MS Amlin Marine NV v King Trader Limited & Ors
[2024] EWHC 1813 (Comm)
Paul David Wood & Anor v Dilip Desai & Anor
24 July 2024
[2024] EWHC 1893 (Ch)
High Court
A company got insurance money after a claim was made against it, but before it was proven responsible. People who claimed against the company said the money should be theirs, not the company's creditors. The court said the insurance money belongs to the company’s creditors because previous court cases showed insurance money normally belongs to the insured company, even if it is bankrupt. The people who made the claim didn't have a legally sound reason to claim the money.
Key Facts
- •Boscolo Ltd (in liquidation) received £250,000 from RSA in relation to a professional negligence claim by Dilip Desai and Paresh Shah.
- •The respondents (Desai and Shah) asserted a proprietary interest in the insurance money.
- •The liquidators applied for directions under section 112 of the Insolvency Act 1986 on how to deal with the remaining £246,000.
- •The respondents' claim against Boscolo Ltd for professional negligence was stayed.
- •The contract between Boscolo Ltd and the respondents incorporated the British Institute of Interior Design Conditions.
- •The insurance policy was a general policy covering all of the company's work, not specific to the respondents' claim.
- •RSA paid the full indemnity limit (£250,000) before liability was established.
Legal Principles
Section 112 of the Insolvency Act 1986 allows the court to determine questions arising in a company's winding up.
Insolvency Act 1986, section 112
Implication of terms in a contract requires necessity, not mere improvement; the term must be obvious or necessary to give business efficacy.
Ali v Petroleum Company of Trinidad and Tobago [2017] ICR 531; Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742
A constructive trust arises where it would be unconscionable for the holder of property to assert beneficial ownership.
Angove's Pty Ltd v Bailey [2016] 1 WLR 3179
Unjust enrichment requires (a) enrichment of the defendant, (b) at the claimant's expense, (c) unjustly, (d) without a defence.
Investment Trust Companies v HMRC [2018] AC 275
In a professional indemnity insurance policy, the insured must first suffer a loss (establishment of civil liability) before indemnity is payable.
Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363
The proceeds of a professional indemnity policy generally belong to the insured, even if insolvency prevents payment to a third party.
Re Harrington Motor Co Ltd, ex p Chaplin [1928] Ch 105; Hood's Trustees v Southern Union General Insurance Co of Australasia [1928] Ch 793
Outcomes
The respondents do not have a proprietary interest in the insurance payment.
The contract did not create a trust or agency relationship; no term should be implied; no constructive trust arises; no unjust enrichment claim is made out.
The insurance payment belongs beneficially to the company and is subject to the usual insolvency framework.
The payment was made under the insurer's contractual right to discharge potential future liability, not as acknowledgment of the insured's liability. There was no enrichment at the expense of the respondents, and the enrichment (if any) was not unjust.
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