AB AND ANOTHER V TRANSFORM MEDICAL GROUP (CS) LTD AND ANOTHER

[2020] CSOH 3, Court of Session (Outer House) Lord Tyre, 9 January 2020

Insurance – Third party rights – Defendant and insurers entering into settlement agreement for claims under policy – Defendant going into administration – Whether settlement agreement void for prejudicing rights of third party claimants – Third Parties (Rights against Insurers) Act 1930

A number of women brought actions for damages against Transform, who had engaged surgeons to carry out breast augmentation surgery using implants which had a tendency to rupture. The claimants brought proceedings against Transform. For the period March 2007 to March 2011, Transform was covered by liability insurance for personal injury issued by Travelers. On 15 April 2015 a settlement agreement was reached between Transform and Travelers under which Travelers agreed to pay 52 per cent of the value of claims by women whose injuries were arguably incurred outside the period of insurance. Transform went into administration in June 2015 and its business was transferred to a subsidiary of a secured creditor. A number of women subsequently obtained judgments against Transform and challenged the settlement agreement in that it interfered with their future rights against Transform under the Third Parties (Rights against Insurers) Act 1930 (the legislation then in force).