Cheltenham Gloucester Plc v. Sun Alliance London Insurance [2002] ScotCS 141 (21st May, 2002)

Cheltenham Gloucester Plc v. Sun Alliance London Insurance [2002] ScotCS 141 (21st May, 2002)

The insured solicitor's act in releasing funds without obtaining a first ranking security was deliberate and not covered by the policy, which only indemnifies negligent acts, errors, or omissions committed in good faith. Furthermore, the insured acted dishonestly by fabricating a file note to support his claim for indemnity, thereby forfeiting any right to indemnity under the policy's fraud exclusion. The pursuers, standing in the shoes of the insured, have no enforceable right against the defenders.

Citation
[2002] ScotCS 141
Parties
Pursuer: Cheltenham & Gloucester Plc; Defender: Sun Alliance & London Insurance Plc
Jurisdiction
Scotland
Procedural Posture
Civil Insurance/indemnity / Proof Before Answer (trial on Evidence)
Outcome
Action dismissed; decree of absolvitor pronounced in favour of defenders.
Legal Topics
Professional Indemnity Insurance, Third Parties (rights Against Insurers) Act 1930, Solicitor's Duties, Fraud and Dishonesty, Good Faith in Insurance, Deliberate Acts Exclusion
Insurance Law Professional Negligence Contract Law Professional Indemnity Insurance Third Parties (rights Against Insurers) Act 1930 Solicitor's Duties Fraud and Dishonesty Good Faith in Insurance +1 more

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Parties

Cheltenham & Gloucester Plc

Pursuer

Sun Alliance & London Insurance Plc

Defender

Procedural Posture

Civil Insurance/indemnity / Proof Before Answer (trial on Evidence)

Legal Issues

  1. 1 Whether the insured solicitor's conduct was covered by the professional indemnity policy
  2. 2 Whether the act or omission was committed in good faith as required by the policy
  3. 3 Whether the insured forfeited indemnity by using fraudulent means (forged file note)

Ratio Decidendi

The insured solicitor's act in releasing funds without obtaining a first ranking security was deliberate and not covered by the policy, which only indemnifies negligent acts, errors, or omissions committed in good faith. Furthermore, the insured acted dishonestly by fabricating a file note to support his claim for indemnity, thereby forfeiting any right to indemnity under the policy's fraud exclusion. The pursuers, standing in the shoes of the insured, have no enforceable right against the defenders.

Court Disposition

Action dismissed; decree of absolvitor pronounced in favour of defenders.

Orders

  • Decree of absolvitor granted to Sun Alliance & London Insurance Plc.