Europ Assistance Insurance Ltd v Temple Legal Protection Ltd

In deciding whether to grant interim injunctive relief, the court must assess the adequacy of damages, the balance of convenience and, where appropriate, preservation of the status quo. The effect of relief on contractual obligations owed to third parties is a material consideration. Relief should not ordinarily create confusion or place the defendant and third parties in probable breach of contract where the claimant’s interests can instead be protected by information, audit and accounting safeguards. The significance of the status quo is increased where insureds and intermediaries depend on established arrangements pending trial.

Europ Assistance Insurance Ltd sought interim injunctions and declarations restraining Temple Legal Protection Ltd from conducting the run-off of after-the-event legal expenses insurance written under a binding authority agreement. The agreement had been terminated as to new business, but existing policies remained in force. Both parties alleged that the agreement had ended and disputed Temple’s continuing authority to administer claims, collect premiums and pay claims.

Europ Assistance relied on alleged unlawful means, unlawful interference and breach of trust. The court was required to decide whether interim relief should transfer administration of the run-off to Europ Assistance pending trial, which was listed for February 2008.

1. Relief refused. The court declined to grant the injunctions and consequential interim declarations. The claim for interim relief depended on disputed allegations which could not properly be resolved on the application.
2. The exercise of discretion turned principally on the adequacy of damages, the balance of convenience and, where those matters produced an even balance, preservation of the status quo. Any loss caused by wrongful claims handling or accounting failures appeared quantifiable and recoverable. Temple’s loss of business, goodwill and cash flow would be more difficult to prove and quantify.
3. The proposed relief would deprive Temple of information about claims and premiums, place Temple in breach of coverholder agreements which Europ Assistance had authorised, and probably place coverholders and policyholders in contractual difficulty. Policy documents directed claims notifications to Temple and did not expressly require notification to Europ Assistance.
4. The interests of Europ Assistance could be protected pending trial without disrupting the existing structure. Temple was required to continue supplying monthly bordereaux and related claims information, provide relevant records and bank statements, maintain the separate account and the agreed distribution arrangements, and remain subject to Europ Assistance’s inspection and audit rights under sections 22, 28 and 30 of the binding authority agreement.
5. The status quo had particular significance because third parties, insureds and coverholders depended on the existing arrangements. Maintaining those arrangements, subject to safeguards, protected the parties and third parties more effectively than granting the requested injunctions.

Not stated in the judgment.