In Travelers Insurance Company and Denton Wilde Sapte v Gauri Advani [2012] EWHC 623 (QB) Sir Raymond Jack held that where a solicitor had acted dishonestly and outside the scope of her employment, the terms of the relevant professional indemnity insurance allowed the insurer to recover amounts paid to fund the defence of that solicitor in negligence proceedings.

The claimants, Travelers Insurance Company (Travelers) made a claim for £501,398 in respect of defence costs it paid to fund the defendant, Gauri Advani (Advani) (an employee of Denton Wilde Sapte (DWS)) in respect of a negligence claim made against her. Travelers provided professional indemnity insurance to DWS and its employees.

In a previous judgment of Mr Justice Hamblen, in respect of the negligence claim against DWS and Advani, it had been held that Advani had received monies from her clients (the claimants in the negligence action) which had been intended to bribe certain Indian officials. It was held that Advani had acted outside the scope of her employment in attempting to arrange the bribe and had been in breach of her duties to her clients.

In the present action, it was Travelers’ case that the terms of the relevant insurance policy allowed it to recover the defence costs paid out in circumstances where Advani had acted dishonestly and outside her employment. Advani’s primary defence was that she had not acted in the way in which Hamblen J had found she did. Acting on legal advice, she had not given evidence at the trial before Hamblen J.

Sir Raymond Jack held that he was fully satisfied that Advani had known the money in question was going to be paid, and was paid, as a bribe. This was based on the findings of Hamblen J, the evidence before him and the fact that in his judgment, Advani, in giving her evidence “was telling many lies“. Based on these findings, he went on to hold that in accordance with the terms of the insurance policy in question, Travelers was not obliged to provide an indemnity in circumstances where the insured had been found to have acted dishonestly or fraudulently. Advani was therefore ordered to pay Travelers’ claim of £501,398.