In Dunlop Haywards (DHL), Erinaceous Commercial Property Services Limited v Erinaceous Insurance Services Limited and Lockton Companies International Limited [2008] EWHC 520, the Claimants instructed the Defendant broker (Erinaceous Insurance) to renew professional indemnity insurance for the companies in the Claimants’ group and to procure a primary layer of insurance cover of £10 million and an excess layer of £10 million. The Defendant engaged a sub-broker (Lockton) to place the cover. The Claimants faced numerous claims arising out of allegedly negligent and/or fraudulent valuations but excess insurers denied liability on the basis that the insurance did not cover valuations. The Claimants commenced proceedings against Erinaceous Insurance for failing to comply with their instructions by obtaining excess insurance which contained a condition limiting cover to liability arising from the insured’s commercial property management activities. The Defendant in turn sought an indemnity or contribution from Lockton as sub-broker. No claim had been made against the excess insurers for an indemnity under the policy in the instant proceedings or any other action.

Mr Justice Field first considered the Defendant’s application under Civil Procedure Rule (CPR) 19.2(2) to have the excess insurers joined as defendants so that they would be bound by any decision of the court. The Defendant argued that the policy, correctly construed, did cover valuations or alternatively that the policy should be rectified. The Judge declared that the court had jurisdiction to make the order sought notwithstanding that neither the Defendant nor any other party to the proceedings was in a position to assert a claim against the excess insurers. He noted that the Rule would be superfluous if a requirement were imposed that a party must be able to bring a claim against the party sought to be joined, if that were the case the party seeking joinder could bypass CPR 19.2(2) and issue a Part 20 claim for contribution or indemnity in its place. In this instance though, the Judge was not prepared to exercise his discretion to allow the Defendant to join the excess insurers. The Defendant’s rectification case, in light of the wording on the slip, was so weak that the excess insurers should not be put to the inconvenience and expense of defending such a claim. The Judge also decided that although the Defendant’s policy construction case had a reasonable prospect of success, it was not clear that claims would be made against the excess insurers and if they were, the claims could be tried quickly in separate proceedings.

The court’s decision turned to a significant extent on the strength of the case put forward by the party seeking joinder. If the Defendant’s case had been stronger they might have succeeded in bringing insurers into the proceedings with the consequent expense for insurers.