The defendant, an insurance intermediary, sought to strike out the claim against it. The defendant had arrangements with a firm of solicitors to refer people with potential civil claims to these solicitors in return for a referral payment. The defendant, acting as the agent of various insurers, would arrange and administer BTE and ATE insurance policies which were put in place in order to cover the solicitors' clients for their liability for the solicitors' costs plus any adverse costs and disbursements. Following the late payment of referral fees and premiums, the defendant stopped making referrals. The solicitors subsequently commenced proceedings, seeking to recover (from both the defendant and insurers) sums which it alleged were payable under the insurance policies issued in favour of their clients.
Picken J has now struck out that claim, describing it as "unwinnable", for the following reasons:
- The solicitors could not rely on the Contracts (Rights of Third Parties) Act 1999. The policies expressly excluded the operation of that Act but, in any event, they did not provide for the solicitors to enforce their terms and nor did they purport to confer a benefit on the solicitors. The purpose of the policies was to benefit the solicitors' client and not other parties (such as the solicitors, the client's opponent in the litigation, or those to whom disbursements are payable) to whom the client has a relevant liability. It was not sufficient to show that the solicitors would incidentally derive a benefit from the policy.
- The solicitors did not have title to sue in their own name as they were not the insured under the policies. This position was also spelt out in the solicitors' client care information pack. Where it was stated that the solicitors "will claim disbursements on your insurance policy", this simply meant that a claim would be presented on the client's behalf. Any action would have to be brought in the name of the client. Furthermore, although a solicitor will often, as a matter of practicality, pay disbursements to third parties, such as experts, on their clients' behalf, this does not mean that the solicitors have any legal liability to do so, and so there is no such liability to be covered under the policies.
- There was no implied term in the policies entitling the solicitors to sue in their own name. There was no necessity to imply such a term and the judge's finding on this point was supported by the decision of Cooke J in Greene Wood McLean v Templeton (see Weekly Update 40/10).
- It was also hopeless to argue that the defendant was liable under the policies. The defendant was not an insurer, it was just an agent which marketed the policies. Prior caselaw makes it clear that "the fact that an insurance agent administers policies and commonly pays claims does not make it personally and directly liable to make payments under policies".
- The decision in Greene Wood (see above) did not assist the solicitors in this case. In Greene Wood, Cooke J had found that solicitors were able to bring a claim against ATE insurers because they had given a guarantee to their clients of "no risk, no cost" (ie that the solicitors themselves would pay if the insurers did not – but the primary liability rested with the insurers). However, no such guarantee had been given in this case. Nor was there any other contractual commitment that the solicitors would pay disbursements. The judge added that Greene Wood was "an exceptional case".