The High Court has refused both sides permission to inspect other parties’ documents ahead of a high profile £126m civil case over inflated credit hire charges.
Sir Andrew Smith, sitting as a deputy High Court judge, ruled that documents in Accident Exchange Ltd & Anor v McLean & Ors were protected by privilege and he refused applications by lawyers for both the claimants and defendants.
Claims manager Accident Exchange is suing 10 parties for damages in relation to 4,700 claims where a now-defunct company called Autofocus Limited made false estimates for the cost of courtesy cars after motor accidents. Seven former employees of the business were found guilty last year of what a judge called 'perjury on an industrial scale’.
In the civil claim the defendants include three law firms: Keoghs, Lyons Davidson and Morgan Cole (now Blake Morgan). It will go to trial this autumn.
In a statement, a Blake Morgan spokesperson confirmed Morgan Cole is defending the claim 'which we are confident will be found to be groundless'. Keoghs said its stance has not changed since last year and that the firm is 'vigorously defending' the claim.
Ahead of that trial, Accident Exchange brought an application against the solicitor defendants to seek inspection of insurers’ documents over which they asserted privilege.
Smith said the application hinged on whether so-called ‘iniquity exception’ – where the case involves a fraud or crime – defeated any claim for privilege.
The judge said that Autofocus, the party alleged to have been involved in the fraud, could not be said to be involved in the confidential lawyer-client relationship between the solicitor firms and insurers. Instead, it was described in court – and this assertion backed by Smith – as a ‘parasitic’ influence upon the lawyer-client relationship, which was created for a normal and legitimate purpose. Smith dismissed the Accident Exchange application, adding that to apply the iniquity exception to this case would be a ‘major innovation’ unjustified by authority, legal principle or established principles of public policy.
Meanwhile, two of the law firm defendants, Morgan Cole and Lyons Davidson, applied for disclosure and inspection of documents in files of solicitors who were instructed to bring the claims.
Accident Exchange asserted that legal professional privilege covered these documents, while the law firm defendants contended that due to the arrangements between AE, its clients and the clients’ solicitors, the claims manager had ‘unfettered’ access to the solicitors’ files and controlled the pursuit of each claim.
AE said it should not itself disclose documents without clients’ consent, and that the solicitors had been retained by the clients, not the claims company.
Smith dismissed this application as well, arguing there was no evidence that AE became the client of the solicitors or that it had the power or authority to waive the common interest privilege.