XYZ v Travelers Insurance Company Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Thirlwall |
| Judgment Date | 24 February 2017 |
| Neutral Citation | [2017] EWHC 287 (QB) |
| Court | Queen's Bench Division |
| Date | 24 February 2017 |
| Docket Number | Case No: TLQ/13/0607 |
[2017] EWHC 287 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Thirlwall DBE
sitting as a judge of the High Court
Case No: TLQ/13/0607
Mr Hugh Preston QC and Mr Marcus Pilgerstorfer (instructed by Hugh James Solicitors) for the Applicants
Mr Guy Philipps QC and Mr Ben Lynch (instructed by DWF Solicitors) for the Respondents
Hearing dates: 26 th and 27 th October 2016
This is an application for an order under section 51 Senior Courts Act 1981 that Travelers Insurance Company Ltd (Travelers) pay to the applicants the costs they incurred in their successful claims against Transform Medical Group (CS) Limited (in Administration) (Transform) for damages for injuries sustained as a result of Transform's supply to them of defective breast implants manufactured by the French company PIP.
A Group Litigation Order (GLO) was made by Wyn Williams J in April 2012. From October 2012 I was the managing judge. About 1000 claimants joined the GLO and brought claims, in contract, and/or under the Sale of Goods and Services Act (SOGSA). There were several defendants, all companies running private hospitals. Further, separate, claims were brought under the Consumer Credit Act and settlements were reached in many cases. This application concerns a single defendant, Transform, and 426 of the 623 women who brought claims against it.
Transform had in place a standard product liability policy with Travelers for the period 31 st March 2007 to 30 th March 2011. Otherwise Transform was uninsured. The policy covered 197 claims. Those claims were settled in June 2015 in the light of expert evidence received in April 2014 which was overwhelmingly likely to lead to a finding that the implants were not of satisfactory quality. Travelers paid the damages and costs. Some claims arose during the period of cover but were not covered by the policy terms; those were cases where the claimant was concerned about the implant but there had been no rupture. These claimants were referred to by the parties as the "worried well". Other claims fell outside the period covered by the policy. The applicants are all those whose claims were uninsured. Judgment was entered in all of their claims by March 2016. By then Transform was in administration. No damages or costs have been paid.
I have recorded the course of this litigation on a number of previous occasions. Suffice it to say here that in August 2013 I gave directions down to the trial of four issues in four sample cases. It was my expectation that the resolution of those issues (often referred to as the preliminary issues) would lead to the resolution of the whole of the litigation. That proved to be the case but there were twists and turns on the road.
The issues in the four sample cases were:-
i) Were the implants supplied in breach of the implied term as to satisfactory quality pursuant to S4(2) of the Sale of Goods and Services Act (SOGSA)?
ii) Were the implants supplied by Clover Leaf to Transform in breach of the term as to satisfactory quality implied under S14(2) of Sale of Goods Act, (SOGA) (as amended)?
iii) What remedies shall be afforded by S11 (M) (P) of SOGSA insofar as such issues are raised in the sample cases?
Cloverleaf had supplied PIP implants to Transform (and others). They were Part 20 defendants. They had insurance with Amlin Insurance. Transform and Travelers assumed that the policy would be similar to that issued by Travelers and so would not cover the "worried well". For some years Amlin took virtually no part in the proceedings, asserting that Cloverleaf was not liable. As late as June 2014 it refused to take part in mediation. By then the expert evidence showed that the PIP implants had a higher propensity to rupture than other brands. Travelers wished to settle but did not do so because it wanted to be sure of recovering against Cloverleaf. The statements of Mr Kidman (solicitor, BLM) and of Mr Keating (claims specialist at Travelers) both emphasise the imperative to Travelers and Transform of ensuring that Cloverleaf was involved so as to avoid difficulties in recovering from them later. In my judgment there was no such imperative with respect to the insured claims and the delay in settling those claims was unnecessary. It was open to Travelers to settle with the claimants at any stage and to pursue Cloverleaf thereafter. Given that it was assumed that the Amlin policy would be in similar terms to the Travelers policy Transform cannot have expected to recover anything in respect of the "worried well". I do not know whether there was any cover for the periods when Transform was uninsured.
Transform's financial position
By the middle of 2013 Mr Harvey, solicitor, of Hugh James, the lead solicitors for the claimants, formed the view that Transform was in financial difficulties. He had asked repeatedly for confirmation that it had adequate insurance to cover the claims. He was given no substantive response. In September 2013 I heard an application "that Transform do provide information to the claimants as to the nature and extent of its liability insurance cover in respect of its potential liability in these proceedings to the relevant claimants on the group register and/or that it do serve a copy of the relevant insurance policy documents upon those said claimants, pursuant to CPR part 18 and/or part 3.1(2)(m)". Although the accounts had been signed off on a going concern basis it was plain that the financial position of Transform was precarious. Leading counsel for Transform accepted that on the evidence I was entitled to conclude, as I did, that Transform may not be able to fund the litigation to trial, meet any award of damages or meet any award of costs.
I dismissed much of the application (see my judgment at [2013] EWHC 3643 (QB)). Part 18 was of no application but I concluded (paragraph 36), "I am satisfied that CPR 3.1(2)(m) gives me the power to order Transform to provide to the court a witness statement (or statements) setting out whether Transform has insurance adequate to fund its participation in this litigation to the completion of the trial and the conclusion of any appeal. That knowledge will permit me to case manage this litigation now on the basis of adequate information. I am sure that is also in accordance with the overriding objective. It gives no unfair advantage to the claimants. There is no prejudice to Transform. The result will be that the court retains control over the use of its resources in this litigation."
At paragraph 34 of the statement of Mr Keating (Travelers) the following appears "When [my judgment of November 2013] was handed down, BLM [who were representing Transform, funded by Travelers] felt uncomfortable having anything to do with assisting Transform in complying with the order because BLM did not want to become involved in insurance issues". This notwithstanding that BLM and counsel had represented Transform on the application for disclosure of the insurance position. Mr Keating relates that Travelers and Transform then agreed the terms of a letter to be sent by Travelers' solicitors, DWF, to me in purported compliance with my order. I did not consider this appropriate. The order was against Transform.
In December 2013 Mr Ainley, Chief Executive of Transform, provided to the court a witness statement in the light of which I did not amend the case management directions. The claimants' advisers inferred, correctly, that I was satisfied that Transform had confirmed that they had insurance adequate to fund its participation in the litigation. The claimants' advisers also inferred that Transform were insured in respect of all the claims they faced. That was not correct.
In April 2014 (after the expert evidence revealed that the claimants were overwhelmingly likely to succeed) Transform and Travelers told the claimants' advisers that Transform had no insurance for claims occurring outside the period March 2007-March 2011 and that they were agreed that the terms of the product liability policy covered only rupture or injury cases (and so not claims by the "worried well").
I am quite satisfied that had the claimants' advisers known that there was no insurance cover for the 426 claims none of them would have been pursued. That would have been entirely consistent with the approach taken to other uninsured and impecunious defendants and with the way the application before me was argued in 2013.
At paragraph 47 of their skeleton argument for this hearing Mr Philipps QC and Mr Lynch assert "It would be wholly inconsistent with [my] decision [of November 2013] now to hold that Travelers should be penalised in costs for having asserted a right that the Court had held in the course of the very same litigation that it was entitled to assert." This is a revealing submission, making clear that it was Travelers which was asserting the right in the hearing before me. It overlooks that the application was made against and resisted by Transform which was represented by counsel who were (I was told in the course of the hearing of this application) jointly instructed by Travelers and Transform. Whilst Travelers had a direct interest in the question of the disclosure of the terms of the insurance policy it was not a party to the application nor to the litigation. I made no determination of Travelers' rights which in any event did not extend to uninsured claims.
The Insurance Policy
The Insurance policy is a standard product liability policy. Clause 1 reads as follows, under the heading "Legal Liability"
" the Company will indemnify the insured subject to the Limits of Indemnity in respect of all sums which the Insured shall become legally...
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