The ever increasing costs and damages in multi-party and catastrophic injury litigation have resulted in the rise of an associated issue of whether a defendant can meet the costs of the claim and litigation through its liability insurance. Historically the terms of insurance between an insurer and insured are confidential and form no part of the disclosure process. However the recent judgment in Senior v Rock UK Adventure Centres & A N Other [2015] EWHC 1447 (QB) has given cause to revisit this.

The background law

The previous decisions in this area turn on the application of CPR Part 18 (Request for Further Information) namely "i) the court may at any time order a party to a) clarify any matter which is in dispute in the proceedings…" and CPR Part 3.1 (2)(m) (Case Management) "the court may…take any… step or make any…order for the purpose of managing the case and furthering the overriding objective".

In Harcourt v Griffin & Others [2007] EWHC 1500 - involving catastrophic injury to a young claimant with a prospective periodical payments order - the court considered a request under Part 18 for disclosure of the extent of insurance cover held by the defendants. In deciding he had jurisdiction, Irwin J considered the wording of Part 18 'requires to be interpreted reasonably liberally'. Although the insurance cover was not itself 'a matter…in dispute in the proceedings' on his interpretation the court had jurisdiction because its purpose was to ensure that the parties had all the information they need to deal efficiently and justly with the matters in dispute. In the absence of a rule of law or practice to the contrary, 'the wording of CPR 18 is broad enough to cover information of this kind'.

That decision is contrasted with West London Pipeline and Storage v Total (UK) Ltd & others [2008] EWHC 1296. This was one of a number of claims arising out of the Buncefield litigation which had a total value of £700 M. Again, Part 18 was relied on to obtain details of the insurance arrangements of a third party from whom Total were seeking a contribution. In concluding that he had no jurisdiction to make such an order, Steel J noted that the policies were not disclosable under Part 31 (where you find the court rules on disclosure and inspection of documents in the case). In respect of Part 18 he considered the rule and the accompanying practice direction (which had not been raised in Harcourt) together with other materials and concluded the rule confined itself to matters which are reasonable and necessary for the parties to prepare their own case or understand the case they have to answer. The insurance policies impacted neither on the preparation nor understanding of the case and therefore he had no authority under Part 18 to require their disclosure.

The matter came before the courts again in X,Y Z v Various [2013] EWHC 3643 (QB), an application in the course of the breast implant group litigation. The total value of claims was £13 M with costs of both sides in addition. Following numerous case management hearings, directions were set with a timetable for trial. Pursuant to Part 3.1 (2)(m) and Part 18 the claimants applied for information on the nature and extent of the liability insurance cover held by one of the defendants due to concerns about its financial position. Thirwall J followed the reasoning in West London Pipeline in concluding the request could not be permitted under Part 18. However, as the parties' financial positions and ability to fund the litigation was relevant to case management he ordered the defendant to provide a witness statement setting out whether it had adequate insurance to fund its participation to the completion of the trial and possible appeal.

The latest decision

These cases form the background to the decision in Senior v Rock UK Adventure Centres & A N Other. In brief, the claim involved a very serious injury to a claimant arising from the failure of a rope which caused him to fall a considerable distance. Liability was not disputed and damages were pleaded in excess of £5 million. The defendant employer brought a Part 20 claim against the rope manufacturer who in turn agreed to indemnify the defendant. The court noted that the 'realities of the situation have to be recognised' in that it is insurers who are dealing with the claim rather than the employer and rope manufacturer themselves. This meant that the claimant did not know who was ultimately funding the settlement. This is important because damages were sought on the basis of a lump sum and periodical payments which required satisfaction that continuity of payment is secure. As in Harcourt, the claimant was concerned that the level of insurance cover, which has to be a minimum of £5 million, would be inadequate when liability for costs was taken into account.

The court concluded that it had jurisdiction to make the order. It is not clear whether the decision was based on CPR 18 or CPR 3.1 (2)(m) but it seems likely that CPR 18 was mentioned as the judgment includes reference to Harcourt and the same claimant's solicitors were instructed for both cases. The court emphasised that without knowing the level of cover, neither the claimant nor the court could make a reasonably informed assessment of the merits of a lump sum award or a periodical payment.

What can insurers expect next?

All the above cases are High Court decisions and as yet there is no appeal court decision on the issue. It seems from this latest decision, however, that where a claim is of sufficient value (in excess of £5 M) and a periodical payments order is being proposed, the court will be minded to order disclosure of insurance cover under Part 18 if there is concern about the security of payments. Furthermore, the court will consider limited disclosure of insurance coverage under CPR 3.1 (2)(m) where a party's litigation funding potentially impacts on case management and directions to trial but this is likely to be only in the most complex of litigation.