Out-Law Guide | 15 Oct 2009 | 1:46 pm | 3 min. read
Derrick Barr and others v Biffa Waste Services Limited
The claimants applied to the court for a Group Litigation Order (GLO) to pursue claims in negligence and nuisance against Biffa Waste resulting from odour and emissions from a waste site. The claimants' solicitors informed Biffa that the action was funded by an "after the event" (ATE) legal expenses policy supporting a conditional fee agreement.
Biffa made several requests to see this policy, but the claimants' solicitors refused, saying they had already supplied a Notice of Funding form in accordance with court rules. They confirmed, however, that there were no exclusion clauses likely to render the policy invalid and that it provided an adequate level of cover.
Biffa was not satisfied. In response to the application for the GLO, it asked the court to make it a condition of the order that the claimants disclose the ATE policy. A GLO was granted, covering about 140 claimant households near the waste site, but the application for disclosure was deferred.
There was no dispute that, but for the GLO, the action would probably not have been pursued at all. Each individual claim would probably be worth only a few thousand pounds, whereas the cost of pursuing the action was likely to be substantial.
Biffa argued that, without disclosure, it could not know whether the policy provided proper cover for its own legal costs if its defence succeeded or if there were any exclusions that might affect coverage. There would be no detriment to the claimants if the policy was disclosed. If necessary, the amount of the premium could be redacted from the disclosure, in case it gave some indication of the strength of their case.
Biffa claimed that the court's power to order disclosure lay in the fact that the policy had been mentioned in witness statements lodged in support of the GLO application and this information was not covered by legal privilege (Civil Procedure Rule 31). Alternatively, the court could make the order under its general case management powers.
Traditionally, liability insurance policies have been treated as a private matter between the insured and the insurer and not disclosable. There have, however, recently been conflicting decisions on this point: Harcourt v Griffin , where disclosure was ordered; and West London Pipeline , where the judge held he did not have jurisdiction to make such an order.
In this judge's view, however, different considerations applied to the disclosure of an ATE policy than to a liability policy.
Liability insurance is likely to have been taken out long before the event which gives rise to the subsequent litigation and will have absolutely nothing to do with those events. An ATE policy, on the other hand, will have been taken out after the cause of action arose and will very often be a critical element of the litigation, in that, without the policy, there would be no litigation at all.
Questions such as the existence of exclusion clauses and the level of cover were clearly significant to the issues before the court. The claimants could not reasonably expect Biffa or the court to accept their summary of the policy's terms.
The judge concluded that, in circumstances such as these, where without the ATE policy there would be no proceedings at all, the traditional approach to liability insurance was not directly relevant.
In this case, the policy was disclosable because it had been mentioned in witness statements and was not privileged. Litigation privilege did not apply except (possibly) as to the amount of the premium which might conceivably reflect legal advice received as to the prospects of success. This information could be redacted from the disclosed document.
But the policy was also disclosable under the court's wider case management powers and would be consistent with the "cards on the table" principles underlying the court rules. It would be unfair and unjust to require the defendant to participate in the group litigation not knowing whether, if it won the case, any costs would be recoverable because of a provision in the policy.
The judge in this case drew a clear distinction between disclosure of an ATE policy and disclosure of a conventional liability policy.
His comments, however, were not restricted to ATE insurance in group litigation. Although the judge acknowledged that each case would depend on its own circumstances, the same reasoning could apply to many ATE policies without which the litigation would never have been instigated. The decision is likely to encourage many more applications for disclosure.