Lord Goff of Chieveley said: ‘In normal cases, as for example under contracts of insurance, the insurer will on payment request the assured to sign a letter of subrogation, authorising the insurer to proceed in the name of the assured against any wrongdoer who has caused the relevant damage to the assured. If the assured refuses to give any such authority, in theory the insurer can bring proceedings to compel him to do so. But nowadays the insurer can short-circuit this cumbrous process by bringing an action against both the assured and the third party in which (1) he claims an order that the assured shall authorise him to proceed against the third party in the name of the assured and (2) he seeks to proceed (so authorised) against the third party. But it must not be thought that, because this convenient method of proceeding now exists, the insurer can without more proceed in his own name against the third party. He has no right to do so, so long as the right of action he is seeking to enforce is the right of action of the assured. Only if that right of action is assigned to him by the assured can he proceed directly against the third party in his own name.’
The vessel Esso Bernicia was involved in an accident while berthing at Sullom Voe terminal under the control of tugs. The failure of a piece of equipment on board one of the tugs caused the vessel to come into contact with the jetty as a result of which both the vessel and the jetty sustained damage and the foreshore in the area of the terminal was contaminated by fuel oil. Esso paid compensation to the owners of the jetty and to crofters whose sheep had been injured by the pollution of the foreshore and sought to recover from the builders of the tug, Hall, Russell and Co., on the grounds that they had been negligent in its design and construction. Esso contended that it was entitled to be subrogated to the claims of the jetty owners and the crofters against Hall Russell in tort and could pursue those claims in its own name.
Held: Esso it could pursue the claims of the jetty owners and the crofters only in their names. Esso’s payment did not discharge Hall Russell’s liability, and for the same reason Esso could not make a claim in restitution because Hall Russell had not been enriched at its expense. An indemnifier who is subrogated to the rights of someone whom he has indemnified can only pursue those rights in the name of that person.
Lord Jauncey, Lord Goff of Chieveley
[1989] 1 AC 643, [1989] AC 643, [1989] 1 All ER 37, [1989] 1 Lloyds Rep 8, [1989] 1 All ER 37
England and Wales
Cited by:
Cited – Caledonian North Sea Ltd v London Bridge Engineering Ltd and Others HL 7-Feb-2002
Substantial personal injury claims had been settled following the Piper Alpha disaster. Where a contractual indemnity had been provided under a contract, and insurance had also been taken out, but the insurance had not been a contractual . .
Lists of cited by and citing cases may be incomplete.
Damages, Insurance
Updated: 08 January 2022; Ref: scu.191164