Cox v Bankside Members Agency Ltd and Others: CA 16 May 1995

Successful Lloyds names were entitled to enforce their claims in the normal time sequence. The transfer of the rights of the insured against the insurer under section 1(1) the 1930 Act takes place on the event of insolvency, even if the insured’s liability to the third party has not yet been established. In handling claims, instructing solicitors and so forth, the insurers act as agents for the company and are entitled to reimbursement for their expenses.
Lord Justice Saville said: ‘Under the Act the rights of the insured against the insurer are transferred to the third party on (in the case of an insured company) the making of a winding up order etc.: see s.1(b) of the Act. It follows from this that a statutory transfer can take place before the obligation of the insurer to pay arises i.e. before the liability of the insured has been established. In such an event, since it is clear from the authorities that the third party is to be put in no better position than the insured, the third party does not obtain the right to immediate payment until the liability of the insured is established. .
That right [the right of the third party to immediate payment by the insurers] only arises when, in each case, the claim is established, just as that right, while owned by the insured, would also arise only when the particular claim in question was established. It is only when that right arises that the insurers come under the correlative obligation to make payment. To my mind it follows that as each claim is established (whether before or after the statutory assignment), the right to payment arises and thus the amount of available insurance is in effect diminished, so that when it is exhausted later established claims have no right to an indemnity. . .’
Lord Justice Saville
Independent 09-Jun-1995, Times 16-May-1995, [1995] 2 Lloyd’s Rep 437
Third Parties (Rights Against Insurers) Act 1930 1(1)(b)
England and Wales
Appeal fromCox v Bankside Members Agency Ltd and Others QBD 27-Jan-1995
Some agents had policies against which there were likely to be various calls, either because several claims were being pursued against the same agents by different Lloyd’s Names, or because the policies were group policies covering several agents . .

Cited by:
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These lists may be incomplete.
Updated: 07 June 2021; Ref: scu.79585