Legal expenses insurance - Liability of an insurer for costs

(Worsley v Tambrands Ltd and Syndicate 582 at Lloyd’s [2002] Lloyd’s Rep IR (forthcoming))

Section 51 of the Supreme Court Act 1981 gives the court a wide discretion in its making of costs orders, and in particular contemplates that an order may in appropriate circumstances be made against a person who was not a party to the litigation but who in some way funded or supported the litigation. The possibility that a liability insurer who unsuccessfully conducted the defence of its assured, or a legal expenses insurer who supported an unsuccessful claim, might face a s51 order became a live issue after the decisions of the Court of Appeal in Murphy v Young & Co’s Brewery [1997] 1 WLR 1591 and Chapman (TGA) v Christopher [1998] 1 WLR 12. The guidelines laid down in those cases, as interpreted in subsequent decisions, have made it clear that the prospects of an order are relatively remote, and that something is required to make the circumstances exceptional. Legal expenses insurers may be further reassured by the most recent authority in this line, Worsley v Tambrands Ltd and Syndicate 582 at Lloyd’s, a decision of HHJ Hegarty QC in June 2001.