Pedro Emiro Florez Arroyo and Others v BP Exploration Company (Colombia) Ltd
| Jurisdiction | England & Wales |
| Judge | The Senior Master |
| Judgment Date | 06 May 2010 |
| Neutral Citation | [2010] EWHC 1643 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ08X00328 |
| Date | 06 May 2010 |
[2010] EWHC 1643 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Senior Master
Case No: HQ08X00328
OCENSA PIPELINE GROUP LITIGATION
Alexander Layton QC & Benjamin Williams (instructed by Leigh Day & Co) for the Claimants
Charles Gibson QC & Nicholas Bacon QC (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendants
Hearing date: 17 March 2010
In this case management conference in the above litigation the Defendant makes application that the Claimants disclose the ATE Insurance policy they have obtained. The Defendant advances its case for disclosure on the basis that the policy is relevant, is not privileged and without sight of its terms it cannot properly assess whether it is likely to be able to recover its litigation costs against the Claimants in the event that it succeeds in the litigation. The Claimants resist the application on the basis that there is no jurisdiction in the court to order the disclosure of the policy and/or that it is irrelevant and/or privileged and/or that if its disclosure is ordered, it will cause irremediable prejudice to the Claimants' case. The Defendant relies heavily in its submissions on the fact that this is a group litigation action by non resident Colombian farmers who it says it is highly likely could not have brought this litigation without the benefit of ATE insurance, so it has a legitimate interest in knowing whether or not it is likely to be able to recover costs and up to what level. In summary I uphold the Claimants' submissions. In my judgment I do not have the jurisdiction under the CPR in general or under that part relating to group litigation to compel them to produce their ATE policy or policies; they are not relevant documents for the purposes of disclosure; they are in any event privileged; their disclosure would in any event be likely to prejudice the Claimants in the conduct of this litigation.
The statutory regime on which the current version of conditional fee agreements, together with after the event insurance policies, is based is in sections 27 and 29 of the Access to Justice Act 1999. Section 27 deals with the recoverability ofthe success fee and section 29 with the recovery of the ATE premium, both as "additional liabilities" from an unsuccessful Defendant. Although in this case we are concerned only with an application for the disclosure of the terms of the insurance policy and not with disclosure of the level of the premium for the policy which the Claimants will seek to recover from the Defendant if they are successful in their claim as an additional liability, many of the points made in this application would apply equally to both policy and the level of success fee.
The Access to Justice Act 1999 at section 29 provides as follows,
'29 Recovery of insurance premiums by way of costs
Where in any proceedings, a costs order is made in favour of any party who has taken out an insurance policy against the risk of incurring a liability in those proceedings, the costs payable to him may, subject in the case of court proceedings to rules of court, include costs in respect of the premium of the policies.'
This statutory provision was given effect to in the court rules from April 2000. Old style conditional fee agreements taken out under the provisions in force before that had frequently been accompanied by ATE insurance, but the success fee on the CFA was recoverable from the client and not from the unsuccessful Defendant. The premium for the ATE insurance had to be paid by the client and was not recoverable from the unsuccessful opponent. From the date of commencement of the new rules in April 2000, that situation was reversed.
The key provisions in the CPR concerning provision of information about ATE insurance are found in the rules, the Costs Practice Direction ['CPD'], and the Pre-Action Conduct Practice Direction ['PACPD']. They are as follows:
a. CPR 44.15 'Providing information about funding arrangements';
b. CPD 19 (practice direction to CPR 44.15) as it applies to the insurance arrangements in this case;
c. CPD 19 as amended to apply to insurance arrangements entered on or after 1 st October 2009;
d. PACPD 9.3 'Information about funding arrangements' as it applies to the insurance arrangements in this case;
e. PACPD 9.3 as amended to apply to insurance arrangements entered on or after 1 st October 2009; and
f. CPR 44.3B 'Limits on recovery under funding arrangements'.
Disclosure of information concerning CFAs and ATE insurance is principally regulated by CPR 44.15. It provides that 'A party who seeks to recover an additional liability must provide information about the funding arrangement to the court and to other parties as required by a rule, practice direction or court order.'
The Defendant's reasons for seeking disclosure
It is clear from the Claimants' notices of funding that they have obtained an ATE policy number GA11419377 dated 23 June 2008 issued by FirstAssist Insurance Services Limited (FirstAssist). The Defendant seeks disclosure and inspection of that policy and any other ATE policies the Claimants may have obtained in relation to this claim. The Defendant stresses the fact that if there was no ATE policy there would be no action against the Defendant and that in the event of success the policy provides the only realisable hope that the Defendant has of recovering its costs.
The Defendant seeks such an order for the following reasons:
(a) Unless the policy is disclosed the Defendant will not know the extent of the Claimants' insurance cover in respect of any orders for costs the Defendant obtains. Although the Claimants have stated the level of the cover (£1.8 million) they have refused to clarify the conditions and exceptions on the cover. The Claimants have also refused to state whether the policy covers the 33 individuals whose claims have already been struck out or discontinued, and in respect of whom costs orders have already been made in the Defendant's favour.
(b) Most of the Claimants live in rural Colombia and the majority of them are (according to their solicitor) peasant farmers. If the Claimants are not covered by insurance the Defendant will have considerable difficulty enforcing any costs order against them.
(c) The Claimants know that if they obtain an order for costs they will be able to enforce it. Unless the policy is disclosed the Defendant will not know whether and/or to what extent it will be able to enforce any order for costs. That places the parties, the Defendant says, on an unequal footing.
(d) The method of calculating the premium under the policy remains unclear. Therefore the Defendant is unable to assess a major component of the costs it is likely to be ordered to pay if it loses the case. By contrast the Claimants are, as a result of the costs reporting order made by the Court, well aware of the costs being incurred by the Defendant.
(e) The Defendant is thus litigating in the dark. It does not know what proportion (if any) of its costs it will recover if it wins; it is unable to make a proper assessment of the costs it is likely to be ordered to pay if it loses. The Claimants are under no such handicap.
(f) The uncertainty prejudices the Defendant's assessment as to how best to conduct the litigation. In particular it is prejudiced in making an informed assessment as to what steps and costs to incur in fighting the case and whether to make an application for security for costs.
FirstAssist's standard policy terms
FirstAssist publish the standard terms under which they offer ATE insurance on their website. They offer 3 types of ATE cover: a "Watermark" policy for " standard personal injury claims" a "Rebate" policy for insurers pursuing subrogated claims; and a "Pursuit" policy for other claims "where the case is being run on a conditional fee agreement".
The Defendant has asked the Claimants to confirm whether they have taken out a "Pursuit" policy. The Claimants' solicitors replied in correspondence (see Leigh Day's letter dated 8 March 2010 at tab 36) that "substantial elements of our clients' insurance arrangements have been negotiated on bespoke terms!' but have declined to give any further clarification. Leigh Day's response suggests that the Claimants' ATE policy is based at least in part on standard terms. The Defendant says that the likelihood must be that those standard terms are the "Pursuit" terms. This in my judgment is a reasonable assumption but equally in my judgment it is of importance in this application that this is a "bespoke" policy and not one whose terms are public but rather one in which the terms have been tailored to the Claimants' cases, no doubt with strategic and risk factors taken into account.
From a copy of the public standard "Pursuit" terms at tab 4, it can be seen that there are a considerable number of exceptions and qualifications to the cover under a standard "Pursuit" policy. Of particular concern to the Defendant are the following:
(a) Page 3: "Cover ceases when: .… e) as a result of material developments it becomes reasonably foreseeable that the aggregate of Adverse Costs and Expenses could exceed the Long Stop at any time during the Legal Proceedings unless We have given Our written permission to continue cover'.
(b) Page 5. The insurance does not cover: " 1. Any payment by the Insurer under this Policy which is due as a result of a discontinuance or settlement to which we have not given our prior written consent."
(c) Page 6. The insurance does not cover: "5. Legal Proceedings made, commenced, brought or transferred outside the Territorial Limits or which are not governed by the laws of England and Wales".
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