When can an insurer apply to join proceedings against its insured?

James Thompson and Issie Huckin consider the High Court’s recent decision in Managed Legal Solutions v Mr Darren Hanison (trading as Fortitude Law) and HDI Global Specialty SE [2025] EWHC 2645 (Comm) which concerns the circumstances in which a professional indemnity insurer may be added as a defendant to underlying liability proceedings on their own application. 

This case highlights the requirements that insurers must meet in order to be successfully joined to proceedings under Civil Procedure Rule (CPR) 19.2 which governs the court's power to add or remove parties to proceedings when limitation is not an issue. The court decided it was appropriate to apply CPR 19.2 rather than CPR 19.6, which applies when limitation has expired and there are more limited circumstances in which the parties can be added, as they found that the relevant limitation period for a potential claim against the insurer had not expired.

Facts of the case

HDI was the professional indemnity insurer of a sole practitioner solicitor, Mr Darren Hanison trading as Fortitude Law.

Managed Legal Solutions Limited (MLS), a litigation funder, commenced proceedings against Mr Hanison, seeking damages from failed group litigation conducted by Fortitude in which MLS provided funding and security for costs. 

If MLS was successful in their claim, it was likely that Mr Hanison would be made bankrupt, which would mean that his rights under the policy would transfer to MLS under s.1 of the Third Parties (Rights against Insurers) Act 2010.

HDI denied that it was liable to indemnify Fortitude for the MLS claim because they argued that the “trading debts exclusion” in the policy was triggered, and they initiated confidential arbitration proceedings against Mr Hanison in relation to coverage.

Mr Hanison had initially defended the liability proceedings in their entirety, but he was debarred from defending them from November 2024, having failed to comply with a court order.

HDI then applied to be joined as a defendant to the MLS claim under CPR 19.2 in respect of a single issue, namely whether Fortitude owed MLS a duty of care. It was common ground that HDI had an interest in this issue as, if a duty of care was established, then the damages sought could not be trading debts, thus the exclusion wouldn't apply and the PI policy may be engaged. 

MLS opposed this application and argued that the case fell within CPR 19.6, which "applies to a change of parties after the end of a period of limitation under…the Limitation Act 1980", due to their belief that HDI’s application was made after the end of the relevant limitation period for their claim against Fortitude.

HDI’s position was that limitation hadn’t expired as the claim against them remained contingent.

Decision

Ultimately, the court rejected MLS’s submissions relating to CPR 19.6 and the application by HDI was granted.

The court held that applying CPR 19.6, under the same limitation period applicable to MLS’s claim against Fortitude, but as though it were being pursued by MLS against HDI, would have failed to reflect the fact that the insurer had an interest in the instant proceedings because of its (potential) liability under the 2010 Act as the firm’s insurer. Therefore, it confirmed that the potential claim under the 2010 Act against HDI from MLS was not time barred and remained a contingent claim unless and until Fortitude’s liability was established. The court also accepted HDI’s alternative argument that CPR 19.6 didn't apply because adding HDI didn't introduce a new cause of action.

It also addressed and rejected MLS’s objections due to alleged delay, prejudice and complexity as it found that HDI had acted promptly once Mr Hanison was debarred from his defence, and that the joinder was appropriate.

This case confirms that where an insured is debarred or is not defending a claim against it and an insurer faces a material, direct exposure dependent on the outcome, CPR 19.2 can facilitate joinder so the insurer can be heard on liability issues linked to its interest.

Why this decision is of interest to insurers?

This is a helpful example of an insurer taking a pro-active approach using CPR 19.2 in order to protect its interests against a potential 2010 Act claim. Insurers may want to consider this in cases where an insured has become debarred from protecting their claim and a substantial 2010 Act claim is contingent. However, the cases in which this will apply will be fact specific and limited.

Appeal

MLS has appealed to the Court of Appeal. Permission to appeal has been granted because of the lack of authority on both points. 

The appeal will be one to watch and we'll post a further article once it has been decided.