INSURER NOT LIABLE TO PAY CLAIMANTS’ COSTS: TRAVELERS INSURANCE DECISION OVERTURNED BY THE SUPREME COURT
In the judgment today in Travelers Insurance Company Ltd v XYZ  UKSC 48 the Supreme Court held that the insurer was not liable to pay the costs of those claimants who had proceeded (unknowingly) against uninsured defendants. This is an important decision in relation to non-party costs orders. One of the points made in relation to a non-party order is that there has to be a causative link between the conduct of the non-party and the incurred costs which are sought to be recovered.
“… causation remains an important element in what an applicant under section 51 has to prove, namely a causative link between the particular conduct of the non-party relied upon and the incurring by the claimant of the costs sought to be recovered under section 51. If all those costs would have been incurred in any event, it is unlikely that a section 51 order ought to be made”
623 claimants brought an action against a medical clinic in relation to defective silicone breast implants. The insurer, Travelers, funded the whole of the defendant’s defence. It did not disclose until a late stage that a substantial number of the claimants were uninsured, in that the defendant’s policies only covered the clams brought by 197 claimants. The claimants who were covered recovered costs and damages. The court initially ordered that the insurer nevertheless pay the costs of those claimants who were not covered by the defendant’s policies. This decision was upheld by the Court of Appeal.
THE SUPREME COURT: OVERTURNS THE EARLIER DECISIONS
The Supreme Court overturned the earlier decisions. No costs of the “uninsured” claimants were to be recoverable from the insurer. The decision is set out in the helpful summary available here.