Curtiss & Ors v Zurich Insurance Plc: Allegations of fraud and disclosure pilot scheme issues

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On 16 July 2021 Judge Keyser QC handed down his reserved judgment on disclosure issues relating to a claim for punitive damages against Zurich, heard as part of a Costs and Case Management Conference (“CCMC”).


The claim is being brought by more than 100 leasehold owners of apartments in the Meridian Quay development in Swansea, each of whom contracted with the developer to acquire, in respect of potential structural defects, a policy of New Home Warranty Insurance underwritten by Zurich. Zurich employed surveyors to carry out inspections of new homes prior to issuing such policies, which involved the provision of a Cover Note by a surveyor.

The claimants’ case is that in issuing the Cover Notes Zurich (by its surveyor, for whom it was vicariously liable) made two representations:

  1. That a genuine final inspection of the relevant apartment had been carried out by a qualified surveyor; and
  2. That the final inspection in relation to the apartment and common parts was satisfactory and the apartment was complete (save, in certain cases, for snagging works).

The claimants allege these representations were made fraudulently because the surveyors knew they had not carried out any genuine final inspections, and Zurich had no real belief that they had done so. As a result of these fraudulent representations the claimants were induced to purchase apartments considerably less valuable than the price that was paid.

The Disclosure Pilot Scheme (Practice Direction 51U)

The case falls under the Disclosure Pilot Scheme (the “Disclosure Pilot”), which currently only applies to cases in the Business and Property Courts. The Disclosure Pilot commenced on 1 January 2019 for an initial term of two years, but has since been extended to the end of 2021. Following feedback from the initial period, some revisions came into force on 6 April 2021. It is likely that many of the changes introduced to the disclosure process will remain in force long term.

The aim of the Disclosure Pilot is to make the often lengthy and costly process of disclosure more proportionate, and tailor this to the case in question. As part of that it requires parties (save where it is agreed otherwise) to adduce “Initial Disclosure” at the same time as the statements of case [1]. Initial Disclosure includes the key documents on which a statement of case relies (expressly or otherwise), along with key documents that are necessary to enable the other parties to understand the case they have to meet. In many cases Initial Disclosure may be no more onerous than complying with a duty to provide documents under an applicable pre-action protocol (in respect of which we comment further below), but it nevertheless encourages greater focus on appropriate disclosure from the very outset of proceedings.

There is no automatic right to any disclosure over and above Initial Disclosure [2]. Parties can seek an order for Extended Disclosure, based on the various Models set out in the Disclosure Pilot, but no model will apply without the approval of the Court. This issue will usually be considered at the first CCMC.

Following some consternation over the ambiguous wording of the Disclosure Pilot, the changes from 6 April 2021 confirmed that a party need not disclose adverse documents at the Initial Disclosure stage. The latest time for disclosing known adverse documents will be determined by the order given for Extended Disclosure at the CCMC (albeit there is a continuing duty to disclose adverse documents thereafter).

The recent judgment considered 12 issues (being issues 51 through 62) for disclosure put forward by the claimants – two of which (issues 54 and 55) were agreed by Zurich – along with the scope of any Extended Disclosure to be ordered in respect of those issues.

General principles

In a discussion of relevant general principles Judge Keyser QC emphasised the position set out by the Chancellor, Sir Geoffrey Vos, in McParland & Partners Ltd v Whitehead [3] that issues for disclosure under the Disclosure Pilot are very different from issues for trial – the issues for disclosure being “driven by the documentation that is or is likely to be in each party’s possession[4], and therefore limited to key issues which “require extended disclosure of documents…to enable them to be fairly and proportionately tried. [5] A dispute will be a “key issue” only if it is an issue that must be determined in order for there to be a fair resolution of the proceedings. [6]

Issues for disclosure, therefore, are not to be conflated with issues in the underlying dispute. They are centred around the documentation that is, or is likely to be, available; they need not be numerous; and they will almost never be legal issues. The judgment in Curtiss also agreed with the approach taken by Mr Eggers QC in Lonestar Communications Corporation LLC v Kaye [7] that an issue for disclosure must necessarily arise out of the statements of case. In adopting this position the Judge distinguished the ruling in HMRC v IGE USA Investments Limited [8], which took a contrary view.

Application in Curtiss

The disclosure issues sought by the claimants in Curtiss were extremely broad including, by way of example:

“51. What was the profitability of the New Home Warranty business, how did Zurich assess that profitability, and how did that profitably compare to other forms of insurance offered by Zurich?”

Whether or not the scheme was profitable for Zurich is entirely irrelevant the central issue in dispute; being whether, by issuing the Cover Notes, Zurich made fraudulent representations to the claimants relating to the apartments.

In the event the judgment rejected all of the claimants’ requested issues for disclosure, save the two which had already been agreed by Zurich. The reasons for rejecting the remaining ten issues were, broadly speaking:

  1. That they did not address key issues in the claim;
  2. Where admissions had been made by Zurich, the additional disclosure sought was unnecessary;
  3. Some were vague and wide-ranging, and amounted to fishing expeditions. This included issues based on inadequately particularised statements in the Particulars of Claim, in respect of which the claimants could (and should) have provided greater particularity. The Judge felt that an averment “devoid of any particulars is, when converted into a proposed Issue for Disclosure, a mere fishing expedition[9]; and
  4. That disclosure under the two agreed issues was sufficient to address the relevant matters in dispute in any event.

The Judge went on to grant Model D disclosure in respect of the agreed issues 54 and 55, and not the wide search-based Model E disclosure requested by the claimants. Under Model D (or “narrow search-based disclosure”) each party must conduct a reasonable and proportionate search in relation to each issue Model D applies to, and disclose any documents that are likely to support or adversely affect its position. Model D most closely resembles an order for “standard disclosure”, being the most common order prior to the Disclosure Pilot. Model E (or “wide search-based disclosure”) requires disclosure of documents which are likely to support or adversely affect a party’s position, in addition to any documents which may lead to a chain of enquiry which may then result in the identification of other documents for disclosure.  This is the widest order available and is only to be ordered in “an exceptional case”.[10]

Pre-Action Disclosure

Before commencing proceedings, the Courts will expect the parties to have exchanged sufficient information to: (a) understand each other’s position; (b) make decisions about how to proceed; (c) try to settle the issues without proceedings; (d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement; (e) support the efficient management of those proceedings; and (f) reduce the costs of resolving the dispute.  Specifically, the parties to a coverage dispute have an obligation to disclose “key documents relevant to the issues in dispute” and the Courts will expect the parties to have acted reasonably prior to the start of proceedings with this in mind.

But on closer inspection is that really adequate for the parties to an insurance coverage dispute?  Importantly there is no positive duty on either party to disclose documents adversely impacting its claim or defence at the pre-action stage, and no specific duties in the context of certain types of coverage claims; for example, it says nothing about what an insurer must disclose where a policyholder brings a S.13A claim for late payment of insurance claim.

Therefore, it will be important for a party and those advising to shape the issues carefully pre-action, and to lay an audit trail with the first CMC and disclosure in mind.  Considering disclosure for all claims in the abstract is difficult if not impossible.  It will require a decent understanding of: the line of business which you are dealing with – no two lines of business are the same; the broking process involved in your dispute; the underwriting and claims processes and how the two interact; the underwriting and claims systems – what information will realistically be on them or ought to be on them (claims or underwriting notes for example); legal privilege – what is or is not protected by litigation or legal privilege (when is an adjuster or forensic report privileged for example?); and of course, it will require an understanding of the coverage issues and what is/is not important in the context of your dispute, rather than an unending search for something that might be relevant as in the Curtiss case.  There is no one size fits all, as good coverage lawyers will know.  Disclosure is just another variable that must be carefully considered by brokers and lawyers before advising a policyholder upon an appropriate dispute resolution strategy.  CPR disclosure differs significantly to disclosure in LCIA or ARIAS arbitration or ad-hoc arbitration under the 1996 Act, even the Financial Ombudsman process is fundamentally different.  These strategic questions ought to be considered the moment a coverage dispute has arisen, and formal action is being considered.  No two coverage claims are the same.

Comment on Curtiss

It is clear from the judgment in Curtiss that the Court will resist attempts by parties to use the Disclosure Pilot to go on fishing expeditions.  Going forwards it is likely that issues for disclosure will be closely monitored (and debated between the parties), and will only be permitted where they: (i) arise out of the statements of case; (ii) relate to a key issue in dispute, being one which must be determined in order for there to be a fair resolution of the claim; and (iii) are not so vague, unparticularised or wide-ranging as to amount to a fishing expedition.

Practically speaking claimants should carefully consider the wording used to define the issues for disclosure, to ensure these can be firmly linked to the Particulars of Claim and an underlying key issue.  Not only will this maximise the chance of the issue being included in disclosure (as opposed to rejected out of hand – the burden of establishing that any model of Extended Disclosure is appropriate, reasonable and proportionate being on the party requesting it), but it will also save time and costs arguing with defendants over vague and unparticularised issues which are ultimately likely to be refused by the Court at a CCMC.

Whilst the increased focus on disclosure from the outset required by the Disclosure Pilot inevitably results in a front loading of costs, many of the changes will likely be permanent, at least in the Business and Property Courts.  Claimants should therefore be alive to the issues that can arise when seeking Extended Disclosure and try to ensure, insofar as possible, that any requests are carefully formulated with a view to maximising the chance of making a successful request for disclosure of relevant documents.


Hattie Alvis (Consultant Solicitor) and Dan Brooks (Partner) are coverage lawyers specialising in difficult or unusual coverage disputes for policyholders.  They work with Top 100 Insurance Brokers across a broad spectrum of product lines.

[1] Practice Direction 51U, para 5.

[2] Ibid, para 8.2.

[3] [2020] EWHC 298 (Ch), [2020] Bus LR 699.

[4] Ibid, para 44.

[5] Ibid, para 56.

[6] Curtiss & Ors v Zurich Insurance Plc [2021] EWHC 1999 (TCC), 2021 WL 03023052, para 14.

[7] [2020] EWHC 1890 (Comm).

[8] [2020] EWHC 1716 (Ch).

[9] Curtiss, para 25.

[10] Practice Direction 51U, para 8.

This post is intended to provide guidance of a practical nature but does not contain legal advice or advice as to what action you should or should not take specific to your insurance needs or those of your business, or with regard to any particular situation.