Eqoq Legal Ltd v Das Legal Expenses Insurance Ltd
| Jurisdiction | England & Wales |
| Judge | Mr C Hancock |
| Judgment Date | 30 March 2021 |
| Neutral Citation | [2021] EWHC 1477 (Comm) |
| Date | 30 March 2021 |
| Docket Number | Case No: CL-2020-000073 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 1477 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
The Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr C Hancock QC
(Sitting as a Deputy Judge of the High Court)
Case No: CL-2020-000073
Mr P Jones appeared on behalf of the Claimant
Mr L Weston appeared on behalf of the Defendant
THE DEPUTY JUDGE: This is an application for summary judgment in this case. The brief background of the case is as follows. The claimant, Epoq Legal Limited provides online legal documents whilst the defendant, DAS Legal Expenses Insurance Company Limited, is a legal expenses insurer. The defendant's product is frequently sold bundled together with other lines of insurance but is on occasions sold independently.
In 2011, these two parties entered into two agreements, a commercial lines services agreement and a personal lines services agreement. The relevant terms of which for present purposes are in similar terms. Those relevant terms are as follows. Firstly, the provisions of clause 9.12 provide as follows:
“Upon either party giving to the other 10 days written notice, its agent, if suitably qualified, will have the right to examine during any working day the other's records and/or other information in the possession of such a party in relation to the calculation of the access fees, additional charges, affiliate marketing charges, use charges, the introducer fee and ELL referral fee (a “financial audit”).”
Financial audit is then defined as follows:
“Financial audit means the examination during any working day of records and/or other information in the possession of another party in relation to the calculation of the access fees, additional charges, affiliate marketing charges, use charges, introducer fee and ELL referrer fee by another party or their representative.”
Clause 9.13 went on to provide that:
“A financial audit shall be conducted causing the minimum possible disruption to the audited party's commercial operations and shall be limited to such information as made reasonably be required to carry out such audit effectively and efficiently.
In addition clause 11 provided for obligations of confidentiality. Clause 11.1.1 stated that, “except as required by law the signatories shall procure the confidential information shall…” 11.1.3:
“Not be disclosed to any third party except in so far as this may be required for the proper operation of this agreement and then only under appropriate confidentiality provisions approved by the other party.”
The arrangements between the parties remained in force until 31 December 2019 when they were terminated pursuant to notice given by the defendant earlier in that year. Under the agreements, customers of the defendant had during that period been allowed to allow their customers accesses to the claimant's services. For example, an individual with home and contents insurance would be entitled as part of a bundle to the defendant's legal expenses insurance and in turn through the defendant would be entitled to access the claimant's legal document drafting service either on a co-branded basis or otherwise. The defendant then was to pay the claimant for the access granted. As I understand it, the majority of that payment was essentially on the basis that each individual user who had potential access to the services would have an amount paid in respect of that user.
In August 2019 the claimant's case is that it discovered that a customer of the defendant, B Calm, had been permitted access to the claimant's extended document suite on the wrong basis, with the result that the wrong price had been paid for that access. In addition, at about this time it was discovered by the claimant allegedly that there had not been full accounting in relation to certain provision to customers of another insurance, Direct Line.
Following this in August 2019, the claimant gave notice that it required a financial audit of the figures provided to it by the defendant and on the basis of which the claimant had been paid for access to its documents under clause 9.12 in each of the agreements.
The relevant letters in this respect are, firstly, a letter of 29 August 2019, which stated that it was a notice served in accordance with clause 21 of each of the commercial lines contracts and personal lines contract requiring access to conduct a financial audit under clause 9.12 of each of the contracts and setting out certain proposals in five sub-paragraphs for the manner in which that audit should be conducted.
Those five proposals being, firstly, that the CEO of the claimant would conduct the financial audit possibly in conjunction with someone with some formal accountancy training. Secondly, that Mr Horwitz would provide to the defendant details of the records and information that he wishes to examine. Thirdly, that the financial audit would take place on an agreed date or agreed dates which shall be no less than 10 working days nor more than 20 working days after Mr Horwitz had provided the details in the preceding paragraph. Fourthly, that during the financial audit, DAS will make the records available together with reasonable copying facilities for which no charge should be made and reasonable access to relevant personnel who can answer questions about the records. And fifthly, Mr Horwitz was then to prepare and provide a report of his findings of fact and invite DAS's agreement thereto.
The defendant responded to that letter on 5 September and indicated that there was no objection in principle to a financial audit but indicated also that the request for such an audit was premature.
Thereafter, on 12 September the defendant responded again setting out a dispute as to the possibility of involving external auditors at what they...
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