GREENE WOOD MCLEAN LLP V TEMPLETON INSURANCE LTD

[2010] EWHC 2679 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Cooke, 26 October 2010

Insurance (after the event) - Assureds incurring costs in losing application for group litigation order - Insurers refusing indemnity - Solicitors indemnifying assured under guarantee - Whether solicitors had action against ATE insurers - Implied term - Restitution - Contribution - Whether solicitors and counsel owed duty of care to insurers - Civil Liability (Contribution) Act 1978

GWM was a firm of solicitors. Templeton issued an after the event policy for GWM clients, members of the Union of Democratic Mineworkers against the risk of an adverse costs order and for the clients' own liability to GWM for costs, arising out of an action by the clients against the Department of Trade and Industry for compensation for respiratory diseases and vibration white finger. Each of the claims was very small, and the decision was taken to apply for a group litigation order. GWM granted an indemnity to the clients in respect of legal costs. The application was dismissed by the court, and costs were awarded against the clients. Templeton, alleging that the policy was void, refused to pay the clients' costs and also refused to pay GWM's own disbursements and also GWM's liability to counsel for fees. GWM indemnified the clients under the guarantee, but was unable to take assignments of the claims against Templeton under the policy because of a non-assignment clause. GWM commenced the present action seeking indemnification from Templeton. Cooke J held as follows. (1) In the light of the actual contractual arrangements, there was no implied term in the arrangements between GWM and Templeton that Templeton would meet valid claims under the policy: it was not necessary to give business efficacy to the arrangements; and an officious bystander would not have recognised such a term. (2) GWM could recover from Templeton, in that GWM was legally obliged to discharge the debt owed by Templeton to the clients and so had a restitutionary claim against Templeton. (3) GWM had a claim against Templeton for contribution under the Civil Liability (Contribution) Act 1978, as both were liable for the same damage. The amount of contribution was 100 per cent. (4) Neither GWM nor counsel owed any duty of care to Templeton in respect of the application for a group litigation order. In any event, there had been no negligence.