Costs – Group Litigation Order – Insurance – PIP – Product Liability
Queen's Bench Division
Lady Justice Thirlwall
24 February 2017
An insurer was ordered to pay the costs of successful uninsured claims where it was considered that they had influenced the conduct of the litigation by choosing not to reveal the nature and extent of their insurance policy as this had inevitably affected the claimants’ approach to the claims.
The application concerned a request by the claimants under s 51. Senior Courts Act 1981 that Travelers pay their costs for all successful claims against Transform Medical Group Ltd for damages sustained as a result of Transform’s supply to them of defective breast implants manufactured by the French company PIP.
Broadly speaking the claimants under the Group Litigation Order fell into three distinct categories: those who fell under the period of insurance and whose implants had ruptured; those who fell under the period of insurance and whose implant had not ruptured but they were concerned it would “worried well”; and those whose claims fell outside the period of insurance. Judgment was entered in relation to all the claims in March 2016 but the company, Transform, was in administration and no damages or costs were paid. Throughout the litigation Travelers had been reluctant to disclose the terms of their insurance policy, not doing so until 2014 when they received expert medical evidence confirming that the claimants were overwhelmingly likely to succeed. At this time Travelers advised the claimants’ solicitors that they would only be in a position to cover claims between March 2007 and March 2011 and no claims concerning the “worried well”.
On examining the application the judge considered the defendant’s submission that it was necessary for the claimants to establish that Travelers controlled the litigation. In her opinion the correct starting point was that the uninsured claims were nothing to do with Travelers and therefore any involvement they had with their defence was a relevant consideration.
The court concluded that the mere fact that Travelers insured other claims did not entitle them to be involved in, still less influence, the conduct of the uninsured claims both of which it did on the facts. She concluded that “but for” Travelers interest in the litigation Transform would have disclosed earlier the insurance position. Furthermore, the court concluded there were two additional relevant factors when deciding to grant the application, namely: had the claimants failed the defendants would have been liable to pay all of Traveler’s costs in defending the claim and by paying the defence costs Travelers took no risk but reaped a significant benefit; secondly, Travelers would be paying for what they bargained under the contract. The application was therefore granted.
This is an important conclusion by the Judge and one, which will have huge ramifications for the claimants who otherwise would not have been insured and would have been unlikely to receive compensation as Transform was in administration. This decision emphasises the importance of early disclosure of the insurance position and reinforces the point that an insurance company who meddles in the litigation process will be liable for the costs that flow from their intermeddling.