Pine v Das Legal Expenses Insurance Company Ltd

A legal expenses insurer must generally indemnify the reasonable and necessary fees of the lawyer chosen by the insured once proceedings make legal representation necessary. A policy term allowing refusal of the insured’s choice only in exceptional circumstances must be given its ordinary meaning. The insurer’s commercial interest in monitoring prospects, costs and settlement does not itself justify insisting that a public access barrister be instructed through a solicitor. The circumstances must be truly out of the ordinary. A barrister is a “lawyer” for the purposes of the relevant legal expenses insurance provisions. General damages for breach of contract are not ordinarily recoverable merely because insurance provides reassurance or peace of mind; extending that principle to legal expenses insurance would logically extend it to insurance contracts generally.

The claimant held a home and contents policy containing family legal protection cover provided by the defendant. She sought indemnity for the reasonable and necessary fees of a barrister whom she wished to instruct directly on a public access basis in separate proceedings brought against her by solicitors claiming unpaid fees. The defendant accepted that the barrister could act, but required him to be instructed through a solicitor so that the defendant’s contractual reporting and cost-control requirements could be maintained.

The claimant sought a declaration under the policy and the Insurance Companies (Legal Expenses Insurance) Regulations 1999, together with damages for breach of contract. The central issues were whether the policy and Regulations permitted the defendant to impose that requirement, whether the circumstances were exceptional, and whether damages for loss of peace of mind were recoverable.

1. Choice of representative. The policy’s Appointment Clause entitled the insured, once court proceedings had begun and legal representation was necessary, to choose her own suitably qualified lawyer, subject only to refusal in exceptional circumstances. Its ordinary language did not permit the insurer to require the insured to appoint a solicitor merely because the solicitor could then instruct the barrister selected by the insured.
2. Regulatory background. The Insurance Companies (Legal Expenses Insurance) Regulations 1999 and Council Directive 87/344/EEC formed part of the background against which the policy was to be construed. A member of the Bar of England and Wales fell within the definition of “lawyer” in Regulation 2(1)(b). The Regulations did not support the insurer’s narrower construction.
3. Exceptional circumstances. The insurer’s legitimate commercial concerns about prospects of success, costs, reporting and settlement did not alter the meaning of the Appointment Clause. The litigation was substantial and document-heavy, but many cases had comparable characteristics. The insured was capable of conducting those aspects of the litigation which the barrister’s professional rules prevented him from undertaking. Her wish to instruct the barrister directly was not, by itself, exceptional.
4. Declaration. The defendant was bound, subject to the policy apart from the Appointment Clause, to indemnify the claimant for the reasonable and necessary fees charged by the barrister for his services as counsel in the related proceedings.
5. Damages. The court declined to extend the principle in Farley v Skinner [2002] 2 AC 732 to legal expenses insurance. The policy could provide reassurance, but extending general damages for breach of contract on that basis would logically extend the principle to insurance contracts generally. The declaration was therefore the appropriate substantive relief on the pleaded issue.

First-instance judgment. No prior appellate decision is stated in the judgment.