Pine v Das Legal Expenses Insurance Company Ltd

The claimant in this action, Miss Julie Pine, has been represented before me by Mr. Oliver Hyams, a member of the Bar of England and Wales, instructed on a public access basis. Miss Pine desires to instruct Mr. Hyams on the same basis in another action in this court, that bearing the number HQ08X04311, in which she is the defendant and the claimants are Royds LLP (“Royds”). It is convenient in this judgment to refer to the action numbered HQ08X04311 as “the Solicitors Action”. The Solicitors Action was commenced by a claim form issued on 31 October 2008.

In the Solicitors Action Royds are claiming legal fees of some £126,000 alleged to be due to them from Miss Pine in respect of acting for her in proceedings (“the Employment Proceedings”) in an employment tribunal against Cinven Ltd. (“Cinven”). Cinven formerly employed Miss Pine. As I understand it, for the purposes of the Employment Tribunal some 16 lever arch files of documents were produced.

Miss Pine resists the claim of Royds in the Solicitors Action on the grounds that Royds allegedly conducted the Employment Proceedings negligently. She has made a counterclaim in the Solicitors Action for damages in respect of the alleged negligence of Royds. Two members of the Bar who acted on behalf of Miss Pine in the Employment Proceedings have been joined as defendants to the counterclaim. All of the defendants to the counterclaim resist the claims of Miss Pine and have instructed solicitors and counsel to represent them.

On 5 June 2006 Miss Pine entered into a policy of insurance (“the Policy”) in the form of a Hiscox 505 Home and Contents Policy. She has maintained the Policy ever since. The Policy included, as Section D, cover in respect of “Family legal protection”. That cover was, and is, provided by the defendant, DAS Legal Expenses Insurance Co. Ltd. (“DAS”).

By a letter dated 6 November 2008 Miss Pine gave notice to DAS of a possible need for cover under the Policy in respect of the claim of Royds in the Solicitors Action. Miss Pine was also entitled to the benefit at that time of legal expenses cover provided by another insurer, First Assist. First Assist was invited to, and did, agree that Miss Pine instruct Mr. Hyams in the Solicitors Action on a public access basis. However, the limit of indemnity under the First Assist policy was reached and Miss Pine made a claim for cover in respect of the Solicitors Action against DAS. She wished to continue to instruct Mr. Hyams in that action on a public access basis and that DAS should indemnify her in respect of her liability to pay Mr. Hyams his reasonable and necessary fees for so acting. The position of DAS as explained in the Amended Defence in this action is that it is prepared for Mr. Hyams to be retained to conduct the Solicitors Action on behalf of Miss Pine, and to indemnify her in respect of his reasonable and necessary fees of so acting, but that it was not prepared for Miss Pine herself to instruct Mr. Hyams on a public access basis. DAS required that Mr. Hyams be instructed through a solicitor.

In this action Miss Pine sought, as it was put at paragraph 5 of the Amended Particulars of Claim,

“a Declaration that she is entitled, pursuant to The Insurance Companies (Legal Expenses Insurance) Regulations 1990 and under the terms of her contract, to choose her own legal representative, namely a public access barrister.”

While that was the principal focus of her claims, she also sought, as set out at paragraph 7 of the Amended Particulars of Claim,

“7.1

Her full costs in this matter.

7.2

Damages for all losses suffered in relation to other proceedings in which the insurance is relied upon, which arise from the Defendant’s refusal to indemnify the Claimant in respect of her choice of legal representative.

7.3

Interest on such damages as are awarded to her, pursuant to section 35A of the Supreme Court Act 1981 at such rate and for such period as the Court thinks fit.”

The claims at paragraphs 7.1 and 7.3 do not require further comment at this stage. No particulars of damage were pleaded in the Amended Particulars of Claim. The only evidence of loss or damage which it was sought to adduce was a third witness statement of Miss Pine, made only two working days before the commencement of the trial. I shall come, later in this judgment, to the claim for general damages for breach of contract explained in that third witness statement. Other matters canvassed in that witness statement were not, in the event, pursued.

The real question at issue in this action was whether Miss Pine was entitled to indemnity under the Policy in relation to costs incurred by her in instructing Mr. Hyams to act on her behalf on a public access basis in the Solicitors Action. The logical place at which to start a consideration of whether or not she is so entitled is the material terms of the Policy.

Section D of the Policy included the following provisions which are presently material:-

“Extra definitions

Appointed Representative

The lawyer, accountant or other suitably qualified person who has been appointed to act for you in line with the terms of this section.

Costs and expenses

a)

Legal costs

All reasonable and necessary costs which the appointed representative may charge on a standard basis. Also the costs your opponents have to pay in civil cases if you have been ordered to pay them, or pay them with our agreement.

…

What is covered

This section covers you. …We agree to provide the insurance in this section as long as:

…

d)

for civil claims, it is always more likely than not that you will get back damages (or get any other legal remedy which we have agreed to) or make a successful defence.

…

If you use an appointed representative, we will pay the costs and expenses for this.

The most we will pay for all claims resulting from one or more event arising at the same time or from the same cause is £50,000.

1.

Contract disputes

We will negotiate for your legal rights in a contractual dispute arising from an agreement or an alleged agreement which you have entered into for:

a)

buying or hiring any goods or services; …

…

Claims conditions applying to this section

1.

Once you have sent us the details of your claim and we have accepted it, we will start to deal with your legal problem.

…

We normally deal with claims through our legal claims centre but sometimes we use appointed solicitors.

Please do not ask for help from a solicitor or accountant before we have agreed. If you do, we will not pay the costs involved.

2.

a) We can take over and control, in your name, any claim or legal proceedings at any time. We can negotiate any claim on your behalf.

b)

You are free to choose an appointed representative (by sending us a suitably-qualified person’s name and address) if:

•

we agree to start court proceedings and it becomes necessary for a lawyer to represent your interests in those proceedings;

•

there is a conflict of interest.

We may choose not to accept your choice, but only in exceptional circumstances. If there is a disagreement over the choice of appointed representative in these circumstances, you may choose another suitably-qualified person.

c)

In all circumstances except those in 2. b) above, we are free to choose an appointed representative.

d)

We will appoint a representative and the appointed representative must co-operate fully with us at all times.

e)

We will have direct contact with the appointed representative.

f)

You must co-operate fully with us and the appointed representative, and must keep us up to date with the progress of the claim.

g)

You must give the appointed representative any instructions that we may need.

3.

a) You must tell us if anyone offers to settle a claim.

…

4.

a) You must tell the appointed representative to have costs and expenses taxed, assessed or audited, if we ask for this.

b)

You must take every step to recover costs and expenses that we have to pay and must pay us any costs and expenses that are recovered.

…

7.

If we and you disagree about the choice of appointed representative, or about the handling of a claim, we and you can choose another suitably-qualified person to decide the matter. We and you must both agree to the choice of this person in writing. Failing this, we will ask the president of a relevant national law society to choose a suitably-qualified person.

Whoever loses the dispute must pay all the costs of resolving the disagreement.

…

Conditions

The following extra conditions apply to the whole of this section.

1.

You must:

a)

keep to the terms and conditions of this section;

b)

take reasonable steps to keep any amount we have to pay as low as possible;

c)

try to prevent anything happening that may cause a claim;

d)

send us everything we ask for, in writing; and

e)

give us full details in writing of any claim as soon as possible and give us any information we need.

…”

On the face of those provisions, subject to the limit of indemnity, DAS agreed to indemnify Miss Pine, in the events which have happened, the costs reasonably and necessarily incurred by her which her lawyer charged on a standard basis for his services in acting for her in the Solicitors Action. The effect of clause 2 b) of the “Claims conditions applying to this section” (to which sub-clause I shall refer hereafter in this judgment as “the Appointment Clause”), as a matter of the English language, appeared to be that, once court proceedings had started and it had become necessary for a lawyer to represent the interests of Miss Pine, she was entitled to choose her own lawyer, subject to DAS being able to dissent from that choice, “only in exceptional circumstances”. The Policy contained no express indication of what might constitute “exceptional circumstances”.

I think that it was common ground before me that the provisions of the Policy which I have quoted needed to be construed, if necessary, against the background of The Insurance Companies (Legal Expenses Insurance) Regulations 1999 (“the Regulations”), which gave effect in the United Kingdom to Council Directive 87/344/EEC (“the 1987 Council Directive”).

Regulation 2 of the Regulations contains definitions for the purposes of the Regulations. By Regulation 2(1)(b):-

““lawyer” means a person entitled to pursue his professional activities under one of the denominations laid down by Council Directive 77/249/EEC.”

By Regulation 5(4) of the Regulations it is provided that:-

“The company [carrying on legal expenses insurance business] shall, in the policy, afford the insured the right to entrust the defence of his interests, from the moment that he has the right to claim from the insurer under the policy, to a lawyer of his choice or, to the extent that the law of the relevant forum so permits, to any other appropriately qualified person.”

Regulation 6 of the Regulations is concerned with freedom to choose a lawyer. It is in these terms:-

“(1)

Where under a legal expenses insurance contract recourse is had to a lawyer (or other person having such qualifications as may be necessary) to defend, represent or serve the interests of the insured in any inquiry or proceedings, the insured shall be free to choose that lawyer (or other person).

(2)

The insured shall also be free to choose a lawyer (or other person having such qualifications as may be necessary) to serve his interests whenever a conflict of interests arises.”

On the face of it, with the exception that the Regulations do not appear to contemplate that the right to choose a lawyer might be denied by a legal expenses insurer in “exceptional circumstances”, the Appointment Clause did comply with the requirements of Regulations 5(4) and 6 of the Regulations. The only contribution to the proper construction of the Appointment Clause which it seemed that the provisions of the Regulations could make was in relation to what might be “exceptional circumstances” for the purposes of the Appointment Clause. As the Regulations appear to contemplate no circumstances in which a legal expenses insurer might choose not to accept the lawyer chosen by the insured, it would seem that the “exceptional circumstances” would have to be very exceptional.

Council Directive 77/249/EEC (“the 1977 Council Directive”), referred to in Regulation 2(1)(b) of the Regulations, is concerned with facilitating the effective exercise by lawyers of freedom to provide services within the European Economic Community, as it was known at the time of the making of the 1977 Council Directive. In Article 1(2) of the 1977 Council Directive are listed, for each of the then Member States, the denominations applicable to those providing legal services. In respect of the United Kingdom the denominations identified are “Advocate”, “Barrister” and “Solicitor”. A member of the Bar of England and Wales is thus a “lawyer” for the purposes of the Regulations. I think that, in the end, that was accepted by Mr. Gavin Hamilton, who appeared on behalf of DAS, but, as I explain later in this judgment, at an earlier point it was suggested on behalf of DAS that a barrister instructed on a public access basis did not fall within the definition of “lawyer” in Regulation 2(1)(b).

It was common ground that, if necessary to eliminate any obscurity in some provision of the Regulations, it was appropriate to have regard to the provisions of the 1987 Council Directive.

The stated subject of the 1987 Council Directive was “the coordination of laws, regulations and administrative provisions relating to legal expenses insurance”.

One of the recitals to the 1987 Council Directive is:-

“Whereas the interest of persons having legal expenses cover means that that the insured person must be able to choose a lawyer or other person appropriately qualified according to national law in any inquiry or proceedings and whenever a conflict of interests arises;”

Article 4 of the 1987 Council Directive is in these terms:-

“1.

Any contract of legal expenses insurance shall expressly recognize that:

(a)

where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person;

(b)

the insured person shall be free to choose a lawyer or, if he so prefers and to the extent that national law so permits, any other appropriately qualified person, to serve his interests whenever a conflict of interests arises.

2.

Lawyer means any person entitled to pursue his professional activities under one of the denominations laid down in Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise of lawyers of freedom to provide services.”

Mr. Hamilton drew to my attention that in Article 4 of 1977 Council Directive are to be found, inter alia, these provisions:-

“1.

Activities relating to the representation of a client in legal proceedings or before public authorities shall be pursued in each host Member State under the conditions laid down for lawyers established in that State, with the exception of any conditions requiring residence, or registration with a professional organization, in that State.

2.

A lawyer pursuing these activities shall observe the rules of professional conduct of the host Member State, without prejudice to his obligations in the Member State from which he comes.

3.

When these activities are pursued in the United Kingdom, “rules of professional conduct of the host Member State” means the rules of professional conduct applicable to solicitors, where such activities are not reserved for barristers and advocates. Otherwise the rules of professional conduct applicable to the latter shall apply.”

I shall return to the submissions which Mr. Hamilton made on the basis of Article 4 of the 1977 Council Directive.

The provisions of the 1987 Council Directive shared with the Regulations the characteristic that no provision was made for a legal expenses insurer in any circumstances not to accept the lawyer chosen by the insured.

So far as is presently material, and omitting words crossed through and underlining, the position of DAS in relation to the claim of Miss Pine was explained in the Amended Defence as follows:-

“3.

Save that it is admitted that the Defendants have refused to permit the Claimant to instruct counsel on a direct professional access basis in the case of Royds v. Pine HQ08X04311, paragraph 3 of the Particulars of Claim are denied. The Defendant avers that it has been and remains willing to permit the Claimant to instruct a solicitor of her own choice to represent her interests in proceedings, whether such be a non-panel solicitor (subject, to their agreement to abide by DAS Standard Terms of Appointment) or a DAS Panel solicitor. Further, in so far as is necessary in the proper conduct of her claim, the Defendant avers that it has been and remains willing to permit the Claimant, through the solicitors instructed, to subsequently instruct counsel of her own choice to represent her interests in such claim.

3A. It is the Defendants’ primary contention that the matters pleaded in paragraph 3 hereof, (namely the freedom to instruct solicitors of her own choice, and through them, counsel of her own choice, amounts to freedom to choose a lawyer), of themselves, amount to compliance by the Defendants with the obligations imposed on the Defendants by regulation 6 of The Insurance Companies (Legal Expenses Insurance) Regulations 1990, SI 1990/1159. The Defendants deny that the said regulations require the Defendants to permit the Claimant to instruct counsel on a direct public access basis. In the premises, it is denied that the Defendant is in breach of regulation 6 of the said regulations.

3B. In the alternative, the Defendants will contend that, in the particular circumstances of the Claimant’s case as pleaded below, the freedom of choice provided to the Claimant as pleaded in paragraph 3 hereof amounted to compliance by the Defendants with the obligations imposed on it Defendants [sic] by regulation 6 of The Insurance Companies (Legal Expenses Insurance) Regulations 1990, SI 1990/1159.

PARTICULARS

(i)

It is averred that the provisions of the Bar Code of Conduct prohibit counsel from conducting litigation on behalf of a lay client. Accordingly, were the lawyer instructed by the Claimant to be counsel instructed on a direct professional access basis, the Claimant would necessarily be required to undertake day-to-day conduct of the litigation herself.

(ii)

The terms of the Claimant’s contract for legal expenses insurance with the Defendants requires the Defendants to be kept up to date with the progress of the claim, and give the Defendants any information they need. The Defendants ordinarily require their being notified, amongst other things, in the event that the prospects of success of the proceedings being brought by the Claimant and underwritten by the Defendants are less than 51%, that the claimant remains covered under the terms of the legal expenses insurance policy between the parties hereto and to provide regular case reports as to the progress of the case including the likely costs incurred by both sides to the date of the report and thus whether the level of indemnity cover has been reached.

(iii)

It is the Defendants’ case that the matters pleaded in paragraph 3B (ii) above are a feature of the day-to-day conduct of litigation and thus not something which any counsel instructed by the Claimant on a direct professional access basis would undertake.

(iv)

The Claimant is not legally qualified; further, she has a personal interest in the outcome of the case. In those circumstances, it is the Defendant’s case that the Claimant does not possess the necessary experience, expertise and/or objectivity to enable her to comply with the above contractual requirements.

(v)

In the circumstances, the Defendant contends that it is necessary for a solicitor (of the claimant’s own choice) to be instructed to represent her whilst also ensuring compliance with the above contractual requirements.

(vi)

The Defendant avers that given the necessity, for the reasons pleaded in paragraph 3B hereof, for solicitors to be instructed on behalf of the Claimant, the freedom for the Claimant to instruct solicitors of her own choice, and through them, counsel of her own choice, amounts to freedom to choose a lawyer in accordance with the obligations imposed on the Defendants by regulation 6 of The Insurance Companies (Legal Expenses Insurance) Regulations 1990, SI 1990/1159.

3C. In the circumstances, it is denied that the Defendant is in breach of regulation 6 of The Insurance Companies (Legal Expenses Insurance) Regulations 1990, SI 1990/1159.

4.

As to paragraph 4 of the Particulars of Claim, it is denied that the Defendant is in breach of contract for the reasons pleaded in paragraphs 3-3B above.

4A. Further or alternatively, in so far as necessary, the Defendant will rely upon that part of paragraph 2b of the Claimant’s legal expenses insurance policy entitling the Defendant not to accept the Claimant’s choice of appointed representative in exceptional circumstances. The Defendant will, if necessary, aver that the matters pleaded in paragraph 3B above amount to exceptional circumstances, thus entitling the Defendants to refuse to accept counsel instructed on a direct professional access basis as the claimant’s sole appointed representative.

4B. In the circumstances, it is denied that the Defendant is in breach of contract with the Claimant.

4C. Further, it is denied that the said directive is directly enforceable against the Defendant. Without prejudice to this contention it is, in any event, denied that the Defendant is in breach of the provisions of the said directive for the reasons pleaded in paragraphs 3 – 3B herein.”

Mr. Hamilton explained in his written skeleton argument that references in the Amended Defence to “direct professional access” should be read as “public access”.

The effect of the pleaded case thus was, first, that it was asserted that DAS was not in breach of the Policy or in breach of Regulation 6 of the Regulations by refusing to agree to indemnify Miss Pine in respect of the costs of instructing Mr. Hyams on a public access basis. The short point was that, so it was said, on proper construction of the Appointment Clause and Regulation 6, Miss Pine was free to choose to instruct Mr. Hyams if she was free to choose to instruct him through a solicitor of her choice. The second point, it seemed, was that, as a matter of proper construction of the Appointment Clause and Regulation 6, DAS was not in breach of either because it insisted, in its own interests, on having Mr. Hyams instructed through a solicitor. The second point struck me as difficult to disentangle from the first point, but, in the end, it appeared that the difference between the two points was that the first depended simply upon the words actually used in the Appointment Clause and in Regulation 6, whereas the second necessitated the Appointment Clause and Regulation 6 being construed against the background of the desire of DAS to have the obligations set out at clause 2e), f), g) and clause 3a) of the Claims conditions applying to this section part of Section D of the Policy, and clause 1b) and d) of the Conditions part, as interpreted by DAS, (to which obligations I shall refer in this judgment as “the Obligations”) performed. The third point raised in the Amended Defence was that the circumstances of the present case were “exceptional”, so that DAS did not need to afford Miss Pine the opportunity to choose to instruct Mr. Hyams on a public access basis. That point plainly proceeded on the basis that, but for the “exceptional circumstances”, DAS would have been in breach of the Appointment Clause. It did not appear to be contended that the “exceptional circumstances” point provided an answer to anything which would otherwise have amounted to a breach of Regulation 6.

In his written skeleton argument Mr. Hamilton elaborated upon the objections of DAS to Mr. Hyams being instructed on a public access basis:-

“28.

It might be thought that DAS would favour the instruction of a barrister on a public access basis, because it would save the cost of instructing a solicitor. DAS’s position, developed below, is that the way in which it provides legal expenses insurance cover to policyholders requires it to have safeguards in place to ensure that the merits of the claim or defence are regularly and independently reviewed, the incurring of cost is regularly monitored and any offers to settle are reported to it. These are proper commercial concerns to avoid it having to fund claims or defences with insufficient prospects of success and/or to incur adverse costs (through the inadequate conduct of litigation by an inexperienced and ill-resourced litigant in person) which might otherwise be avoidable.

29.

The policyholder is neither qualified, nor sufficiently independent, to be capable of being relied on to protect DAS’s legitimate interests in this way. A barrister appointed on a public access basis by the policyholder would not necessarily be in the position of having all of the relevant information in order to be able to report to DAS or to control all of the steps being taken in the litigation.”

No doubt, from the perspective of DAS, these are fair points. However, in my judgment they have no bearing on the proper construction of the Appointment Clause or on the proper construction of Regulation 6.

In his written skeleton argument Mr. Hamilton submitted, first, that there had been no breach of Regulation 6 because there was, in this case, freedom of choice, but also he submitted that the regulation did not apply because Mr. Hyams was not a “lawyer” for the purposes of Regulation 6. Mr. Hamilton put his argument in this way:-

“30.

DAS first point is that there is no breach of regulation 6, because there is freedom of choice. Ms Pine is able to choose a solicitor to act for her and also to choose a barrister. There is no objection to her choice of Mr. Hyams, merely a pre-condition as to how he is to be instructed.

31.

There is however no breach of regulation 6, for a further reason that Mr. Hyams is not a lawyer within the meaning of regulation 2(b) as he is not permitted to conduct litigation.

32.

If he were to be instructed to act in the Royds action on a public access basis, he would not be acting within the scope of article 4.1 and 4.2 of the 1977 Directive, and therefore would not be within article 4 of the 1987 Directive.

33.

Article 4.3 of the 1977 Directive identifies as the relevant professional rules the professional rules governing solicitors, because the activity in question is not one that is reserved to barristers and advocates. Since it cannot be supposed that a self-employed barrister could be under an obligation to comply with the professional conduct rules of a solicitor, the article seems to require to be read as referring to a solicitor. This would be a quixotic conclusion, but is probably explicable on the basis that in 1990 there was no blurring of the distinction between advocacy services being performed by barristers and litigation services being performed by solicitors.

34.

Assuming that article 4.3 should be read as referring to the professional rules governing barristers, then it is necessary to consider what a barrister is permitted to do under those professional rules.

35.

A barrister is not permitted by rules 401(b)(i) and (ii) … of the Professional Conduct Rules to “undertake the management administration or general conduct of a lay client’s affairs” or “conduct litigation … and must not conduct correspondence or other work involving other parties save as permitted by rule 401A below.”

36.

Rule 401A … permits a barrister to conduct correspondence if it is [in] the lay client’s best interests that he does so and he has adequate systems, experience and resources for doing so.

37.

The Public Access Rules are at Annexe F2 to the Code of Conduct and were revised and re-issued on 31.3.2010. …

38.

Rule 3(2) prevents a barrister from accepting direct instructions from a lay client “in connection with any matter of [sic] proceedings in which, in all the circumstances, it would be in the best interests of the client or in the interests of justice for the client to instruct a solicitor or other professional client.”

39.

Rule 4 imposes a continuing duty to consider whether it is appropriate for him to act on a public access basis.

40.

Rule 5 imposes an obligation on the barrister to have regard to guidance published by the Bar Council in carrying out any public access instructions.

41.

Rule 6(c) requires the barrister to notify the client that “the barrister cannot be expected to perform the functions of a solicitor or other authorised litigator and in particular to fulfil limitation obligations, disclosure obligations and other obligations arising out of or related to the conduct of litigation.””

The factors identified by Mr. Hamilton in his written skeleton argument which appeared to be relied upon in support of the contention that there were, in the present case, “exceptional circumstances” which justified DAS in not accepting Miss Pine’s choice of Mr. Hyams to act for her in the Solicitors Action were:-

“45.

In a document-heavy and complex professional liability claim such as the Royds action, it is unrealistic to suppose that there are not litigation services to be provided. The following points are relevant:

45.1

this is a financially significant claim;

45.2

Royds are represented by Reynolds Porter Chamberlain (“RPC”), a large firm well used to handling complex professional indemnity claims;

45.3

there will need to be continual liaison with the court, with RPC, with witnesses and with DAS;

45.4

court directions will need to be obtained and then complied with, including directions as to disclosure of documents, the preparation of schedules of loss and the preparation of witness statements;

45.5

it may well be that there will need to be expert evidence.

46.

There are two difficulties about Ms Pine taking on this role of providing the litigation services:

46.1

it is unrealistic to expect that Ms Pine with her lack of legal qualification and her chronic fatigue syndrome will be able to handle all of these tasks effectively without assistance, against a sophisticated opponent such as RPC – she recognises this herself;

46.2

there is an obvious potential conflict of interest between Ms Pine and DAS in considering whether or not there continue to be merits in the defence and counterclaim in the Royds action.

47.

There are two difficulties about Mr. Hyams taking on the role:

47.1

he is not permitted to perform these tasks by the Public Access Rules;

47.2

in practice he would not be able to monitor and report to DAS as would a solicitor, as he would not necessarily know all that was relevant about the matter at any given time.”

In his oral submissions Mr. Hamilton accepted that it was not inevitable that Mr. Hyams, if acting on a public access basis, would infringe relevant provisions of the Code of Conduct of the Bar, even in reporting to a legal expenses insurer, such as DAS. Rather the position was that there might be a temptation to a barrister to go further than was permitted in order to assist his client. Miss Pine was called to give evidence on her own behalf. She said that in fact she felt herself able to conduct the Solicitors Action, insofar as Mr. Hyams was not permitted to. I was impressed by Miss Pine. She is plainly intelligent and, I think, well able to undertake the conduct of the Solicitors Action, provided only that she can do so at a pace which takes account of her disabilities. I think that Mr. Hamilton accepted that. Certainly in his oral submissions he rather withdrew from the position that Mr. Hyams could not be acting as a “lawyer”, within the meaning of Regulation 2(1)(b) of the Regulations or Article 4.3 of the 1977 Council Directive, if acting on a public access basis on behalf of Miss Pine in the Solicitors Action.

Again, in his oral submissions Mr. Hamilton emphasised the “exceptional circumstances” point which I have identified somewhat more than the issues of construction of the Appointment Clause.

While the evidence led before me was limited, being confined to that of Miss Pine and that of Mrs. Holly Quemper, who is employed by DAS as a Legal Specialist and is in fact a qualified solicitor, the extent to which the evidence was relevant to the central issues was even more limited.

One relevant aspect of the evidence was the ability of Miss Pine to conduct the Solicitors Action on her own behalf. Apart from that, and the provision of a certain amount of background information, all she really told me was about the impact upon her of the dispute with DAS as to the availability of indemnity in respect of the fees of Mr. Hyams. Her evidence on the latter point was not in dispute. It was set out at paragraph 5 of her third witness statement:-

“I have suffered a great deal of stress as a result of not being indemnified by the Defendant and thereby being unrepresented in my high value claims against professional litigants who are legally represented. My medical condition of ME/Chronic Fatigue Syndrome renders me highly susceptible to stress and stress in turn exacerbates my medical condition, in both the short and long-term. Being unable to represent myself in any capacity at case management hearings because of ill-health and being unable to fund Mr. Hyams’ representation of me, has meant that hearings have proceeded in my absence and led to a number of orders being made which were not in my favour. The prospect of those legal professionals, who have most likely cost me hundreds of thousands of pounds in my employment tribunal claim (because I am now deemed retired at the age of 34) and who have directly contributed to my being medically advised not to start a family, as a result of their combined failures in their representation of me, being permitted to not only not pay me compensation but also to claim fees for their negligent work from me, and the prospect that I may lose my home in the process, has been a cause of stress which has been too much to bear.”

While Mrs. Quemper explained with great clarity the commercial reasons why DAS wished Mr. Hyams to be instructed by a solicitor, rather than directly by Miss Pine on a public access basis, all I think that she told me which was of some relevance to the issue of construction of the Appointment Clause was that it was the practice of DAS not to indemnify policyholders in respect of fees charged by lawyers which were covered by legal expenses insurance until after the conclusion of each relevant matter.

In my judgment it is plain from the words used in the Appointment Clause that, subject to the entitlement of DAS not to accept such choice in “exceptional circumstances”, it is bound to afford indemnity to Miss Pine in respect of the reasonable and necessary costs of the lawyer she wished to choose to act for her in the Solicitors Action. In the case of Mr. Hyams she had chosen a barrister to act for her on a public access basis. Prima facie that choice fell squarely within the terms of the Appointment Clause.

Although, from its point of view, DAS had sound reasons for wishing Miss Pine to instruct Mr. Hyams through a solicitor, in fact its attempt to insist seemed to me clearly to amount to a breach of the terms of the Appointment Clause. Instead of allowing Miss Pine to choose Mr. Hyams as her lawyer, what DAS sought to compel her to do was to choose someone else, a solicitor, as her “appointed representative”, although permitting such “appointed representative” to instruct Mr. Hyams, if that was what Miss Pine wanted.

The plain words of the Appointment Clause did not permit DAS, as it seems to me, to insist on Miss Pine appointing a solicitor as her “appointed representative”. The matters pleaded at paragraph 3B of the Amended Defence, to the extent that they were accurate (they were not, as Mr. Hamilton accepted, in respect of the contention that a barrister instructed on a public access basis must inevitably be required to undertake the day-to-day conduct of litigation), did not, in my view, lead to the conclusion that a different construction from that which resulted simply from reading the words of the Appointment Clause was appropriate.

Mr. Hamilton did not seek to rely on any of the provisions of the Regulations as supporting the construction of the Appointment Clause for which DAS contended.

In the end, therefore, the question whether DAS was justified in the position which it took that Mr. Hyams should be instructed through a solicitor, depended upon whether there were, in the present case, “exceptional circumstances” which entitled DAS not to accept Miss Pine’s choice of Mr. Hyams.

Quite rightly Mrs. Quemper and Mr. Hamilton emphasised that DAS had no objection to Mr. Hyams as counsel to act for Miss Pine in the Solicitors Action. I think that Mr. Hamilton accepted that Miss Pine could herself conduct her case in the Solicitors Action to the extent that Mr. Hyams was prevented by his professional rules from so doing. Certainly I am satisfied that she can, on the basis which I have indicated. Although Mr. Hamilton suggested that the nature of the Solicitors Action, being a substantial piece of litigation against well-funded defendants competently advised, and involving a considerable burden of paper, took it into the area of “exceptional circumstances”, there are many actions which have similar general characteristics. These days the courts are increasingly familiar with litigants in such actions either acting entirely on their own, or with limited, non-professionally qualified, help, or with the assistance of counsel instructed on a public access basis. Thus there is in fact nothing particularly out of the ordinary in the circumstances of the Solicitors Action.

A particular feature of the Solicitors Action is that, under the Policy, DAS is bound to indemnify Miss Pine in respect of the fees of her appointed lawyer. Mrs. Quemper explained to me that it was in its own interests, as well as in those of its insured, that DAS wished solicitors to be involved in the conduct of litigation after the commencement of proceedings. What, from the point of view of DAS, appeared to take the present case out of the ordinary was simply the fact that Miss Pine wished to instruct Mr. Hyams on a public access basis without the intervention of a solicitor. That, I am afraid, is nothing like enough to take the present into the arena of “exceptional circumstances”, any more than would a case in which an insured wished to instruct solicitors who were not prepared to enter into a standard form of agreement with DAS which I was told about, but not shown.

In the result, and subject to hearing Counsel further as to the precise form of the declaration which is appropriate, I intend to make a declaration that DAS is bound, by the terms of the Policy, to indemnify Miss Pine, subject to the terms of the Policy, other than the Appointment Clause, in respect of the reasonable and necessary fees charged to her by Mr. Hyams for his services as counsel in the Solicitors Action.

The basis upon which Mr. Hyams, who appeared before me on behalf of Miss Pine, urged me to award general damages to Miss Pine, in addition to a declaration, was by extension of the principle established in Farley v. Skinner [2002] 2 AC 732. That principle was that general damages could be awarded for breach of a contract if, as Lord Steyn put it in his speech in paragraph 24 at page 750, “a major or important object of the contract is to give pleasure, relaxation or peace of mind”. Mr. Hyams submitted that a contract to provide legal expenses insurance should be considered as having as one of its major or important objects peace of mind. In a certain sense that is correct. Having such insurance may provide a degree of reassurance that, to the limit of indemnity, and subject to the conditions of the policy, one may not need to have resort to one’s own resources in order to fund litigation, if one becomes involved in such. However, the case of legal expenses insurance is a long way from the facts of Farley v. Skinner itself, which were rather individual. It is also a long way from any of the other cases in which, thus far, general damages for breach of contract have been awarded. One of the best established of such categories is the holiday cases. However, as Lord Steyn pointed out at paragraph 16 of his speech in Farley v. Skinner, at page 746:-

“The general principle is that compensation is only awarded for financial loss resulting from the breach of contract:”

I am not persuaded that the circumstances of the present case justify an extension of the Farley v. Skinner principle to a contract to provide legal expenses insurance. If the principle did extend that far, then, logically, it would extend to all contracts of insurance, for all are intended to provide cover against mishap of some sort and each, to that extent, provides the insured with peace of mind.