The High Court of Justice did not accept the application to join into proceedings a defendant’s insurer. Had the application been successful, the claim against the insurer would have been for a declaration as to the scope of the insurance available to meet the potential claims against the insured. Thus, the well-established jurisprudence that a claimant must take the defendant as he finds him remains valid.
Nearly 1,000 women seek damages from private hospital groups for supplying defective implants manufactured by the French company, PIP. They claim that the implants, which were used in breast implant surgeries, were of unsatisfactory quality and therefore the private hospital groups were in breach of s4 (2) of the Supply Goods and Services Act 1982 (SOGSA). The total value of the claims, if proved, is around £13m.
A number of defendants are parties to an action managed under a Group Litigation Order, under which the lead defendant is Transform Medical Group (CS) Ltd (“Transform”). Transform has relevant insurance for some of the claims with Travelers. Transform and other defendants have brought Part 20 claims against the UK supplier of the breast implants, Clover Leaf Products Limited (“Clover Leaf”) – a dormant company with no material assets save for the insurance that it has with Amlin.
Part 20 proceedings were issued by some defendants against their respective insurers (including by Transform against Travelers) seeking determination of certain insurance coverage issues that have arisen between them (the “insurance coverage proceedings”). Clover Leaf has not sought to join its insurer, Amlin, to the insurance coverage proceedings.
Travelers subsequently applied to join Amlin as a party in the insurance coverage proceedings pursuant to CPR 19.2 (2). Additionally, Travelers sought a declaration that Amlin’s insurance of Clover Leaf would respond to Clover Leaf’s liability, if any, to Transform.
Amlin objected to the application and the Court was asked to determine whether Amlin should be joined or not to the insurance coverage proceedings.
The application to join was refused.
The application was made pursuant to CPR 19, which provides that a court may order a person to be added as a new party if:
- it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
- there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve the issue.
The Court found that it was not right that the matters in dispute to be considered under (a) were confined to those matters in dispute between the actual claimants and defendants in these proceedings. It was also not necessary for an application to succeed under the provisions of CPR19 to require that a cause of action existed between the proposed new party and the party seeking its joinder.
The Court held that the claim would more appropriately have been made under CPR 20 but that, in any event, the application would still have been refused.
It was held that it was important to appreciate that Clover Leaf’s insurance position was wholly separate from its liability (which is itself a matter in dispute), if any, to the defendants in the same way as the defendant’s insurance position was quite separate from any liability to the claimants.
Further the Court found that the insurance cover provided by Amlin to Clover Leaf (from which Transform/Travelers could benefit) was an issue that might be very similar to claims between the defendants and their insurers, but it was nonetheless a separate issue.
Although a short judgment, taken together with the Judge’s earlier judgment in XYZ these are two interesting decisions as to when the court will and will not intervene in a party’s insurance arrangements including whether it will enquire as to, or require production of evidence concerning, the state of a defendant’s insurance coverage.
The Court did not accept that: (1) the PIP Litigation made this a special case or a reason for some special exceptance from the established rule, or (2) that general case management powers under CPR 3.1(2) required or enabled such an order to be made given that the purpose of the application, in the Court’s opinion, was solely to establish in advance how much money may ultimately be recoverable from Clover Leaf/Amlin.
As the Judge commented, this application to join a party’s insurer where that party was not officially insolvent was an attempt to “establish in advance the depths of another insurer’s pockets” and if it had been successful would have “cut across years of jurisprudence”. Ultimately, a claimant (or, in this case, another insurer, itself a defendant to the insurance coverage proceedings) must take its defendant as he finds him. Taken to its logical conclusion, had the application been successful, it would, for example, have entitled a personal injury claimant to join a defendant’s insurers into proceedings to seek a declaration as to the scope of the insurance available to meet the claim. This runs contrary to the position that the English Courts have taken to date.
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