Disclosure of documents

The decision of Peter Smith J in Quinn Direct Insurance Ltd v The Law Society of England and Wales [2009] EWHC 2588 (Ch) discusses the circumstances in which a liability insurer is entitled to obtain documents from the assured where the insurer suspects that the assured may have been guilty of fraud. The point arose in the specific context of solicitors’ indemnity insurance, following intervention by the Law Society in the firm’s affairs.

Quinn: the facts

The case concerned a two-partnership solicitors’ firm (the partners being O and I), South Bank Solicitors (‘SBS’). The firm held professional indemnity cover, the primary layer of which was subscribed to by the claimant insurers, Quinn Direct, for the year commencing 1 September 2007. Claims were made against SBS by clients which indicated that monies had been dishonestly misappropriated. Claims were made against the insurers, who refused to indemnify O on the basis of his fraud and who also refused to indemnify I in respect of a number of cases and reserved their position in others. The claims related to mortgage fraud. What appeared to have happened was that O obtained sums of money from banks who were funding residential property transactions, but the sums did not match the amounts applied for by borrowers and the transactions did not take place. The largest single sum involved was £2,717,994.25.