Scotbeef Limited v D&S Storage Limited & Anor
[2024] EWHC 341 (TCC)
Nicole Marlene Riedweg v HCC International Insurance Plc & Anor
11 November 2024
[2024] EWHC 2805 (Ch)
High Court
An insurance company can't sue other parties for causing the same problem its insured caused, even if you can sue the insurance company directly. The insurance company only pays what its insured owes; it didn't cause the problem itself.
Key Facts
- •Claimant sued Goldplaza (insolvent) for negligent property overvaluation, resulting in £2,200,000 loss.
- •HCC International Insurance plc (HCC) is Goldplaza's professional indemnity insurer.
- •Claimant sued HCC under the Third Parties (Rights Against Insurers) Act 2010.
- •HCC sought to issue a Part 20 claim against claimant's solicitors (Forsters LLP) and Ms. Johns for contribution under the Civil Liability (Contribution) Act 1978.
- •The key legal question: Is the insurer liable for the 'same damage' as the insolvent insured for contribution purposes under the 1978 Act, given the 2010 Act's procedural changes?
Legal Principles
For damage to be 'the same damage' under the 1978 Act, it must be suffered by the person to whom the party seeking contribution is liable.
Birse Construction Ltd v Haiste Ltd [1996] 1 WLR 675
An insurer's liability is to indemnify the insured, not to be liable to the third party for the damage caused by the insured.
Bovis Construction Ltd v Commercial Union Assurance Co Ltd [2001] 1 Lloyd’s Rep 416; Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397
The 2010 Act provides a procedural mechanism for claimants to sue insurers directly, but the insurer's liability remains limited to its obligations to the insured.
Third Parties (Rights Against Insurers) Act 2010, sections 1, 2
The 'mutual discharge test' from Howkins & Harrison v Tyler can be used to assess whether claims are for the 'same damage', but it's not always conclusive.
Howkins & Harrison v Tyler [2001] PNLR 27; Royal Brompton Hospital NHS Trust v Hammond [2002] 1 WLR 1397
Outcomes
HCC's application for permission to pursue a Part 20 claim for contribution against Forsters LLP and Ms. Johns was dismissed.
HCC is not potentially liable for the same damage as Forsters and Ms. Johns; the 2010 Act allows direct claims against insurers but doesn't change the fundamental principle that an insurer's liability is to indemnify the insured, not to be directly liable for the insured's actions.
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