AmTrust Speciality Limited v Endurance Worldwide Insurance Limited [2025] EWCA Civ 755

[2025] EWCA Civ 755Case No CA 2024 002819
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2024] EWHC 3409 (Comm)
ON APPEAL FROM BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Mr Peter MacDonald Eggers KC
Sitting as a Deputy High Court Judge
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 19 June 2025
Before
LORD JUSTICE UNDERHILL(Vice President of the Court of Appeal Civil Division)LADY JUSTICE ASPLINLADY JUSTICE FALK
Between
AMTRUST SPECIALTY LIMITED (formerlyPart 20 Claimant/AMTRUST EUROPE LIMITED)AppellantENDURANCE WORLDWIDE INSURANCE LIMITED (trading as Sompo International)Part 20 Defendant/
Ben Elkington KC, George McDonald and Ed Grigg (instructed by DWF Law LLP) for AppellantJonathan Hough KC and Benjamin Archer (instructed by Clyde & Co LLP) for RespondentHearing Hearing date: 10 June 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 19 June 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]This is an unusual appeal. It is concerned with a decision made by Mr Peter MacDonald Eggers KC, sitting as a deputy High Court Judge, in relation to disclosure at a case management conference. Having heard submissions, we informed the parties that the appeal would be allowed and that written reasons would follow. These are those reasons.

Background

[2]The background to the litigation is also unusual. It arises out of a failed litigation funding scheme. Participants in the scheme entered a loan agreement with Novitas Loans Limited, the Claimant in the action, (“Novitas”) and a conditional fee agreement with one of a panel of solicitors. Most of the claims were conducted by Pure Legal Limited (“Pure”) or High Street Solicitors Limited (“HSS”) (together referred to as “the Scheme Solicitors”). Both Pure and HSS went into administration. HSS has since entered creditors’ voluntary administration. Pure remains in administration. As one might expect, they both had professional indemnity insurance. It was provided by the Respondent and Part 20 Defendant, Endurance Worldwide Insurance Limited which trades as Sompo International, (“Sompo”). Participants in the scheme were also required to enter an after the event (“ATE”) policy with the Appellant, AmTrust Specialty Limited, formerly known as AmTrust Europe Limited, (“AmTrust”). The ATE policies were contracts of indemnity which enabled each policyholder to recover certain disbursements and any adverse costs at the conclusion of their litigation. In addition, AmTrust entered into a Deed of Indemnity with Novitas and Terms of Business Agreements (“TOBAs”) with the Scheme Solicitors.[3]In fact, the TOBAs were entered into by each of the Scheme Solicitors and Composite Legal Expenses Limited, which was acting as AmTrust’s agent and was defined as the “Administrator”. AmTrust was defined as the “Insurer”. The third recital to the TOBAs provided that the Scheme Solicitor was solely responsible for “risk assessing the merits of each personal injury claim . . . and . . . agrees that it will carry out a full and detailed risk assessment and will provide the Administrator and the Insurer with a professionally reasonable assessment of the prospects of success of each claim it proposes for After the Event (ATE) legal expenses cover.” The fifth recital stated that the Administrator agreed to accept business on behalf of the Insurer which would underwrite the ATE risks “on the basis that such claims are being pursued by the Scheme Solicitor . . . and are reasonably considered to possess the prospects of success stated by the Scheme Solicitor in the application for ATE cover”.[4]The Scheme Solicitors’ obligations were set out at clause 1 of the TOBAs. At clause 1.1 it is stated that the “Scheme Solicitor will ensure that all declarations made when applying for cover via the Administrator are entirely accurate and reflect the risk being proposed to the best of the Scheme Solicitor’s knowledge, belief and professional opinion.” Amongst other things at clause 1.4 the Scheme Solicitor was required to notify the Administrator immediately of “any material change of fact that [is] likely to affect the prospects of success of the claim” and at clause 1.10 it is expressly stated that:
“The Scheme Solicitor understands that at all times it has a duty of care to the Administrator and the Insurer.”
[5]AmTrust contends that the Scheme Solicitors are to blame for the failure of the Scheme. It alleges that:(a) most of the claims should never have been made because they had insufficient prospects of success; and(b) once the claims were made, they were mishandled by the Scheme Solicitors. This is disputed by Sompo.

The Proceedings

[6]The failure of the litigation funding scheme led, amongst other things, to a claim by Novitas against AmTrust and Part 20 proceedings by AmTrust against Sompo. Novitas seeks to recover around £56 million from AmTrust in relation to approximately 10,000 unsuccessful cases. It contends that that sum is payable pursuant to the Deed of Indemnity it entered into with AmTrust. In the alternative, Novitas claims restitution of the sum of £22 million, being the proportion of the loans paid to AmTrust for ATE insurance premiums. By the Part 20 proceedings, AmTrust seeks to pass on any liability it may have to Novitas to Sompo and to recover damages of around £15 million in respect of the amount it has paid so far in disbursements and adverse costs in respect of the claims handled by the Scheme Solicitors.[7]The basis of the Part 20 proceedings is that the Scheme Solicitors were in breach of their contractual duties pursuant to the TOBAs and common law duties owed to AmTrust. Such a claim would normally be brought against the Scheme Solicitors directly. As they are in insolvent the claims are brought against Sompo in its capacity as their insurer pursuant to the Third Parties (Rights against Insurers) Act 2010. Pursuant to that Act, AmTrust is the statutory assignee of the rights of the Scheme Solicitors against Sompo.[8]Sompo denies that it has any liability to AmTrust. Part of its case is that even if the Scheme Solicitors have a liability to AmTrust, they are not entitled to an indemnity from Sompo in respect of that liability. This is put on three bases: that the Scheme Solicitors’ liability to AmTrust falls outside the scope of the insuring clause in clause 1 of the policies issued by Sompo; alternatively, that it falls within the scope of the exclusion clause in clause 2.6(b) of those policies; and/or it falls within the scope of the exclusion clause in clause 2.6(c).[9]A five week trial of a number of preliminary issues is due to take place in November 2025. The preliminary issues which are relevant to the issue before us mirror Sompo’s contention that AmTrust is not entitled to an indemnity. They are framed in the following way: whether any of the contractual or tortious liabilities alleged by AmTrust fall within clause 1 of the policies issued to either Pure or HSS, (together referred to as the “Policies”) being civil liabilities arising out of and/or in connection with “the conduct of any Professional Business (as defined) carried on by, or on behalf of the Insured” and, if so, which of the alleged liabilities (Generic Issue 2); if the answer to Generic Issue 2 is “yes”, whether such liabilities are excluded by clause 2.6(b) of the Policies which excludes cover for claims “arising out of or in connection with any . . . legal liability assumed or accepted by the Insured under any contract of agreement for the supply to, or use by the Insured of goods or services in the course of Professional Business (as defined)” (Generic Issue 3); or whether they are excluded by clause 2.6(c) which excludes any claim “arising out of or in connection with any . . . guarantee, indemnity or undertaking given by or on behalf of the Insured in connection with the provision of finance, property, assistance or other benefit or advantage directly or indirectly to the Insured” (Generic Issue 4).[10]The Policies contain wording before the insurance clause stating that a written proposal containing particulars and statements was made to Sompo and which together with other information supplied to Sompo shall be incorporated into the contract. Further, each of the Policies contains a schedule summarising details of the insured risk. Documents are then listed under a heading which states that the following information has been seen and agreed by Sompo.

Disclosure

[11]At the third Case Management Conference, AmTrust sought disclosure of correspondence between Sompo and its insured firms for a period of five months before the Policies were entered into. In the draft disclosure review document (the “DRD”), AmTrust formulated two issues, 1A and 1B, relating to Pure and HSS respectively. They were: “(1A) What communications (if any) were there between Pure and Sompo, at any time prior to the inception of the Pure 20/21 Policy regarding Pure’s involvement in the Scheme and/or any agreement that Pure had with AmTrust or CLE? (1B) What communications (if any) were there between HSS and Sompo, at any time prior to the inception of the HSS 22/23 Policy regarding HSS’s involvement in the Scheme and/or any agreement that HSS had with AmTrust or CLE?” (CLE is a reference to Composite Legal Expenses Limited which acted as AmTrust’s agent.)[12]Despite making a wide ranging order for disclosure, the judge in his ex tempore judgment refused to order disclosure on the basis of Issues 1A and 1B. The judge started by saying that “[W]hatever [he said was] not intended to bear on the issues to be determined at the issues trial or the party’s ability to argue those issues” [29]. He went on to state, also at [29], that he was not engaging in any issue of construction but that he was looking at the definition of “Professional Business” and asking himself what the court would have to consider when determining what “services as a Solicitor” means. He added that he imagined the type of information which may have been provided to Sompo prior to the execution of the Policies which may have included the TOBA and how that might impact on the construction of the Policies.[13]He held at [30] that the mere fact that the insureds may have referred to the transaction and the terms of business was not likely to affect the construction of the policy. He added that “it may do, and if it became relevant later, it may be open to argument to either party to say it does”. For the purposes of disclosure, however, he was sceptical as to the relevance of the material for the purposes of assisting the court or the parties as to the issues at trial. For the same reason, he did not think that the mere fact that any communication which may exist may have been incorporated as terms of the contract advanced matters. He added: “Whether these communications are terms of the contract or they are factual background material, I struggle to see how the meaning of the phrase “Professional Business” in this particular circumstance could be influenced by this material” [30].[14]He added at [31] that he also struggled to see how the communications in question could influence the phrase “arise out of or in connection with the conduct of any Professional Business” to a degree which would justify an order for disclosure. He went on, also at [31], to state that he found it “somewhat unsatisfactory” that AmTrust as an assignee of the rights under the Policies did not have access to the relevant material, but he was not sure that that helped him to come to the conclusion that the documents would be relevant to construing the contracts.[15]When refusing permission to appeal the judge stated that: he was not satisfied that the documents were “likely to be relevant and important for the fair resolution of the claim”; although he had regard to the overriding objective, there was no need to address expressly the issues of reasonableness and proportionality once a decision was made that Disclosure Issues 1A and 1B were not likely to be relevant to the fair resolution of the claim, but that if he had come to a different conclusion, he would have been satisfied that their disclosure would have been reasonable and proportionate; and the principles underlying the approach to the formulation of Disclosure Issues are reasonably settled.

Grounds of Appeal and Respondent’s Notice

[16]It is said that the judge erred in three ways: first, he failed to adopt the correct approach when deciding whether or not to approve Issues 1A and 1B as issues for disclosure; secondly, he reached the wrong conclusion about the relevance or potential relevance of the documents in question; and thirdly, he adopted the wrong approach at the CMC by making a final decision as to the relevance of the documents to which Issues 1A and 1B relate which should have been left to the trial judge.[17]By a Respondent’s Notice, Sompo seeks to uphold the judge’s decision on the grounds that: Generic Issue 2 is one of construction of an insuring clause in a market standard wording, written to accord with the SRA Minimum Terms, and therefore the argument that its construction is likely to be affected by precontractual communications is wrong; the argument that certain materials were incorporated into the contract does not assist AmTrust. It only begs the question of whether the scope of the expression “provision of services as a Solicitor” was a standard expression or one the meaning of which could be expanded by precontractual materials. Further, “basis of the contract” clauses giving all the contents of referenced documents contractual effect have been superseded by section 9 of the Insurance Act 2015, and the policy exclusions with which Generic Issues 3 and 4 are concerned are in standard form and reflect materially identical provisions in the SRA Minimum Terms. They are not affected by precontractual underwriting correspondence.

The Policies in more detail and SRA Minimum Terms

[18]As I have already mentioned, the Policies each contain a preamble which has been referred to as the “Incorporation Clause”. It is in the following form:
“This Policy provides cover to the Insured in the form of the Minimum Terms and Conditions. Whereas a representative of the Insured has made to the Insurers a written proposal containing particulars and statements made to the best of the representative’s knowledge and belief which, together with any other information supplied to the Insurers shall be incorporated into this contract.”
The Policies also contain a schedule summarising details of the insured risk, containing a list of documents against the heading ‘INFORMATION.’ In the Pure policy schedule, the entry against that heading was: “The following information has been seen and agreed by Insurers” followed by a list of seventeen documents or headings for a series of emails. The list contained the proposal form.[19]The “Insuring Clause” in the Policies, Clause 1.1 (‘Civil Liability’), states:
“… the Insurers agree: 1.1 – Civil Liability to indemnify the Insured up to the Limit of Indemnity in respect of any civil liability (including liability for Claimants' costs, expenses and disbursements) resulting either: (a) from a Claim or Claims first made against the Insured during the Period of Insurance; or (b) from Circumstances first notified to the Insurer during the Period of Insurance, provided that such Claim, Claims or Circumstances arise out of and/or in connection with the conduct of any Professional Business carried on by, or on behalf of, the Insured.”
The expression “Professional Business” is defined in Clause 6.27 in the following manner:
“Professional Business means the provision of services as a Solicitor or a registered European lawyer in private practice from offices in England and Wales…” “Solicitor” is further defined at Clause 6.32 as “a person who has been admitted as a solicitor of the Senior Courts of England and Wales and whose name is on the roll kept by the Law Society under section 6 of the Solicitors Act 1974, including a person who practises as a solicitor whether or not he or she has in force a valid practising certificate.”
[20]The relevant part of the exclusion clause in the Policies was in the following form: “This Policy shall not indemnify the Insured against any Claim: … 2.6 – Trading Debts and Liabilities arising out of or in connection with any: . . . (b) legal liability assumed or accepted by the Insured under any contract of agreement for the supply to, or use by the Insured or goods or services in the course of Professional Business… (c) guarantee, indemnity or undertaking given by or on behalf of the Insured in connection with the provision of finance, property, assistance or other benefit or advantage directly or indirectly to the Insured.”

arising out of or in connection with any:

[21]The Minimum Terms and Conditions of Professional Indemnity Insurance scheduled to the Solicitors Regulation Authority’s Indemnity Insurance Rules contains a provision concerning the scope of insuring clauses, in the following terms:
“1.1 Civil liability Subject to the limits of clause 2 [monetary limits], the insurance must indemnify each insured against civil liability to the extent that it arises from private legal practice in connection with the insured firm’s practice…”
Subject to the limits of clause 2 [monetary limits], the insurance must indemnify each insured against civil liability to the extent that it arises from private legal practice in connection with the insured firm’s practice…”

Practice Direction and Authority

[22]The judge’s decision was concerned with the selection of disclosure issues for the purpose of parties giving extended disclosure. Since 1 October 2022, CPR Practice Direction 57AD has provided for disclosure in the Business and Property Courts, save in the case of a number of specified types of proceedings which are not relevant here. The Practice Direction is substantially in the form of and replaces Practice Direction 51U which governed the disclosure pilot in the Business and Property Courts. Furthermore, where it applies, it replaces much of CPR Part 31. Paragraph 7 of Practice Direction 57AD is headed “Identifying the Issues for Disclosure and Models”. Paragraph 7.6 is relevant here. It states as follows:
“The List of Issues for Disclosure should be as short and concise as possible. ‘Issues for Disclosure’ means for the purposes of disclosure only those key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings”
. Paragraph 6, which is headed “Extended Disclosure” provides at paragraph 6.3 that the court will only make an order for Extended Disclosure that is search-based (which would be the case here) “where it is persuaded that it is appropriate to do so in order fairly to resolve one or more of the Issues for Disclosure.” Paragraph 6.4 is as follows:
“In all cases, an order for Extended Disclosure must be reasonable and proportionate having regard to the overriding objective including the following factors – (1) the nature and complexity of the issues in the proceedings; (2) the importance of the case, including any non-monetary relief sought; (3) the likelihood of documents existing that will have probative value in supporting or undermining a party’s claim or defence; (4) the number of documents involved; (5) the ease and expense of searching for and retrieval of any particular documents (taking into account any limitations on the information available and on the likely accuracy of any costs estimates); (6) the financial position of each party; and (7) the need to ensure the case is dealt with expeditiously, fairly and at a proportionate cost.”
[23]The selection of disclosure issues was considered by Sir Geoffrey Vos C, as he then was, in the Practice Note in McParland & Partners Ltd vWhitehead [2020] EWHC 298 (Ch), [2020] Bus LR 699. That case was concerned with the disclosure pilot provisions in Practice Direction 51U mentioned above. There is no substantive difference between the provisions with which we are concerned and their equivalents in the pilot scheme. Under the heading “The identification of issues for disclosure”, the Chancellor stated, where relevant:
“44. The starting point for the identification of the issues for disclosure will in every case be driven by the documentation that is or is likely to be in each party’s possession. It should not be a mechanical exercise of going through the pleadings to identify issues that will arise at trial for determination. Rather it is the relevance of the categories of documents in the parties’ possession to the contested issues before the court that should drive the identification of the issues for disclosure. . . . 46. . . . issues for disclosure are very different from issues for trial. Issues for disclosure are issues to which undisclosed documentation in the hands of one or more of the parties is likely to be relevant and important for the fair resolution of the claim. That is why paragraph 7.3 of PD51U [equivalent to paragraph 7.6 of PD57AD] provides that issues for disclosure are ‘only those key issues in dispute, which the parties consider will need to be determined by the court with some reference to contemporaneous documents in order for there to be a fair resolution of the proceedings”
(emphasis added). Paragraph 7.3 goes on to explain, as I just have, that issues for disclosure do ‘not extend to every issue which is disputed in the statements of case by denial or non-admission’. 47. This explanation demonstrates that, in many cases, the issues for disclosure need not be numerous. They will almost never be legal issues, and they will not include factual issues that are already capable of being fairly resolved from the documents available on initial disclosure.” . . .

Discussion and Conclusions

[24]This is a short and relatively straightforward issue. It is important to begin by turning to the Practice Direction itself. When making an order for Extended Disclosure, the court must apply CPR Practice Direction 57AD. Paragraph 7.6 makes clear that issues for disclosure are the key issues in dispute which will need to be determined with some reference to contemporaneous documents for there to be a fair resolution of the proceedings. Paragraph 6.4 states that any order must be reasonable and proportionate having regard to the overriding objective including the various factors which are listed at (1) – (7). It is necessary, therefore, to consider whether there is a key issue or issues in dispute which need to be determined by reference to contemporaneous documents. Further, when determining whether to make an order for extended disclosure it is necessary to have regard to the overriding objective including the factors listed at paragraph 6.4 in order for there to be a fair resolution of the proceedings. The issue is multi-factorial.[25]There is no threshold test of relevance. Factor (3) is one of the seven factors which must be taken into account when determining whether it would be reasonable and proportionate, having regard to the overriding objective, to order extended disclosure. It requires consideration of the degree of likelihood of documents existing that will have probative value in supporting or undermining a party’s claim or defence. If it is unlikely that such documents exist, it is unlikely to be appropriate to make an order. Furthermore, if there is little or no prospect of such documents being of probative value, an order is unlikely to be appropriate. In other cases, other factors together with the overriding objective may mean that disclosure should be ordered of documents which the judge may think it is unlikely will ultimately make a difference to the determination of the issue at trial but where taking a view would involve prejudging that issue.[26]It seems to me that in this case too much emphasis has been placed upon an assumption that there is a minimum threshold of likelihood of the documents being relevant when the degree of likelihood is one factor to be taken into account. This has arisen, perhaps, from the way in which the Chancellor, described issues for disclosure in the McParland case at [46]. He quite properly distinguished between issues for trial and disclosure issues and then in relation to disclosure issues, between issues in relation to which documentation will be relevant (disclosure issues) and those in relation to which they will not (pure questions of law, for example). In that context, he formulated the question as being whether there is documentation in the hands of one or more of the parties which is likely to be relevant and important for the fair resolution of the claim.[27]This should not be translated or elevated into the proposition that it is for the judge when determining whether to order extended disclosure to decide definitively whether documents will be relevant to the manner in which an issue for trial is ultimately determined by the trial judge. It seems to me that that is what has happened in this case.[28]Despite stating that he was not engaging in the task of construction and was not intending to affect the issues to be determined at trial or the parties’ ability to argue those issues, that is what the judge did. He considered the definition of “Professional Business”, “services as a Solicitor” and “arising out of and/or in connection with the conduct of any Professional Business” at clause 1.1 of the Policies and asked himself what the court would have to consider when determining what those phrases mean. He concluded that he struggled to see how the meaning of those phrases could be affected by materials referred to in the incorporation clause, whether they were incorporated into the Policies or were part of the relevant factual matrix. In doing so, in effect, he decided one of the questions for the trial judge when construing the Policies. He decided that the documentation should be excluded from the equation and could have no effect upon the task of construction. It seems to me that he was wrong to do so.[29]He did not consider the numerous factors which are set out in the Practice Direction and are relevant when determining whether extended disclosure is necessary for the fair resolution of the proceedings. Instead, he pre-empted the trial judge and restricted the scope of the argument available to AmTrust at the trial of the preliminary issues. It is for the trial judge to decide whether documentation referred to as being incorporated in the Policies is relevant to the proper construction of the insuring clause at clause 1.1 and the exemption clauses. The judge did not consider, for example, whether the documents may be regarded by the trial judge as having probative value in supporting AmTrust’s claim based upon a construction which includes the Scheme Solicitors’ obligations to AmTrust or undermining Sompo’s defence to it.[30]The documentation referred to in the incorporation clause exists and it is not suggested that it would be disproportionate to disclose it. The case is also an important one in terms of the sums claimed. Furthermore, it seems to me that it is realistically arguable that the trial judge will regard the documents referred to in the incorporation clause (whether they are treated as forming part of the Policies themselves or a relevant factual matrix) as material or probative to the construction and scope of the cover under the Policies and to the exclusion clauses. That matter cannot be pre-judged, especially without sight of the documentation itself.[31]Although neither Mr Elkington KC, on behalf of AmTrust, nor Mr Hough KC, on behalf of Sompo, was able to give us a clear explanation of the status of such “incorporation clauses” after the enactment of the Insurance Act 2015, the reference to a written proposal and other documents and the use of the phrase “shall be incorporated into this contract” leads to the conclusion that for the purposes of disclosure, at least, the documents referred to can properly be regarded as having probative value. It seems to me that in such circumstances, it is not possible for the court properly to determine the proper construction of the Policies and Generic Issues 2, 3 and 4, in particular, without having all the relevant documentation before it. This is the case whether they are contractual documents or part of the factual matrix. As Lords Hamblen and Leggatt JJSC, (with whom Lord Reed PSC agreed), stated in Financial Conduct AuthorityArch Insurance (UK) Ltd [2021] UKSC 1, [2021] AC 649, at [47]:
“. . . an insurance policy, like any other contract must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contact, would have understood the language of the contract to mean.”
Although it is possible that the further documentation may not affect the proper construction of the relevant clauses and phrases, or that the status and effect of that documentation is affected by section 9 of the Insurance Act 2015, the question of construction cannot be pre-determined especially without having had sight of the documentation itself.[32]It follows that I reject Mr Hough KC’s underlying argument, which was accepted by the judge, that despite the express “incorporation clause” (whatever its effect may be), Generic Issues 2, 3, and 4 are purely questions of law and that accordingly, there is no need for disclosure. As I have already explained, the documentation may be relevant to the construction exercise.[33]I also reject his further argument that as a result of the fact that he says that the terms of the Policies are in standard form and they must be construed consistently against the backcloth of the minimum terms required by the Solicitors Regulation Authority, the documentation sought on disclosure can be of limited relevance, if any.[34]Mr Hough relied, in this regard, upon the Supreme Court’s decision in Impact Funding Solutions Ltd v Barrington Support Services Ltd[2016] UKSC 57, [2017] AC 73. That case was concerned with a litigation funding scheme in which there was an agreement between a firm of solicitors and a loan company under which the loan company provided a data management system and loans to clients whose claims had been accepted by the solicitors. Many of the claims were abandoned and the loans went unpaid by the clients. The loan company brought an action against the solicitors for breaches of the agreement governing their relationship. The solicitors went into liquidation and the loan company brought proceedings against their professional indemnity insurers pursuant to the Third Parties (Rights against Insurers) Act 1930. The question was whether the insurers were entitled to rely upon an exemption clause in the professional indemnity insurance policy which was similar to clauses 2.6(b) and (c) of the Policies.[35]It was held that the professional indemnity policy sought to cover breaches of solicitors’ professional conduct in connection with legal services to their clients, and not breaches of obligation arising from contracts for the supply of services used by them in the course of their provision of those legal services. The contract between the loan company and the solicitors fell into the latter category and accordingly, fell within the exemption clause.[36]It is true that Lord Hodge JSC, with whom Lords Mance, Sumption and Toulson JJSC agreed, made clear that, in general, a professional indemnity policy must be read against the relevant regulatory background which aims to protect the clients of a solicitor and third parties to whom the solicitors have been held to owe duties of care in their performance of legal services and to whom they have incurred liability in negligence and may include undertakings to third parties in the course of acting for their clients. Lord Hodge also stated that a reader of the policy ascertains the boundaries of liability by construing the broad statement of cover and the broad exclusions in the context of the regulatory background. See [17] and [18]. In addition, Lord Toulson JSC stated at [41] that when considering the nature and purposes of such a policy and its scope it is relevant that its terms are intended to replicate the minimum terms of cover required by the Solicitors Regulation Authority.[37]I fail to see, however, how any of this assists Sompo. Even if the insuring clause at clause 1.1 and the exemption clauses are in standard form and modelled on the minimum terms required, that cannot be determinative of the proper construction of the Policies. One of the questions which the trial judge will have to answer is whether in the circumstances of this case, in which the Policy includes an “incorporation clause”, the various terms, including “Professional Business”, cover the activities which have led to AmTrust’s claim. If, for example, the written proposal referred to in the incorporation clause, refers expressly to the litigation funding business, it is possible that the trial judge might decide that in the circumstances of this case, those activities fall within the phrase “arise out of and/or in connection with the conduct of any Professional Business” in clause 1.1. This would not amount to an impermissible expansion of a standard term. Were that to be the outcome after trial of the Generic Issues, it would be the proper construction of the terms construed in accordance with the well-known and well-established principles.[38]The Impact case was not concerned with disclosure, nor was it concerned with a policy with an “incorporation clause” of the kind with which we are concerned. Neither were the other cases to which we were referred, albeit in passing, being: Sutherland Professional Funding Ltd v Bakewells [2011] EWHC 2658 (QB), [2013] Lloyd’s Rep IR 93, and Doorway Capital Ltd v American International Group UK Ltd [2022] EWHC 182 (Comm), [2023] Lloyd’s Rep IR 83.[39]Further, unsurprisingly, in the Impact case, Lord Hodge made clear at [5] and [7] and Lord Toulson reiterated at [35] that a policy must be construed against its factual matrix, words of exemption must be read in the context of the contract as a whole and the contract must be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or classes of persons to whom it is addressed. It seems to me that it cannot be said at this stage, therefore, that the documentation sought in the DRD in relation to Disclosure Issues 1A and 1B is not of probative value in supporting AmTrust’s claim or undermining Sompo’s defence to it. Neither can it be said that the construction of the Policies is an issue which does not require the disclosure of the contemporaneous documents which is sought or that the documents are not relevant to the fair resolution of the construction issue.[40]Furthermore, as Mr Elkington also explained, AmTrust stands in the shoes of the Scheme Solicitors. In determining the meaning of the Policies, the trial judge will need to consider the arguments which Pure and HSS could have raised were Sompo to have refused to indemnify them for their alleged liabilities to AmTrust. That might include an assertion that Sompo was refusing to indemnify them against liabilities arising out of activities which were fully disclosed prior to the inception of the Policies.[41]This is true, all the more so, where AmTrust, as statutory assignee of the Scheme Solicitors, does not have access to the documents. As Males LJ pointed out when granting permission to appeal, at present there is an imbalance between the parties. Sompo has access to these contractual documents whilst AmTrust as the statutory assignee of the claims does not. Although the documents may not advance the matter, fairness requires that AmTrust have the opportunity to consider them.[42]It seems to me, therefore, that for all the reasons set out above, despite the fact that this was a case management decision, it ought to be set aside. The judge erred in principle. He applied the wrong test when determining whether to order extended disclosure and erred in pre-judging the proper construction of the Policies. In doing so, he shut out AmTrust from being able to argue that the documents are relevant to the proper construction of the Policies and shut out the trial judge from being able to consider that question in the light of all the relevant documentation.[43]In the circumstances, and given that it is not suggested that the documents are not available or that it would be disproportionate to provide them, it seems to me that they should be disclosed.[44]I agree with both judgments.[45]I also agree that this appeal should be allowed. For the purpose of his decision whether to order disclosure of the documents sought, applying the provisions of PD 57AD, it was not necessary for the Judge to decide definitively whether they were likely to be relevant to the issue of the scope of the cover or the applicability of the exemptions relied on, and he was not in any event in a position safely to do so. It was enough that there was reason to suppose that the documents might be relevant to those issues. It is clear from Asplin LJ’s judgment that that is the case. It is not of course for us, any more than for the Judge, to reach a concluded view on the relevance of the documents (and still less on the substantive issues themselves).[46]I also agree with Asplin LJ that it is legitimate, so far as necessary, to take into account two other matters:(a) The documents in question are documents which the assured, in whose shoes AmTrust is standing, would normally have: it is only because AmTrust is a statutory assignee that it does not. That inequality between the parties can be properly taken into account in considering whether disclosure is required as a matter of fairness, actual or perceived, and the overriding objective.(b) The documents, or in any event some of them, are expressly “incorporated” in the insurance contract. As Asplin LJ notes, there is some doubt what the effect of that provision is; but it is in principle unsatisfactory that a Court should be asked to construe a contract without seeing the entirety of its terms.

Cited in 1 later judgment