Google-spoofing, unenforceability, and third party disclosure orders: Considering the Judgment of Mrs Justice Dias in Parker v (1) Skyfire Insurance Company Limited (2) Spectra Drive Limited [2024] EWHC 1060 (KB)

This is a case in which Skyfire Insurance Company Limited (“Skyfire”) made an application for a third party disclosure order. Mrs Justice Dias addressed the increasingly prevalent “Google-spoofing”, third party disclosure order applications, and the difficulties facing defendants seeking to run an unenforceability defence on the basis of misrepresentation.

A background

The claim arose following an accident on 5 December 2021. Immediately after the accident, Mr Parker, hereinafter referred to as “the Claimant”, attempted to notify his insurers.

In very 21^st century fashion, the Claimant Googled his insurer’s name and rang the first number in the search results. Instead of speaking to his insurers as he might have expected, he was in fact speaking to a claims management company, but was informed that he could be put in touch with a hire company who could arrange for his car to be repaired. His car was removed the same day, and he was called shortly thereafter by Spectra Drive Limited, the Third Party, and First Respondent to the Defendant’s application, hereinafter referred to as “Spectra”.

The Claimant entered into a series of credit hire agreements with Spectra before seeking to recover his losses arising out of the accident, including credit hire charges (and storage and recovery fees) incurred under the credit hire agreements with Spectra. Other aspects of the claim were settled.

Skyfire’s suspicions were piqued, strongly suspecting that a misrepresentation had been made in the course of the Claimant’s discussions with Spectra. The argument followed, as most readers of this article would suspect to be made, that if there had been a misrepresentation, the agreement would be voidable for that same reason, and if the Claimant were to avoid it, he would not be under any subsisting liability to pay the charges and thus he would not have suffered any loss. In those circumstances, Skyfire would be relieved of any obligation to indemnify the Claimant.

Understandably therefore, given Skyfire sought to pursue that defence, they would need evidence of the conversations which took place between the Claimant and Spectra, necessitating an application for third party disclosure of “the recordings of all calls between Mr Joshua Parker and Spectra in relation to the accident, vehicle damage and replacement vehicle…”.

The Judgment under appeal

The application for third party disclosure under CPR 31.17 came before Mr Recorder Michael Smith in the County Court at Liverpool on 25 September 2023.

The application was opposed by the Claimant and Spectra on the grounds that (i) disclosure was not necessary in the circumstances of the case; (ii)  there had been delay in bringing the application; (iii)  it would be disproportionate to require Spectra to search for all recordings over the entire lifetime of its relationship with Mr Parker; and (iv) on a proper analysis of the law, no useful purpose would be served by ordering the disclosure because it would take Skyfire nowhere.

The Recorder correctly identified the requirement to consider whether the threshold conditions in CPR 31.17 had been met before exercising his discretion based on a consideration of all the circumstances of the case.

In short, the Recorder acknowledged the difficulties that Skyfire would be in, running the defence it wished to, without an order for third party disclosure. However, he determined that even if Skyfire did have the disclosure sought, they would not be able to show the agreement was unenforceable because the Claimant had not indicated he would avoid the contract and thus it remained valid and enforceable. The authority of Irving v Morgan Sindall plc, [2018] EWHC 1147 (QB) was relied upon to suggest that the Claimant would be entitled to recover his losses even if his liability under the contract was contingent upon his recovering damages from Skyfire. Thus, in the Recorder’s view, no useful purpose was served by making an order.

Grounds of appeal

The following assertions were made in support of Skyfire’s appeal which it said lead to an error of law/perverse conclusion:

• The Recorder wrongly interpreted Irving v Morgan Sindall plc (supra) as precluding Skyfire from raising an argument as to misrepresentation;
• It was inconsistent for the Recorder to suggest that, despite satisfying the threshold provisions of Part 31.17, disclosure would nonetheless serve no useful purpose; and
• The conclusion that no useful purpose would be served was in any event perverse since it was based on an assumption that the contract with Spectra would be confirmed by the Claimant when there was no direct evidence from him to this effect, only indirect hearsay evidence from his solicitors (in respect of whom there was a clear conflict of interest given that they also acted for Spectra). It was speculation what his evidence would be at trial.

Mr Justice Constable granted permission to appeal on the papers, recognising that the Recorder’s decision was a case management decision, meaning there was thus a high threshold to overcome. In brief, he concluded there was (i) a reasonable prospect of establishing there was an error of law or that the decision to effectively prevent Skyfire from advancing the argument they wished to was perverse; and (ii) that the “Google-spoofing” element of the factual matrix was one of importance which might impact on other cases of a similar nature. There was an ancillary costs argument too.

Discussion and analysis

Although not in issue before the appeal court, the first threshold condition to satisfy was whether the disclosure was likely to support or adversely affect either side’s case, with the appropriate test to apply being whether the disclosure sought “may well” support or adversely affect one side’s case, requiring a higher degree of probability than that of “real prospect”. The second threshold condition of whether the disclosure was necessary to dispose fairly of the claim or save costs would prove more difficult for Skyfire to overcome. This was because if the disclosure wouldn’t make a difference to the outcome of the claim, it certainly couldn’t prove necessary to dispose fairly of the claim.

The reason that Skyfire couldn’t show that the disclosure would make a difference to the outcome, let alone prove necessary to dispose fairly of the claim, is because the Claimant would still need to elect to avoid the contract even if it were voidable by misrepresentation, which Skyfire could not show was a real prospect, even if it could show there was a real prospect it was voidable. Crucially, the Claimant was present and pursuing his claim, and as such there was no evidence that the Claimant would seek to avoid his contract with Spectra.

Finally, and very importantly, Dias J concluded that even if the Claimant did wish to avoid the contract, he was not able to, as fully performed contracts were not capable of recission.

Key takeaways

For those who deal with recurring arguments of enforceability in credit hire cases, the following key takeaways might be of use:

• Contracts remain valid and enforceable unless and until a party elects to rescind.
• For a case that makes its way to trial, it will be open to the Claimant’s representatives to argue that there is no evidence to show that the Claimant intends, or that there is any motivation, to rescind their contract.
• In any event, a fully performed contract is not capable of being rescinded.

Defendants in Skyfire’s position face an unenviable task. Even where a misrepresentation can be proven, the defendant will not avoid liability simply by virtue of that misrepresentation.

And what for ‘google spoofing’?

Counsel had raised ‘google spoofing’ with Dias J during the hearing as an issue upon which an authoritative decision was eagerly awaited. Unfortunately, for those intrigued by the term and the perceived questionable nature of the practice fuelled by Search Engine Optimisation, Dias J set out in a postscript that she did not think it appropriate to say anything more about the legitimacy of the practice, leaving it to Parliament, the Financial Conduct Authority, or some other regulator to deal with it if required. We remain waiting with great anticipation…

Albert Gibbon