ROYAL & SUN ALLIANCE PLC V HUME

[2009] CSIH 24, Court of Session, Inner House, Lord President, Lord Reed and Lord Philip, 20 March 2009

Insurance (motor) – Compulsory insurance – Insurers satisfying judgment against assured – Insurers seeking to recover the judgment sum from the assured – Whether assured was in breach of condition

H was insured by RSA under a motor liability policy in accordance with the Road Traffic Act 1988. He was involved in an accident. Judgment was given against H, and RSA satisfied the judgment in accordance with section 151 of the Road Traffic Act 1988. RSA sought to recover from H the sums paid by them to the third party under a policy term which provided that if RSA was required to pay a third party in circumstances when, but for section 151, they would not have faced any liability, then H was required to repay that sum. The court ruled that H had been in breach of a policy condition regarding the giving of notice, that the breach operated to discharge the insurers from liability and accordingly that they had made payment only by reason of section 151. As a result they were entitled to recover.