“Whereas the Insured carrying on Business described in the Schedule and no other for the purpose of this insurance by a proposal and declaration which shall be the basis of this contract……...”
“Manufacturers of Bricks and Asbestos Board and Expanded Vermiculite”
“Now this Policy witnesseth that if any person under a contract of service or apprenticeship with the Insured shall sustain bodily injury or disease caused during the Period of Insurance and arising out of and in the course of his employment by the Insured in the Business. The Company will subject to the terms exceptions and conditions contained herein or endorsed hereon indemnify the Insured against liability at law for damages and claimant’s costs and expenses in respect of such injury or disease.”
“The Company shall not be liable in respect of: Liability which attaches by virtue of an agreement but which would not have attached in the absence of such agreement …”
“No admission offer promise payment or indemnity shall be made or given by or on behalf of the Insured without the written consent of the Company which shall be entitled if it so desires to take over and conduct in the name of the Insured the defence or settlement of any claim or to prosecute in the name of the Insured for its own benefit any claim for indemnity or damages or otherwise and shall have full discretion in the conduct of any proceedings and in the settlement of any claim and the Insured shall give all such information and assistance as the Company may require.”
“The first premiums and all renewal premiums that may be accepted are to be regulated by the amount of wages and salaries and other earnings paid to employees by the Insured during each Period of Insurance. The name of every employee and the amount of wages salary and other earnings paid to him shall be duly recorded in a proper wages book. The Insured shall at all times allow the Company to inspect such books and shall supply the Company with a correct account of all such wages salaries and other earnings paid during and Period of Insurance within one month from the expiry of such Period of Insurance and if the total amount paid shall differ from the amount on which premium has been paid the difference in premium shall be met by a further proportionate payment to the Company or by a refund by the Company as the case may be”
“RATIONALIZATION OF U.K. TRADING ACTIVITIES”: The Chairman reported that, in accordance with previous discussions on this matter he had, on1st January 1964 , signed on behalf of [CIH] contracts with the undermentioned wholly owned subsidiaries for the acquisition by [CIH] of the whole of the assets and undertaking of such subsidiaries as at midnight on 31st December, 1963, namely Cape Asbestos Fibres Limited Cape Insulation & Asbestos Products Limited Andersons Insulation Company Limited Cape Building Products Limited Harefield Lime Company Limited Kismet Limited Small & Parkes Limited Capasco Limited. The Chairman produced copies of such Agreements executed on behalf of the above-mentioned subsidiaries and reported that arrangements for carrying through this operation were now well in hand.”
“The Vendor [CDL] shall sell and transfer and the Purchaser [CIH] shall acquire and take over as from midnight on the Thirty first day of December One thousand nine hundred and sixty three (hereinafter called “the Time of Sale”) the whole of the undertaking property assets and rights of the Vendor [CDL] whatsoever including the benefit of all contracts and engagements whether written or oral to which the Vendor [CDL] shall be a party at the Time of Sale.”
“As part of the consideration for the said sale the Purchaser [CIH] shall undertake pay satisfy and discharge all the debts liabilities and obligations (including all income tax and profits tax assessable by reference to profits up to the Time of Sale) of the Vendor [CDL] whatsoever subsisting at the Time of Sale and shall adopt perform and fulfil all contracts and engagements binding on the Vendor [CDL] at the Time of Sale and shall at all times keep the Vendor [CDL] indemnified against the same and against all proceedings costs and demands in respect thereof.”
“The balance of the consideration for the sale shall be a sum equal to the excess of the Vendor’s [CDL’s] assets over its liabilities at the Time of the Sale ascertained by reference to the values shown in a Balance Sheet to be drawn up to that date on a basis consistent with that adopted hitherto by the Vendor [CDL] for the purpose of its annual accounts but subject to the following modification namely that for the purpose of arriving at the liabilities at the Time of Sale any provision or amount set aside in the Balance Sheet in respect of taxation arising on the profits or capital gains of the Vendor [CDL] up to the Time of Sale shall be treated as a liability.”
“Until the completion of the sale the Vendor [CDL] shall carry on the business of the Vendor [CDL] as heretofore and shall in so doing be deemed to be the agent of the Purchaser [CIH] and shall account and be entitled to be indemnified accordingly”
“6. The Vendor [CDL] shall execute and do all such documents acts and things as the Purchaser [CIH] shall reasonably require for the purpose of or with a view to procuring that any subsisting contracts of any nature to which the Vendor [CDL] is a party and in which the Purchaser [CIH] becomes interested pursuant to this Agreement shall where necessary be novated between the Purchaser [CIH] and the other parties respectively to such contracts. 7. The Vendor [CDL] shall with all due diligence if and when called upon by the Purchaser [CIH] so to do but at the expense of the Purchaser [CIH] execute all necessary assignments and do all such acts and things as the Purchaser [CIH] may reasonably consider necessary to carry out the terms of this Agreement and to vest in the Purchaser [CIH] the undertaking property and assets hereby agreed to be sold PROVIDED THAT that until the book debts of the Vendor [CDL] shall be actually assigned to the Purchaser [CIH] the Vendor [CDL] shall collect on behalf of the Purchaser [CIH] all such debts and in doing so the Vendor [CDL] shall act under the direction of the Purchaser [CIH] and shall account to the Purchaser [CIH] for all monies so collected less all expenses of collection and the Vendor [CDL] shall not be responsible for any losses in the course of collection.”
“For administrative reasons assets of the wholly-owned subsidiaries at home have been grouped together in the ownership of the parent Company, and the separate Balance Sheet of the parent Company shows substantial changes in consequence.”
“Although that position has altered following changes to the Companies Act, the practice has been retained in the Group.”
“The agency arrangements were originally established on1 January 1964 when by virtue of sale and agency agreements the net assets of the following UK subsidiaries were purchased by CAC and the subsidiaries were simultaneously appointed to act as CAC’s agents in administering their respective businesses: Andersons Insulation Company Limited (now Cape Contracts Limited) Capasco Limited Cape Asbestos Fibres Limited Cape Building Products Limited (now Cape Distribution Limited) Cape Insulation & Asbestos Products Limited (now Cape Insulation Limited) Harefield Lime Company Limited Kismet Limited Small and Parkes Limited.”
“It is hereby declared and agreed that all interest in this Policy is now vested in the Cape Asbestos Company Limited [CIH] as Proprietors of Cape Building Products Limited [CDL], Manufacturers of bricks, asbestos board and expanded vermiculite of Cowley Bridge Works, Uxbridge, Middlesex, who shall be deemed henceforth to be ‘the Insured’ referred to herein.”
“No formal transfer of the said property assets and rights has as yet been made by the Trustee [CDL] to the Purchaser [CIH] as provided for by the said Agreement.”
“NOW THIS DEED WITNESSETH that the Trustee [CDL] hereby declares that it holds the whole of its undertaking property assets and rights existing as at midnight on the said31st December 1963 in trust for the Purchaser [CIH] and hereby agrees that it will at the request and cost of the Purchaser [CIH] convey and transfer the said property or any part thereof to such person or company at such time or times and in such manner or otherwise deal with the same as the Purchaser [CIH] shall from time to time direct or appoint.”
“The right to recover contribution in accordance with section 1 above supersedes any right, other than an express contractual right, to recover contribution (as distinct from indemnity) otherwise than under this Act in corresponding circumstances,; but nothing in this Act shall affect - (a) any express or implied contractual or other right to indemnity; or (b) any express contractual provision regulating or excluding contribution; which would be enforceable apart from this Act (or render enforceable any agreement for indemnity or contribution which would not be enforceable apart from this Act).”
“Where damage is suffered by any person as a result of a tort … - … (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.”
“Although it can be said that all these cases depended on the medical evidence given to the court, the evidence (often given by Dr Rudd) was to much the same effect as that summarised in this judgment. These cases have established a pattern at first instance to the effect that actionable injury does not occur on exposure or on initial bodily changes happening at that time but only at a much later date; whether that is when a malignant tumour is first created or when identifiable symptoms first occur does not matter for the purposes of this case. I would hold that these earlier cases were correctly decided and that injury cannot be equated to the ‘insult’ received by the body when exposure first occurs.”
“There is a further consideration, namely, the ambit of the word ‘liability’. I refrain from any detailed attempt to explore the various possible meanings of this word. All that I need say is that I have looked at the entry under that word and under "liable" in Words and Phrases (1944) and in Stroud's Judicial Dictionary (1952) and that it seems plain that ‘liability’ is a word capable of some amplitude of meaning. I say this without discussing the meaning that that word bears in the celebrated classification in Hohfeld’s Fundamental Legal Conceptions (1932), where it is the correlative of ‘power’ and the opposite of ‘immunity’. I do not think that the meaning of the word can be limited, as Mr Heyworth Talbot would have me limit it, to a present, enforceable liability, excluding any contingent or potential liability. Used simpliciter, the word seems to me to be fully capable of embracing the latter form of liability, as in a surety's liability for his principal before there has been any default.”
“I would respectfully agree with the general statements made by Mr Justice Megarry in that judgment and apply them word for word to the context here under consideration. I regard the word ‘liabilities’ as capable of having amplitude of meaning. In the context of this case I consider that it is wide enough to apply to contingent or potential liabilities.”
“It is a liability which, by reason of something done by the person bound, will necessarily arise or come into being if one or more of certain events occur or do not occur.”
“49. This guidance is obviously valuable and must be borne in mind. However, it seems to me that the question in the present case cannot be answered by reference solely to authorities, or, indeed, as a matter of abstract principle. As the absence of any statutory definition and the disagreement in the House of Lords in Sutherland[1963] AC 235 , suggest, the term ‘contingent liabilities’ is ultimately not a term of art. Its precise meaning will depend on its context. There are certain types of debt which one could say with a fair degree of confidence would, or, as the case may be, would not, be ‘contingent liabilities’. Nonetheless, even in such cases, the context (which will normally be a contractual context) in which the expression is used may be so extraordinary as to justify a thoroughly exceptional meaning 50. Thus, an unqualified obligation to pay a sum of money after a specified date in the future could not normally be said to be a contingent liability. Even though there would be no present liability to pay, one could be confident that, once the stipulated date arrived, there would be an immediate liability to pay: contrast Lord Reid's categories (2) and (3). On the other hand, a liability which could not arise unless and until the happening of an event (e.g. the exercise of an option or a default on a primary liability) would normally be a contingent liability. Not only would an immediate liability to pay not yet have arisen, but one could not say for certain whether it would ever arise.”
“[Selex] shall assume all debts and liabilities of [BSEL], including the overdraft assumed to the extent provided in clause 3.1 hereof and contingent liabilities, but excluding excluded liabilities subsisting at the transfer date incurred by [BSEL] in the carrying on of business and shall discharge such debts as they fall due and indemnify [BSEL] against all claims arising or claims to arise out of the conduct of the business whether before or after the transfer date.”
“In my judgment, the overall commercial purpose of a clause like clause 8.1 is to draw a line under the seller's liabilities for the business it is in the course of selling. The risk of the unknown is transferred to the buyers. Thus it seems it me that if Mr Martin is right in saying that the rule change was neither foreseen nor foreseeable that is a point in the seller’s favour rather than the buyers …”
“It is also worth noting that the reference to contingent liabilities in clause 8.1 is in a parenthesis beginning with the word including. The primary obligation relates to all debts and liabilities of BSEL subsisting at the transfer date. This form of clause reinforces, I think, one’s impression that it was meant to catch everything that was not expressly excluded. Lastly, the clause must be read as a whole so that the obligation to indemnify in the final part of the clause may shed light on the scope of the obligation to assume debts and liabilities referred to in the opening part of the clause. The indemnity extends to all claims arising out of the conduct of the business, whether before or after the transfer date. This form of words is very widely drawn and further reinforces the impression that the risk of the unknown is passed to the buyer.”
“(1) ‘Debt’ in relation to the winding up of a company, means … any of the following— (a) any debt or liability to which the company is subject … at the date on which the company went into liquidation; (b) any debt or liability to which the company may become subject after that date by reason of any obligation incurred before that date; …”
“In these cases, a target company's liability under the FSD scheme arises because it was a member of a group of companies, which, to put it very loosely, fell within the scope of the regime (as the group included a company which had a pension scheme, and that company was a service company, or insufficiently resourced). In order for the liability in issue to fall within rule 13.12(1)(b), therefore, the fact that the target company was a member of such a group must amount to a sufficient ‘obligation incurred’ within the meaning of that rule, before the target went into administration. Timing is no problem in the present cases, because each of the Target companies in the Lehman and Nortel groups were members of a group which fell within the scope of the regime, as I have used that expression, well before they went into administration.”
“That issue thus centres on the meaning of the word ‘obligation’ in rule 13.12(1)(b). The meaning of the word ‘obligation’ will, of course, depend on its context. However, perhaps more than many words, ‘obligation’ can have a number of different meanings or nuances. In many contexts, it has the same meaning as ‘liability’, but it clearly cannot have such a meaning here. Indeed, in the context of rule 13.12, it must imply a more inchoate, or imprecise, meaning than ‘liability’, as the liability is what can be proved for, whereas the obligation is the anterior source of that liability.”
“Where a liability arises after the insolvency event as a result of a contract entered into by a company, there is no real problem. The contract, in so far as it imposes any actual or contingent liabilities on the company, can fairly be said to impose the incurred obligation. Accordingly, in such a case the question whether the liability falls within paragraph (b) will depend on whether the contract was entered into before or after the insolvency event.”
“… It would be dangerous to try and suggest a universally applicable formula, given the many different statutory and other liabilities and obligations which could exist. However, I would suggest that, at least normally, in order for a company to have incurred a relevant ‘obligation’ under rule 13.12(1)(b), it must have taken, or been subjected to, some step or combination of steps which (a) had some legal effect (such as putting it under some legal duty or into some legal relationship), and which (b) resulted in it being vulnerable to the specific liability in question, such that there would be a real prospect of that liability being incurred.
“The critical question is what constitutes an ‘obligation incurred’ for the purpose of rule 13.12(1)(b) of theInsolvency Rules 1986 . The context shows it means a legal rule applying before the date when the company goes into liquidation which may, contingently on some future event, give rise to a ‘debt or liability’ arising after that date. But it cannot extend to every legal rule which may on any contingency have that effect. Otherwise every debt or liability would be provable irrespective of the date when it accrued, unless the law changed after the company went into liquidation. Since the scheme depends on there being a common date as at which the fund falls to be valued and distributed pari passu, that cannot be right. Some limitation must be read into sub-paragraph (b). But what limitation?”
“The paradigm case of an ‘obligation’ within the sub-paragraph is a contract which was already in existence before the company went into liquidation. It is implicit in the argument of those who contend on this appeal that there is no provable debt in this case that contract is not just the paradigm case but the only one. Yet when one asks what it is about a contract that qualifies it as a relevant source of obligation, the answer must be that where a subsisting contract gives rise to a contingent debt or liability, a legal relationship between the company and the creditor exists from the moment that the contract is made and before the contingency occurs. The judgment of Lord Reid in In re Sutherland, decd[1963] AC 235 was concerned with a very different statutory scheme, but his analysis is nevertheless illuminating because it makes precisely this point at pp 247–248: ‘It is said that where there is a contract there is an existing obligation even if you must await events to see if anything ever becomes payable, but that there is no comparable obligation in a case like the present. But there appears to me to be a close similarity. To take the first stage, if I see a watch in a shop window and think of buying it, I am not under a contingent liability to pay the price: similarly, if an Act says I must pay tax if I trade and make a profit I am not before I begin trading under a contingent liability to pay tax in the event of my starting trading. In neither case have I committed myself to anything. But if I agree by contract to accept allowances on the footing that I will pay a sum if I later sell something above a certain price I have committed myself and I come under a contingent liability to pay in that event.’”
“Generally speaking, the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of the rescission. It deprives him of any right as against the other party to continue to perform them. It does not give rise to any secondary obligation in substitution for a primary obligation which has come to an end. The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations. This secondary obligation is just as much an obligation arising from the contract as are the primary obligations that it replaces: see R. V. Ward Ltd. v Bignall [1967] 1 Q.B. 534, 548.”
“In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen, commonly on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take the risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.”
“If one accepts that this is the purpose of an arbitration clause, its construction must be influenced by whether the parties, as rational businessmen, were likely to have intended that only some of the questions arising out of their relationship were to be submitted to arbitration and others were to be decided by national courts. Could they have intended that the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court? If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.”
“In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator's jurisdiction. As Longmore LJ remarked, at para 17: ‘if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so’.”
“all contracts and engagements binding on the Vendor at the Time of Sale” includes binding arrangements between CDL and its employees, and CDL was entitled to be indemnified in respect of claims in respect of such arrangements (“contracts and engagements”) by calling on CIH to “adopt perform and fulfil” those arrangements (“contracts and engagements”) as at31 December 1963 . I make it clear that I do not consider that “all contracts and engagements binding on the Vendor at the Time of Sale” includes tortious obligations. I make it clear also that, when I refer here to employees, I do not mean to include people who became employees after the “Time of Sale”
“The question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed. If the event has caused loss to one or other of the parties, the loss lies where it falls.”
“An agent is not entitled to reimbursement of expenses incurred by him, nor to indemnity against losses or liabilities - … (b) incurred solely in consequence of his own negligence, default, insolvency or breach of duty;”
“Why on earth would a parent company agree with its subsidiary that the subsidiary could thereafter pass back its insurers’ outlay to the parent?”
“1. A clear intention must appear from the words used before the Court will reach the conclusion that one party has agreed to exempt the other from the consequences of his own negligence or indemnify him against losses so caused. The underlying rationale is that clear words are needed because it is inherently improbable that one party should agree to assume responsibility for the consequences of the other’s negligence … . 2. The Canada Steamship principles are not to be applied mechanistically and ought to be considered as no more than guidelines; the task is always to ascertain what the parties intended in their particular commercial context in accordance with the established principles of construction … . They nevertheless form a useful guide to the approach where the commercial context makes it improbable that in the absence of clear words one party would have agreed to assume responsibility for the relevant negligence of the other.”
“In submitting that phrase [6] does not deny the insurers their usual legal remedies for negligent misrepresentation by Heaths, the insurers drew sustenance from the well-known principles propounded by Lord Morton of Henryton giving the judgment of the Board in Canada Steamship Lines Ltd v The King[1952] AC 192 at 208. There can be no doubting the general authority of these principles, which have been applied in many cases, and the approach indicated is sound. The courts should not ordinarily infer that a contracting party has given up rights which the law confers upon him to an extent greater than the contract terms indicate he has chosen to do; and if the contract terms can take legal and practical effect without denying him the rights he would ordinarily enjoy if the other party is negligent, they will be read as not denying him those rights unless they are so expressed as to make clear that they do. But, as the insurers in argument fully recognised, Lord Morton was giving helpful guidance on the proper approach to interpretation and not laying down a code. The passage does not provide a litmus test which, applied to the terms of the contract, yields a certain and predictable result. The courts' task of ascertaining what the particular parties intended, in their particular commercial context, remains.”
“1. The Agent will for a period of one year from the date hereof and thereafter from year to year until this Agreement shall be determined by Cape by notice in writing act solely as the Agent of Cape in connection with the business or businesses for the time being carried on by Cape during the continuance of this Agreement and all such other matters as Cape shall reasonably specify to the Agent Cape bearing all the expenses of the Agent incurred thereby.”
“2. During the continuance of this Agreement all contracts and engagements made or entered into and all acts done by the Agent in the course of business including the employment of staff will be made entered into and done by the Agent as Agent for Cape and on its behalf and all assets held by the Agent other than those held by it at the date hereof shall be the property of Cape and shall be held by the Agent as Agent for Cape and on its behalf.”
“3. Cape hereby confirms the appointment of the Agent as its Agent as aforesaid and hereby agrees to ratify and confirm all such contracts engagements and acts as aforesaid and to indemnify the Agent from all proceedings claims damages and demands which may be made against the Agent or which may arise through under or out of such contracts engagements or acts or any of them.”
“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.”
“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 am of opinion that the indemnity under clause 15.1.c. was not secondary to or co-ordinate with any insurance that the operators might choose to obtain in respect of the same losses. I suppose that it would have been theoretically possible to frame the clause to confer an indemnity only insofar as the operator was unable to recover from its insurers, although one cannot imagine the parties in practice entering into such a contract. But this contract did not require the operator to take out any insurance at all. It therefore follows that the contractual indemnity was a primary liability and the underwriters were entitled to be subrogated.”
“It is vital to distinguish between an assignment of the contract of insurance and an assignment of any claim that arises under that contract. The insured may wish to transfer the subject-matter of the insurance and at the same time transfer the benefit of the insurance policy so that the transferee can sue under the policy for the damage sustained by what is now his interest. This can only be done in accordance with settled rules of law and, since there is to be a substitution of the original insured by a new insured, there is, in effect, a novation and the consent of the insurers will be required.”
“An assignment of the contract of insurance must be accompanied by a contemporaneous transfer of interest in the subject-matter insured, if the assignment is to be valid. Thus, if a contract of insurance is assigned before the subject-matter is transferred, the assignee will have no insurable interest and the policy will become void, whereas if it is assigned after transfer the policy will have already ceased to be in force as the insured will have lost all interest in the subject-matter.”
“In order to avoid additional work and expense at the time the agency companies were formed, no transfers of the assets passing under the sale agreements were made into the name of [CIH], the agreements being regarded as sufficient evidence of [CIH’s] title.”
“On1 July 1968 and at the request of CIH, CDL conveyed, transferred or otherwise dealt with its undertaking, property, assets and rights so as to vest them in another subsidiary of CIH, namely Cape Universal Building Products Limited, subsequently known as Plumefern Limited.”
“Policies of insurance are not renewable beyond their original term unless they are expressed to be so, and where there is no provision for renewal they can only therefore be renewed by a new agreement between the parties. Where there is a provision for renewal it may give the assured an unconditional right to renew or, as is generally the case, renewal may be conditional on the assent of both parties. The latter class includes policies which may be renewed by tender of a further premium by the assured and by the acceptance of that premium by the insurers, and also those policies, known as ‘self-renewing’, which provide that they shall be automatically renewed unless either of the parties shall give notice of an intention not to renew. It is a matter of construction whether a policy is self-extending, although most policies are not of this type. …”
“A policy may be issued to cover a certain risk for a definite period at a definite premium without any provision for renewal; but often the policy is expressed to cover first a definite period, say a year, for which the premium is acknowledged to have been received, and secondly, an indefinite period thereafter, so long as an annual or other periodical payment shall be paid in accordance with the conditions of the policy. In the case of risks other than life, the insured is not given an absolute right of renewal; the continuance of the policy being conditional not only upon the payment of the premium by the insured but also upon the acceptance of it by the insurers. In any such case the insurers may terminate the risk at each renewal period by refusing to accept the premium tendered.”
“It is hereby declared and agreed that all interest in this Policy is now vested in the Cape Asbestos Company Limited [CIH] as Proprietors of Cape Building Products Limited [CDL], Manufacturers of bricks, asbestos board and expanded vermiculite of Cowley Bridge Works, Uxbridge, Middlesex, who shall be deemed henceforth to be ‘the Insured’ referred to herein.”
“It is hereby declared and agreed that the interest of the [CIH] of 114 Park Street, London W.1. is noted in the insurance by this Policy.”
“…It is hereby declared and agreed that all interest in the within Policy is vested in Cape Building Products Ltd. [CDL], & The Cape Asbestos Co. Ltd. [CIH], who shall be deemed henceforth to be the Insured referred to herein. It is further declared and agreed that although more than one firm is entitled to the indemnity given by this Policy in respect of any one Accident or Occurrence the Limit of Indemnity of the Company [RPA] as set out in the Policy is not thereby increased and any payment made by the Company [RPA] in connection with the cover granted by the Company [RPA] in respect of such Accident or Occurrence shall be deemed to be in satisfaction or part satisfaction of the Limit of Indemnity.”
“3(a) Unless authorised by the Standing Committee premium must be based on the total earnings of all employees other than any rated per capita and an insurance must include all employees except that it shall be permissible at the request of the Insured to exclude:- (a) Clerical Staff, (b) Managerial employees who do not engage in manual labour, (c) Commercial Travellers.”
“On request insurances may be extended as follows or as otherwise authorised by the Standing Committee. (1) Where an Indemnity including liability for the act, default or neglect of the Principal or his servants or agents is required in regard to:- … (c)(i) The trades to which the Classification and Group Code numbers on page 3a apply … Additional Premium 20% of the premium chargeable in connection with the work to which the Indemnity applies … .”
“Endorsement A386A or A386(1)A to be used. Alternatively a Policy may be issued with the Principal as Joint Insured subject to Endorsement A458A.”
“Where an Indemnity is required to Principal in respect only of the negligence of the Insured or his employees … No additional premium.”
“Endorsement A386(2)A to be used. Alternatively a Policy may be issued with the Principal as Joint Insured subject to Endorsement A460A.”
“This policy is extended to indemnify … (hereinafter called ‘the Principal’) in like manner to the Insured but only so far as concerns the liability of the Principal to employees of the insured arising in connection with an agreement/engaged in work the subject of a contract for … entered into by the Insured with the Principal …”
“Where in connection with these trades an undertaking is given that employees (other than Clerks of Works, Surveyors and other Inspecting Officials) of the Principal will not be on the Site and the Principal will not supply Machinery, Tackle or Plant”
“(2) Where an insurance is required in the name of a Parent Company and its Subsidiary and/or Associated Companies a joint policy may be issued without additional premium. (3) Where an insurance is required in respect of employees who are under a contract of service or apprenticeship with more than one employer a joint policy may be issued, without additional premium, provided that premium is paid on the total earnings from all employers.”
‘(i) that CIH became an insured under the policy by virtue of the Endorsement; and (ii) CIH thereby obtained insurance cover under the Policy in respect of liability to an employee of CDL arising out of that employee’s employment with CDL’
“the parties to the Policy having establish by their common apprehension of the effect of the Endorsement that ‘the Insured’ remained CDL, having regulated their subsequent dealings on that basis and it being the case that RPA (through its successors) would suffer detriment if CIH were to resile from that convention, CIH are now estopped from asserting that they were ‘the Insured’.”
“VIII.3.1 A critical element of an estoppel by convention, analysed as a variant of other estoppels, namely estoppel by representation of fact, promissory or proprietary estoppel - and differing from other examples of those doctrines in the manner by which the party to be estopped assumes responsibility to the other for the relevant proposition, i.e. by mutual assent rather than representation - is, therefore, the requirement that the assumption of the relevant fact or proposition as to the parties’ rights must be expressly or impliedly communicated between them. Without such communication one party could not be responsible to the other for his acting on the relevant assumption so as to render it unfair for the former to depart from it. It is only, therefore, detrimental reliance on the relevant assumption after such communication that will constitute the necessary unfairness to stop the parties from resiling from the assumption. VIII.3.2 ‘It is not enough that each of the two parties acts on an assumption not communicated to the other’. It is not, however, necessary that the assumption by the estoppel raised be ‘created or encouraged’ by the party to be estopped: but if not, it must ‘be shared in the sense that each is aware of the assumption of the other’ – ‘the party to be estopped [must have] at the very least communicated to the other that he is indeed sharing his (ex hypothesi) mistaken assumption’. … .”
“The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with cases. That is why I have not gone through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel. At the same time it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away with the need for consideration, and so forth. All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption - either of fact or of law - whether due to misrepresentation or mistake makes no difference - on which they have conducted the dealings between them - neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.”
“A completely separate point arises in relation to the Richmond Policy and that concerns the scope of the cover. The question is whether the expression ‘liability at law for damages’ covers liability to indemnify a party or to make a contribution under the provisions ofCivil Liability (Contribution) Act 1978 . There is an express exclusion in respect of liabilities arising in connection with any contract or agreement, unless such liability would have attached in the absence of such contract or agreement, so a pure contractual indemnity which does not duplicate a common law liability is not covered. A claim for damages for negligence in an amount which would give the claimant an indemnity would be within the scope of the cover provided the liability to pay such was ‘liability at law for damages’.”
“So what about the past? We may not be the insured but we are entitled to all interest in the policy. They vested it in us. Assume therefore this claim for an injury in 1963 or an event in 1963. They come to us. We have got an interest in the policy but we’re not the insured. We have all interest in the policy. The whole interest in the policy is the right to be indemnified against that claim. That is what the policy does. It indemnifies you against a claim brought by a workman arising out of his employment. So the all interest must give us a right to an indemnity from these insurers.”
“That’s the risk. We are both covered for it and it is the same subject matter and when one looks at the authorities one sees that you are looking for insurable interest and you are looking for in essence the same subject matter and the same risk being covered.”
“I should, however, mentioned the remaining stages of the argument in case I should be wrong so far; but I can do so very briefly. It is said to be a fundamental rule in the case of joint insurance that the insurer cannot exercise a right of subrogation against one of the co-assured in the name of the other. I am not satisfied that there is any such fundamental principle. In my judgment, the reason why an insurer cannot normally exercise a right of subrogation against a co-assured rests not on any fundamental principle relating to insurance, but on ordinary rules about circuity. In the present case, a claim in the name of the plaintiffs might well have been defeated by circuity if the insurance had purported to protect the defendants against third party liability. … So far as there is any authority on this point, it does not support the view that there can never be a right of subrogation against a co-assured. In Samuel v Dumas, Viscount Cave said this at pages 214 and 445: ‘... My Lords, there is force in this argument, but I am not prepared to say that in the present case it should prevail. It may well be that, when two persons are jointly insured and their interests are inseparably connected so that a loss or gain necessarily affects them both, the misconduct of one is sufficient to contaminate the whole insurance … . But in this case there is no difficulty in separating the interest of the mortgagee from that of the owner; and if the mortgagee should recover on the policy, the owner will not be advantaged, as the insurers will be subrogated as against him to the rights of the mortgagee … .’”
“That brings me to the last question: does the fact that the defendants are fully insured under the present policy defeat the insurer's right of subrogation? In the Commonwealth Construction Co. case and in the American cases there referred to, it was assumed that it followed automatically that the insurers could have no right of subrogation. In the Commonwealth Construction Co. case it was described as being a ‘basic principle.’ In one of the American cases it was said that the rule was too well established to require citation. In none of the cases is there any discussion as to the reason for the rule, except for a brief reference in the Commonwealth Construction Co. case to Simpson and Co. v. Thomson(1877) 3 App.Cas. 279 as follows, at p. 561: ‘The starting point of that submission is the basic principle that subrogation cannot be obtained against the insured himself. The classic example is, of course, to be found in Simpson and Co. v. Thomson, 3 App.Cas. 279. In the case of true joint insurance, there is, of course, no problem; the interests of the joint insured are so inseparably connected that the several insureds are to be considered as one with the obvious result that subrogation is impossible. In the case of several insurance, if the different interests are pervasive and if each relates to the entire property, albeit from different angles, again there is no question that the several insureds must be regarded as one and that no subrogation is possible.’ The question whether there is a fundamental principle of the law of insurance that insurers can never sue one co-insured in the name of another came up in The Yasin[1979] 2 Lloyd’s Rep. 45. In that case I said that I was not satisfied that there was any such fundamental principle as had been suggested: the reason for the rule seemed to me to rest on ordinary principles of circuity. This idea has since been adopted by the current editors of MacGillivray & Parkington on Insurance Law, 7th ed. (1981), para. 1214. In paragraph 1215 the editors say: ‘The crucial question, therefore, in any case involving joint assured is whether the liability of one co-assured to the other is one of the matters covered by the policy.’ Thus where a bailee is insured against liability to the bailor, and the bailor is insured under the same insurance, it is obvious that the insurer could not exercise a right of subrogation against the bailee: circuity would be a complete answer. But in The Yasin I went on to contrast the position where the bailee had insured, not his liability to the bailor, but the goods themselves. Now that the matter has been argued again, I have come to the conclusion that the contrast I was seeking to draw is fallacious. Whatever be the reason why an insurer cannot sue one co-insured in the name of another, and I am still inclined to think that the reason is circuity, it seems to me now that it must apply equally in every case of bailment, whether it is the goods which the bailee has insured, or his liability in respect of the goods. The same would also apply in the case of contractors and sub-contractors engaged on a common enterprise under a building or engineering contract. Even if I still had reservations of the kind which I tried to voice in The Yasin, I would feel obliged to bury them in the light of the decision of the Supreme Court of Canada in the Commonwealth Construction Co. case, a decision which was not cited in The Yasin and for the reference to which in the present case I am very grateful to counsel.”
“Where a policy is effected on a vessel to be constructed and it is expressed to be for the benefit of sub-contractors as co-assured, if a particular sub-contractor negligently causes loss of or damage to the whole or part of the vessel which has been insured under the policy and the sub-contractor has an insurable interest in the vessel, it is not open to underwriters who have settled the insured’s shipbuilders’ claim to exercise rights of subrogation in respect of the same loss and damage against the co-assured sub-contractor. To do so would be completely inconsistent with the insurer’s obligation to the co-assured under the policy. The insurer would in effect be causing the assured with whom he had settled to pursue proceedings which if successful would at once cause the co-assured to sustain a loss arising from loss or damage to the very subject matter of the insurance in which that co-assured has an insurable interest in and a right of indemnity under the policy. In my judgment so inconsistent with the insurer’s obligation to the co-assured would be the exercise of rights of subrogation in such a case that there must be implied into the contract of insurance a term to give it business efficacy that an insurer will not in such circumstances use rights of subrogation in order to recoup from a co-assured the indemnity which he has paid to the assured. To exercise such rights would be in breach of such a term. In such a case the law recognises the rights of the co-assured by enabling him to rely on his rights under the policy by way of defence in the proceedings which the insurers have caused to be commenced in breach of their implied obligation under the policy. This is an effective means of enforcing the co-assured’s rights and makes it unnecessary for him to join the insurers as third parties in this action. … If the risk insured against is loss of or damage to the subject matter of the insurance and the co-assured is interested in the entire subject-matter, rights of subrogation cannot be exercised to sue him for causing tortiously or in breach of contract loss of or damage to that same subject-matter unless he does so wilfully or fraudulently. What matters is not that the policy insures him against his liability to the assured for such loss or damage but that it insures him against such loss or damage to the subject matter of the policy. Accordingly if it is accepted that SV is interested in the whole subject-matter insured, it is entitled to be protected against subrogation claims in accordance with the principle which I have identified, regardless of whether the policy is expressed as an insurance of the co-assured’s liabilities. If the policy did insure the co-assured’s liabilities the result would doubtless be that the insurers would similarly be precluded from exercising subrogated rights of suit against the co-assured, but, as I have held, that is not the only type of insurance which produces that result and it is therefore incorrect in principle to confine the test for disallowance of a subrogated claim against a co-assured to that type of insurance alone.”
“For these reasons I am firmly of the view that the conclusion arrived at by Mr Justice Lloyd in Petrofina was right: an insurer cannot exercise rights of subrogation against a co-assured under an insurance on property in which the co-assured has the benefit of cover which protects him against the very loss or damage to the insured property which forms the basis of the claim which underwriters seek to pursue by way of subrogation. The reason why the insurer cannot pursue such a claim is that to do so would be in breach of an implied term in the policy and to that extent the principles of circuity of action operate to exclude the claim. Before leaving this point it is right to emphasise - as Mr Aikens was at pains to submit as one of his alternative submissions - that there can be no exclusion of the right to bring subrogated claims unless loss and damage of the kind that occurred caused in the way in which it was actually caused was insured for the benefit of the co-assured sub-contractor. Accordingly if the policy provides the co-assured (NOW) with cover of a narrower scope than the cover provided by it to the principal assured (DOL), it will only be in respect of loss and damage falling within that narrow scope of cover that subrogated claims are excluded … .”
“… if the underlying contract envisages that one co-assured may be liable to another for negligence even within the sphere of the cover provided by the policy, I am inclined to think that there is nothing in the doctrine of subrogation to prevent the insurer suing in the name of the employer to recover the insurance proceeds which the insurer has paid in the absence of any express ouster of the right of subrogation, either generally or at least in cases where the joint names insurance is really a bundle of composite insurance policies which insure each insured for his respective interest. Most co-insurances are of such a composite kind. … It is unusual for an insurer to sue his own insured to recover insurance proceeds due under its own policy, but it must be recalled that he does so in the name of and under the right of another party, viz the employer. … .”
“… In my judgment, that principle [the co-insurance principle] is not applicable here since it depends upon the defendant in any subrogated action being insured for the same loss or damage as the claimant in whose name the action is brought. That is true of PEV’s employer, Rathbone Trustees, as the insurers accept. But that is not the position with respect to Rathbone plc who have no liability with respect to any loss suffered by the beneficiaries of the Walker Trust. ... .”
“… although the defendant was not co-insured with the plaintiff under the policy of insurance, the plaintiff was to be regarded as having insured the whole building for the joint benefit of itself and of the defendant; that the defendant had an insurable interest in the continuing existence of the building, and therefore was entitled to assert that although the insurance had been effected by the plaintiff it was intended to enure for the defendant’s benefit to the extent of the defendant’s interest in the subject matter of the insurance …”
“However, in my view this does not decide the real issue between the parties. This is whether the terms of the lease, and the full indemnification of the plaintiff by its receipt of the insurance moneys, preclude it from recovering damages in negligence from the defendant, or whether the plaintiff’s right to recover such damages remains unaffected.”
“The only English authority cited the judge in this connection was the decision of Lloyd J in Petrofina (UK) Ltd v Magnaload Ltd[1984] QB 127 . That decision is of considerable importance to insurances in the field of the construction industry, but for present purposes it is at most only of indirect relevance and distinguishable on its facts. In that case Lloyd J followed with approval a decision of the Supreme Court of Canada in Commonwealth Construction Co Ltd v Imperial Oil Ltd (1976) 69 DLR (3d) 558 which he regarded as indistinguishable. The feature which distinguishes those cases from the present case and from the Canadian and American cases mentioned below is that the defendants were co-insured with the plaintiffs under the same policy. They were accordingly not restricted to the contention that the insurance had been effected in part for their benefit, as the defendant is in the present case. Being co-insured with the plaintiff under the same policy, it necessarily followed that the plaintiff’s insurers in these two cases were unable to assert any right of subrogation.”
“In the present case it was the defendant who paid an appropriate part of the insurance premium on a policy which the plaintiff took out under a contractual obligation to the defendant, and the defendant was therefore entitled to the benefit of that policy.”
“101. I do not think that this observation materially assist the insurers. No doubt where there is an express clause linking the exclusion of liability with an obligation to ensure, it can readily be seen that insurance is intended to be the primary source of indemnity. But as the passage from Longmore LJ’s judgment [in Scottish and Newcastle plc v GD Construction (St Albans) Ltd.[2003] EWCA Civ 16 , [2003] Lloyds Rep. IR 809] also makes plain, this might still be the appropriate inference to draw from the facts even when there is no explicit link. 102 In my judgment, the relevant question is to ask whether PEV would naturally have understood that his claim under the indemnity had been exhausted once his liability been fully met under the insurance policy. Was the insurance the primary source of indemnification thereby discharging any obligation which Rathbone plc might otherwise have had under the Rathbone indemnity? 103 In my judgment, it was. It seems to me that in substance Rathbone plc has made available two ways in which any professional negligence liability of PEV may be met. It is a matter of indifference to PEV how he is protected, provided that one way or the other there is the necessary indemnity. They are not co-extensive and there may be circumstances where the insurance cover does not meet the full liability and recourse would then be had to the indemnity. But to the extent that the liability is discharged by the insurance moneys, in my view Rathbone plc can take advantage of that payment and treated as discharging pro tanto its own obligations. 104 In my view, one can readily imply a term into the Rathbone indemnity contract to the effect that it is intended to provide supplemental protection only once the claim against the insurance company has had been exhausted. It makes little sense to treat the insurance payments secured by a premium paid by Rathbone plc itself as being res inter alios acta as far as Rathbone plc is concerned. I should add that even if, as Mr MacDonald Eggers QC submits, it may be said that PEV is indirectly paying for the premium so far as the policy relates to him, I would reach the same conclusion. It is still not a policy which he voluntarily obtained for himself, in which case one could see that it ought to have no bearing on his relationship with Rathbone as was the position in the Caledonia case. 105 I do not think that the fact that there is no extrinsic link between the insurance and the indemnity should preclude implying the term. All the parties were fully aware that insurance protection had been provided and that this was the context in which the Rathbone indemnity has been agreed. A term in the indemnity to the effect that insurance was intended to be the primary liability would have been conclusive, but I do not consider that the lack of it demonstrates that there was no such intention.”
“The proposition that it was part of the commercial bargain between the excess insurers and Rathbone, that the excess insurers could receive a premium from Rathbone for ensuring PEV’s excess, could pay the excess to PEV, but could then put themselves into PEV’s shoes to claim the excess from Rathbone under the Rathbone indemnity, struck me as a surprising one during the course of argument and it still does. The obvious purpose of the policy was to transfer risk outside the Rathbone ‘group’ and on to insurers, who received a premium for accepting that risk. I would add that this conclusion seems to me to sit more comfortably with the twin objectives of subrogation which are to ensure that the insured receives no more than a fair indemnity and that the cost of the loss should be borne by the responsible person (or more probably their insurers).”
‘yes at least inasmuch as the relevant liabilities were asbestos-related’. (2) Preliminary Issue 1(b): ‘no’ as the indemnity“against the same” embraces both the agreement to “pay, satisfy and discharge all debts liabilities and obligations” of CDL, as well as the agreement to “adopt perform and fulfil all contracts and engagements binding on” CDL as at the “Time of Sale”. (3) Preliminary Issue 1(c): ‘yes’ as “all contracts and engagements binding on the Vendor at the Time of Sale” includes binding arrangements between CDL and its employees, and CDL was entitled to be indemnified in respect of claims in respect of such arrangements (“contracts and engagements”) by calling on CIH to “adopt perform and fulfil” those arrangements (“contracts and engagements”) as at31 December 1963 , but “all contracts and engagements binding on the Vendor at the Time of Sale” does not include tortious obligations. (4) Preliminary Issue 2(a): approaching the matter purely as a matter of construction of Clause 4 and so ignoring the express requirement that the basis to be used should be “consistent with that adopted hitherto”, there should be ‘no discounting’. (5) Preliminary Issue 2(b): ‘no’. (6) Preliminary Issue 3(a): ‘yes’. (7) Preliminary Issue 3(b): ‘no’. (8) Preliminary Issue 3(c): ‘no’. (9) Preliminary Issue 4: ‘yes’ and ‘yes’ in that the Sale Agreement was completed and, in any event, Clause 2 took effect regardless of whether the Sale Agreement was completed. (10) Preliminary Issue 5: ‘not applicable’, in the light of the determination in relation to Preliminary Issue 4. (11) Preliminary Issue 6: ‘no’. (12) Preliminary Issue 7: ‘yes inasmuch as the claim concerns a period when there was co-insurance’. (13) Preliminary Issue 8: ‘yes’ and ‘yes’. (14) Preliminary Issue 9: ‘there were multiple contracts of insurance following each renewal’. (15) Preliminary Issue 10: ‘yes’ by which I mean: ‘(i) that CIH became an insured under the policy by virtue of the Endorsement; and (ii) CIH thereby obtained insurance cover under the Policy in respect of liability to an employee of CDL arising out of that employee’s employment with CDL’. (16) Preliminary Issue 11: ‘no’. (17) Preliminary Issue 12: ‘yes in both cases but not if the only liability is under the Sale Agreement’. (18) Preliminary Issue 13: ‘the effect of the Endorsement was prospective only’. (19) Preliminary Issue 14(a): ‘yes’. (20) Preliminary Issue 14(b): ‘no’. (21) Preliminary Issue 15: ‘no’. (22) Preliminary Issue 16(a): ‘not applicable’ because CIH did not maintain its case that the Policy was entered into for the benefit of the Cape group of companies. (23) Preliminary Issue 16(b): ‘yes’. (24) Preliminary Issue 16(c): ‘no inasmuch as the claim concerns a period when there was co-insurance’