“(i) in the event that the Insured is not indemnified in whole or in part under the Principal Insurance; or (ii) in the event of the lack or insufficiency of required insurance due to error or accidental omission; or (iii) in the event of the exhaustion of the aggregate limit under the Principal Insurance.”
“SECTION FIVE: GENERAL EXCLUSIONS 5.5 Principal Policy This insurance does not cover loss or damage which is recoverable as a claim from the Principal Policy. … 6.6 Non-contribution This Insurance does not cover claims which are recoverable under any other policy in favour of the Insured except for any excess beyond the amount which would be payable under such other policy had this Insurance not been effected. SECTION SIX: OTHER TERMS AND CONDITIONS 1. Under Contingent coverage claims arising from the exhaustion (partial or total loss) of the aggregate available under the operator’s Hull War insurance are excluded.”
“…if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better.”
“That does not mean, however, that the court should shy away from determining summarily any question raised in an unjust enrichment claim if appropriate. However difficult it may be to identify whether a defendant’s enrichment was at the expense of the claimant in cases which lie at the margin, the court should do so if the particular case clearly lies beyond the margin. … .”
“To make out a claim for contribution or reimbursement, the claimant must show that he discharged the defendant’s liability to a third party and that (1) the claimant and the defendant were both liable to the third party, (2) who was forbidden to accumulate full recoveries from both of them, but (3) who could choose to recover in full from either of them, and that (4) some or all of the burden of paying the third party should ultimately be borne by the defendant.”
“Contribution should be carefully distinguished from subrogation. Since contribution implies more than one contract of insurance, it is only where there are two or more policies involved that there can be any confusion between the two. Subrogation ensures that the assured receives no more than an indemnity by allowing the insurers to exercise the assured’s rights against a third party. Contribution ensures that the insurers do not suffer injustice amongst themselves because of the rule that the assured can claim from the insurers as he thinks fit. Unlike a claim for subrogation, a contribution action must be brought in the insurer’s own name. Contribution is not brought in the name of the assured and is in principle not affected by defences that might have been pleaded against the assured had the action been brought by the assured for his own benefit.”
“The insurer’s right of subrogation must be distinguished from his right to claim contribution from a co-indemnitor (usually a co-insurer in case of double insurance). Both rights arise where the insurer has indemnified the assured against loss, and another person is (or other persons are) liable to the assured in respect of the loss. But the right of subrogation arises where another person is primarily liable to the assured, and the insurer’s obligation to indemnify the assured under the contract of insurance is secondary - as, for example where the loss against which the insurer has indemnified the assured has been caused by tort or breach of contract (including, in an appropriate case, a contract of indemnity) committed by a third party. The right of contribution arises where the liability of the insurer and a third party to the assured are co-ordinate - as, for example, where the assured is insured in respect of the same loss under more than one insurance policy, and elects to claim the loss from one insurer alone. In order to test whether obligations are primary and secondary or co-ordinate, it is legitimate to ask whether the insurer’s payment to the assured would be res inter alios acta between the assured and the other party liable. Where the payment made by the insurer would be res inter alios acta, so that the other party would remain liable to the assured notwithstanding the insurer’s payment, the obligation of the other party is primary, and that of the insurer secondary, so that the insurer may pursue a subrogated claim to enforce the rights of the assured. Where the payment made by the insurer would not be res inter alios acta, and would discharge the other party liable to the assured (in whole or in part), the obligations of the insurer and the other party are coordinate, and the insurer may pursue only a claim for contribution.”
“Contribution is an equitable remedy which arises between co-debtors where one or more of them has been called upon to discharge a disproportionate part of the debt in respect of which all have bound themselves. The foundation of the modern law of contribution lies in the equitable rights which exist between co-sureties. Although the right of contribution is equitable, rather than contractual, it may be modified by contract.Section 80(2) of the Marine Insurance Act 1906 recognises the origin of the right of contribution between co-insurers, in the provision that an insurer who has paid more than his proportion of the loss is entitled to ‘the like remedies as a surety who has paid more than his proportion of the debt’. The right of contribution between co-insurers must be distinguished from the rights of subrogation that accrue to an insurer on payment under a contract of insurance. The right of contribution between co-insurers (although sui generis) is analogous to the equitable right of contribution that exists between co-indemnitors. That right is founded upon the proposition that payment by one co-indemnitor discharges the liability of all others: the indemnitee, having been indemnified, may not make any further claim under other contracts of indemnity. In consequence, the indemnitor who has paid acquires a right to claim rateable contribution, in his own name, from those co-indemnitors whose liability his payment has discharged. Subrogation, by contrast, is founded upon the proposition that a claim paid by an insurer is, so far as third parties are concerned, res inter alios acta. Thus a third party liable to the assured remains liable even though the assured has been indemnified under the contract of insurance. But the insurer is entitled to the benefit of the assured’s claim against the third party: he is therefore subrogated to the position of the assured, and may pursue the claim, but in the name of the assured. However, it does not follow that where an insurer has made a payment under the policy, he cannot be subrogated to the claim of his assured against a third party under another contract of indemnity, and can only claim contribution. On the contrary, he will be subrogated to his assured’s claim under another contract of indemnity in all cases where the insurer’s obligation to indemnify (under the contract of insurance) is secondary to the third party’s obligation to indemnify. In most cases where the assured has a claim against a third party under a contract of indemnity other than a contract of insurance, the insurer’s obligation to indemnify will indeed be secondary to the obligation of the third party to indemnify, if only because the payment made by the insurer will be res inter alios acta (and thus will not discharge or reduce the obligation of the third party), whereas any payment made by the third party will extinguish or reduce the sum due from the insurer under the policy. But where two contracts of insurance are concerned, each providing indemnity against the same loss, the liability of the respective insurers to indemnify their assured will be co-ordinate. In consequence, the insurer who has paid the indemnity will be entitled to claim rateable contribution from the insurer who has not paid.”
“As Mr Wolffe for the defenders said, the defenders’ basic argument was simple. The pursuers had been indemnified by their insurers. The pursuers now sought to be further indemnified by the defenders under the various indemnity clauses in their service contracts. But, having been fully indemnified by their insurers, the pursuers were not entitled to seek any further indemnity from the defenders, since this would mean that they were being more than fully indemnified, contrary to the basic principle of the law of indemnity … The present actions would accordingly be irrelevant if brought by the pursuers and they must equally be irrelevant when raised by the insurers using the pursuers’ name. In attacking that argument Mr Batchelor, QC, advanced an equally simple point of view on behalf of the pursuers. He did not call into question the principle that an assured is not entitled to be more than fully indemnified. But, he said, payments made by insurers to indemnify an assured were res inter alios acta so far as any third party was concerned. That was a general principle which applied in any case where an insurer raised proceedings in the name of the assured. It therefore applied in the present cases where the proceedings were based on a right under a contract of indemnity. … .”
“In presenting their argument that the payment by the insurers had the effect of extinguishing the contractors’ liability under the indemnity clauses, counsel for the defenders accepted, of course, that payments by an insurer are not generally regarded as having the effect of extinguishing a third party’s liability to the assured. To take only the most obvious example, it has long been settled that a wrongdoer’s liability to pay damages is not affected by the fact that the victim may have been indemnified for his loss under a contract of insurance… Counsel argued, however, that a clause or contract of indemnity was different. Under such a contract the person to be indemnified is entitled to be indemnified for his loss but is entitled to nothing more. Therefore, it was said, in a case where the person seeking to be indemnified had already been indemnified by his insurers, he no longer had any loss for which he could be indemnified under the contract or clause of indemnity. I do not find the supposed distinction compelling. In a case where an owner’s property is damaged by the wrongful act of a third party, the third party’s liability is to pay damages which will compensate the owner for the loss which he has suffered as a result of the third party’s act. The liability arises only where there is loss. In a particular case, of course, the owner may have been insured and so may receive a full indemnity from his insurers. In those circumstances he will no longer be suffering any actual loss as a result of the damage to his property. Nevertheless, as between the owner and the third party, he is regarded as still suffering a loss, at least for the purpose of allowing proceedings to be brought in his name to recover that loss from the third party. Were the law not to treat him as continuing to suffer a loss for these purposes, there would be no loss for which the third party would remain liable to compensate him; he would have no remaining right to damages from the third party and so there would be no right which the insurers could enforce by raising proceedings in his name. In other words subrogation could not operate. … So, it is critical to the entire approach of the law to many routine claims for damages which are brought before our courts that the pursuer is regarded as continuing to suffer loss even though he has been indemnified for his loss by his insurer. In all these cases any payment by the insurer to the assured indeed the very existence of a contract of insurance - is said to be res inter alios acta. For that reason, when considering whether an assured’s right to be indemnified is to be treated as remaining in existence, even after the assured has been indemnified by his insurer, I do not find the answer simply in the fact that the indemnifier’s obligation is to indemnify for loss. Equally, a wrongdoer’s liability is to compensate for loss. In both cases, the question is whether, as between the assured and the third party, the law regards the assured as continuing to suffer loss even though he has been indemnified by his insurer. We know that in the case of a wrongdoer the law does indeed treat the assured as continuing to suffer loss in those circumstances and so allows an action to be brought in his name. For my part I can see no real distinction, for present purposes, between that kind of case and the case of an indemnity clause or contract; nor do I perceive any reason in principle why the approach of the law should be different in the two cases. What counsel for the defenders were really arguing was that the question should be decided by focusing on the contract or clause of indemnity and its characteristics. In my view that is to look at the matter from the wrong end. Subrogation is a remedy which is available to the insurer under the contract of insurance and its purpose is to give effect to that contract as one of indemnity. … subrogation works by giving the insurer who indemnifies the assured the right to raise proceedings in his name and, by the very nature of the circumstances in which it comes into play, the proceedings by the insurer must necessarily be to recover sums which have already been paid to the assured or paid on behalf of the assured. The remedy could not exist unless, in insurance as in other cases of indemnity, our law took the view that payments made by the indemnifier fall to be ignored in proceedings raised by him in the name of the assured against a third party. Those payments are ignored in all cases where subrogation applies, whatever may be the basis of the action which is raised in the name of the assured after he has been indemnified by the insurer.”
“In all these cases the law has chosen to disregard the payments made by the insurer to the assured and topermit the insurer to raise an action in the assured’s name. This is not a standpoint which is compelled by legal logic alone: if nothing but legal logic had been in play, the law could equally well have taken the opposite view. It could have regarded the payments made by the insurer as having the effect of indemnifying the assured and so as extinguishing the loss. But the law has consistently taken the opposite view and, as a matter of substance, this can only be because the policy underlying the law of insurance is that the insurer should not bear the ultimate responsibility for indemnifying the assured in these cases. Instead, the third party who is under an enforceable legal obligation to pay the assured is made to bear the ultimate responsibility. … On the basis of the authorities the doctrine could perhaps be stated in a more general form to the effect that where the assured has a primary right against a third party which goes to reduce his loss, whether the right be based on a delict or on a contract, an insurer on making good the loss is entitled to be put in his place and to enforce the remedies which he would have had against the third party. Counsel for the defenders sought to distinguish the present cases from other cases involving a liability on a third party by pointing out that they involve two sets of companies, the insurers and the contractors, both of which undertook, for a consideration, to indemnify the pursuers in the events which occurred. Counsel suggested that, since both had undertaken theobligation to indemnify as a commercial transaction, there was no obvious reason why the contractorsrather than the insurers should bear the ultimate liability to indemnify the pursuers.The answer tocounsel’s suggestion must be that the pursuers are regarded as having a primary right against the contractors and a secondary right against the insurers.The primary right derived from the agreement under which the contractor in question carried out its role on the platform. The contractor’s indemnity was just one element in the complex of relationships which were put in place to allow the platform to be operated. The insurers were not a part of that complex of relationships but were external to it, owing an obligation to the pursuers by reason of a contract which was concerned only with insuring the pursuers against losses suffered by them as a result of the operation of the platform. More particularly, in the absence of any indication to the contrary, it can be assumed that the pursuers took out and paid for the policy of insurance, partly at least, to protect themselves against any loss which they might suffer as a result of any failure by the contractors to fulfil their contractual obligations to indemnify the pursuers against the claims and losses specified in the respective indemnities. The insurance policy was intended to benefit the pursuers. If the defenders’ argument were correct, by paying for the insurance policy, the pursuers would have benefited not themselves but the defenders, who would be relieved pro tanto of their contractual obligation to indemnify the pursuers against the relevant claims and losses. That is inconsistent with the nature of a contract of insurance. The perception that a contract of insurance is intended to benefit the assured rather than a third party, expounded long ago by Bramwell B in Bradburn v Great Western Railway Co, applies as much in the present situation as in any other. I therefore see no reason in principle why the law should adopt a different approach and exclude the possibility of a subrogated action in the case of a clause of indemnity. Such a clause of indemnity, however absolute its terms, is just an undertaking by the indemnifier to pay to the creditor the amount of the loss which he has suffered. In essence that obligation is no different from the absolute obligation of the wharfinger to make good the loss suffered by the owner of grain stored in his warehouse and destroyed by fire (North British & Mercantile Insurance), or the obligation of a tenant under a lease to repair the landlord’s house if it is destroyed by fire (Darrell v Tibbitts).In these cases the insurers can raisesubrogated proceedings against the wharfinger or tenant and recover the loss, even though the owner has been indemnified. If the law does not impose the ultimate liability to indemnify on the insurers in these cases, there can be no reason of legal policy to make the insurers bear the ultimate liability in a case like the present. They should therefore be entitled to raise proceedings in the pursuers’ name based on theindemnity clauses.”
“Counsel for the defenders argued that in all cases where there was a right to contribution, it must work in both directions - in other words, if one obligant has a right of relief against the other, that second obligant must have a similar right against the first.That will indeed be so where the nature of the relationship is such that each is to bear a pro rata share of the burden of the debt and the right is, accordingly, properly described as a right to contribution. It will not, however, be the case where, as with a cautioner and principal debtor, one of the obligants has the primary or ultimate obligation to the creditor and the other has a secondary obligation. In that situation, while the cautioner who pays the debt is entitled not merely to a contribution but to total relief from the principal debtor, the principal debtor has no corresponding right to any contribution or relief from thecautioner - for the simple reason that the principal debtor is the person who is to bear the final responsibility of paying the debt to the creditor. It follows that, even if we approach the matter in the present case on the footing that, as the defenders argue, the insurers and the defenders are under parallel obligations to indemnify the pursuers, that does not in itself tell us anything about the extent of the rights of relief which arise if the insurers indemnify the pursuers. The extent of those rights of relief depends on the nature of the overall relationship among the parties. If the insurers and the defenders were properly to be regarded as co-obligants on an equal footing in a joint and several obligation to indemnify the pursuers, the insurers would indeed have a right to relief to the extent of a contribution of their pro rata share from the defenders. That is the position which the law has adopted in respect of double insurance where twoinsurers are liable to indemnify the assured in the events which have happened. Reflecting the commercial reality and the practical understanding of insurers, the law treats the matter as if there were really only one insurance and the insurers are seen as co-obligants, each liable to bear a one half share of the liability. Accordingly, if one of two insurers indemnifies the assured, it is entitled to recover a contribution of one half from the other in an action of relief. … .”
“I emphasise that the approach which I have outlined would not apply, of course, to cases of double insurance. As Lord Low stressed in Sickness and Accident Assurance at p 980, double insurance has been treated in a somewhat special manner by the law. The various policies taken out by the assured are treated as truly one insurance and an assured who has been indemnified by one of the insurers cannot recover any more from another insurer. Lord Low’s approach was adopted by Barwick CJ in Albion Insurance at p 347. Having explained the particular analysis which applies in cases of double insurance, Lord Low goes on to distinguish the situation in double insurance from the situation where an assured has a primary right against a third party. In double insurance the assured has no such primary right against any third party and so there is no right which an insurer can use to enforce its right to a pro rata contribution from any other insurer. In cases of double insurance, therefore, the insurer’s only way to enforce its right to the appropriate contribution is by means of an action of relief. … .”
“Certain basic principles are clear. (1) As a general rule whatever arrangements a party may choose to make to cover his own position by insurance are res inter alios acta as far as any third party is concerned.(2) Where there is double insurance by one insured it is treated as being one insurance: Sickness and Accident Assurance Ltd v General Accident Insurance Corporation Ltd. Accordingly, each insurer is liable to contribute. An insurer who pays in full may sue other insurers in his own name for contribution. The basis for this rule is expressed by Lord Mansfield in Godin v London Assurance Co and Mason v Sainsbury and is that it would be unfair to one insurer to be saddled with the whole loss just because it is that insurer from whom the insured has elected to claim. Similar principles have been evolved in relation to co-cautioners. A cautioner who pays the whole debt is entitled to relief in full against the debtor, failing which relief pro rata from co-cautioners. (3) Where a party who has double insurance sustains a loss which has been paid in full by one insurer, he cannot claim against the other insurer for the same loss. Similarly if he is paid by a third party he cannot claim against his insurers because he has no outstanding loss. In a question with a third party the insured and the insurer are treated as one: Simpson & Co v Thomson.(4) Where there is a primary obligation owed by a third party to an insured in respect of the loss and the insurer pays the loss, the insurer may be subrogated to the rights of the insured and sue the third party in the name of the insured: North British & Mercantile Insurance Co v London, Liverpool and Globe Insurance Co. This is because the primary obligation remains in place, despite the insurers’ payment, unlike theposition in double insurance where, as both insurances are treated as one, payment by one insurer is payment of the whole and the remedy of that insurer is to claim relief in his own name against his co-insurer. (5) If, after the insured has been paid by his insurer, he chooses to proceed against the third party on the still subsisting obligation and receives payment from the third party he is bound to reimburse his insurers, thus avoiding being recouped for more than his actual loss: Castellain v Preston; Morley v Moore. The question that arises for decision in this case is whether, where the obligation of a third party is of the nature of an indemnity, that can ever be a primary obligation which is not discharged by payment by an insurer and which can thus give rise to subrogation, or whether it is to be equiparated to insurance and thus discharged when the insurer makes payment to the insured, which can only give rise at best to a right of relief at the instance of the insurer. I did not understand it to be disputed by the respondents that it would be possible and legitimate to frame an indemnity clause in such a way as to make it a primary obligation, their contention being that the wording of the indemnity clauses in these contracts gave no indication that such a construction would be proper.”
“As a general rule insurance policies are taken out by a party for his own protection and they are res inter alios acta as far as a third party is concerned. When considering the rights and liabilities of parties to a commercial contract, whatever insurance may have been taken out by either party for whatever purpose falls to be ignored. If the reclaimers have a right of indemnity as part of their contract with the respondents, that is a primary contractual right which remains vested in them whatever arrangements may have been made between the reclaimers and their own insurers. There are many examples of contracts which are regarded as primary and which remain vested in insured persons giving right to subrogation on payment by insurers. A right of subrogation rather than contribution has been upheld where a civil body had a statutory duty (Mason), where there is a covenant in a lease (Darrell v Tibbitts), where there is absolute liability of a bailee (North British & Mercantile), where a seller has rights under a contract of sale (Castellain), and where there is a right of contribution under general average (Dickenson v Jardine). … Where a third party can be categorisedas awrongdoer giving rise to the loss there is no doubt that his obligation to the injured party is a primary obligation. This is so even if the wrongdoing only arises out of an absolute obligation without fault, e g North British & Mercantile where wharfingers were liable on custom of trade. The same would apply to a breach of contract giving rise to the loss (Darrell). There is no material difference between a covenant in a lease and an indemnity. What, however, is the position of an entirely innocent third party who is not in breach of any duty either absolute or in delict or under contract but who has granted an indemnity to cover the loss sustained? Can that contractual indemnity ever be a primary obligation or must it be treated as being on an equal footing with a contract of insurance? In North British & Mercantile at p 584 it was said that the contract whereby a bailee was made absolutely liable in case of loss by fire is not a contract of insurance so as to make the bailee himself an insurer but is merely part of the terms of a contract of bailment. It is difficult to see any distinction here where there is an equivalent absolute obligation (in the events which happened) which even although it is called an indemnity is part of a contract of services. If the contractors had accepted liability under theindemnity clause in respect of claims by their employees against the reclaimers and had paid the claimants, the reclaimers obviously would not have had any claim against their own insurers having suffered no loss, but could the contractors claim contribution from the reclaimers’ insurers on the basis that they were joint indemnifiers of the reclaimers?In my view not, because the reclaimers’ insurance arrangements are res inter alios as far as the contractors are concerned. Contribution, however, is a two way exercise. You cannot have contribution from one without contribution from the other. Accordingly, in the events which happened and had the contractors fulfilled their contractual obligations when called upon to do so, contribution would be out of the picture. It follows, in my view, that in the reverse situation the reclaimers’ insurers could not claim contribution from the respondents. While it does not necessarily follow that because there is no room for contribution there must be a right of subrogation, it does at least show that the position of the indemnifier and the position of the insurers are not the same, and once that is accepted, a major part of the respondents’ argument disappears.”
“The basic rule that an indemnitee cannot claim if already paid may seem to be a problem. However, in all cases of subrogation the insured has, by definition, been paid but that does not bar a claim in his name under a primary obligation. The rule against claiming when already paid is to prevent an indemnitee making a profit. Where, however, the claim is made under subrogation any benefit goes to the insurers and there is no profit to the indemnitee. This is so even when the insurers have asked the insured not to make any claim but the insured nevertheless successfully does so (Morley). The insured’s proceeds from that claim belong to the insurers. … A contractual scheme of indemnities is in my view intended to allocate primary responsibility. This appears to accord with general practice within the industry and makes perfectly good commercial sense. The fact that a party chooses to insure against the possibility of non-recovery under the indemnity clause, either because the indemnifier cannot pay or because he can escape liability under some limitation of the indemnity clause (which is what the respondents argue for in another part of this appeal), or even simply because they prefer to have a straightforward way to be indemnified immediately without having to have recourse to litigation to resolve complications arising out of the terms of what is on any view a limited indemnity clause, cannot affect the contractual obligations which are primary. The reclaimers’ liability having shifted under the contract to the contractor, if the contractor fails to meet its contractual obligation the reclaimers and thus their insurers may have to pay. That, however, is contingent upon the contractors’ failure to meet their contractual obligation. The position of the reclaimers’ insurers is thus secondary to the contractors’ obligation and the fact that the reclaimers may have backup insurance is res inter alios. … The liabilities of the contractor and reclaimers’ insurers are not in my opinion coexistent and on the same footing so as to give rise to the inference that they constitute a joint and several obligation under which payment by the reclaimers’ insurers automatically extinguishes the obligation owed by the respondents. As it was put in Albion Insurance, the reason behind the rule relating to double insurance is that payment by one insurer is made for the benefit of both and thus contribution is equity. This is because the two insurances are treated as one and payment by one insurer discharges the whole obligation. In the present case the payment by the insurers on a claim under the policy, which could not be resisted, was made for the benefit of the reclaimers. … .”
“On the whole matter, therefore, I am satisfied that the contractual indemnity does not stand on the same footing as the insurance taken out by the reclaimers, that the reclaimers’ insurance cannot be used to benefit the respondents, that the contractual indemnity is to be regarded as a primary obligation and that it is therefore appropriate that the insurers, having paid the claims, are entitled to be subrogated to the rights of the reclaimers to indemnity under the contract.”
“80(1) Where the assured is over-insured by double insurance, each insurer is bound, as between himself and the other insurers, to contribute rateably to the loss in proportion to the amount for which he is liable under his contract. (2) If any insurer pays more than his proportion of the loss, he is entitled to maintain an action for contribution against the other insurers, and is entitled to the like remedies as a surety who has paid more than his proportion of the debt.”
“Although applicable in terms only to marine insurance, these sections express more general principles. And the argument for the contractor seeks to build upon them. In very simplified form the argument runs like this. A claim was made against the operator for the death of Mr Pyman, an employee of the contractor. It was settled by the operator’s insurers. The operator itself therefore suffered no ultimate loss and has no claim to be pursued in its name against the contractor. The operator’s insurers may have a claim to contribution against the contractor as another party liable (with the insurer) to indemnify the operator but that is not a subrogated claim to be pursued by the insurer in the name of the operator but a claim to contribution from a co-indemnifier to be pursued by the insurer in its own name.”
“The right of an insurer who has paid a claim to seek contribution from other insurers of the same risk on the same interest in the same property is clearly established … It is equally clearly established that a surety who is obliged to pay the debt owed by the debtor to the creditor is entitled to contribution from his fellow co-sureties … The question at the heart of this issue in the appeal is, as it seems to me, this: is the present claim, as the operator contends, a subrogated claim properly made in its name by its insurer (who has indemnified it under a policy of insurance) to enforce a contractual right of the operator against the contractor or is it, as the contractor contends, a claim for contribution by one party liable to indemnify the operator against another?”
“I am clearly of opinion that the operator’s contention is to be preferred, for the reasons given by the judges of the Inner House and also by Lord Mackay. The operator was not obliged to insure itself against adverse claims. Thus the existence of such insurance, prudent though no doubt it was in business terms, is irrelevant to the mutual obligations of the operator and the contractor; in technical language, it was strictly res inter alios acta. It would be wholly anomalous if the operator’s voluntary decision to insure itself against the risk to which it was exposed should operate to the advantage of the party against whom its contractual claim for indemnity lay (a party not involved in the decision to insure and not responsible for payment of any part of the premium). The contractor’s contention would also, as it seems to me, disturb the very clear apportionment of risk for which the parties have provided by their contract. As already noted, the legislature has not sought in this field to restrain the pursuit by insurers of subrogated claims.”
“The researches of counsel have not disclosed any Scots or English case in which any contention at all similar to the contractor’s in this case appears to have been advanced. But courts in the United States have been asked to consider a similar contention. The American cases must be approached with a measure of reserve since courts have on occasion applied a principle of superior equity which has no counterpart in our law. It is nonetheless clear that courts of high standing have adopted an approach close to that outlined in the foregoing paragraphs. In Hall & Long v The Railroad Companies (1871) 80 US 367 Strong J, giving the opinion of the Supreme Court of the United States, said at p 370: ‘It is too well settled by the authorities to admit of question that, as between a common carrier of goods and an underwriter upon them, the liability to the owner for their loss or destruction is primarily upon the carrier, while the liability of the insurer is only secondary. The contract of the carrier may not be first in order of time, but it is first and principal in ultimate liability.’ In Chicago St Louis & New Orleans Railroad Co v Pullman Southern Car Co (1891) 139 US 79 at 88 the liability of the railroad company was described as ‘in legal effect, first and principal’ and that of the insurer as ‘secondary, not in order of time, but in order of ultimate liability’. In FH Vahlsing Inc v Hartford Fire Insurance Co (1937) 108 SW 2d 947, 950 the Court of Civil Appeals of Texas adopted a statement in 26 Corpus Juris to this effect: ‘The right of subrogation is not limited to cases where the liability of the third person is founded in tort; but any right of the insured to indemnity will pass to the insurer upon payment of the loss.’ In Meyer Koulish Co v Cannon (1963) 28 Cal Rptr 757, 762 a District Court of Appeal in California observed: ‘Appellants were parties to an express contract whereby they assumed responsibility for the loss of the goods of respondents. They thereby accepted primary liability and it cannot be said that appellants stand on equal footing with the insurance company. The equities in this matter do not balance but preponderate in favor of the insurer of the bailor.’ The Supreme Court of Washington expressed the point very clearly in Consolidated Freightways Inc v Moore(1951) 229 P 2 d 882, 885. ‘That insurance company recoveries, under their right of subrogation, most often flow from tort actions is quite natural, but without significance. Subrogation is an equitable principle and applies to contract rights as fully as it does to tort actions. By his contract the appellant bound himself to pay the loss. Respondent has a contractual right to recover it from him. This cause of action is not defeated by the insurance company’s payment of the judgment. The insurer is subrogated to appellant’s contract right of indemnity. This sustains the cause of action against appellant for the identical reason that subrogation sustains a tort action where the plaintiff has been paid for his loss.’ A similar ruling was made in North Central Airlines Inc v City of Aberdeen, South Dakota (1966) 370 F 2d 129, a decision of the United States Court of Appeals.”
“Reference was made to Albion Insurance Co Ltd v Government Insurance Office of New South Wales(1969) 121 CLR 342 . That was a decision of the High Court of Australia, concerned with the right of a co-insurer to contribution. Kitto J (at pp 349-350) referred to the principle that ‘persons who are under co-ordinate liabilities to make good the one loss (eg sureties liable to make good a failure to pay the one debt) must share the burden pro rata’. But his ruling was not directed to the case where the liabilities of the two indemnifiers are not co-ordinate, where (to use different language) one liability is primary. In Speno Rail Maintenance Australia Pty Ltd v Hammersley Iron Pty Ltd, Zurich Australian Insurance Ltd v Speno Rail Maintenance Australian Pty Ltd [2000] WASCA 408, (2000) 23 WAR 291 the Supreme Court of Western Australia followed the decision of the Inner House in the present case. Ipp J pointed out (at 312 (para 93)) that the competing liabilities (one of them arising from a contract of insurance) were intrinsically different and not co-ordinate. Wheeler J (at327 (paras 167 and 168)) shared this view: ‘It appears to me that the status of a policy of insurance as res inter alios acta so far as third parties are concerned, and the cases to which the Court of Session refers where a right of subrogation has been held to exist, suggest that where, as here, there is a contract for services which contains within itself an indemnity provision, together with insurance which may also cover the events the subject of the indemnity, it is generally appropriate to regard the insurance as a secondary rather than a co-ordinate obligation. I would not be prepared to suggest that this must invariably be the case; rather, it appears to me that the terms of the particular indemnity provision will be relevant. However, in this case, the works and services contract is, as one would expect, a document dealing in detail with all the rights and liabilities of the parties arising in relation to the work to be performed by Speno. It does appear to me that in the context of that contract, the indemnity clause is, as Lord Sutherland put it, intended ‘to allocate primary responsibility’.’ I can find no support for the contractor’s contention in the terms of the contract, in the commercial context, in principle or in authority. I would accordingly resolve this issue against the contractor, as the Inner House did.”
“There is no objection taken to the title of the operator to sue this action. The objection is taken to the relevancy of the action on the basis that since the claims in issue were settled by the indemnity insurers of the operator, the operator cannot now make a relevant case for payment to him of the amounts covered by indemnity granted by the contractor under clause 15.1(c) of the contract. It is not disputed on the basis on which this part of the case is argued that if the operator had paid these sums he would be entitled to repayment from the contractor. The sole reason that this claim is not a good claim in law it is asserted is that the sums were paid by an indemnity insurer of the operator and that this defeats the claim for repayment from the contractor. The submission is that here we have the operator entitled to the benefit of two indemnities in respect of the claims on which the action is founded, the indemnity from the contractor and the indemnity covering exactly the same claims from the operator’s insurers. It is not permissible to be indemnified twice in respect of the same loss and therefore it is not permissible for the indemnity insurer, by suing in name of the operator, to pass his liability on to the contractor. It is said that if the operator’s insurer is entitled to pass his claims on to the contractor, if the contractor paid the claims he would be equally entitled to pass his liability to the operator’s insurer, thus producing a deadlock which would have to be resolved on other principles. The argument is further elaborated by saying that in truth the operator’s insurance company as its indemnifier in respect of these claims is entitled only to an action of relief against the contractor. It was this aspect of the case that raised the question whether this action could be treated as an action of relief and whether an action of relief could be raised in name of the indemnified. If the claim of the operator in this action is well founded in law as an action for payment, this second question which was considered in detail particularly in the opinion of the Lord President in the Court of Session would not arise.”
“The facts of this case lie in a narrow compass. The argument turns much on want of precision in stating the case, as most arguments do. The office paid without suit, not in ease of the Hundred, and not as co-obligors, but without prejudice. It is, to all intents, as if it had not been paid. The question, then, comes to this, can the owner, having insured, sue the Hundred? Who is first liable? If the Hundred, it makes no difference; if the insurer, then it is a satisfaction, and the Hundred is not liable. But the contrary is evident from the nature of the contract of insurance. It is an indemnity. Every day the insurer is put in the place of the insured. In every abandonment it is so. The insurer uses the name of the insured. The case is clear: the act puts the Hundred, for civil purposes, in the place of the trespassers; and, upon principles of policy, as in the case of other remedies against the Hundred, I am satisfied that it is to be considered as if the insurers had not paid a farthing.”
“The central question posed by Lord Mansfield CJ – ‘Who is first liable?’ - is the appropriate question to pose in the present case. Putting the matter another way - was the Hundred liable only if the insurance office failed to pay the plaintiff or was the insurance office liable to indemnify the plaintiff only if the hundred failed to pay? … .”
“is the contractor liable to indemnify the operator only if and to the extent that the operator’s insurer fails to do so, or is the operator’s insurer liable to indemnify the operator only if and to the extent that the contractor fails to do so?”
“Since there is no provision in the contract requiring the operator to have insurance I cannot see any ground on which it can be said that the contractor’s indemnity is limited to indemnifying the operator if and to the extent that the operator’s insurer fails to do so.”
“I consider that support for this view is obtained from the clause dealing with insurance which I have already quoted in which it is provided that the insurances required by the contract other than workers’ compensation and employer’s liability should include the operator as a co-insured thus giving the operator a right against the insurer as an insured and the further provision that such policies must also provide that they are to be primary and not contributing with any other insurances available to the operator. This is a strong pointer to the conclusion that indemnities stipulated for in the contract are to be primary obligations and that any other insurance available to the operator is to be secondary.”
“Your Lordships were treated to a very well prepared and forcefully presented argument on behalf of the contractor and if the indemnities granted by the contractor and the operator’s insurers were truly to be regarded as on an equal footing or co-ordinate I think the result for which counsel argued might be appropriate. For the operators we were treated to an equally persuasive argument in which the principles underlying the relationship of insured and insurer and insured and third parties were clearly laid before your Lordships and in which the crucial question first posed by Lord Mansfield was demonstrated to be the critical question for your Lordships. The doctrine of subrogation with its incidents available against third parties in both situations in which the claims of the assured arise in contract and in tort or delict were illustrated by authorities in England, Scotland and the United States of America, as well as in Australia. Among the cases from England and Scotland Yates v Whyte (1838) 4 Bing NC 272; Dickenson v Jardine (1868) LR 3 CP 639; Simpson & Co v Thomson(1877) 3 App Cas 279 and Esso Petroleum Co Ltd v Hall Russell & Co Ltd (Shetland Islands Council, third party), The Esso Bernicia[1989] 1 All ER 37 ,[1989] AC 643 may be referred to as examples.”
“These cases show that generally liabilities incurred in tort or delict, or in contract will be primary while the liability of the indemnity insurer of the injured party will be secondary. In cases relating to marine insurance,s 79 of the Marine Insurance Act 1906 is statutory authority to this effect.”
“Sickness and Accident Assurance Association Ltd v General Accident Assurance Corp Ltd (1892) 19 R 977 dealt with the situation in which an insurance company, after paying to a tramway company a sum due under a policy insuring against loss by accident, raised an action in its own name against another insurance company for contribution on the ground that it had insured the same risk, which is the situation as it was presented in the contractor’s argument in the present case. Where there are co-ordinate indemnities for the same loss it is clear that the doctrine of subrogation cannot provide an answer, and that where one of the indemnifiers pays, the way their liabilities inter se are decided is by an action of relief. The principle of res inter alios acta will not be of relevance in that situation where the overriding principle is that a person cannot be indemnified twice over for the same loss, and therefore if one indemnifier has made good the loss to the indemnified the rights of the indemnified are no longer useful in deciding questions between the indemnifiers.”
“The absence of any case directly deciding the present question is because I believe it has always been assumed that a contractual indemnity will be the primary indemnity in situations where the other indemnity is provided by an insurer of a party to a contract where there is no obligation on the party to make any insurance arrangement, and where in consequence the insurance arrangements are res inter alios acta so far as the other parties to the contract are concerned.”
“Contingent cover A distinction is to be drawn between double insurance and contingent cover. The latter applies where the insurers under the primary policy have refused to pay a claim, in which case the contingent cover kicks in and provides an indemnity to the assured. The contingent insurers will in turn have a subrogation action against the primary insurers. An illustration of contingency wording is provided by AerCap Ireland Ltd v AIG Europe Ltd …”
“Some mortgagees’ interest insurance policies may respond to a claim by the mortgagee in the event that the shipowner is unable to recover under its own policy, even though the mortgagee may be able to assert an independent valid claim under the same policy. Further, the mortgagee may be able to recover under another policy which has been placed in its favour. In such cases, the mortgagees’ interest insurers, having paid a claim to the mortgagee, may have rights available either in subrogation or contribution arising by reason of the mortgagee’s rights under the other policies. In such cases, the question will arise whether any of the competing policies are intended to be the primary source of indemnity or whether they are co-ordinate. If one policy is primary, the other insurers may be subrogated to the mortgagee’s rights under the primary policy, If the policies are co-ordinate, the indemnifying insurer will be entitled to a contribution from the other co-ordinate insurers.”
“… we say that this case falls between the principles governing both scenario 2 and scenario 3 in that we say it is in fact a double insurance case and we say it is also a case that is sufficiently analogous to what I’ll call the guarantee-type cases, because it is not a line of authority confined to guarantees, and is therefore one where indemnity or reimbursement may be claimed by the person who did pay from the person who should have paid first … And so, therefore, in high level terms what we’re saying is you have two principles with perhaps rather fuzzy edges and it just so happens that this sits in an area where they overlap.”
“The damage therefore arises through their default, and the general proposition applicable to such a case as the present is, that where one person is compelled to pay damages by the legal default of another, he is entitled to recover from the person by whose default the damage was occasioned the sum so paid. This doctrine, as applicable to cases like the present, is well stated by Mr. Leake in his work on Contracts, p. 41: ‘Where the plaintiff has been compelled by law to pay, or, being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendant is held indebted to the plaintiff in the amount.’”
“That is an undertaking that the requirements of the Act as to the payment of duty shall be duly complied with; but, in my opinion, the obligations so imposed on the plaintiffs as warehousemen are ancillary to and by way of security for the due payment to the Customs and do not supersede the liability of the importers, though, if the warehousemen pay the duty, the importers cannot be made by the Customs to pay it over to them a second time.”
“Insofar as the claimant miners were entitled to indemnity under the ATE policy, I have no hesitation in finding that, as between GWM and Templeton, this was the intended primary means of discharging the liability of the claimant miners for adverse costs and own disbursements, and that GWM’s Guarantee was secondary thereto, being made in reliance thereon, albeit wider in its terms. Whilst both the ATE policy and the GWM guarantee were made in the full knowledge of the existence of the other, there cannot be any doubt that the primary liability to the claimant miners lay with Templeton and that the parties would, if asked by an officious bystander at the time of making the arrangements, unhesitatingly have agreed that this was the case.”
“Whilst therefore there was no implied term in the contract between GWM and Templeton that Templeton would honour the policy, it was clearly understood between GWM and Templeton that if the situation arose where adverse costs or own disbursements became payable by the claimant miners, so that both Templeton and GWM were liable under their respective contracts with the claimant miners, the primary liability to them lay with Templeton.”
“should any such Local Policy or Underlying Insurance, by virtue of its scope of cover, definitions, conditions or limits of liability, not indemnify the Insured in whole or in part in respect of such legal liability, costs and expenses as herein provided, this Master Policy, subject to its terms, Conditions and Exceptions, shall provide indemnity to the extent that such indemnity is not provided by the terms and conditions of such Local Policy or Underlying Insurance. In the event that the Insured cannot obtain an admission of liability from the insurer of an Underlying Insurance and/or Local Policy and/or the Underlying Insurance and/or Local Policy fails or is reasonably likely not to indemnify the Insured, then the Insurer of this Master Policy shall be obligated to indemnify the Insured and defend any actions.”
“(1) ACE has been relieved of a burden to indemnify the JV by the payment of Lloyds. (2) It would be just and equitable to require ACE to reimburse Lloyds all of the amount paid by Lloyds because Lloyds’ liability to pay the JV only arose because ACE did not meet its obligations under its policy.”
“Given that ACE was on risk from the moment of casualty and Lloyds was only contingently liable on the failure of ACE to indemnify it, I accept that the two insurers were not jointly liable as at the time of casualty. Where one insurer is liable to indemnify and remains liable to indemnify and subsequently another insurer becomes liable there may be some room for argument as to the applicability of AMP v QBE, but I proceed on the basis that contribution as a remedy in the insurance context is not available as a remedy for this reason. … .”
“The position is different if the payment made also relieves the payer from her or his own liability. For example, where two persons are liable for the same debt, and, as between them, one is primarily liable and the other is secondarily liable, the former is obliged to indemnify the latter if the latter discharges the liability. This restitutionary right to an indemnity is not founded on a request for payment and there is no question of the secondary obligor officiously exposing herself or himself to the liability to pay the principal debt: the secondary obligor is, after all, liable in her or his own right. The right to an indemnity arises simply because the secondary obligor discharges the liability of the primary obligor. This principle allows a lessee, who had assigned the lease, to obtain an indemnity after payment to the lessor, not only against the assignee, but also against a surety for the assignee. The indemnity arises despite the absence of privity of contract between the lessee and the surety for the assignee.”
“In my view this present case, even if not falling within the description of contribution, is sufficiently close as to enable some aspects of the approach taken in relation to contribution in the insurance context to be relevant when looking at the case as one for recoupment, i.e.: (1) Just as there is no question that a second insurer who pays a claim can recover from another insurer even where the first insurer has no knowledge of the existence of the other policy there is no requirement for Lloyds to prove that ACE requested that the JV enter into the Lloyds policy or knew that the JV proposed to do so (there is, as it happens, evidence that ACE did know of the Lloyds policy). (2) In contribution, it is accepted that the payment by one insurer discharges the burden of the second insurer and it should be accepted here. I reject ACE’s assertion that it was not discharged by Lloyds’ payment. I note that in para 170 of its submissions of10 March 2009 , ACE agreed that it ‘obviously obtains the benefit of having its liability discharged’ but as this discharged Lloyds’ own liability that made a difference. I do not accept that contention - if Lloyds was not meeting a liability of its own then it might have been said that it was an officious intermeddler. (3) The essence of contribution in insurance law is that it is just and reasonable for the party relieved of liability to the insured to pay its share to the insurer which has paid. That same underlying principle here requires consideration of whether the liability for ACE was a primary obligation or not. … (5) In my view the law of contribution recognises that there is nothing ‘officious’ about an insurer covering a liability that is covered under another policy by another insurer. An agreement by an insurer to meet a liability imposed on another insurer when that second insurer refuses to meet its obligations seems to me to be a commercial arrangement with positive ramifications for commerce and the construction industry, rather like credit or mortgage insurance, and I do not accept ACE’s argument that Lloyds only has itself to blame for entering into a policy of that kind and meeting its obligations under it, or that Lloyds, by providing conditional cover, was acting ‘behind [ACE’s] backs’ … ACE’s position has a distinct lack of merit to it and none of the cases relied on by ACE support, in my view, such an outcome. … .”
“Where a man makes a double insurance of the same thing, in such a manner that he can clearly recover, against several insurers in distinct policies, a double satisfaction, ‘the law certainly says that he ought not to recover doubly for the same loss, but be content with one single satisfaction for it.’”
“Double insurance arises where the same party is insured with two (or, as is said to be the position in this case, more) insurers in respect of the same interest on the same subject matter against the same risks. … By the middle of the 18th century, the common law had already developed a principled response to incidents of double insurance. First, the indemnity principle operated to limit the insured’s recovery to his or her actual (or agreed) loss and, secondly, an insurer who had paid a claim could seek contribution from other insurers who were liable for the same loss. … It is now settled that the right of contribution arises in equity and can be exercised by the insurer in his own name without resort to the doctrine of subrogation.”
“Insurer A, the paying insurer, cannot claim contribution from insurer B in circumstances where, had insurer B paid first, insurer B could not have claimed contribution from insurer A. Contribution requires mutuality. HIH Claims Support Ltd v Insurance Australia Ltd concerned the Scheme established following the collapse of HIH in 2001. A Trustee was appointed and Government funds were made available to pay at least 90% of claims against HIH. As a condition of obtaining payment, any policyholder had to assign to the Trustee his claim against HIH. S was insured against public liability under a policy issued by HIH and also under a policy issued by IAL’s predecessor in title. S was paid by the Trustee on behalf of HIH, who sought to exercise rights of contribution against IAL. The High Court of Australia held that no contribution claim was possible. Had IAL paid S first, IAL would not have had any contribution claim against the Trustee because IAL was not a policyholder. In the absence of mutuality - under which whoever paid first was entitled to a contribution claim - the Trustee could not have a contribution claim against IAL.”
“The purpose of the Cut Through Clauses was not to circumvent mandatory requirements of Russian law that prohibit foreign insurers from covering risks in Russia without a Russian license by using a local insurer as a nominal ‘fronting insurer’.”
“Subject to the following provisions of this section, any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with him or otherwise).”
“A person is liable in respect of any damage for the purposes of this Act if the person who suffered it … is entitled to recover compensation from him in respect of that damage (whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise).”
“References in this section to a person’s liability in respect of any damage are references to any such liability which has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage; but it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a country outside England and Wales.”
“Judgment recovered against any person liable in respect of any debt or damage shall not be a bar to an action, or to the continuance of an action, against any other person who is (apart from any such bar) jointly liable with him in respect of the same debt or damage.”
“Section 1(1) enables the person ‘liable in respect of any damage’, the appellants in the present case, to recover contribution ‘from any other person liable in respect of the same damage’. The only other person at whom the finger is pointed in these proceedings are the two respondents. So the next question is whether they are persons ‘liable in respect of the same damage’. What is the damage for which they are liable? On one view they are not liable to the Alliance and Leicester for damage at all; they are simply liable for the payment of debt that they had covenanted to pay the Alliance and Leicester. But that view may adopt too narrow a construction of the word ‘damage’. It is possible to take the view that where, under a contract, A owes B a sum of money, ie., a debt, a failure by A to pay B, although of course a failure to pay a debt, is also a breach of contract. To categorise the failure as a breach of contract seems a little unrealistic because the remedy for such a breach of contract would ordinarily be simply an order for payment of the debt. But there is certainly a sense in which the person to whom the money is owed suffers damage by reason of the breach of the contractual obligation to pay the money, the damage being the non-receipt of the money that is due. So, in answer to the question, what is the damage to the Alliance and Leicester for which the two respondents were and are liable, it may be said that the damage is the failure of the respondents to pay the money due under the security documents they had signed.”
“The Act was intended to deal with cases where the damage suffered by the victim could be remedied by a claim against one or other of two or more possible defendants, and where the quantification of the damage to the victim for which a defendant would be liable would be affected by what the victim might recover or had recovered from one or other of the possible defendants. If that condition is not present, it seems to me that the Act was not intended to apply and cannot be applied. When this point was put to Mr Seitler, his response was to submit that the payment of the£400,000 agreed damages by the appellants to the Alliance and Leicester reduced the amount of the debt that the respondents owed to the Alliance and Leicester. In my judgment that proposition is incorrect. The debt owing by the respondents to the Alliance and Leicester is, in my view, not reduced or discharged by the receipt on the part of the Alliance and Leicester of the damages from the appellants. … .”
“In that event, the£400,000 agreed damages assumes a potential recovery by the Alliance and Leicester from the respondents of£100,000 . But the receipt of the£400,000 by the Alliance and Leicester does not reduce the debt that the respondents owe. If the respondents were to win a substantial amount in the lottery, it seems to me there would be nothing to stop the Alliance and Leicester from suing for recovery of the£500,000 . The result would be that the Alliance and Leicester would have recovered£500,000 on the debt due from the respondents and£400,000 damages from the appellants.”
“I agree with Mr Seitler’s instinctive response that in those circumstances the excess over the£500,000 , and whatever costs of recovery might be involved, would be held by the Alliance and Leicester upon trust for the appellants. The appellants would have been shown to have paid more than they should have paid. The£400,000 damages would have been shown to have been calculated on an incorrect premise as to the amount of the debt recoverable from the respondents. If the Alliance and Leicester were to sue on the£500,000 debt and to recover, say,£200,000 , they would, in my view, hold£100,000 for the appellants. Similarly, it seems to me, although this is not a matter which needs to be decided now, that if the appellants want to test the extent of the recovery that the Alliance and Leicester can obtain from the respondents, they can bring an action joining the Alliance and Leicester and the respondents as defendants, and claiming payment by the respondents of the£500,000 debt. The extent of the benefit the appellants would obtain in such an action would depend, first, on the extent of the recovery obtained from the respondents and, second, on the state of the account between the Alliance and Leicester and the respondents.”
“These are matters of subrogation and of restitution. They have in my view nothing whatever to do with the 1978 Act. So far as the 1978 Act is concerned, it seems to me, a contribution can be claimed only in cases where a sum to the victim paid by the claiming party would reduce the liability of the other party. That, in my view, is not so in this case.”
“For my part I do not wish to express any view as to whether a liability in debt falls withinsection 1 of the Civil Liability Contribution Act 1978 . As my Lord, the Vice-Chancellor pointed out, there is no need to decide that matter in this case. … .”
“In my judgment, despite the distinction between a claim for restitution and one for damages, each may be a claim for compensation for damage under sections 1(1) and 6(1) of the Act of 1978. The difference between asking for a particular sum of money back or for an equivalent sum of money for the damage suffered because of the withholding of it is immaterial in this statutory context, which is concerned with ‘compensation’ for ‘damage’. The purpose and effect of the Act were to provide for contribution beyond that of joint tortfeasors for whichsection 6 of the Law Reform (Married Women and Tortfeasors) Act 1935 had previously provided. The contribution is as to ‘compensation’ recoverable against a person in respect of ‘any damage suffered by another’ ‘whatever the legal basis of his liability, whether tort, breach of contract, breach of trust or otherwise’. It is difficult to imagine a broader formulation of an entitlement to contribution. It clearly spans a variety of causes of action, forms of damage in the sense of loss of some sort, and remedies, the last of which are gathered together under the umbrella of ‘compensation’. The Act was clearly intended to be given a wide interpretation, as Ferris J observed in K v P (J, Third Party)[1993] Ch. 140 , 148, holding that illegality was arguably not a defence to a claim under the Act of 1978: ‘The Act of 1978 extends the potential for contribution beyond joint tortfeasors to joint contractors, joint trustees and others who are liable in respect of the same damage ... it is manifest that the words ofsection 6(1) of the Act of 1978 are intended to be interpreted widely, hence the use of the words ‘whatever the basis of his liability’ and the emphasis added by the word ‘otherwise at the end of the enumerated causes of action.’ As to the judge’s reliance on the word ‘responsibility’ insection 2(1) of the Act , it is a word which, in my view, has some elasticity of meaning in this context. It may or may not, depending on the circumstances, connote some notion of breach of duty or default. It has an obvious role when apportionment on ‘just and equitable’ principles has to be made, but it is not to be so narrowly construed as to restrict the wide language of section 6(1). The final words of that provision, in particular, ‘whatever the legal basis of his liability’ and ‘or otherwise’ make plain that it was not intended to confine the operation of section 1(1) to liability arising from breach of duty or default. As to the judge’s reliance on the special provision for debt in section 3, an action of debt is, historically and in everyday parlance, quite distinct from a claim for compensation for damage. It is true that a claim for restitution in quasi-contract may in some respects be close to a claim in debt because of the former’s origin in indebitatus assumpsit: see per Lord Wright in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] A.C. 32, 61-63. However, indebitatus assumpsit, as its name indicates, was, when it developed in the 16th and 17th centuries, a hybrid of an action on a (fictitious) contract and in debt. Its origin, explained in Maitland, Forms of Action (1936), pp. 63, 68-70, was quite distinct from that of debt, and delictual in nature. It emerged as an offshoot of the action on the case, developing into the action of assumpsit and then indebitatus assumpsit, largely supplanting debt; see also Goff & Jones on the Law of Restitution, 4th ed., ch. 1. Even though the need for precise categorisation has disappeared since theCommon Law Procedure Act 1852 (15 & 16 Vict. c. 76), the hybrid character of indebitatus assumpsit and its modern manifestation, quasi-contract, lingered on: see, e.g., per Lord Sumner in Sinclair v Brougham [1914] A.C. 398, 452. In any event, for the reasons I have given, even if the judge was right in associating a claim for restitution in quasi-contract with an action for debt, that would not exclude it from being a claim for compensation in respect of damage in quasi-contract within the meaning of sections 1(1) and 6(1) of the Act of 1978.”
“One accepted restriction on the width of the statutory wording is that a person who is liable to a claimant in debt cannot seek contribution from a person who is liable to the claimant in damages. That is partly because it is difficult to say that someone who is a mere debtor is liable in respect of damage at all … .”
“Reliance was placed on certain comments in Howkins and Harrison (a firm) v Tyler [2001] 1 PNLR 1, at [13] and [24], to the effect that a party may suffer relevant ‘damage’ for the purposes of the 1978 Act as a result of non-payment of a debt. The suggestion is that a breach of a contractual obligation to pay gives rise to damage (recoverable as such) in the amount of the unpaid debt. That argument (even if correct) does not arise in the present case, as the only obligation giving rise to the debt is a statutory one. There is no possibility of a claim for breach of contract nor is there a sustainable claim in tort such as breach of statutory duty. The only remedy is to recover the debt as unpaid tax. There is no recoverable ‘damage’ and the remedy is not ‘compensation’.”
“Despite the terms of the defence, which he drafted, Mr Parsons had accurately explained in his skeleton argument why s 1 did not apply to a claim for contribution in respect of costs alone. At common law there was no general right of contribution as between joint wrongdoers: see Merryweather v Nixan (1799) 8 Durn & E 186. A statutory exception to this position was made in the case of joint tortfeasors bys 6(1)(c) of the Law Reform (Joint Tortfeasors and Married Women) Act 1935 . In 1977 the Law Commission’s Report on Contribution Law (Law Com No. 79) recommended that the right of contribution ought not to be limited to cases of tort but ought to be extended to any case of breach of duty. The 1978 Act gave effect to this recommendation; see the concluding words of section 6(1). However, the liability of Ms Gibson and the defendant for Mr Francis’s costs arose by virtue of the court’s exercise of its power unders 51 of the Senior Courts Act 1981 . The costs order created a debt, or at the very least something analogous to a debt; it was not in the nature of a remedy for a wrong. An action for a debt is not within the scope of s 1 of the 1978 Act: Hampton v Minns[2002] 1 WLR 1 . I agree with all of that.”
“The submissions made by Mr Kent and Mr Feeny as to the purpose of the 1978 Act led to them agreeing that the answer to the question as to whether or not RSA’s claim for a contribution against Generali is a claim covered by s 1(1) of 1978 Act is determined by answering the question as to whether the Company’s claim against RSA, for an indemnity in respect of Mr Merritt’s Mesothelioma claim, was a claim sounding in debt or a claim sounding in damages. Mr Kent and Mr Feeny agree that if it is a claim sounding debt then is not covered by s 1(1) of the 1978 Act whereas if it is a claim sounding in damages then it is covered by s 1(1) of the 1978 Act.”
“two or more persons are concurrent wrongdoers when both or all are wrongdoers and are responsible to a third person … for the same damage.”
“The distinction between a claim for debt and a claim for recovery of damages was explained in precisely these terms by Millett LJ. In Jervis v Harris[1996] 1 All ER 303 , at p. 307 as follows: ‘The law of contract draws a clear distinction between a claim for payment of a debt and a claim for damages for breach of contract … a debt is a definite sum of money fixed by the agreement of the parties as payable by one party to the other in return for the performance of a specified obligation by the other party or on the occurrence of some specified event or condition; whereas damages may be claimed from a party who has broken his primary contractual obligation in some way other than by failure to pay such a debt.’”
“It follows that a person who seeks to recover a debt does not have to have suffered any ‘damage’ and, as we have explained, does not claim ‘damages’. They are simply enforcing their contractual right. Although, as Clarke J stressed in Moloney v Liddy (at para. 5.3) differences in wording between the CLA and other similar statutes in other jurisdictions mean that one must exercise caution in applying authorities from those jurisdictions in interpreting the Irish Act, we think the statement from Goff and Jones on Restitution (5th ed. 1998), at page 396, cited with approval by Lord Steyn in Royal Brompton Hospital v Hammond (No. 3)[2002] 2 All ER 801 at para. 33 must be both correct and applicable to the Irish legislation: a restitutionary claim is not one for ‘damage suffered’, the suggestion that it is ‘cannot be justified in principle’ and this, a fortiori must be the case in an action for debt which is quite distinct from an action ‘for damage’ (see Goff and Jones op cit p. 396 to 397 at fn 14). It is, functionally and in principle, equivalent to a claim for an order requiring a defendant to discharge any primary obligation owed by it to the plaintiff.”
“If, as we consider to be clearly the case, a person who seeks to recover a debt does not bring an action for ‘damages’, and if, more importantly, they need establish no ‘damage’ as a precondition to the bringing of their claim, the proposition that the person who does not pay the debt is responsible for ‘the same damage’ as a party without whose negligence the debt would not have been incurred must be wrong. To put it another way, if a plaintiff in an action for recovery of debt is not claiming ‘damages’ it must follow that his claim against a third party but for whose actions it is alleged the debt would not have been incurred (which is a claim for ‘damages’) cannot be said to be in respect of the ‘same damage’. They are legally distinct because the object of the proceedings is different, and they are factually distinct because one is for the recovery of debt and the other for damages to compensate for a loss where (and to the extent that) the debt is not recovered.”
“… if insurance contract liabilities are viewed as sounding in damages, it appears somewhat surprising if the 1978 Act could operate as an alternative statutory remedy with different effect in a case of true double insurance in respect of post-commencement liabilities.”
“The court’s conclusion was that the authorities on insurance claims were unambiguously in favour of the proposition that a claim was one for unliquidated damages rather than debt, that two insurers on risk for the same loss were both liable in damages for an insurance claim and that the 1978 Act superseded previous principles.”