Winterthur Swiss Insurance Company & Anor v AG (Manchester) Ltd & Ors Rev 1

Legal professional privilege belongs to the client and ordinarily continues until waived. However, the client may contractually grant an insurer access to privileged documents for defined purposes. Under an after-the-event insurance policy, a subrogation and co-operation clause may require the insured to provide documents genuinely necessary to enable the insurer to pursue rights against solicitors or other parties after paying an indemnity. That contractual right can override the insured’s assertion of litigation privilege and may be assigned with the relevant contractual rights. Pre-policy documents created for the insurer’s underwriting decision are privileged, if at all, in favour of the insurer rather than the prospective insured. An insurer and insured may also have sufficient common interest to permit access to privileged documents and their use in related litigation.

The claimants, an insurer and its assignee, brought claims arising from losses under an after-the-event legal expenses insurance scheme. They alleged that the scheme operator, a vetting solicitor and panel solicitors had failed properly to vet or monitor claims. The proceedings were managed as large-scale litigation, and an early determination was ordered concerning files held by panel solicitors.

The central issues were whether pre- and post-policy documents attracted legal professional privilege, whether the insurer had contractual or common-interest access to those documents, and whether the assignee could exercise equivalent rights. The court also considered the effect of the relevant assignments and the insurer’s subrogation rights.

1. Pre-policy documents. Litigation was contemplated when the relevant application, questionnaire and vetting documents were created. Nevertheless, their dominant purpose was to decide whether insurance would be issued and the claim funded. The process was directed objectively by NIG through TAG. Any litigation or legal advice privilege therefore belonged to NIG, if it existed at all, rather than the prospective insured.

2. Post-policy documents. Documents created after the policy was issued were, in principle, protected by litigation privilege belonging to the TAG Claimant. That privilege was subject to any contractual right of access granted to NIG.

3. Condition 6. The policy’s subrogation clause required the insured to co-operate with NIG in enforcing rights and remedies to which NIG was entitled or subrogated after paying an indemnity. This included producing documents genuinely necessary or required to pursue claims against TAG, Rowe Cohen or panel solicitors. NIG’s contractual access extended to both pre- and post-policy documents and was inconsistent with the insured asserting litigation privilege against NIG.

4. Common interest privilege. The insured and NIG, as indemnity insurer, had a sufficient common interest in documents created to assess and pursue the insured’s claim. NIG could therefore use common-interest privilege as a sword to obtain access to documents which would otherwise be privileged. The documents could also be used in litigation against third parties where the insured owed NIG the contractual co-operation obligations in Condition 6.

5. Winterthur’s rights. The first assignment validly assigned NIG’s causes of action against the relevant defendants. The further assignment assigned NIG’s contractual rights of access under Condition 6, insofar as they related to the defined claims. It did not assign legal professional privilege or common-interest privilege as such. However, NIG had impliedly waived its privilege in favour of Winterthur by assigning the causes of action, and Winterthur could enforce the assigned contractual access rights.

6. The panel solicitors could not maintain privilege against Winterthur in relation to the relevant pre- and post-policy documents. Consequential orders concerning inspection and audit were left for agreement or, if necessary, a further hearing.

This was a first-instance determination in the Commercial Court of preliminary privilege and document-access issues arising in the TAG Group Litigation.