QUANTUM CLAIMS COMPENSATION SPECIALISTS LTD V WREN INSURANCE SERVICES

[2011] ScotCS CSOH_61, Outer House, Court of Session, Lord Hodge, 30 March 2011

Insurance (after the event) - Three additional defendants added to claim - Whether consent of insurers should have been sought under policy

Quantum funded and managed civil litigation for clients. Quantum obtained an after the event policy from Wren under which Wren was to indemnify Quantum for £90,000 in excess of a £10,000 deductible for awards of costs against Quantum in the event that an action funded by it failed. Clause 1(k) excluded Wren's liability for "any Defendants Costs, Own Disbursements and Own Costs which have been incurred after the Insured and/or their Client becomes aware of any fact or matter which adversely affects the prospect of success in any Legal Action or the quantum of the Claim unless Underwriters have given their prior written consent which will not be unreasonably withheld". Quantum pursued a personal injury road accident claim against Mrs Carter, who was partially disabled due to multiple sclerosis, and during the proceedings decided to add as co-defendants the garage and employees responsible for installing hand controls on Mrs Carter's vehicle. Wren's consent was not sought. The court ruled that this was a breach of clause 1(k). That provision did not require Quantum to report to Wren every factor which might adversely affect the prospect of success, so that the condition was not broken by failure to report a medical report on the claimant's condition, but the addition of three defendants, against whom an essentially alternative action was brought, was of material concern to Wren and should have been reported to them under clause 1(k).