Beecham Peacock Solicitors LLP v (Enterprise Insurance Company Plc & Ors

On a summary judgment or strike-out application, the court must decide whether the claim has a realistic prospect of success without conducting a mini-trial. It may determine a short point of law where the evidence is sufficient, but should allow a trial where fuller investigation may affect the outcome.

A solicitor who is not named as an insured under an after-the-event policy may nevertheless have a realistic direct contractual claim against the insurer if the surrounding contractual arrangements arguably impose payment obligations owed to the solicitor. A claim under the Contracts (Rights of Third Parties) Act 1999 may also be arguable where the policy term purports to confer a benefit on the solicitor.

Whether a solicitor has an interest requiring disclosure under regulation 4(2)(e)(ii) of the Conditional Fee Agreements Regulations 2000 is fact-sensitive and may require a trial.

Beecham Peacock Solicitors LLP, successor to Beecham Peacock Solicitors, sought recovery from three insurers of disbursements incurred in failed personal injury claims conducted under conditional fee agreements and after-the-event insurance policies.

The insurers applied for summary judgment or strike-out, arguing that the solicitors were not parties to the policies and that the predecessor firm had failed to disclose an interest in recommending the insurance. The claimant relied on direct contract, third-party rights, subrogation and restitution, and alternatively sought joinder of the clients.

The court also considered applications concerning relief from sanctions and procedural defaults.

1. Summary judgment principles. The court applied the approach summarised in Easy Air Limited v Opal Telecom Limited [2009] EWHC 339, including the requirement for a realistic prospect of success and the prohibition on conducting a mini-trial. A short legal or construction point may be decided summarily where the necessary evidence is available.
2. Direct contractual claim. The policies primarily indemnified the clients, and the solicitors were not parties to them. That did not necessarily exclude a separate contractual claim. The Procedure Manual arguably formed part of contractual arrangements between the panel solicitors and the insurers. Its payment request procedures arguably imposed obligations enforceable directly by the solicitors and their successor. The claim therefore had a realistic prospect of success and was unsuitable for summary determination.
3. Third-party rights. The claim under the Contracts (Rights of Third Parties) Act 1999 was probably unavailable under the first insurer’s policy because of its exclusion clause. The position under the second insurer’s policy was seriously arguable: the term concerning disbursements incurred by the legal representative might purport to confer a benefit on the solicitors, subject to the parties’ intention under section 1.
4. Subrogation and restitution. Provisionally, subrogation would permit proceedings in the clients’ names, not proceedings by the solicitors in their own names. Payment of disbursements did not discharge the insurers’ liabilities under the policies. The insurers were therefore not enriched and the restitutionary claim would fail.
5. Disclosure of interest. Under regulation 4(2)(e)(ii) of the Conditional Fee Agreements Regulations 2000, the question is whether a reasonable person knowing the relevant facts would think that the solicitor’s interest might affect the advice given. The existence and effect of any interest depended on the individual facts, including the relationship with the panel and the significance of referrals. The issue could not fairly be resolved summarily.
6. Outcome. The applications for summary judgment and strike-out were dismissed. The joinder application was left undecided. Relief from sanctions was granted because both sides were in default, there was no demonstrated prejudice, and the delay had substantial procedural explanations.