Equitas Insurance Ltd (Respondent) v Municipal Mutual Insurance Ltd (Appellant)
Case ID: UKSC 2019/0122
Case summary
Issue(s)
- In the event of an insured employee being tortiously exposed to asbestos in multiple years of employers’ liability ("EL") insurance, and the EL insurer settling the employer’s claim without allocating the loss to any particular year of exposure, is the EL insurer obliged (in the absence of specific provision for this situation in the corresponding reinsurance) to present any outwards claim in respect of that loss on a pro rata, time on risk basis for the purpose of calculating reinsurance recoveries, because the doctrine of good faith requires the claim to be presented on that basis?
- If the EL insurer is not so obliged, and may present a claim to a single year of its choice, how are the rights of recoupment and contribution acquired by the reinsurers of that year to be calculated?
Facts
The appellant ("MMI") is a company which specialised in providing insurance, including EL insurance, to local authorities and similar public bodies until 1992. A number of its policyholders had claims brought against them by former employees or other workers who had been negligently exposed to asbestos by the policyholders (or such claims were brought by the personal representatives of the former employees or other workers). In each case relevant to this appeal, the underlying claimant was negligently exposed to asbestos by MMI’s insured during more than one policy year for which MMI was on risk as insurer and various Lloyd’s syndicates, whose liabilities have been transferred to the respondent ("Equitas"), were on risk as reinsurers. The claims were settled by MMI without any allocation or apportionment of the settlement amounts between the applicable EL insurance policies under which MMI was liable, in accordance with MMI's understanding that it was 100% liable under each applicable policy.
MMI gave notice of arbitration to Equitas on 14 June 2014 in respect of a number of reinsurance claims arising from these facts. Flaux J (as he then was) was appointed as sole judge-arbitrator pursuant to section 93 of the Arbitration Act 1996. The judge-arbitrator determined the issues in dispute in MMI's favour. Equitas then sought permission to appeal to the Court of Appeal in respect of three questions of law. Permission was granted and Equitas' appeal was allowed. MMI now appeals to the Supreme Court.
Judgment appealed
Parties
Appellant(s)
Municipal Mutual Insurance Ltd
Respondent(s)
Equitas Insurance Ltd (Respondent) v Municipal Mutual Insurance Ltd (Appellant)
Appeal
Justices
Lord Reed, Lord Hodge, Lady Black, Lord Briggs, Lord Sales
Hearing start date
08 Jul 2020
Hearing finish date
09 Jul 2020