Travelers Insurance Company Ltd v Armstrong and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lady Justice Asplin,Lady Justice King |
| Judgment Date | 01 July 2021 |
| Neutral Citation | [2021] EWCA Civ 978 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2020/1494 |
[2021] EWCA Civ 978
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
(BUSINESS AND PROPERTY COURT)
Mr Andrew Hochhauser QC (sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice King
Lady Justice Asplin
and
Lord Justice Coulson
Case No: A2/2020/1494
and
Mr Ben Lynch QC & Ms Nathalie Koh (instructed by DWF LLP) for the Appellant
Mr Christopher Boardman QC (instructed by Katten Muchin Rosenman LLP) for the First Respondent
Mr Ben Hubble QC (instructed by Mills & Reeve LLP) for the Second Respondent
Hearing date: 26 May 2021
Approved Judgment
Introduction
The principal issue which arises on this appeal can be presented in simple terms. Where insurers and insured jointly retain solicitors and a barrister, and can therefore each claim joint retainer privilege (“JRP”) in the documents created, if the insured assigns its professional negligence claims against the solicitors and barrister to X, is X (as the insured's successor in title) entitled to disclosure of the files covered by JRP, or does the insurer have the right to claim privilege against the successor in title, thereby preventing X from accessing the documents? The answer would, on the face of it, appear to be plainly in favour of disclosure to X. However, in this case, the issue has become mired in a certain amount of factual complexity and a good deal of suspicion and bitterness between the parties, the consequence of group litigation gone wrong and large amounts of costs which have not been recovered.
By his order of 12 August 2020, Mr Andrew Hochhauser QC, sitting as a deputy High Court Judge (“the judge”), decided that the administrators of Transform Medical Group (CS) Ltd (the insured, a cosmetic surgery company, whose administrators are the First Respondents to this appeal) were entitled to disclose to HJI, their successors in title, the documents in the file created by Transform's joint retainer of Berrymans Lace Mawer LLP (“BLM”) as their solicitors in connection with litigation brought against Transform by a large number of claimants in respect of faulty breast implants. BLM were jointly retained as solicitors in that litigation by Travelers (Transform's insurers and the Appellant in this appeal).
The judge's order meant that, despite Travelers' vehement objections, disclosure would be to an entity called Hugh James Involegal (“HJI”) and their solicitors (Hugh James), because HJI had taken an assignment from the administrators of Transform's causes of action against BLM and counsel arising out of advice given during the underlying litigation. For these purposes, therefore, HJI were Transform's successors in title in respect of the assigned claims. The twist is that Hugh James had been the solicitors acting for the claimants in the group litigation against Transform in respect of the faulty implants, prior to its unsatisfactory conclusion. In this way, Hugh James, the solicitors acting for the claimants against Transform (and therefore against Travelers), have become the solicitors acting for and the owners of HJI who, as the assignees of Transform's own claims against their former legal advisors are, on the judge's order, entitled to disclosure of the documents covered by Travelers' JRP.
On the face of it, that might appear to be an odd result. Perhaps understandably, that was Travelers' initial response, doubtless exacerbated by the fact that the assignment and its consequences were presented to them as a fait accompli. But the more this court was taken to the authorities, and the few documents relevant to this appeal, the more it became apparent to me that Travelers could do little more than point to the unusual result on the facts as a reason why, in principle, their JRP should override Transform's right to disclosure, and thus that of HJI, Transform's successors in title. Despite Mr Lynch's sterling efforts in this respect, no principle, no authority, and no part of the background material was identified which even began to persuade me that the ordinary principles relating to successors in title, and joint retainer privilege, did not apply to this case.
I set out the background facts in Section 2. I set out the relevant parts of the Deed of Assignment in Section 3. In Section 4, I identify the relevant passages in the judge's judgment. In Section 5, I identify what I consider to be the relevant assumptions which this Court has to make, at this stage of these satellite proceedings, for the purposes of this appeal. In Section 6, I deal with the law. In Section 7, I explore whether HJI are entitled to disclosure in principle. Assuming that the answer to that question is Yes, in Section 8 I consider whether there are particular facts, or particular parts of the Deed, which should lead to a different result in all the circumstances of this case. In Section 9, assuming that the answer to the second question is No, I address Mr Lynch's second alternative argument, as to the disclosure of particular categories of documents. There is a short summary of my conclusions in Section 10. I am grateful to all counsel for the clarity of their written and oral submissions.
The Background Facts
Transform were one of the UK's leading cosmetic surgeries. They used silicone breast implants manufactured by a French company, Poly Implant Prothese (“PIP”). These implants were made using inferior quality silicon. By 2012, hundreds of claimants had indicated claims against Transform in consequence of their use of PIP implants and, on 17 April 2012, a group litigation order was made, with Hugh James acting as lead solicitors for the claimants. As noted, Transform and their insurers Travelers jointly engaged BLM to act on their behalf in relation to those claims which were covered by Travelers' insurance. In addition, Transform retained BLM in relation to those claims which were not covered by Travelers' insurance.
It appears that, in relation to the 623 claimants in the group litigation against Transform, 197 of those claimants were making claims that were covered by Travelers' insurance of Transform. That meant that 426 of the claimants were not so covered. This was primarily because these claimants, although very anxious about what had happened, had not exhibited any signs of personal injury and were – wholly unbeknownst to them – outside the terms of Travelers' insurance of Transform. They are referred to in the papers as “the worried well”, which I am confident, is a description that the women in question would rightly disown. This unhappy insurance position was not disclosed to the claimants in the group litigation until June 2014.
In 2015, the claimants who were covered by the terms of Travelers' insurance of Transform settled their claims with Transform. It then became apparent that, without insurance, Transform would not have the resources to pay compensation or costs to any successful but uninsured claimants. Transform entered administration. The administrators were appointed on 30 June 2015. The uninsured claimants subsequently obtained summary judgment against Transform on 20 October 2016, but there was of course no money to pay any damages.
As a result, there was a significant black hole in Hugh James' accounts. In the group litigation, there was a large amount of what were called ‘common costs’ (which one estimate puts at £11 million) for which Travelers were not liable and which Transform could not pay. Since Hugh James were representing the claimants in the group litigation on a CFA arrangement, this meant that it was Hugh James themselves who were significantly out of pocket in respect of costs. It is plain to me that it is that shortfall which has primarily driven the subsequent events.
Armed with the judgment of 20 October 2016 against Transform, Hugh James' first attempt to make good the shortfall was an application for a third party costs order against Travelers under s.51 of the Senior Courts Act 1981. That application was granted by Thirlwall J (as she then was) and upheld by the Court of Appeal, but the Supreme Court allowed Travelers' appeal against that order ( [2019] UKSC 48; [2019] 1 WLR 6075). One of the reasons that the Supreme Court gave for allowing the appeal was that the non-disclosure of limits of cover by a defendant at the request of the insurer was unlikely to amount to unjustified meddling by that insurer since, as a matter of law, such non-disclosure was legitimate 1.
By the time of the Supreme Court judgment, Hugh James had already set in motion an alternative means of seeking to make good the costs shortfall, and also – at least potentially – to make some recovery for those claimants whose claims against Transform were not covered by Travelers' insurance. On 30 August 2018, the administrators of Transform assigned to HJI the claims which Transform “had or may have” against BLM and counsel “arising out of or concerning the conduct of the defence” in the group litigation. I identify the relevant parts of the Deed of Assignment in Section 3 below.
In consequence of that Deed of Assignment, the administrators sought disclosure of the joint retainer files to HJI, and their solicitors, Hugh James. Travelers objected. On 8 July 2019, ICCJ Jones directed that the dispute as to whether or not the joint retainer files should be disclosed to HJI and/or Hugh James was to be determined as a preliminary issue. The judge heard that dispute in early February 2020 but did not hand down judgment until 31 July 2020 ( [2020] EWHC 2064 (Ch)). As noted above, he found against Travelers and ordered disclosure. It is Travelers' appeal against the judge's order with which these...
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The Companies Act (2020 Revision) and 58.Com, Inc.
...to the property {Hollander on Documentary Evidence (14th Ed) 13-08 and 19-04, approved in Travelers Insurance Company v Armstrong [2021] EWCA Civ 978; Surface Technology pic v Young [2002] FSR 25; Winterthur Swiss Insurance v AG (Manchester) Ltd [2006] EWHC 839 (Comm); Crescent Farm v Ste......
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The Companies Act (2020 Revision) and 58.Com, Inc.
...to the property (Hollander on Documentary Evidence (14th Ed) 13-08 and 19-04, approved in Travelers Insurance Company v Armstrong [2021] EWCA Civ 978; Surface Technology pic v Young [2002] FSR 25; Winterthur Swiss Insurance v AG (Manchester) Ltd [2006] EWHC 839 (Comm); Crescent Farm v Ste......
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...title to the property (Hollander on Documentary Evidence (14th Ed) 13-08 and 19-04, approved in Travelers Insurance Company v Armstrong[2021] EWCA Civ 978; Surface Technology plc v Young[2002] FSR 25; Winterthur Swiss Insurance v AG (Manchester) Ltd[2006] EWHC 839 (Comm); Crescent Farm v St......