 5162 email caroline.bell@addleshawgoddard.com
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