XYZ v Travelers Insurance Co Ltd (QBD, Thirlwall LJ) 24 February 2017

The applicants applied for an order under the Senior Courts Act 1981 s.51 that the respondent insurer pay the costs they incurred in their successful claims against a company for damages for injuries sustained as a result of the company’s supply to them of defective breast implants. The applicants were those whose claims were uninsured. Judgment was entered in all their claims in March 2016 but the company was then in administration and no damages or costs had been paid. The insurer had been keen not to disclose the terms of the policy and the company had only disclosed the insurance position in 2014.

Held: it was unnecessary for the applicants to establish that the insurer controlled the litigation of their claims. The uninsured claims were nothing to do with the insurer but its involvement in the defence of the claims and their approach to the company’s conduct of them were relevant considerations. The insurer had been in the driving seat of the litigation. The insurer’s desire not to reveal the details of the policy had inevitably affected the approach to the uninsured claims. The cases were exceptional as defined in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Costs) [2004] UKPC 39 in relation to the making of costs orders against non-parties, Dymocks applied. They were well outside the normal run of cases in which parties pursued or defended claims for their own benefit and at their own expense. The fact that the insurer insured other claims did not entitle it to be involved in or influence the conduct of the uninsured claims, both of which it did. But for the insurer’s interest, the company would have disclosed the terms of the policy to the claimants at an early stage. If that had happened the applicants would not have pursued their claims and incurred the costs they sought. It was also relevant that, in paying the defence costs, the insurer took no risk yet reaped a significant benefit, and that the insurer would be paying what they bargained for under the contract of insurance.