Travelers Insurance Company Ltd (Appellant) v XYZ (Respondents)

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Case summary

Case ID

UKSC/2018/0117

Parties

Appellant(s)

Travelers Insurance Company Ltd

Respondent(s)

XYZ

Issue

Where a liability insurer was contractually obliged to indemnify its insured against the costs of defending claims against it by third parties, in what circumstances is it appropriate to make an order pursuant to section 51 of the Senior Courts Act 1981 (the “1981 Act”) the effect of which is to impose on a liability insurer, an extra-contractual liability to pay those third parties’ costs of bringing the claims?

Facts

The issue raised on this appeal is the liability for costs arising out of litigation concerning the supply of defective implants for use in breast surgery, which had been manufactured by PIP. Claims were made in group litigation and were brought against Transform Medical Group (CS) Ltd (“Transform”). Transform had insurance cover with Travelers Insurance Co Ltd in relation to 197 claims; but was uninsured in respect of 426 claims made against it. Transform subsequently entered insolvent administration. The insured claims were settled by an agreement made in August 2015. Travelers paid an agreed proportion of the damages and costs attributable to those insured claims. The uninsured claimants (respondents) applied to the court for an order that Travelers pay their costs of the action.