Insurance Law Monthly

The basis of subrogation is that the insurance position of the claimant in legal proceedings is to be disregarded. It is not, therefore, open to a defendant to assert that the claim against him should be dismissed because the claimant has not suffered any loss by reason of indemnification by his insurers. In Sousa v London Borough of Waltham Forest Council [2011] EWCA Civ 194 the Court of Appeal held that the same principle should apply to litigation funding mechanisms adopted by the insurers: the matter is to be looked at as if the insurers were not involved.

The assured in Sharon’s Bakery (Europe) Ltd v AXA Insurance UK plc and Anr [2011] EWHC 210 (Comm) may be thought to have been a little unfortunate. The assured created false documents for the purpose of obtaining finance from a bank and then, when the subject matter was destroyed by fire, used those same documents to press a claim against the insurers. The outcome was that the assured suffered a genuine loss but the insurers were able to deny liability both by reason of non-disclosure and by reason of the assured having made a fraudulent claim. This seems to be a case in which the fraud was not an attempt to obtain any dishonest advantage but rather to substantiate the assured’s version.

The suing and labouring clause is found in virtually all modern marine policies. The provision is of some antiquity, and its use is codified by the provisions of s78 of the Marine Insurance Act 1906. However, various aspects of its operation remain uncertain. The issues were discussed by Burton J in Melinda Holdings SA v Hellenic Mutual War Risks Association (Bermuda) Ltd [2011] EWHC 181 (Comm).

The decision of the Scottish Court of Session in Quantum Claims Compensation Specialists Ltd v Wren Insurance Services [2011] ScotCS CSOH_61 is of interest as it is one of very few reported decisions on the terms of cover obtained by organisations which fund litigation. The case shows that if the insurers are not kept informed of significant developments in the litigation, including the addition of new defendants facing entirely different claims, there may be no cover under the policy.

Under the Road Traffic Act 1988 an insurer who has issued a compulsory policy is required to satisfy a judgment brought against the assured if the liability is covered by the policy. The question in Bristol Alliance Ltd Partnership v Williams and Anr [2011] EWHC 1657 (QB) was whether loss inflicted by a deliberate act was required to be covered. Tugendhat J held that this was the case, both as a matter of English law and as a matter of EU law.