Liability insurance: liability of insurer for costs

Section 51 of the Senior Courts Act 1981 gives the court a discretion as to the award of costs, and also permits the court to make a costs order against a non-party. The usual scenario is that the assured has become insolvent and the insurers have defended the claim in their own interests. In XYZ v Travelers Insurance Co Ltd [2017] EWHC 287 (QB) the facts were somewhat different.

The insurers in this case had funded a number of claims, some of which were insured and some of which were uninsured, but the true insurance position was not disclosed. In those circumstances Thirlwall LJ had little hesitation in holding that the insurers should pay the costs of successful claimants whose claims would not have been brought had the insurance position been made apparent.