Facts
The claimant, aged 16, was very seriously injured in an accident
at a gym and sued the gym owner and two coaches who worked there.
The defendants admitted 75% liability but the amount of damages
remained to be decided.
The claimant's solicitors said the claim was worth over £6
million. None of the defendants had any significant assets, but
they had accidentally disclosed a certificate of insurance which
indicated cover was available to the tune of £5 million. It
was not clear if this was the only insurance available, whether it
was a “once and for all” limit or how it would apply to periodical
payments, if at all.
Naturally, the claimant wanted to know how any damages and costs
awarded to him would be met, so he made an application under Part
18 of the Civil Procedure Rules for more information about the
insurance.
Part 18 allows the court to order a party to “clarify any matter
which is in dispute in the proceedings…or give additional
information in relation to any such matter”.
The claimant argued that, if the maximum cover was £5 million
overall, there would be little point in having a lengthy battle
over quantum. But if further insurance funds were available, it
would be in his interest to try to maximise the award. And without
this information, his solicitors could not consider whether an
order for periodic payments would be appropriate.
The defendants argued that it was an elementary rule that an
outsider has no right to know the terms of an insurance contract to
which he is not a party. Disclosure of policy details would give
claimants an unfair advantage in litigation and applications of
this sort would rapidly become standard practice.
Judgment
Mr Justice Irwin found in the claimant’s favour and ordered
details of the insurance cover to be disclosed.
He acknowledged that the nature and extent of the defendants'
insurance cover was not strictly a “matter… in dispute in the
proceedings”, but decided that the wording of Part 18 should be
interpreted reasonably liberally.
The overall objective of the court rules was to ensure a swift,
proportionate and economical approach to litigation. Part 18 in
particular was intended to ensure the parties had "all the
information they need to deal efficiently and justly with the
matters that are in dispute between them".
The judge did, however, make it clear that such disclosure
should only be ordered when the claimant could demonstrate there
was a “real basis for concern that a realistic award may not be
satisfied” and that disclosure was necessary to determine whether
further litigation would be useful or a waste of time and
money.
Commentary
Despite the judge’s cautionary words about the need to
demonstrate a ″real basis″ for disclosure, the decision will alarm
defendants and their insurers who may consider that the discovery
of deep insurance pockets will only encourage claimants to litigate
for longer.
The limits of the decision are also unclear. Quite a few
defendants might have trouble meeting a £6 million damages award.
In asking for the information, this claimant was not on a fishing
expedition because the accidental disclosure of the insurance
certificate meant he knew that insurance of some sort was in place
and that the limit appeared to be lower than the likely damages.
But would the judge have reached the same conclusion had no
certificate been disclosed?
Almost a year after the Harcourt decision, another High Court
judge faced with a similar application in West London Pipeline v Total firmly concluded
that the court had no jurisdiction to order disclosure of insurance
details. Whether or not the defendant would be able to pay
any damages awarded was not a “matter… in dispute in the
proceedings”.
This is clearly an issue that needs to be resolved.
