Cape Distribution Ltd v Cape Intermediate Holdings Plc [2016] EWHC 1119 (QB) (17 May 2016)

Cape Distribution Ltd v Cape Intermediate Holdings Plc [2016] EWHC 1119 (QB) (17 May 2016)

The court held that the indemnity in Clause 2 of the Sale Agreement covers both actual and contingent liabilities subsisting at the time of sale, including liabilities for asbestos-related disease claims arising from pre-sale exposure, even if actionable injury occurred after the sale. The Endorsement to the insurance policy did not make CIH a co-insured for the relevant period or preclude Aviva's subrogated claim. CDL is entitled to indemnity from CIH for such claims, and Aviva is not precluded from recovering by way of subrogation.

Citation
[2016] EWHC 1119
Parties
Claimant and Part 20 Defendant: Cape Distribution Limited; Defendant and Part 20 Claimant: Cape Intermediate Holdings PLC
Jurisdiction
England and Wales
Judgment Date
17 May 2016
Procedural Posture
Commercial Contract/insurance Dispute / Judgment on Preliminary Issues
Outcome
CDL is entitled to indemnity from CIH under the Sale Agreement for asbestos-related claims arising from pre-sale exposure; Aviva is not precluded from subrogated recovery.
Legal Topics
Interpretation of Indemnity Clauses, Subrogation Rights, Employers' Liability Insurance, Corporate Restructuring, Contribution Under Civil Liability (contribution) Act 1978
Contract Law Insurance Law Tort Law Company Law Interpretation of Indemnity Clauses Subrogation Rights Employers' Liability Insurance Corporate Restructuring +1 more

Case Brief

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Parties

Cape Distribution Limited

Claimant and Part 20 Defendant

Cape Intermediate Holdings PLC

Defendant and Part 20 Claimant

Procedural Posture

Commercial Contract/insurance Dispute / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether CDL is entitled to indemnity from CIH under the Sale Agreement for asbestos-related claims
  2. 2 Whether the Endorsement to the insurance policy transferred rights to CIH
  3. 3 Whether Aviva (as insurer) can recover from CIH by subrogation

Ratio Decidendi

The court held that the indemnity in Clause 2 of the Sale Agreement covers both actual and contingent liabilities subsisting at the time of sale, including liabilities for asbestos-related disease claims arising from pre-sale exposure, even if actionable injury occurred after the sale. The Endorsement to the insurance policy did not make CIH a co-insured for the relevant period or preclude Aviva's subrogated claim. CDL is entitled to indemnity from CIH for such claims, and Aviva is not precluded from recovering by way of subrogation.

Court Disposition

CDL is entitled to indemnity from CIH under the Sale Agreement for asbestos-related claims arising from pre-sale exposure; Aviva is not precluded from subrogated recovery.

Orders

  • Declaration that CDL is entitled to indemnity from CIH under the Sale Agreement for relevant claims.
  • Declaration that Aviva is not precluded from pursuing subrogated claims against CIH.