August 2007

Show me the money: Defendants ordered to disclose insurance cover to Claimant

The High Court's recent decision in Harcourt v Griffin and Others in which the defendants were ordered to disclose to the claimant, details of their insurance policy, is likely to set alarm bells ringing. The decision offends the basic principle that a non-party to an insurance contract has no right to know the particular coverage afforded by the insurance, specifically the limits of cover.

At the outset, it is important to note that the order was made in a personal injury tetraplegic case where the defendants' liability and quantum had largely been established. An application by way of a CPR Part 18 Request for Information was made by the claimant for disclosure of the terms of the defendants' insurance.

The basis for the application was to enable a decision to be made as to whether the damages award should be a periodical payment, or a lump sum, award. Whilst quantum could be established without knowledge of the insurance limits, the key issue was whether the defendants' insurance was sufficient to satisfy the damages award, which in turn would impact whether the award should take the form of periodic payments or a lump sum.

The Court considered disclosure of the terms of the defendants' insurance was necessary to ensure the parties had access to all information that was necessary to deal efficiently and justly with the matters in dispute. The aim was to avoid a waste of time and costs and to provide proportionate and economical litigation.

The Court accepted that revelation of insurance arrangements potentially could give litigating parties tactical advantages over their opponents, particularly in the context of negotiating settlements. The Court also acknowledged that in such applications for disclosure it would listen to arguments as to any specific prejudice that would be suffered by the disclosing parties.

However, given the particular circumstances and facts of this case, it seems clear that the Court had one eye firmly on the fact that unless the defendants' insurance terms were disclosed, the claimant could not assess whether the defendant had adequate insurance to satisfy a periodic payment award.

The Court made clear that disclosure of such information should be approached with caution and should only be ordered where the claimant is able to demonstrate a genuine concern that an award might not be satisfied: Irwin J. stated, "There must be some real basis for suggesting that disclosure is necessary, in order to determine whether further litigation will be useful or simply a waste of time and money".

Although an important decision for claimants, which may well lead to an increase in applications of this sort for disclosure of insurance terms, one must keep in mind the specific facts and circumstances of this case: liability and quantum had largely been established and the defendants were unable to show they would suffer any specific prejudice in consequence of the disclosure. It is in our view unlikely that this decision will lead as a matter of course to orders obliging defendants to disclose key terms of their insurance.