It has been a while since I looked at an insurance dispute so this week I have chosen to review Chubb European Group SE v Hiscox Insurance and Hawkins & Associates Ltd  EWHC 1808 (TCC). Judgment was handed down on 9 June 2021.
The case was concerned with Chubb’s application for an order seeking the preservation, inspection and delivery up of physical evidence. The application was made on an urgent basis before a claim had been issued (pre-action) and had also been made without notice. (Without notice means that the application was made to the court with no notice at all to the other parties.)
If it can be demonstrated that certain property may be the subject matter of proceedings to be issued in the High Court, then a party can rely upon section 33 of the Senior Courts Act to seek an order for that property to be persevered and/or inspected. CPR 25.1(1)(c)(i) provides that an application for an order for the preservation of evidence may be made pre-action.
Chubb was the insurer for the owner of a property which had suffered fire damage and Hiscox, the first respondent, was the insurer for one of the tenants. Chubb was also the insurer for the tenant of another property which had suffered flood damage and Hiscox was the insurer for the freehold owner. The second respondent, Hawkins, was a firm of forensic investigators who had been employed by the first respondent to investigate the damage at both properties.
During the investigations into the damage at both properties, the second respondent removed physical evidence from the properties. The evidence was electrical appliances, components and alarm systems relating to the fire damaged property and pipes and other components relating to the water damaged property. When Chubb asked to see the evidence, the respondents refused. Hiscox later said in correspondence that Chubb could inspect the evidence but only if Chubb agreed to indemnify the Hiscox's insureds relating to any claims made about the damage to the properties. Hiscox further said that if Chubb did not agree to those terms, the evidence would be disposed of.
Chubb's lawyers demanded written undertakings that the evidence would not be disposed of and when those undertakings were not forthcoming, Chubb issued its application for the preservation and delivery up of the evidence to court.
The court applied the test set out in the case of Smith v Secretary of State for Energy and Climate Change  1 WLR 2283. The test is is whether the applicant has reason to believe that they have suffered a compensatable injury; and, if so, with what degree of likelihood.
The court held that the application was urgent noting that informal notice had been given to the respondents. The court was also satisfied that it was in the interests of justice to deal with the application and that the evidence in question would or would likely be the subject of court proceedings or, alternatively, would be related to the subject of court proceedings.
The court also noted that Chubb's insureds had suffered an estimated loss of £150,000 relating to the flood damaged property and an estimated £600,000 relating to the fire damaged property. There was therefore a reasonable likelihood that Chubb had suffered a compensatable injury as principal for their insureds.
The court was therefore content to make the order for preservation of the evidence. However, the court would not make the order for delivery up of the evidence until the court had had the opportunity to hear full submissions from the parties.
My first thought was that it did seem quite surprising that this issue required intervention from the court. Hiscox must surely have realised that its threat to dispose of the evidence would be met with a court application which Hiscox would likely lose. The judgment refers to an email from Hiscox to Chubb's lawyers which said the evidence would be preserved until Chubb had sent its response to points raised in Hiscox's email. As the judge said, this would have been of little comfort to Chubb, as the letter did not stipulate what would happen to the evidence once Chubb had replied to the email.
It is easy for disputed parties to get carried away in correspondence. Be careful what you say because you might find yourself on the wrong end of a costly court application.
© Melissa Worth, July 2021