Society of Lloyd's v
Jaffray and others
COURT OF APPEAL
(CIVIL DIVISION)
[2001] EWCA Civ 1503,
(Transcript: Smith Bernal)
HEARING-DATES: 8
OCTOBER 2001
8 OCTOBER 2001
CATCHWORDS:
Practice - Disclosure - Confidential information
- Confidentiality order - Order subject to measures designed to ensure
information remaining confidential - Application to set aside order and to join
parties to action as first and second defendants to counterclaim so as to
obtain discovery - Whether order should be set aside - Whether appropriate to
join parties as substantive parties to litigation
COUNSEL:
S Goldblatt QC and V Nelson QC for the
Applicants; C Aldous QC and D Foxton for the Respondents; C Edelman QC for the
Equitas Companies; Mr Harrison, Ms Strong, Mr Butler and Mr Adams appeared in
person; Mr Charity for Sir William Jaffray and others
PANEL: THE MASTER OF THE ROLLS, WALLER, CLARKE
LJJ
JUDGMENTBY-1: THE MASTER OF THE ROLLS
JUDGMENT-1:
THE MASTER OF THE ROLLS: [1] By an application
dated 24 July 2001, Sir William Jaffray sought an order, (1), joining London
Market Claims Services Limited (LMCS) and Equitas Holdings Limited, Equitas
Reinsurance Limited and all Equitas subsidies (Equitas) to the action as first
and second defendants to the counterclaim and, (2), setting aside
confidentiality orders made by Cresswell J on 10 December 1999 and 16 June
2000.
[2] LMCS is a service company which provides
various claims-related services to its subscribers concerning asbestos
pollution health hazard claims (APH claims). These services include
distribution of APH Attorneys' Reports to interested underwriters subscribing
to the relevant insurance or reinsurance policies. Subscribers of services
given by LMCS are certain active Lloyd's syndicates, Equitas Limited and various
insurance/reinsurance companies. There are no formal written contracts between
LMCS and its subscribers. LMCS has no contractual relationship with 1992 and
prior Lloyd's Names, including the applicants.
[3] The Equitas group was formed as part of the
Lloyd's reconstruction and renewal plan (R & R) to reinsure the liabilities
of the members of Lloyd's non-life syndicates allocated to the 1992 and prior
years of account other than life syndicates and to perform the run-off of these
liabilities.
[4] Equitas Reinsurance Limited completed the
reinsurance of the non-life 1992 and prior years business except business
previously reinsured by Lion Cover Insurance Company Limited (Lion Cover
business) with effect from 3 September 1996 and reinsured the Lion Cover
business with effect from 18 December 1997. It retroceded these businesses to
Equitas Limited which is the main operating company of the Equitas Group.
Equitas Reinsurance Limited and Equitas Limited are regulated under the
Insurance Companies Act 1982 by the Financial Services Authority on behalf of
HM Treasury.
[5] Eight unrepresented Names have allied
themselves to Sir William Jaffray's application. We permitted Mr Charity, a
solicitor, to make representations on their behalf on a de bono basis. Had the
purpose of joining LMCS and Equitas been solely so that they could respond to
the applications to set aside the confidentiality orders, we do not understand
that there would have been any objection. That has however proved not to be the
case. I propose to deal first of all with the confidentiality orders.
[6] The application to set aside the order of 10
December 1999 is not pursued. Had it been, LMCS would have been concerned to
resist that application.
[7] I turn to the order of 16 June 2000. On its face,
it is an unusual order. It required the partners in the solicitors' firms and
the counsel acting for the parties in this litigation to enter into the
following undertaking:
"1. I hereby represent, warrant and
irrevocably and unconditionally undertake without limit as to time to the Court
and to Equitas that:
'(i) I will strictly comply with all the
obligations imposed on me by the terms of the Order of the Hon. Mr Justice
Cresswell made on Friday 16 June 2000 in the proceedings Lloyd's and Jaffray;
'(ii) When I am not using the Document and any
copies of written submissions referred to in paragraph 7 of the Order, I will
place any such documents provided to me in a sealed envelope in a locked safe
and other secure place. The envelope shall be marked on its outside: 'The
documents contained in this envelope are subject to a Court Order which
restricts their access to [my name]'.
'2. I hereby acknowledge that:
'(i) No failure or delay by Equitas in
exercising any remedy, right, power or privilege under or in relation to this
Undertaking shall operate as a waiver of the same nor shall any single or
partial exercise of any remedy, right, power or privilege preclude any further
exercise of the same or the exercise of any other right, power or privilege.
'(ii) A breach or threatened breach by me of
this Undertaking would be likely to cause irreparable injury to Equitas."
[8] Subject to these undertakings being given,
the order provided that Equitas would provide to those giving the undertakings
a document, that is 'the Document' referred to in the undertakings. The
document would include 'the Percentages' defined to be 'the individual
percentage figures for asbestos pollution and health hazard claims reserves
which together constitute the total net discounted Equitas opening reserve
figure for APH as at 31 December 1994.'.
[9] It may be (in the limited time available I
have not had time to form a final view on this) that it was also implicit that
the Document would include 'the Figures' which were defined as 'the individual
figures for asbestos pollution and health hazard claims reserves which result
from the application of the percentages to a net discounted Equitas open
reserve figure for APH as at 31 December 1994.'.
[10] The order further provided:
"4. Subject to Equitas responding to the
requests made in the parties' letters dated 24 May 2000 ('the Requests'), and
any supplementary requests relating to information provided in response to the
Requests, following the provision of the Percentages by Equitas in accordance
with paragraph 2 of this Order, Equitas will not be required to provide, during
the course of the Proceedings, any further reserve information held by Equitas.
"5. Subject to their use by the Judge, and
the judges in any appellate Court hearing any appeals in such actions, and by
the Solicitors and Counsel under the following terms of this Order, the
Percentages and the Figures shall be kept strictly private and confidential by
any person to whom they are provided under the terms of this Order and shall
not be disclosed to any other person, including but not limited to, any of the
parties or any partners, assistants, or employees of the Solicitors.
"6. Counsel will not make any reference to
or disclose any of the Percentages and/or the Figures, either orally or in
writing, during the examination-in-chief, cross-examination or re-examination
of any of the witnesses called to give evidence in the Proceedings.
"7. Neither Counsel nor the Solicitors
shall refer to the Percentages and/or the Figures in any Oral Submissions, as
defined in this paragraph, unless the court is sitting for that part of the
Oral Submissions in camera. For the purpose of this Order 'Oral Submissions'
shall mean (1) any Oral Submissions made to the judge in the Proceedings or (2)
any Oral Submissions on the hearing of any appeal in such actions. Neither
Counsel nor the Solicitors shall refer to the Percentages and/or the Figures in
any written submissions to the Judge in the Proceedings or on the hearing of
appeal in such actions unless such reference is made in a separate document
from the rest of their written submissions which document is to be delivered to
the Court as a document stated to be strictly private and confidential and to
be read by the Judge or judges alone.
"8. If the judge decides to refer in his
judgment in the Proceedings to either the Percentages or the Figures, such a
reference shall be contained in a strictly private and confidential schedule to
his judgment which, subject to any other Order in the meantime, may only be
read by the Solicitors, Counsel and by Equitas, and in the event of an appeal
from such judgment, by the judges hearing any such appeal, and not by the
parties to the Proceedings nor the parties to the Proceedings themselves.
"9. . .
"10. None of the parties to the Proceedings
will use the terms on which the Percentages and/or the Figures have been
provided in the Proceedings as set out in this Order as grounds for appealing
to the Court of Appeal or the House of Lords against the judgment of the Judge
in the proceedings."
[11] There were additional provisions, which I
have not read, designed further to protect the confidentiality of the
information.
[12] The very unusual terms of this order are
explained by the fact that it was the product of agreement between the lawyers
representing the parties. Equitas made it plain that it would not provide the
information save subject to these conditions. They also made it plain that if a
subpoena was sought in an attempt to obtain sight of the underlying documents,
that subpoena would be strenuously resisted.
[13] The object of the strict confidentiality
was, as I understand is common ground, to prevent information being disclosed
which would be potentially damaging to Lloyd's and the whole Lloyd's market
including Names party to this litigation.
[14] The purpose for which Sir William Jaffray
and those who ally themselves to him seek to have this order set aside appears
from the following paragraph from a witness statement dated 1 October which he
has filed with the court:
"The reserving information will show the
calculations used to ensure Equitas was adequately capitalised in 1996, and the
discussions which took place with the DTI. The DTI's initial estimates of
capital required for Equitas were substantially reduced to get Equitas approved
by the accepting Names in the R & R scheme. We contend the Equitas
reserving figures will establish three things. (1) That Lloyd's and Lloyd's
syndicates had been consistently under-reserving for APH claims year in and
year out for approximately 30 years and (2) that with connivance with the DTI
and Lloyd's, Equitas was deliberately under-capitalised to bring in the
accepting Names and (3) that progressive deterioration of APH claims through to
the present day will show Equitas is insolvent and unable to meet its
liabilities, thereby proving that claims on old policies written on 1967 and
post years of account continue to bleed into the future."
[15] Mr Charity confirmed that these were indeed
the reasons why this application was being made.
[16] Mr Charity initially sought to bolster the
application by stating on instructions that the unrepresented Names had been
unaware of this order for about a year until they discovered it in the
documents. Subsequently he corrected that statement to state that they had not
seen the order until that stage, although when the court asked whether they had
asked for the order the answer was that they had not. That correction was very
proper because the transcript of the hearing at which the order was made shows
that Sir William Jaffray and other unrepresented Names were present at the
hearing.
[17] In the course of that hearing the following
exchange took place between Mr Jonathan Hirst QC, who was appearing for
Equitas, and Cresswell J:
"Mr Hirst: Might I just stress one thing? I
know that some of the litigants-in-person would like or might want access to
these documents. I think I should just make it plain: if that were one of the
possibilities, then my instructions would be to withdraw all cooperation in
relation to this order, altogether; it is either on these terms or not at all.
Mr Justice Cresswell: There is provision for
lead counsel and lead solicitors in this case; the important thing, as it seems
to me, Mr Goldblatt as lead counsel should have access to this information, and
I'm sure that the litigants-in-person will realise that it is much better that
this material should come in and that Mr Goldblatt should have access to it and
be able to deploy it as he thinks appropriate, subject to the restrictions,
than that it should not be available to the Court at all."
[18] That then, as it seems to me, is the
material material to this application. I consider that the application should
be refused for the following reasons:
[19] First, it comes too late. Equitas has
provided confidential information in reliance on the order and the undertakings
given pursuant to it to which no objection was raised at the time. I think it
would be quite wrong to accede to an order designed to enable the litigants in
person to have access to information that was provided on that basis. I say
that, although it is by no means certain that if the order was set aside that
result would follow.
[20] Second, this was an order made in group
litigation. Group litigation proceeds on the basis that legal representatives
will have the conduct of the litigation and that litigants in person will play
only a limited role relying upon the professionals to protect their interests.
[21] Third, the reasons for seeking to obtain
this information are, for the most part, not relevant to the litigation. The
fact that there was under-reserving is relevant but that, as I understand it,
is not in issue. For myself, I do not see how attempting to show that Equitas was
under-capitalised or is insolvent could properly further the Names' case on the
issues raised by this litigation.
[22] Finally, it does not seem to me that the
Names have been prejudiced by this order. The lawyers with conduct of the
litigation can make use of the information provided by Equitas, albeit subject
to the measures in the order designed to ensure that it remains confidential.
[23] I should indicate that Mr Goldblatt has
intimated to the Court that he will in due course urge that the constraints
imposed upon him by the order were prejudicial, but he did not feel it right to
support the attack being made on the order, the order being one to which he
agreed, on this application. As I see the matter at present I do not see the
basis upon which the Names can say they were prejudiced. So, for those reasons,
I would dismiss that part of the application.
[24] As to the application to join LMCS and
Equitas, Mr Charity has made it plain this morning that there is a further
objective behind that application which is that those two entities should be
joined in order to enable applications to be made for discovery in these
proceedings. No notice was given to anybody that the application was being made
upon that basis and it is, in any event, a basis which is misconceived. It is
not appropriate to join parties as substantive parties to litigation simply to
obtain discovery. The appropriate course is to issue a subpoena for that
purpose. So for those reasons I would dismiss that part of the application which
is to join LMCS and Equitas.
JUDGMENTBY-2: WALLER LJ
JUDGMENT-2:
WALLER LJ: [25] I agree.
JUDGMENTBY-3: CLARKE LJ
JUDGMENT-3:
CLARKE LJ: [26] I also agree.
DISPOSITION:
Judgment accordingly.
SOLICITORS:
Grower Freeman & Goldberg; Freshfields;
Barlow, Lyde Gilbert