Greene Wood & McLean LLP v Templeton Insurance Ltd

A claim may be in respect of an English-law contract for the service-out gateway even though the proposed claimant and defendant are not both parties to that contract. A close contractual connection is sufficient; remoteness is addressed when considering whether England is the proper place for the claim.

On an arguability assessment, an agreement authorising solicitors to procure insurance so that they can give clients a costs-free guarantee may necessarily include a term requiring the insurer to meet valid policy claims. Under section 1(1) of the Civil Liability (Contribution) Act 1978, differing legal bases of liability do not prevent contribution where both liabilities concern the identical loss. Materially similar damage is insufficient.

Miners pursuing compensation-related claims had applied for a group litigation order. Greene Wood & McLean LLP acted for them and gave assurances that they would not bear litigation costs or disbursements. Templeton Insurance Ltd provided after-the-event insurance intended to cover adverse costs and the miners’ own disbursements.

After the group litigation order application failed, the solicitors paid the opposing parties’ costs and settled potential claims by the miners. They sought to serve proceedings on Templeton in the Isle of Man. The claim alleged a direct contractual promise by Templeton and, alternatively, contribution under the Civil Liability (Contribution) Act 1978.

Teare J, in the Commercial Court under 2008 Folio 309, rejected the direct contractual claim but permitted the contribution claim to proceed. The solicitors appealed the first ruling and Templeton appealed the second.

1. GWM’s appeal was allowed and Templeton’s appeal was dismissed. Longmore LJ held that the direct contractual claim had a serious issue to be tried. Hooper LJ and the Master of the Rolls agreed.

2. The alleged agreement between the solicitors and the insurer was bilateral but was intended to create insurance relationships with individual miners. Templeton knew that GWM would give miners a guarantee that the proposed proceedings involved no risk as to costs and disbursements. It was therefore arguable that the agreement necessarily included a term requiring Templeton to meet valid claims under the policy. Without that term, an insurer’s refusal to indemnify could leave the solicitors liable under their guarantee while the miners might not pursue the insurer. The possible absence or uncertainty of subrogation reinforced the arguability of the implied term. The officious bystander test was not an additional requirement if necessity was arguably established.

3. The contribution claim fell within CPR 6.20(5)(c). The rule did not state that the relevant English-law contract had to be between the intended claimant and defendant. A claim closely connected with an English-law insurance contract could therefore be a claim in respect of that contract, notwithstanding that GWM was not a party to the policy. Any issue of remoteness was relevant instead to the separate proper-place inquiry under CPR 6.21(2A).

4. Under section 1(1) of the Civil Liability (Contribution) Act 1978, read with section 6(1), the legal basis of each liability was immaterial but both parties had to be liable for the same damage. Applying the approach in Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397, substantially or materially similar loss was insufficient. Here, GWM’s obligation under its guarantee and Templeton’s failure to honour the policy concerned the identical economic loss: the miners’ exposure to adverse costs and their own disbursements. Contribution was therefore arguable.

• Court of Appeal (Civil Division): In [2009] EWCA Civ 65 , allowed GWM’s appeal on the direct contractual claim and dismissed Templeton’s appeal on contribution.
• High Court, Queen’s Bench Division, Commercial Court: Teare J, under 2008 Folio 309, held that the direct contractual claim had no arguable breach, but refused to set aside service out in respect of the contribution claim.