QUINN DIRECT INSURANCE LIMITED V LAW SOCIETY OF ENGLAND AND WALES [2010] EWCA Civ 805
FACTS:-
This case involved a firm of solicitors, South Bank Solicitors who were closed down by the Solicitors Regulations Authority for failure to comply with accounts rules and suspected dishonesty. Disciplinary proceedings were commenced by the Authority in June 2007 and intervention took place in October 2007. From the 1st October 2007 to the 30th September 2008, the professional indemnity insurer of South Bank Solicitors was Quinn Insurance. A number of claims were made by former clients of the solicitors, which related to sums of money received from lenders for residential property transactions, where it was alleged that the property transactions had not taken place. Quinn requested copies of the relevant files, but the Intervention Agent acting for the Law Society had been unable to locate them. He also said that he was unable to provide bank statement reconciliations and any reports sent to the accountants as he was obliged “to preserve client confidentiality in accordance with its primary concern to protect the interests of former clients and in accordance with the Code of Conduct.”
In March 2009, Quinn commenced proceedings by way of Part 8 against the Law Society in order to compel the Law Society to let it inspect all documents of South Bank Solicitors within its power and control and to take copies thereof. The purpose of that order was to establish whether Quinn was required to indemnify the solicitors. There was no issue in relation to disclosure of the files where claims had been made, and copies of all bank statements of the solicitors had been provided. As to the remainder of the documents of the solicitor in the possession of the Law Society, it appeared to be common ground that they all contained information confidential to one or more former clients whose privilege had not been waived.
JUDGEMENT:-
The Chancellor of the High Court considered the statutory regulation of solicitors, and in particular the Solicitors Act 1974 and the Solicitors Indemnity Insurance Rules 2007. The indemnity insurance provided by Quinn satisfied the minimum terms prescribed by the Rules, but it excluded any claims arising from the dishonesty or fraudulent act or omission committed or condoned by a partner.
Quinn’s counsel argued that the solicitors were obliged to produce to Quinn all documents relevant to an actual or potential claim under Clause 6 of their policy. Therefore they should be allowed to inspect the documents, which they had requested. That argument had been rejected by the judge at first instance on the grounds that the statutory regime did not provide for that kind of disclosure. There was insufficient linkage between the clear regulatory role of the Law Society with that of insurers to confer on those insurers an unfettered right to access to the solicitors’ documents. Quinn’s purpose was to find material that would enable them to avoid the policy, whereas the Law Society’s purpose was to exercise its supervisory powers.
The Chancellor said that it was clear that neither the Law Society nor any client of the solicitors was a party to the policy. Consequently Quinn had no contractual claim to the document unless the client had expressly or by implication consented. The request for production was a blanket request for privileged documents related to clients who had not made any claim against the solicitors.
The Lord Chancellor made a number of points:-
Therefore Quinn’s appeal would be dismissed. The Lord Chancellor added that he agreed with the judge at first instance when he described Quinn’s attempt to see these documents as “simply a fishing expedition.”
Rimer LJ and Jackson LJ agreed.
FACTS:-
This case involved a firm of solicitors, South Bank Solicitors who were closed down by the Solicitors Regulations Authority for failure to comply with accounts rules and suspected dishonesty. Disciplinary proceedings were commenced by the Authority in June 2007 and intervention took place in October 2007. From the 1st October 2007 to the 30th September 2008, the professional indemnity insurer of South Bank Solicitors was Quinn Insurance. A number of claims were made by former clients of the solicitors, which related to sums of money received from lenders for residential property transactions, where it was alleged that the property transactions had not taken place. Quinn requested copies of the relevant files, but the Intervention Agent acting for the Law Society had been unable to locate them. He also said that he was unable to provide bank statement reconciliations and any reports sent to the accountants as he was obliged “to preserve client confidentiality in accordance with its primary concern to protect the interests of former clients and in accordance with the Code of Conduct.”
In March 2009, Quinn commenced proceedings by way of Part 8 against the Law Society in order to compel the Law Society to let it inspect all documents of South Bank Solicitors within its power and control and to take copies thereof. The purpose of that order was to establish whether Quinn was required to indemnify the solicitors. There was no issue in relation to disclosure of the files where claims had been made, and copies of all bank statements of the solicitors had been provided. As to the remainder of the documents of the solicitor in the possession of the Law Society, it appeared to be common ground that they all contained information confidential to one or more former clients whose privilege had not been waived.
JUDGEMENT:-
The Chancellor of the High Court considered the statutory regulation of solicitors, and in particular the Solicitors Act 1974 and the Solicitors Indemnity Insurance Rules 2007. The indemnity insurance provided by Quinn satisfied the minimum terms prescribed by the Rules, but it excluded any claims arising from the dishonesty or fraudulent act or omission committed or condoned by a partner.
Quinn’s counsel argued that the solicitors were obliged to produce to Quinn all documents relevant to an actual or potential claim under Clause 6 of their policy. Therefore they should be allowed to inspect the documents, which they had requested. That argument had been rejected by the judge at first instance on the grounds that the statutory regime did not provide for that kind of disclosure. There was insufficient linkage between the clear regulatory role of the Law Society with that of insurers to confer on those insurers an unfettered right to access to the solicitors’ documents. Quinn’s purpose was to find material that would enable them to avoid the policy, whereas the Law Society’s purpose was to exercise its supervisory powers.
The Chancellor said that it was clear that neither the Law Society nor any client of the solicitors was a party to the policy. Consequently Quinn had no contractual claim to the document unless the client had expressly or by implication consented. The request for production was a blanket request for privileged documents related to clients who had not made any claim against the solicitors.
The Lord Chancellor made a number of points:-
- Firstly he did not accept that an insured solicitor was either entitled or bound to disclose to his insurer, either on inception, renewal or notification, confidential and privileged documents or information of the client without the client’s consent. If the client would not waive his privilege to enable a proper notification to be made by the solicitor either before inception or during the currency of the policy then the solicitor would no doubt so inform the qualifying insurer. The solicitor was not entitled to ignore the client’s privilege.
- Secondly a solicitor’s duty of disclosure to an insurer did not override the entitlement of the client
- Thirdly whilst the statutory regime overrode the client’s privilege on an intervention, there was no corresponding obligation on the Law Society to disclose such documents to an insurer.
- The insurer was not “meshed in” as the recipient of any services or information.
- Quinn’s objectives did not advance any public or regulatory purpose, but to avoid their policy with the solicitors.
- In some circumstances there might be a circle of confidence but there was no reason why it should include an insurer such as Quinn. By way of example it was not only insurers who were required to report misconduct by solicitors, but also other solicitors but that obligation did not entitle them to see other client’s files
Therefore Quinn’s appeal would be dismissed. The Lord Chancellor added that he agreed with the judge at first instance when he described Quinn’s attempt to see these documents as “simply a fishing expedition.”
Rimer LJ and Jackson LJ agreed.