Mrs Bradley was employed by Dart Mill several times from 1933 and 1970 and acquired byssinosis from inhaling cotton dust. The company was wound up in 1975 and dissolved in 1976. In 1984 she applied to the court for pre-action disclosure under section 33(2) of the Supreme Court Act 1981 and RSC Ord. 24 rule 7A. She wanted to see the terms of Dart Mill’s insurance contracts so that she could, if appropriate, bring a claim under the 1930 Act.
Held: (by a majority) The dissolution of the company meant that it was impossible ever to ascertain the existence and amount of the company’s liability. Lord Templeman (dissenting): on the passing of a resolution for the voluntary winding-up of the insured company, the company’s rights against Eagle Star were transferred to Mrs Bradley, even though the amount of the company’s liability to Eagle Star had not then been established.
Lord Brandon of Oakbrook explained what lay behind the 1930 Act: ‘The historical reason for the passing of the Act of 1930 was to remedy a particular form of injustice which had become apparent from two then recent decisions of the Court of Appeal. (Harrington and Hood’s Trustees) . . These two decisions showed that, even where an injured person obtained a judgment for damages against a wrongdoer, if the wrongdoer being a company went into liquidation, or being an individual became bankrupt, and the judgment had not by then been enforced by execution the monies payable by way of indemnity under any policy of insurance by which the wrongdoer was insured against liability to third parties, did not go solely to benefit the injured person but were payable to the liquidator or trustee in bankruptcy of the wrongdoer for distribution pari passu among all the unsecured creditors. This was recognised to be plainly unjust, and the Act of 1930 was passed to remedy that injustice. . . .’ but it ‘was not passed to remedy any injustice which might arise from other matters; in particular it was not passed to remedy any injustice which might arise as a result of the dissolution of a company making it impossible to establish the existence and amount of the liability of such company to a third party. That kind of situation was not in my view, contemplated by the legislature at all.’
Judges:
Lord Templeman, Lord Brandon of Oakbrook
Citations:
[1989] AC 957, [1989] 1 All ER 961, [1989] 1 Lloyds Rep 465, [1989] 2 WLR 568
Statutes:
Third Parties (Rights Against Insurers) Act 1930
Jurisdiction:
England and Wales
Citing:
Cited – Hood’s Trustees v Southern Union General Insurance Company of Australasia Ltd 1928
H, being insured by the defendant company against liability to third parties, negligently injured C in a road accident. C subsequently brought an action against H for damages, but before he could obtain judgment, H was made bankrupt and the official . .
Cited – Re Harrington Motor Co Ltd, Ex parte Chaplin 1928
A person injured in a road accident had obtained judgment for damages against the company, but had been unable to enforce the judgment before the company went into liquidation. The company’s motor insurers paid the amount of the judgment to the . .
Attacked – Post Office v Norwich Union Fire Insurance Society Ltd CA 1967
A contract of insurance provided an indemnity for ‘all sums which the insured shall become legally liable to pay as compensation in respect of loss of property’. The claim was by the Post Office against a contractor, Potters, for damaging one of . .
Cited by:
Cited – First National Tricity Finance Ltd v OT Computers Ltd; In re OT Computers Ltd (in administration) CA 25-May-2004
The company had gone into liquidation. They had sold consumer policies as extended warranties on behalf of the claimant. The company had insured its own joint liability under the contracts, and the claimant sought information from the company’s . .
Cited – Freakley and Curzon Insurance Ltd v Centre Reinsurance International Company and Another; similar CA 11-Feb-2005
Claims were made for personal injury caused by asbestos. The re-insurers sought declaratory relief against the head insurers, and the administrators of the insolvent company. The administrators sought declarations in turn. Curzon insured the company . .
Cited – Socony Mobil Oil Co Inc and others v West of England Ship Owners Mutual Insurance Association Ltd (Padri Island) (No 2); Firma CF-Trade SA v Similar (The ‘Fant’) HL 14-Jun-1990
The House was asked as to the effect of section 1(3) of the 1930 Act on policies including ‘pay or be paid’ clauses.
Held: The central question was whether the condition of prior payment was rendered of no effect by section 1(3) of the Act of . .
Mentioned – Aer Lingus v Gildacroft Ltd and Another CA 17-Jan-2006
The claimant had been found liable to pay damages for personal injury, and now sought contribution from the defendants. The defendants said that they were out of time since the contribution action had been commenced more than 2 years after the . .
Cited – Law Society of England and Wales and others v Shah and others ChD 30-Nov-2007
Solicitor firms had been made bankrupt leaving a shortfall after thefts from client accounts of over 12 million pounds. The thief had diappeared, and the other partners were now discharged form bankruptcy. The Law Society accepted that it could not . .
Cited – Teal Assurance Company Ltd v WR Berkley Insurance (Europe) Ltd SC 31-Jul-2013
An international engineering company had several layers of professional indemnity insurance. The top later did not cover claims originating in the US or Canada. The several insurers now disputed apportionment of liability between them. The . .
Lists of cited by and citing cases may be incomplete.
Insurance, Insolvency
Updated: 30 April 2022; Ref: scu.198402