Pan-NOx Emissions Group Litigation (Funding Information and Disclosure Hearing)

Applications for disclosure of litigation-funding information in advance of possible security for costs applications should be assessed by asking whether there is a real risk that available after-the-event insurance is insufficient. The court may decide the adequacy of the insurance at the disclosure hearing where doing so promotes effective case management and the evidence permits a realistic assessment. The decision binds only the parties and applications before the court. Adequate protection may require security to increase over time in line with prospective costs. Here, the insurance was adequate subject to protection calculated at 64% of relevant incurred costs and increased monthly after 31 July.

Various manufacturer defendants applied against Johnson Law Group for information about its funding arrangements, in advance of potential security for costs applications. Johnson Law Group accepted that the information should be provided, subject to the adequacy of the after-the-event insurance available to protect the defendants.

The court considered whether it should determine only whether there was a present real risk of insufficiency, or also decide the adequacy of the insurance offered. It examined the wording of the policy and anti-avoidance endorsement, the proportion of incurred costs requiring protection, and the date from which prospective costs should be covered.

1. Disclosure and applicable threshold. Johnson Law Group was ordered to provide the requested funding information in accordance with the latest draft order, subject to adequate after-the-event insurance. The relevant question was whether there was a real risk that the insurance was insufficient. If that threshold was met, the disclosure application was likely to succeed.
2. Timing and scope of the determination. It was not premature to decide the adequacy of the insurance rather than merely the risk of inadequacy. That course had sound case-management advantages and might avoid a further hearing. The decision applied only to Johnson Law Group and the applications before the court. Other parties remained entitled to rely on different or additional evidence in later security for costs applications, although materially identical submissions based on no further evidence were unlikely to produce a different result.
3. Policy wording. There was no real risk that the wording of the policy or its anti-avoidance endorsement provided inadequate protection. The express inclusion of fraud and the breadth of the existing anti-avoidance endorsement addressed the objections raised.
4. Amount and timing of protection. Adequate protection required 64% of the defendants’ incurred costs. The insurance was sufficient up to 31 July, but from 1 August the required security had to increase pro rata each month to reflect the total protected costs.
5. Continuing protection. Adequate security had to be maintained for the ratcheted-up costs. The claimants could arrange cover for the whole period from the outset or agree increasing premiums with the insurers. Liberty to apply was granted after judgment in the PDD trial concerning possible repurposing of some or all of the insurance.