Disclosure Of Insurance Policies In Insolvency Cases

The recent decision of Jefford J in Peel Port Shareholder Finance Co Ltd v Dornoch Ltd [2017] EWHC 876 (TCC) clarified the applicable regime for pre-action disclosure of insurance policies in insolvency cases. Jefford J held that the special regime for disclosure created by the Third Parties (Rights against Insurers) Act 2010 precludes the ordinary operation of pre-action disclosure through CPR 31.16(3) and insurers only have a duty to provide pre-action disclosure of insurance policies where the 2010 Act applies.

The Third Parties (Rights against Insurers) Act 2010

The 2010 Act applies to third parties who have rights against an insured declared insolvent or entering a voluntary arrangement with its creditors. It provides for the transfer of the rights of the insured against its insurer to the third party so as to enable them to benefit from the contract of insurance. It effectively allows a wronged third party to make a claim directly against an insolvent person's insurers.

Schedule 1 to the 2010 Act permits a third party to write to the insured or directly to the insurer for information where the third party reasonably believes that the 2010 Act applies.

The 2010 Act limits the information which is disclosable to, amongst other things, whether a contract of insurance exists which covers or might reasonably be thought to cover the supposed liability. Where such a contract exists, the name of the insurer and the terms of the insurance must be disclosed. Default allows the third party to apply to the Court for its disclosure.

In the case of Re OT Computers Ltd (In Administration) [2003] Lloyd's Rep IR 669, the Court of Appeal held that the 2010 Act's predecessor, the Third Parties (Rights against Insurers) Act 1930, allowed for the disclosure of a contract of insurance before the establishment of the insured's liability. This is reflected in the wording of the 2010 Act which only requires that the third party "reasonably believes" that the rights of insured have transferred under the 2010 Act. Thus, a third party may obtain pre-action disclosure of an insurance policy where the 2010 Act applies.

The decision in Peel Port

In Peel Port an application was made for the disclosure of an insurance policy under CPR 31.16(3). Peel Port owned a warehouse in Kent which was damaged by fire. Peel Port alleged that another company, EAPL, had caused the fire by flame cutting work carried out on neighbouring premises.

The claim was complicated by the fact...