High Court told FBD staff texts discussed policies in ‘disparaging terms’

FBD Insurance personnel exchanged text messages in March and April this year in which there was discussion of the insurer’s policies in “disparaging terms”, the High Court heard this week.

Michael Cush SC, for two companies operating the Lemon & Duke and The Leopardstown Inn bars, told Mr Justice Denis McDonald that the messages were contained within material discovered by FBD as part of proceedings over whether the insurer must pay out for losses resulting from enforced pub closures due to the Covid-19 pandemic.

There was some “pessimistic” discussion of the insurer’s prospects of successfully defending litigation, counsel said during a hearing of pre-trial discovery issues.

The judge remarked the fact someone in FBD may have said it had a weak defence “is neither here nor there” as it was for the court to decide that issue at the hearing next month of four test cases with implications for more than 1,000 pubs.

Mr Justice McDonald ordered FBD Insurance to provide a fuller explanation for its delayed direction to staff to preserve documents relevant to legal proceedings over whether the insurer must pay out for losses resulting from enforced pub closures due to the Covid-19 pandemic.

Mr Cush complained the direction only issued on July 2nd last despite material indicating litigation against FBD was contemplated by the insurer from March and the litigation issuing in May.

Material

Mr Cush said FBD has discovered an email from then FBD chief executive Fiona Muldoon dated March 17th, 2020, to Ms Kate Tobin containing certain notes.

Remy Farrell SC, for FBD, said it has made extensive discovery of more than seven million documents within a much shorter timeframe than normal for this type of commercial litigation and strongly disputed it had not taken its discovery obligations seriously.

The applicant pubs had taken an “aggressive” approach to discovery, counsel argued.

He opposed Mr Cush’s application that FBD be directed to provide a more detailed explanation concerning why the direction to preserve documents issued in July and why FBD believed the delay was unlikely to have meant the destruction of relevant documents, with the exception of certain documents it had referred to in a schedule.

Approach

Mr Cush disputed any “aggressive” approach and said it was inappropriate for his colleague to characterise the pubs’ discovery concerns as “whingeing”.

In his ruling, the judge noted FBD had provided affidavits addressing the applicant pubs concerns that the ‘litigation hold’ direction, a direction to preserve documents, had not issued until July. FBD had given an explanation for that, including that, due to miscommunication within FBD, it was mistakenly thought a litigation hold notice had issued earlier when it had not.

The judge said the FBD affidavits were not sufficiently detailed in relation to the matter.

That may be accounted for by the speed with which FBD had had to provide the relevant affidavits and the court was not criticising FBD, he said.

He directed FBD to provide a supplemental affidavit by Monday explaining, inter alia, how it had discovered a litigation hold notice had not issued, the circumstance in which it previously thought a notice had been issued and the basis for its belief the delay had not led to destruction of documents.

Privilege

The judge also ruled FBD is not entitled to claim litigation privilege over documents from the Central Bank of Ireland concerning the regulator’s expectations of insurance firms in the context of the Covid-19 pandemic.

In response to a call from the Central Bank, FBD had engaged Matheson solicitors and steps were taken to prepare documents for the sole or dominant purpose of engaging with the Central Bank, he said.

While the Central Bank has stressed all courses of action remain open to it, there was objective material showing a reasonable apprehension on the part of FBD that action against it concerning its handling of business interruption insurance claims may arise in the future, the judge said.

Any documents generated by FBD in relation to that reasonable apprehension are privileged but there is no privilege attached to documents from the CBI to FBD recording the bank’s concerns or what it said to FBD and those should also be provided by Monday, he directed.

Mr Farrell said there may be only one document which falls into that category.