The Commercial Court has rejected an attempt by Genworth, the American insurer, to force subsidiaries of AXA and Santander to litigate between them the issue of who is ultimately liable for PPI mis-selling losses sustained by insurance companies that, at the time of the alleged mis-selling, were part of the Genworth group. The insurance companies had issued PPI policies which were marketed by entities now in the Santander group.
The issue arose in the context of a claim by AXA, which had in the meantime bought the insurance companies from Genworth, for payment by Genworth of sums due in respect of the losses under the share purchase agreement between AXA and Genworth. Faced with AXA’s claim, Genworth brought Part 20 proceedings against AXA, the insurance companies, and the Santander entities, in which it sought various declarations regarding the allocation of liability as between those parties for the losses in question. Genworth’s position was that it should not have to pay anything to AXA until the resolution of the issues raised by the Part 20 claim.
The Part 20 Defendants applied to strike out the Part 20 proceedings on the ground that they represented an illegitimate attempt by Genworth to force the Part 20 Defendants to litigate issues concerning their liability as between themselves, when those parties had for the moment no desire to litigate those issues. In a judgment handed down on 1 November 2018, the Commercial Court (Andrew Baker J) granted the applications and struck out the Part 20 claims. The Court held that the Part 20 proceedings were an abuse of the declaratory form of relief. The judgment contains a valuable discussion of the (extremely limited) circumstances in which a claimant can seek a declaration concerning the rights and obligations of the parties to a contract to which the claimant is not himself a party.