At the trial last month of a solicitors’ negligence claim the High Court has held that there was no duty on a solicitors’ firm, acting for a client in civil litigation, to ensure that the opponent had effective professional indemnity insurance cover in place.
The claimants sued the solicitors’ firm (BG) which had previously represented them in a dispute with an architectural practice. BG, when acting for the claimants, knew that they were running the litigation on a tight financial budget, that they were living hand to mouth and that the availability of insurance on the other side to meet their claim for damages and costs was an important consideration for them. BG made repeated requests to the other side in the dispute as to whether there was effective insurance in place, but no satisfactory response was forthcoming.
When the claimants eventually succeeded in the dispute, it transpired that the opponent (the architects’ practice) did not have effective cover to meet the damages or costs – on account of late notification falling foul of the RIBA minimum terms. (The owner of the architects' practice had been confident he would succeed in the dispute and did not notify the matter as he wanted to avoid increased premiums at renewal while it was pending. He first notified it after he had lost.)
The court held that BG were not negligent, and caused no loss, in failing to discover the lack of effective PI cover. They were powerless to compel the opponent to disclose the true position and any application for an order to secure it would have failed.
If nothing else, this case reinforces the advice to all insured individuals and businesses to comply strictly with the notification obligations in their insurance policies. The owner of the architectural practice in this case ended up with a personal costs liability to the claimants of £95,000.
But there is also some comfort in this judgment for solicitors about the limits of their professional duties to assist their clients who may be engaging in litigation which, even if apparently successful, turns out ultimately to be commercially worthless. It should be noted that the events concerned in this case pre-dated the decision of David Steel J in West London Pipeline & Storage Ltd v Total UK Ltd  EWHC 1296 (Comm) which confirmed that the provision of liability insurance information will not be ordered, as it is irrelevant to the matters in dispute.
Finally – if and when the Third Parties (Rights against Insurers) Act 2010 is ever brought into force, the right to information about an opponent’s insurance position will change (in favour of providing that information). But the coalition government has indicated a reluctance to do this in case it proves to be a drag on business.
See: Dowling v Bennett Griffin (A Firm)  EWHC 1995 (Ch).