In (1) Christine Brown-Quinn (2) Webster Dixon LLP & Ors v (1) Equity Syndicate Management Ltd (2) Motorplus Ltd [2012] EWCA Civ 1633, the Court of Appeal held that conditions in a legal expenses insurance contract were in breach of the Insurance Companies (Legal Expenses Insurance) Regulations 1990 reg.6 (the Regulations).
The appeal dealt with the question of whether an insured had the freedom to choose one’s own lawyer under a legal expenses insurance contract. The insured (Brown-Quinn) had instructed legal counsel who were not on the appellant insurer’s (Equity) panel of solicitors. As such, Equity refused to cover any of the legal expenses incurred by Brown-Quinn on the basis that the hourly rate charged by the instructed firm exceeded Equity’s designated ‘non-panel rate’. The conditions within the insurance contract, which sought to restrict Brown-Quinn’s choice of legal representative, were examined in light of the Regulations. Regulation 6 in particular provided that:
“(1) Where under a legal expenses insurance contract recourse is had to a lawyer… to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer.
(2) The insured shall also be free to choose a lawyer… to serve his interests whenever a conflict of interests arises.
(3) The above rights shall be expressly recognised in the policy.”
The Court of Appeal found that a refusal to accept the appointment of an insured’s law firm of choice on the grounds that it would only be accepted if it charged no more than the non-panel rates was clearly contrary to the Regulations. It was additionally held that although Equity could limit the costs for which it was liable to Brown-Quinn to their non-panel rates, it could do so only on the proviso that Brown-Quinn’s freedom of choice, as guaranteed by Council Directive 87/344/EEC, was not “rendered meaningless“. The submission, made and subsequently rejected at first instance, that Brown-Quinn’s right to choose her own lawyer could only be exercised once and no more was not pursued before the Court of Appeal.
Lord Justice Longmore condemned the conduct of Equity and described the insurer as “exhibit[ing] an insouciance to its obligations under the Directive and the Regulations which leaves one quite breathless“. He went on to say that it is unacceptable that, despite the warning shot delivered to legal expenses insurers by the court in Sarwar v Alam [2002] 1 WLR 125, insurers, such as Equity, should continue to issue policies which clearly do not comply with the Regulations.
A copy of the full judgment in this case can be viewed here.
