Rathbone Brothers Plc & Anor v Novae Corporate Underwriting Ltd

Rathbone Brothers Plc & Anor v Novae Corporate Underwriting Ltd

PEV was covered under the policy as a paid employee, including during consultancy; the excess clause does not require exhaustion of co-insured indemnities; insurers cannot exercise a right of subrogation against Rathbone plc for the same risk as the policy, as this would defeat the commercial purpose and is excluded by implied term in the policy and the underlying indemnity contract.

Parties
Applicant/respondent: Rathbone Brothers PLC; Applicant/respondent: Michael Paul Egerton-Vernon; Respondent/appellant: Novae Corporate Underwriting Limited & Ors
Jurisdiction
England and Wales
Judgment Date
14 November 2014
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal allowed in part; insurers cannot exercise right of subrogation; other grounds dismissed.
Legal Topics
Professional Indemnity Insurance, Subrogation, Excess Clauses, Co Insured Indemnity, Policy Interpretation
Insurance Law Contract Law Professional Indemnity Insurance Subrogation Excess Clauses Co Insured Indemnity Policy Interpretation

Case Brief

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Parties

Rathbone Brothers PLC

Applicant/respondent

Michael Paul Egerton-Vernon

Applicant/respondent

Novae Corporate Underwriting Limited & Ors

Respondent/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether PEV was covered under the excess layer of professional indemnity policy when acting as a personal trustee
  2. 2 Whether the excess insurers could rely on the excess clause to require exhaustion of other indemnities before paying out
  3. 3 Whether the excess insurers had a right of subrogation to PEV’s contractual indemnity against Rathbone plc

Ratio Decidendi

PEV was covered under the policy as a paid employee, including during consultancy; the excess clause does not require exhaustion of co-insured indemnities; insurers cannot exercise a right of subrogation against Rathbone plc for the same risk as the policy, as this would defeat the commercial purpose and is excluded by implied term in the policy and the underlying indemnity contract.

Court Disposition

Appeal allowed in part; insurers cannot exercise right of subrogation; other grounds dismissed.

Orders

  • PEV entitled to recover under the policy for liabilities as personal trustee.
  • Excess insurers not entitled to rely on excess clause to require exhaustion of Rathbone indemnity.