There have been a number of cases in recent years in which a party has sought to utilise the provisions of the CPR in order to obtain information on the opposing party's insurance arrangements, rather than waiting for that party to go insolvent in order to use the procedures provided by the Third Parties Rights Act 1930 or 2010. The recent case of Peel Port Shareholder Finance Co v Dornoch Ltd  EWHC 876 (TCC) looks at this again in light of the discretion which Judges have under CPR31.16 for applications for pre-action disclosure and attempts to shut the door on such actions. But has the door truly been locked?
Why parties ask to see a third party's insurance policy?
In today's economic climate, even when a third party appears to be active and solvent, solvency is no guarantee of it being able to satisfy a judgment or pay the often significant costs in play. In this context, a party may try to obtain early information from its opponent on its insurance arrangements to ensure that even if it was to pursue a claim for damages there would indeed be assets (i.e. an insurance policy) behind it. Without such information, the view may be taken that there is little point in pursuing a claim.
How do claimants seek to obtain information regarding a third party's insurance policy?
In the case of an insolvent insured, claimants can obtain this information under the Third Party (Rights Against Insurers) Act 2010 (the "2010 Act") which finally came into force on 1 August 2016. Whilst the previous 1930 Act permitted this, Section 11 and Schedule 1 of the 2010 Act brings in a new regime for disclosure of insurance policies and documents from third parties, providing a simpler procedure for third parties to bring claims against insolvent insureds. Once an insured becomes insolvent, there is clear guidance as to what information a claimant can request and how it can go about getting that information.
But, do the Acts permit a claimant to obtain such information from an insured which may not yet be insolvent or even on the brink of insolvency but, rather, may be in a situation where its assets would simply not satisfy a substantial claim? In these cases, there is no entitlement to obtain insurance information under the Acts.
In the past, parties have therefore resorted to using Part 18 Requests for Information and Pre-Action Disclosure applications, pursuant to CPR 31.16, to try and get around this hurdle.
Whilst Harcourt v Griffin  EWHC 1500 (QB) allowed Part 18 to be used for the purposes of obtaining insurance information, the following cases of West London Pipeline v Total  EWHC 1296 (Comm) and XYZ v Various Companies  EWHC 3643 (QB) closed this path down. This was on the basis that the courts considered that they had no jurisdiction under Part 18 to order disclosure of a party's insurance arrangements, as it is not a matter at dispute in the proceedings.
In the absence of recourse via Part 18, claimants may attempt to utilise CPR 31.16. The case law to date, however, suggests that pre-action disclosure applications are not the appropriate tools by which to obtain insurance information and a party should have to wait until the third party is in fact insolvent before seeking insurance information via the appropriate Third Party (Rights Against Insurers) Acts.
This was looked at in the recent case of Peel Port, where Jefford J considered the 2010 Act and the regime under the 1930 Act, and the Law Commission's Consultation Paper which pre-dated the 2010 Act in order to come to her conclusions. That review led the judge to consider that there has never been any statutory provision allowing a litigant to get the insurance information of a solvent insured, as a litigant takes his defendant as he finds him. The only route therefore is via the CPR, and as the policy falls outside of Part 18 and standard disclosure, CPR 31.16 is the only other possible route as it includes an element of judicial discretion.
Peel Port sought to argue that the facts of the case were "perhaps exceptional", as there was a very high chance of success against the insured, and the insured would be very unlikely to be able to satisfy a judgment without going into liquidation. The applicability of the insurance policy was therefore key to determining whether litigation should be instigated in the first place.
Jefford J disagreed, saying this was a "series of hypotheses about what might happen. They are not sufficiently exceptional circumstances for me to order disclosure of a solvent insured's insurance policy contrary to established practice."
Ultimately Jefford J did not feel her discretion could be exercised in this case. She did, however, say that there could be "sufficiently exceptional" circumstances which could warrant disclosure of a "solvent insured's insurance policy contrary to established practice."
So when is the situation is "sufficiently exceptional" to depart from Peel Port?
There are likely to be few cases which would be considered "sufficiently exceptional" to cause a judge to use his/her discretion in this regard. Jefford J concluded in Peel Port that it would be curious if, against the background of the purpose of the 2010 Act, a potential claimant could say that because the solvent insured might become insolvent and that he, the claimant, might then have a claim against insurers, he should have disclosure of the policy under CPR 31.16. In her judgment, this militated strongly against exercising her discretion to order disclosure in this case.
This judgment is in line with previous decisions but does leave the door ajar for a successful application in the future if the particular facts of the case are "sufficiently exceptional".