Managed Legal Solutions Limited v Darren Hanison

An insurer may be joined to liability proceedings against its insured where it has a legitimate interest in a live issue, particularly where a conflict of interest exists and the insured is no longer defending the claim. The application falls under CPR 19.2 rather than CPR 19.6 where joinder creates no new cause of action and any claim against the insurer remains contingent on establishing the insured’s liability. The court must consider whether joinder is desirable, having regard to the connected issue, the parties’ opportunity to be heard and the overriding objective. Delay and disruption to an existing hearing date do not necessarily justify refusal where the insurer applies promptly after the insured ceases to defend.

Managed Legal Solutions Limited brought claims against Darren Hanison, trading as Fortitude Law. HDI Global Specialty SE had issued Fortitude a professional indemnity policy and sought to be joined as a second defendant. HDI wished to contest whether Fortitude owed MLS a freestanding tortious duty, because HDI’s interests conflicted with those of the insured on that issue.

Fortitude had ceased participating in the proceedings and had been debarred from defending. MLS opposed joinder, relying on limitation, delay, the existing procedural position and the potential disruption to a forthcoming hearing. The central issues were whether the application was governed by CPR 19.2 or CPR 19.6 and whether joinder was desirable under CPR 19.2(2).

1. Applicable rule. The application fell under CPR 19.2. The potential claim against HDI under Third Parties (Rights against Insurers) Act 2010 would arise only if and when MLS established Fortitude’s liability. Section 12(4) meant that the relevant limitation period had not expired. In addition, joinder involved no new claim or cause of action, so CPR 19.6 did not apply.
2. Desirability. CPR 19.2(2) is expressed in wide terms. Its purposes include enabling persons whose rights may be affected by the proceedings to be heard and giving effect to the overriding objective. HDI had an interest in the freestanding-duty issue, which was connected with the matters in dispute.
3. Insurer’s position. The authorities, especially Wood v Perfection Travel Ltd, established jurisdiction in an appropriate case to join an insurer so that it could make submissions in its own interest where its interests conflicted with those of the insured. The issue would otherwise be uncontested because Fortitude was debarred.
4. Discretionary factors. The relevant conflict had become practically significant when Fortitude ceased defending. HDI then acted promptly after learning the procedural position. Its joinder would not improperly improve its position, create conceptual difficulty or amount to an impermissible attempt to control Fortitude’s defence. The disruption to the existing hearing date did not outweigh the need for HDI to be heard, particularly as MLS knew of HDI’s interest but proceeded with listing the hearing without responding to HDI’s correspondence.
5. Order. HDI’s application was granted. MLS was directed to serve an amended claim form adding HDI as second defendant, and HDI was directed to serve its draft defence.