In a judgment handed down on 15 May 2009 in Barr and others v Biffa Waste Services Ltd  EWHC (TCC), the Technology and Construction Court held that an After the Event ("ATE") policy was disclosable both under CPR31.14 and pursuant to the court's case management powers. This decision is significant as it provides an exception to the traditional approach that insurance policies are private as between the insured and insurer and thus not disclosable.
The Claimants (residents of a housing estate in Hertfordshire) applied for a Group Litigation Order ("GLO") in respect of claims in nuisance and negligence against the waste contractor Defendant. The Defendant sought disclosure of the Claimants' ATE insurance policy as a condition of the GLO.
The GLO was in fact ordered before the application for disclosure of the ATE Policy was heard, but the court considered that the Defendant should not be disadvantaged by the order in which the applications had been heard and approached the application accordingly.
The Defendant had two lines of attack. First, it argued that the ATE policy should be disclosed pursuant to CPR31.14, which states that a "party may inspect a document mentioned in …a witness statement", on the basis that the policy had been referred to in the Claimants' witness statements. Second, it argued that an order for disclosure should be made under the court's general case management powers.
Coulson J held that the ATE policy was disclosable pursuant to CPR 31.14. He further held that, in any event, the policy would have been disclosable pursuant to the court's general case management powers.
Coulson J noted that the ATE policy had been expressly and deliberately referred to in two of the Claimants' witness statements in support of the GLO. Accordingly, it was held that disclosure should be ordered unless the policy was irrelevant or covered by litigation privilege.
In finding the policy to be relevant, Coulson J noted that: (a) it was considered sufficiently important to be referred to in the Claimants' witness statements; (b) given the modest value of each individual claim compared to the costs risk, the litigation would not have been instigated without the policy; and (c) that the sufficiency of ATE cover was relevant to the litigation, citing Hobson v Ashdown Morton Slack Solicitors and others  EWHC 1134 and Marion Henry v British Broadcasting Corporation  EWHC 2503.
Coulson J distinguished the traditional approach in West London Pipe Line Storage Ltd v Total UK Ltd and others (2008), in which the court, declining to follow Harcourt v Griffin (2007), confirmed that insurance policies are a private matter between the insured and the insurer. Coulson J stated that different considerations applied to the disclosure of pre-existing liability insurance policies and ATE policies - while the inception of the former may have nothing to do with events which form the subject matter of the litigation, the latter, depending on the facts, will have been taken out for the sole purpose of allowing a claimant to pursue litigation.
It was further held that the policy was not covered by litigation privilege. Coulson J, did, however, note that information relating to the premium would be privileged where this could be said to reflect legal advice as to the prospects of success in the litigation. He therefore held that the amount of premium should be redacted from the disclosed policy.
Case management powers
Given his findings under CPR31.14 there was no need for Coulson J to consider the second argument advanced by the Defendant but he did so in light of the detailed submissions which had been advanced.
As noted above, he stated that different considerations applied to the disclosure of pre-existing liability policies and ATE policies.
In view of this, Coulson J based his decision on the "cards on the table" approach to litigation and the need to balance the parties' respective interests. He noted that it was in the Defendant's interest to know what exposure they might have were they to be successful and seek to recover their costs from the Claimants. The successful recovery of costs would be likely to depend on the efficacy and application of the ATE policy. Disclosure would therefore put the Defendant in the same position as the Claimants who could determine the Defendant's financial viability by checking the Defendant's filed accounts. By way of contrast, the Claimants were unable to identify any detriment they might incur by the disclosure of the ATE policy. Although it was submitted that knowledge of the cover provided might encourage the Defendant to rack up large legal fees and thus "force the litigation off the road and into a ditch", Coulson J rejected this argument as speculative, stating in any event that he had sufficiently wide case management powers to prevent such obstruction of the litigation.
He finally held there was no provision in the CPR that precluded the conclusion he had reached and further noted that an ATE policy might well be disclosable in any event under an application for costs-capping or security for costs.
This decision would seem to pave the way for litigants to apply for the disclosure of ATE policies. Although Coulson J cited with apparent approval the traditional approach of Steel J in West London Pipe Line to the effect that insurance policies are private matters between the insured and insurer and thus not disclosable, he held that different considerations applied to ATE policies. This was on the basis that liability policies are often in place years before the event and have nothing to do with the litigation while ATE policies are closely linked to the litigation such that it would not have been instigated without the ATE policy having been in place.
While the application succeeded on the primary ground that the ATE was referred to within the written witness statements (and litigants should therefore be careful when referring to any ATE policy in proceedings), the second ground of the decision (albeit obiter) was simply the exercise of the court's case management powers.
It should be noted that, in deciding the matter, Coulson J commented that such cases are fact sensitive and thus it was difficult to draw hard and fast principles. Further permutations may therefore trouble the courts in the future, for example where a claimant identifies and asserts prejudice in complying with any disclosure order.