Peel Port Shareholder Finance Company Ltd v Dornoch Ltd

Pre-action disclosure under CPR rule 31.16 remains discretionary even where the jurisdictional threshold is satisfied. The existence of the information regime under the Third Parties (Rights against Insurers) Act 2010 does not, in principle, exclude the CPR jurisdiction. It is nevertheless a material part of the discretionary context.

A prospective claimant will not ordinarily obtain an insurance policy merely because an insured may become insolvent and rights against insurers may then arise. Circumstances involving a likely claim, probable insolvency and a possible transfer of rights remain insufficient where they depend on a series of hypotheses. Disclosure contrary to established practice requires sufficiently exceptional circumstances.

The claimant owned a warehouse damaged by fire during work undertaken by European Active Projects Ltd. The claimant alleged that EAPL was liable and sought the full insurance policy from its insurer, Dornoch Ltd.

Dornoch had denied cover under a hot-working endorsement but had not disclosed the policy. The claimant argued that disclosure might avoid proceedings against EAPL and Dornoch. The application was made under CPR rule 31.16, pursuant to section 33(2) of the Senior Courts Act 1981.

The central issue was whether the statutory information regime for insolvent insureds under the Third Parties (Rights against Insurers) Act 2010 prevented, or should materially restrict, pre-action disclosure under the CPR.

1. Application refused. The claimant was not granted pre-action disclosure of the insurance policy.
2. The conditions in CPR rule 31.16(3)(a) and (b) were satisfied because the claimant and insurer were likely to be parties to anticipated proceedings. The requirement in rule 31.16(3)(c) was also satisfied because the policy would be disclosable in proceedings concerning the effect of the endorsement.
3. Following Black v Sumitomo Corpn [2001] EWCA Civ 1819, the matters in rule 31.16(3)(d) form part of the jurisdictional threshold. If that threshold is met, the court must still exercise an unfettered discretion, assessing desirability on all the facts.
4. The statutory regime under the Third Parties (Rights against Insurers) Act 2010, including Schedule 1, does not in principle preclude the CPR jurisdiction. The two regimes may potentially operate together. Schedule 1 provides specified rights to information, whereas rule 31.16 confers no entitlement to disclosure unless the court exercises its discretion.
5. The statutory and procedural context weighed strongly against disclosure. Insurance policies are not ordinarily disclosable in proceedings against a solvent insured because they are irrelevant to the issues. Parliament had not created an express entitlement to obtain such a policy, and previous attempts to use other CPR provisions had failed.
6. The claimant’s evidence that EAPL would probably be found liable, would probably be unable to satisfy judgment and might enter liquidation did not amount to sufficiently exceptional circumstances. Those conclusions depended on a series of hypotheses. It would be contrary to established practice to order disclosure merely because the insured might become insolvent and a direct claim against insurers might then arise.