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Teal Assurance Co Ltd V W R Berkley Insurance Europe Ltd & Another

23rd Apr 2015

Mr. Justice Eder gave judgment on 23 April 2014 in Teal Assurance Co Ltd v. W R Berkley Insurance Europe Ltd & another [2015] EWHC 1000 (Comm). Christopher Butcher QC and Rebecca Sabben-Clare QC (instructed by DAC Beachcroft LLP) acted for Teal.

The judgment considers a 2nd round of preliminary issues in this litigation. The case has already been to the Supreme Court [2013] UKWC 57 on a 1st round of issues concerning the order of ascertainment and establishment of claims under a programme of professional indemnity insurance and reinsurance.

The upshot of the 1st preliminary issues was that claims attached to the programme in accordance with the order in which insured loss was established and ascertained (i.e. applying Post Office v. Norwich Union [1967] 2 QB 363 and Bradley v. Eagle Star [1989] 2 AC 957). This new judgment considers how the rules on establishment and ascertainment of claims apply to a settlement agreement by which Teal’s insured agreed to pay money into escrow, which was then used to fund remedial work. Money was drawn down from the escrow account as and when a third party surveyor certified that remedial work had been carried out.

Mr. Justice Eder accepted Teal’s case that insured loss was suffered only as and when money was drawn down from the escrow account, and not when the fund was established. The judgment considers the meaning of “compensatory damages” in a policy wording and the ambit of Mr. Justice Phillip’s ruling in Cox v. Bankside Members Agency Ltd [1995] 2 Lloyd’s Rep. 437 that an insured under a liability policy is entitled to indemnity if ordered by the Court to make an interim payment.

To view the judgment please click here.