England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		03/12/2014

Mrs Justice Thirlwall:

1. Travelers Insurance Company Limited (Travelers) applies to join Amlin Insurance (UK) Limited as sixth party in these proceedings and to bring against it a claim for a declaration. The appropriate Amlin entity is Amlin Corporate Members Limited (Amlin). There is no objection to the application being considered against that company and the hearing proceeded on that basis.
2. The application is made pursuant to the following CPR: 20.7, 19.2, 3.1.(2)(m) and 1.
3. The background to the application is well known. I am concerned with group litigation in which nearly 1,000 women seek damages from companies running private hospitals for supplying defective implants manufactured by the French company, PIP, which were used in breast implant surgery. They claim that the implants were of unsatisfactory quality, in breach of s4(2) of the Supply of Goods and Services Act 1982 (SOGSA). Some claimants bring actions against credit card providers, pursuant to the Consumer Credit Act 1974. Some claimants bring actions against the surgeons who carried out the surgery. Those claims are not currently within the GLO.
4. The estimated average value of each claim is £13,000. The total value of the claims, if proved is £13m. To that will be added costs. 670 of the claims are brought against the second defendant, Transform Medical Group (CS) Ltd (Transform). Transform and other defendants have brought Part 20 claims against the UK suppliers of the breast implants, Clover Leaf Products Limited (Clover Leaf).
5. Clover Leaf is a dormant company. It has no assets. It remains in existence for the purposes of this litigation. It has relevant insurance policies with Amlin. Transform has insurance with Travelers. Spire, another defendant, has insurance with RSA.
6. In August 2013 I gave directions which included a timetable to trial of three issues namely:

(i) were the implants supplied in breach of the implied term as to satisfactory quality contrary to S4(2) SOGSA?

ii)Were the implants supplied by Cloverleaf to Transform in breach of the term as to satisfactory quality implied under S14(2) of 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?

7. It was intended and expected that decisions on those three issues would lead to the resolution of the whole of the group litigation, subject to the need for relatively short hearings on quantum, should the claimants succeed.
8. In September of 2013, in light of justified concerns about Transform's financial position the claimants made an application that Transform be ordered to provide information about the nature and extent of its liability insurance cover in respect of its potential liability in these proceedings to the claimants on the register and to serve a copy of the policy documents upon the claimants pursuant to CPR Part 18 and/or Part 3.1(2)(m). Transform, funded by Travelers, resolutely defended the application and resisted the disclosure of any aspect of its insurance position.
9. After argument I concluded that Part 18 did not apply and made an order pursuant to my case management powers under Part 3.1(2)(m) directing Transform to provide a witness statement setting out whether Transform had insurance adequate to fund its participation in the litigation up to the completion of the trial and the conclusion of any appeal. The detail of the decision is in the judgment I handed down on 22^nd November 2013 - see [2013] EWHC 3643 (QB).
10. The trial was fixed for 6^th October of this year.
11. On 12^th September 2014 I acceded to an application from all parties to take the case out of the list. The reasons for that are set out in the judgment I gave ex tempore on that date. There is a dispute between Transform and Travelers as to the scope of the insurance cover. They agree that claims by a large group of claimants, known as the "worried well" are not covered by the Travelers policies. They agree that claims by a further group are covered. There is a further group of claims which Travelers accept may be covered and a yet further group where there is a dispute as to whether the policies cover the claims.
12. At the September hearing Spire indicated through leading counsel that they too were in dispute with their insurers and intended to bring them into the proceedings. I gave directions which should lead to the resolution of the issues between Travelers and Transform and between Spire and Royal Sun Alliance at a trial in the early part of next year. There is to be a CMC in the first week of December.
    
13. There was no application from Clover Leaf in respect of its insurers because Clover Leaf is not in dispute with its insurers. That is likely to be, as Travelers assert, because Clover Leaf has no assets. Leading Counsel for Travelers foreshadowed this application at the hearing in September. The application was issued in October. Travelers seek a declaration that Amlin's insurance of Clover Leaf will respond to Clover Leaf's liability, if any, to Transform. They assert that this is necessary for the proper resolution of the litigation. Travelers aim is to bring Amlin into the litigation now so that it will participate in the trial of the issues between Transform and Travelers and between Spire and RSA.
    
14. Amlin objects to the application. Transform supports it (unsurprisingly). Transform has not sought to join Amlin but would do so should this be necessary to achieve the end sought. The claimants have no objection to the application. In the absence of any indication to the contrary I assume the other parties, including Spire and RSA, are neutral.
    
15. The hearing was conducted on the assumption (made for the purposes of the application only) that at least some of the claimants would succeed in their claims. In that case the following consequences flow:-
    i) Should the "worried well" succeed against Transform there will be no insurance cover from Travelers. The claimants may seek to enforce against Transform. No doubt that will depend on the financial position of Transform.
    ii) The extent to which other claimants' damages will be recoverable under the Travelers insurance policy will depend on the agreement between Travelers/Transform and upon the decision of the court in respect of the disputed areas.

iii) Transform will seek to recover against Cloverleaf (for its benefit and that of Travelers). Cloverleaf will become insolvent and direct claims will then be made against Amlin pursuant to the Third Parties (Rights against Insurers) Act 1930. The real target is Amlin. Whether or not Transform and/or Travelers and/or the claimants succeed against Amlin will depend on the terms of the policy held by Cloverleaf.


16. The same process will apply where Spire is the defendant although there is no concern about Spire's ability to meet claims should the insurance cover prove to be inadequate.
    
17. Stripped to its essentials Travelers' position is this: Sooner or later Amlin will be brought into the litigation. It is sensible, Mr Lockey submits, that it should happen now. The more insurers who are involved in negotiations the greater the likelihood of an early resolution of these claims. Knowing whether they are likely to be indemnified by Amlin will affect the approach of Travelers and Transform to negotiations. Early settlement is more likely if all the relevant insurers are involved now. If settlement is not reached it is desirable that Amlin should be bound by any decisions made by the court in respect of insurance policies. That can only be achieved if they are part of the "insurance" trial. Otherwise there is a risk of inconsistent decisions.
    
18. Amlin's position is this: the application is misconceived and, in any event, premature. There is no issue between Clover Leaf and its insurers. There may never be an issue between Amlin and Travelers or Amlin and Transform. The trial of the issues between Travelers and Transform (and Spire/RSA) should take place followed by (if necessary) the trial of the three issues in the main action. It is only at that stage, if necessary, that Amlin could properly be brought into the proceedings. There is no current basis for a declaration as sought, or at all. This is simply an impermissible attempt by Travelers to do precisely what the claimants sought and failed to do earlier in the proceedings ie to discover the limits of the available insurance so that they may tailor their approach to the litigation accordingly. As to settlement, Clover Leaf/Amlin are prepared to negotiate. As to inconsistent decisions, it is highly unlikely that were the policy provisions the same as those upon which the court had made certain findings Amlin would seek to litigate the point. Were it to do so, it would expect the case to be listed before the same judge, with the same result.
    
19. As Mr Lockey QC correctly observes, Travelers could have made its claim against Amlin without the court's permission pursuant to CPR 20.7(3). Had they done so, the question of whether the additional claim should be separated from the claim would be considered pursuant to part 20.9. In applying under CPR 19 Travelers have brought the issue to a head more quickly. He submits that the provisions of 20.9 (2)(a) and (c) are just as broad in ambit as CPR 19.2(2), if not broader. I shall deal first with CPR 19.2 (2).
    
    CPR 19.2
20. CPR 19.2, so far as relevant, reads:
    
    (1) This rule applies where a party is to be added or substituted
    …
    

(2)The court may order a person to be added as a new party if-

(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve the issue.



21. Mr Popat QC submits that the reference in (2)(a) to "the matters in dispute in the proceedings" is exclusively to the matters in dispute between the claimants and the defendants. I do not accept that. The dispute between the defendants and Clover Leaf are now matters in dispute in the proceedings as are the disputes between the defendants and their insurers as now pleaded. That said, I am quite sure that this application does not come within CPR 19.2(2)(a). All the matters in dispute in the proceedings may be resolved without the addition of Amlin. I need say no more about that.
    
22. I turn to 19.2(2)(b).
    I accept Mr Lockey's submission that it is not required that the issue should constitute an existing cause of action - see the decision of Field J in Dunlop Haywards (DHL) Ltd v Erinaceous Insurance Services Ltd [2008]EWHC 520 at paragraph 44 "As Mr Fenton submitted, if it were a requirement that an existing party must be able to bring a claim against the party sought to be joined there would be little if any need for Rule 19.2 (2) since the party seeking joinder could always issue a part 20 claim". I accept Mr Lockey's submission that this was implicitly approved by the Court of Appeal at [2009] EWCA Civ 354 at paragraph 89. In Al-Rushaid Parker Drilling Limited v Shetty [2011] EWHC 1460 (Ch) Christopher Pymont QC sitting as a Deptuy High Court Judge took the same view. In Chubb v Davies [2005] Lloyds Rep IR 1 Langley J held that joinder did not require the existence of an extant cause of action.
    
23. What is required is that the issue to be determined "is connected to the matters in dispute in the proceedings" (my emphasis). In Al-Rushaid it was agreed that the issue to be joined was connected to the matters in dispute; it was plainly central to their resolution. In Chubb the issue involving the new party was central to the Part 24 application, the question for the court was whether the proposed new party should be permitted to respond to the claim. Langley J found that it should, "in common justice". In Erinaceous the issues of rectification and construction were central to the defendant's defence to the main claim.
    
24. The matters in dispute in these proceedings come under three headings:-
    i) those between the claimants and Transform/Spire etc – the main action
    ii) those between the defendants and Clover Leaf (the part 20 proceedings)
    iii) those between two defendants and their insurers.
    
25. The further issue to be determined here is the scope of the insurance cover provided by Amlin to Clover Leaf from which Transform/Travelers may benefit. There is no connection between that and either (i), the matter in dispute between the claimants and the defendants in the main action or (ii), the matters in dispute between the defendants and Clover Leaf. Clover Leaf's insurance position is quite separate from its liability, if any, to the defendants, in the same way as the defendant's insurance position is quite separate from any liability to the claimants (a point that Transform/Travelers correctly made when the Claimants sought disclosure of the Transform insurance policies).
    
26. I accept that it is likely that any dispute about the public and product liability insurance held by Clover Leaf and written by Amlin will give rise to similar questions to those currently being considered under (iii) above. Some policy provisions may even be the same. Whatever the similarities, their existence does not create a connection between the Amlin/Clover Leaf/Travelers issue and the matters in dispute under (iii) above. They are quite separate.
    
27. However attractively packaged this application may be it is an attempt by Travelers/Transform to establish in advance the depths of another insurer's pockets. If Mr Lockey's submissions are correct, CPR 19.2 (2)(b) would entitle a claimant in a personal injury case to join into proceedings a defendant's insurers, seeking a declaration as to the scope of the insurance available to meet the claim. This would cut across years of jurisprudence to the effect that a claimant must take the defendant as he finds him. I dealt with this at some length in my judgment of November 2013, in particular at paragraph 27. There is no need to repeat it. Mr Lockey submits that I should ignore the floodgates argument since this litigation is so unusual that the decision on this application here could not be relied upon in other proceedings. I do not accept that the litigation is sufficiently different from other litigation (if it really is different at all) to justify an interpretation of the rules that stretches them beyond their limits.
    
28. As to the practical points raised by Mr Lockey I make the following observations:-
    i) Were Amlin joined so as to participate in the trial of the issues between two of the defendants and their insurers that trial would be longer.
    ii) If the points that arise on the Amlin/Clover Leaf insurance policy are the same as those that arise on the Transform/Travelers, Spire/RSA insurance policies the conclusions are likely to be the same. There is no need to add further parties to decide the same issue.
    iii) It is overwhelmingly likely that should there be an issue between Transform/Travelers and Amlin it would be considered and determined by the same judge as determines the issue between Transform/Travelers. It is not inconceivable that the issues will ultimately be decided by the Court of Appeal. Either way the risk of inconsistent decisions is low.
    
    CPR 20.9 (2)(a) and (c)
29. I consider next the approach to be taken had the claim been brought under 20.7 and Amlin had sought to sever the claim. In accordance with CPR 20.9 (2) (a) and (c) the matters to which the court may have regard include-

(a) the connection between the additional claim and the claim made by the claimant against the defendant;
…

(c) whether the additional claimant wants the court to decide any question connected with the subject-matter of the proceedings-

(i) not only between existing parties but also between existing parties and a person not already a party; or

(ii) against an existing party not only in a capacity in which he is already a party but also in some further capacity.

30. The difficulty for Travelers/Transform is the same as under CPR 19.2. There is no connection between their claim for a declaration and the claims currently being made, as I have described them earlier. The question raised on the declaration is not connected with the subject matter of the proceedings.




CPR 3.1 (2) (m)

31. Finally Travelers submit that the orders may be made pursuant to my general case management powers under CPR 3.1 (2) (m). I disagree. I accept that the CPR may be applied flexibly and even imaginatively in furtherance of the overriding objective but in my judgment it is not permissible to use a general case management power in such a way as to circumvent the effect of specific rules, here CPR 19 and 20.
    This application is designed to establish in advance how much money is available from Amlin. That is not a matter of case management.
    
32. Accordingly the applications are dismissed.
    
    NOTE
    The application was heard at the end of October in the hope that were I to accede to it there would be time for Amlin to take the necessary steps to be involved in the CMC in December. This was not possible. Had my decision been to the contrary effect I would have managed the litigation so as to permit the Travelers/Amlin dispute to catch up with the rest. In the event that is not now necessary.