Atradius Credit Insurance N.V. v Whyte And Mackay Ltd [2005] ScotCS CSOH_23 (10 February 2005)

Atradius Credit Insurance N.V. v Whyte And Mackay Ltd [2005] ScotCS CSOH_23 (10 February 2005)

Article 24c of the Guarantee requires that sums recovered after settlement of a claim are to be divided between the insurer and insured in the same proportion as the ascertained loss (after specified deductions) was borne by each. The sum to be apportioned is the net recovery after deduction of recovery agents' commission, but not after deduction of subsequent payments for agency allowances. The contract wording is clear and does not permit recalculation or further deductions for such payments. The fact that this may result in the insurer recovering more than it paid out does not justify a different construction or the implication of a term.

Citation
[2005] ScotCS CSOH_23
Parties
Pursuer: Atradius Credit Insurance N. V.; Defender: Whyte And Mackay Limited
Jurisdiction
Scotland
Judgment Date
10 February 2005
Procedural Posture
Commercial Contract Dispute / Judgment After Debate on Construction of Contract
Outcome
Declaratory judgment in favour of the pursuers on both questions of construction; case to be put out for further procedural hearing.
Legal Topics
Construction of Insurance Guarantees, Apportionment of Recoveries, Specified Deductions, Implied Terms in Contracts
Contract Law Insurance Law Construction of Insurance Guarantees Apportionment of Recoveries Specified Deductions Implied Terms in Contracts

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Parties

Atradius Credit Insurance N. V.

Pursuer

Whyte And Mackay Limited

Defender

Procedural Posture

Commercial Contract Dispute / Judgment After Debate on Construction of Contract

Legal Issues

  1. 1 How should recoveries be apportioned under Article 24c of the Guarantee?
  2. 2 Should the apportionment be based on the loss after deduction of specified deductions or the gross loss?
  3. 3 Should sums paid by the insured after recovery (e.g., agency allowances) be deducted before apportionment?

Ratio Decidendi

Article 24c of the Guarantee requires that sums recovered after settlement of a claim are to be divided between the insurer and insured in the same proportion as the ascertained loss (after specified deductions) was borne by each. The sum to be apportioned is the net recovery after deduction of recovery agents' commission, but not after deduction of subsequent payments for agency allowances. The contract wording is clear and does not permit recalculation or further deductions for such payments. The fact that this may result in the insurer recovering more than it paid out does not justify a different construction or the implication of a term.

Court Disposition

Declaratory judgment in favour of the pursuers on both questions of construction; case to be put out for further procedural hearing.

Orders

  • Recoveries to be apportioned 90% to pursuers, 10% to defenders, based on ascertained loss after specified deductions.
  • Sum to be apportioned is net of recovery agents' commission, not net of subsequent agency allowance payments.