PM Law Ltd & Motorplus Ltd & Ors

A solicitor who acts for an insured litigant has no independent right to recover under the client’s legal expenses policy unless the contractual right to sue has been assigned or otherwise conferred. The solicitor’s practical payment of disbursements does not make the solicitor legally liable for them. An insurance intermediary or coverholder which administers policies and pays claims as the insurer’s agent is not thereby made a party to the insurance contract or personally liable under it. A term giving the solicitor a direct right to sue will not be implied where it is unnecessary and inconsistent with the policy structure. A restitutionary claim likewise requires the solicitor and defendant to bear liability for the same debt; the mere payment of another’s liability is insufficient.

PM Law, a firm of solicitors, brought proceedings concerning referral arrangements and legal expenses insurance claims involving Motorplus, an insurance intermediary, and insurers including Alpha and Ageas. Motorplus applied under CPR 3.4(2)(a) and CPR 3.4(2)(c) to strike out paragraphs 36 to 48 of the Particulars of Claim and sought summary judgment under CPR 24.2.

The challenged claims alleged that PM Law could recover its fees and disbursements under clients’ before-the-event and after-the-event policies, under contracts of appointment, or under the Contracts (Rights of Third Parties) Act 1999. The statutory claim was abandoned. The central issues were whether PM Law had title to sue, whether Motorplus was liable under the policies, whether contractual terms could be implied, and whether an unpleaded restitutionary claim could succeed.

1. Disposition. Paragraphs 36 to 48 of the Particulars of Claim were struck out. Summary judgment was entered for Motorplus on the claims pleaded against it. The claims against Alpha and Ageas in those paragraphs necessarily fell away, although neither insurer had applied for summary judgment.
2. Title to sue. The insurance policies were contracts between the insured clients and the insurers. The clients, rather than PM Law, incurred liability for their own costs, adverse costs and disbursements and were therefore the persons entitled to indemnity. The client-care documents showed that PM Law would make claims on its clients’ behalf, not in its own name. No assignment of the right to sue had been alleged.
3. The solicitor’s practical payment of disbursements did not create an independent liability or a direct right of action against the insurers. Payment directly to PM Law or other recipients by Motorplus as agent for an insurer was a matter of convenience and did not alter the contractual position.
4. Implied terms. The alleged contracts of appointment were insufficiently particularised. In any event, a term entitling PM Law to sue under its clients’ policies was not necessary and would be inconsistent with the policies identifying the clients as insureds and, in some cases, excluding third-party enforcement. The reasoning in Greene Wood McLean LLP (in Administration) v Templeton Insurance Ltd [2010] EWHC 2679 (Comm) was distinguishable because the solicitor there had given its clients a guarantee and was itself liable under a contract.
5. Restitution. The proposed restitution claim could not succeed. PM Law had not undertaken liability to its clients or to the recipients of disbursements. Accordingly, it was not jointly liable for the same debt with the insurers, and neither the insurers nor Motorplus had been unjustly benefited by payment of a liability for which PM Law was responsible. Motorplus was additionally not liable under the policies or otherwise.
6. The alternative procedural strike-out application was not determined as necessary. Had it arisen independently, further particulars rather than immediate strike-out would have been ordered for the alleged contracts of appointment.