Novitas Loans Limited v AmTrust Europe Limited

In deciding an interlocutory disclosure application, the court must assess whether the requested communications have a realistic bearing on the construction of the relevant contract. Communications may be incorporated contractual terms or form part of the factual background, but that classification alone does not establish relevance.

Where policy wording uses an autonomous and stable expression, such as services provided as a solicitor, communications about the insured’s particular transaction are unlikely to justify disclosure unless they could materially influence the meaning of the wording. The same applies to communications relied upon to construe phrases such as arising out of or in connection with the insured business. Speculative or merely possible relevance is insufficient.

Novitas Loans Limited brought proceedings against AmTrust Europe Limited. AmTrust sought disclosure from Sompo in related Part 20 and subrogation proceedings concerning communications between scheme solicitors and Sompo before inception of the relevant professional indemnity policy.

The communications were said potentially to be relevant because pre-contract information might have been incorporated into the policy or might form part of the factual matrix. The central issue was whether the communications identified in Disclosure Issues 1A and 1B were sufficiently relevant to justify disclosure for the later construction issues trial.

1. Disclosure refused. The court refused the disclosure sought in relation to Disclosure Issues 1A and 1B. The ruling was confined to the disclosure application and did not determine the parties’ substantive construction arguments.
2. Pre-contract communications may be relevant to construction because they may be incorporated as contractual terms or may form part of the factual background known to, or reasonably available to, both parties. Their classification does not, however, make them relevant automatically.
3. The policy indemnified civil liabilities arising out of or in connection with the conduct of professional business. Professional Business was defined by reference to the provision of services as a solicitor or registered European lawyer in private practice. The judge considered it unlikely that communications concerning the insureds’ transaction, including any Terms of Business Agreement with AmTrust, could materially affect the meaning of those expressions.
4. The same conclusion applied to the phrase arising out of or in connection with the conduct of Professional Business. The possibility that communications might assist construction was too speculative and insufficient to justify an order for disclosure.
5. The judge recognised that it was unsatisfactory that AmTrust, as assignee of rights under the policy, lacked access to communications between the original contracting parties. That practical concern did not establish legal relevance. The disclosure application was therefore refused.

Not stated in the judgment.