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Intervention
by a third party claimant in a separate action was permitted under the
CPR in suitable circumstances. In this action, the defendant director's
D&O insurer was seeking a declaration that it would not be liable
to indemnify the director, should he be found liable to the claimant
third party. As the claimant third party would ultimately be seeking
an indemnity against the defendant director's D&O insurer under
the Third Parties (Rights Against Insurers) Act 1930, the third party
was entitled to join in the current action.
The claimant
insurer, Chubb, sought summary judgment for a declaration that it was
not liable to indemnify the Defendant, Davies, under D&O insurance
relating to liabilities Davies had incurred following a claim brought
against him by the Black parties, relating to fraudulent representations
made by Davies. Chubb sought a declaration that Davies' claim was excluded
by the policy and that, in any event, it would be contrary to public
policy for him to recover in respect of his own deceit.
The Applicants,
the Black parties, sought to be joined to the action in order to contest
Chubb's right to the declaration. Under CPR 19.2 (2) the court has the
discretion to add a new party if it is desirable to do so to enable
the court to resolve all matters in dispute or to resolve matters between
the new and existing parties which are connected to the matters in dispute.
Davies,
in turn, was granted permission to appeal on the issues of reliance,
causation and calculation of damages, although not on the fraudulent
representations themselves. The Applicants sought a stay of Chubb's
summary judgment application, pending the outcome of Davies' appeal.
Davies'
assets were insufficient to satisfy the Applicants' stayed judgment
against him, although there was at the time no bankruptcy order. The
Applicants, as prospective Claimants against Chubb under the Third Parties
(Rights Against Insurers) Act 1930, were the real parties interested
in whether Davies had cover under the policy. The Applicants therefore
applied to intervene as Defendants in the coverage action between Chubb
and Davies, pursuant to CPR 19.2 (2).
Under the
1930 Act, upon Davies' bankruptcy, the Black parties would be able to
stand in Davies' shoes to bring a claim under his D&O policy. The
Black parties therefore wished to challenge Chubb's contention that
Chubb would not be liable to indemnify Davies. Chubb contended that
the Black parties only had a prospective cause of action because the
bankruptcy order had not been obtained and Davies' appeal was still
pending. The Applicants argued they were the true interested parties
as they stood to benefit from an indemnity from Chubb.
Langley
J held that CPR 19.2(2) does not require 'the new party' to have a cause
of action and that it should be interpreted generously if the court
believes it would enable them to deal with a case justly. Common justice
dictated that the Applicants should be permitted to advance the contention
that Chubb should respond to their claim against Mr Davies.
It is expected
that future decisions will allow appropriate intervention by third parties
to allow the exploration of all relevant issues relating to a claim
and to reflect the commercial reality of a situation.
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