RATHBONE BROTHERS PLC V NOVAE CORPORATE UNDERWRITING AND OTHERS

[2013] EWHC 3457 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Burton, 8 November 2013

Insurance (professional indemnity) - Scope of cover - Double insurance - Effect of clause postponing coverage to other insurance or indemnity - Whether subrogation available against a contractual indemnifier

Proceedings were commenced against PEV, a trustee of trusts and settlements established by JW. PEV had been a partner in a firm of solicitors in Jersey, and the firm was acquired by RB in March 2000. The contract between RB and PEV required PEV to provide an indemnity of up to £45 million to PEV. In June 2007 PEV ceased to be a partner and became a consultant. PEV retired as a trustee in July 2009. Claims were made against PEV by the beneficiaries, and PEV sought to recover under a liability policy taken out by RB for itself and its associated companies. The primary layer of £5 million was with AIG, and the excess layer of £45 million was with Novae. The policy covered any person who was a paid employee of, and working under the direct control and supervision of, an insured company in respect of professional services (consisting of financial services performed pursuant to an agreement with a third party. The policy contained an "Other Insurance" clause which stated that the cover was "excess over insurance and indemnification available from any other source". There was also a subrogation clause which stated: "The insurer shall be subrogated to all insureds' rights of recovery, contribution and indemnity before or after any payment under this policy". Burton J held as follows.