Disclosure of documents – After the event (ATE) insurance policy – Claimant householders bringing action against defendant under group litigation order – Litigation funded by ATE policy supporting conditional fee agreement with solicitor – Defendant applying for disclosure of ATE policy – CPR 31.13 and CPR 3 – Whether entitled to disclosure – Whether policy irrrelevant or protected by litigation privilege – Application granted
The claimants were members of around 140 households on a housing estate close to a landfill site operated by the defendant waste contractor. They wanted to bring proceedings against the defendant in nuisance and negligence for damages for alleged odour emissions from its site. They applied to the court for a group litigation order (GLO) to enable them to bring the claim jointly; without such an order, it was unlikely that any of them would have brought proceedings since the costs of litigation were estimated to exceed £1m for each side, whereas each of the claimants’ individual claims was worth only a few thousand pounds. The claimants’ solicitor was to conduct the litigation pursuant to a conditional fee agreement, supported by an “after the event” (ATE) insurance policy. The policy was mentioned in a witness statement submitted to the court in support of the GLO application. The defendant did not object to the GLO in principle, but it sought disclosure of the ATE policy as a condition of its grant.
At a hearing in March 2009, the GLO was granted and the defendant’s application for disclosure was deferred to enable the insurer to intervene and be heard on the issue. At a subsequent hearing of that application, the defendant contended that the ATE policy should be disclosed pursuant to: (i) CPR 31.14, as a document mentioned in witness statements; and/or (ii) the court’s general case-management powers. The defendant argued that it needed to see the policy in order to protect itself against a situation where it won the litigation but was unable to recover its costs because the ATE policy failed to cover them or was invalidated in some way; disclosure, it contended, would not prejudice the claimants. The claimants did not identify any detriment to themselves but maintained that, as a matter of principle, the ATE policy could not be disclosed. They submitted that it was covered by litigation privilege and, further, that an insurance policy was never disclosable because it was a private matter between the insured and the insurer and was irrelevant to the issue between the parties.
Held: The application was granted.
Although the traditional approach was to regard insurance policies as a private matter between the insured and the insurer, different considerations applied to ATE policies since such a policy was often a critical element of the litigation, without which no claim could be brought at all.
The claimants’ ATE policy was disclosable pursuant to CPR 31.14 because it was mentioned in witness statements and was neither irrelevant nor protected by litigation privilege. As to relevance, the ATE policy was regarded by the claimants themselves as an important matter and relevant to their application for a GLO. There would be no litigation without the GLO, which in turn depended on the existence of the ATE policy, and the terms of the policy were relevant to the issues before the court: Hobson v Ashton Morton Slack Solicitors [2006] EWHC 1134 (Admin) and Henry v British Broadcasting Corporation [2005] EWHC 2503 (QB) applied, Expandable Ltd v Rubin [2008] EWCA Civ 59; [2008] 1 WLR 1099 considered, West London Pipeline Storage Ltd v Total UK Ltd [2008] EWHC 1296 (Comm); [2008] Lloyd’s Rep IR 688 distinguished. Since the claimants accepted that the terms of the policy were a relevant matter, they could not reasonably expect either the defendant or the court to accept their summary of the document, as opposed to its disclosure. The defendant should be able to view the document, enabling it to form its own view as to its limits and any exclusion clauses. It was not covered by litigation privilege because it did not contain legal advice and was not a communication between the claimants and their solicitors or between their solicitors and third parties: Winterthur Swiss Insurance Co v AG (Manchester) Ltd (in liquidation) [2006] EWHC 839 (Comm) distinguished. However, the amounts of the premiums should be deleted from the disclosed version of the policy because these might be said to reflect legal advice on the claimants’ prospects of success.
Had the ATE policy not been mentioned in the claimants’ witness statement, the court could none the less have ordered its disclosure under CPR 3 pursuant to its general case-management powers and the “cards on the table” approach promoted by the CPR. The defendant’s interest in knowing the terms of the policy to identify any risks pertaining to the litigation was not outweighed by any prejudice to the claimants. The provisions of CPR 44 PD 19 concerning the disclosure of information regarding funding arrangements should not be read as restricting or preventing the court from exercising its case management powers in a way that would best meet the overriding objective of doing justice between the parties. It was relevant that an ATE policy might be disclosable in particular circumstances in any event, such as where a defendant has applied for a costs-capping order or for security for costs: R (on the application of Buglife – The Invertebrate Conservation Trust) v Thurrock Thames Gateway Development Corporation [2008] EWCA Civ 1209; [2008] 45 EG 101 (CS) considered.
Nigel Cooksley QC and John Bates (instructed by Hugh James, of Cardiff) appeared for the claimants; Ian Croxford QC and Thomas de la Mare (instructed by Nabarro LLP) appeared for the defendant; Greg Cox (of Colemans-ctts LLP, of Manchester) appeared for the insurer, as intervenor.
Sally Dobson, barrister