High Court refuses to order pre-action disclosure of a defendant’s public liability insurance policy

In Peel Port Shareholder Finance Co Ltd v Dornoch Ltd [2017] EWHC 876 (TCC), Peel Port Shareholder Finance Co Ltd (Peel Port) applied for pre-action disclosure of the defendant’s insurance policy under Civil Procedure Rule 31.16. Peel Port was not able to rely on the provisions in Third Party (Rights against Insurers) Act 2010 because the defendant was not insolvent. Peel Port argued that it was highly probable that rights against insurers would be transferred to them under the 2010 Act in due course. They argued, therefore, that the court should exercise its discretion to grant disclosure of the defendant’s insurance policy at this stage to help avoid litigation and wasted costs. Mrs Justice Jefford refused to exercise her discretion to grant disclosure in anticipation of such a transfer of rights.

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Better rights against insurers of ‘insolvent’ entities – finally here

A key question in any litigation is whether the defendant can satisfy a judgment.  Where the defendant is both insolvent and insured a further issue is whether the claimant can ultimately recover payment from the insurer.  This may be possible under the Third Parties (Rights against Insurers) Act 1930 (“1930 Act“) but there are a number of significant hurdles for a third party to overcome before it can benefit from the application of the1930 Act.

On 1 August 2016, the Third Parties (Rights against Insurers) Act 2010 (“2010 Act“) finally comes into force and replaces the original 1930 Act (although the 1930 Act will still apply in cases where the insured both incurs liability to a third party and enters insolvency proceedings before 1 August 2016).

The 2010 Act is long-awaited, having received Royal Assent on 25 March 2010.  The 2010 Act provides for a less complex procedure for a third party claimant to claim directly against the insurer of an insolvent individual or corporate defendant. The new law will improve the position of third parties with claims against insolvent assureds.

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