AB AND CD AGAINST TRANSFORM MEDICAL GROUP (CS) LTD AND TRAVELERS INSURANCE COMPANY LTD [2020] ScotCS CSOH_3 (09 January 2020)

AB AND CD AGAINST TRANSFORM MEDICAL GROUP (CS) LTD AND TRAVELERS INSURANCE COMPANY LTD [2020] ScotCS CSOH_3 (09 January 2020)

The court found no evidence of collusion or bad faith in the Settlement Agreement between Transform and Travelers. The agreement was negotiated at arm's length, with independent legal advice, and for sound commercial reasons. The fact that Transform entered administration shortly after did not render the agreement fraudulent or collusive. The pursuers, as statutory assignees, were in no better position than Transform and had no contractual right to challenge the agreement. The Settlement Agreement is binding on the Scottish claimants.

Citation
[2020] ScotCS CSOH_3
Parties
Pursuer: AB; Pursuer: CD; Defender: Transform Medical Group (CS) Limited; Defender: Travelers Insurance Company Limited; Minuter: CD
Jurisdiction
Scotland
Judgment Date
09 January 2020
Procedural Posture
Personal Injury/damages Action / Preliminary Proof on Enforceability of Settlement Agreement
Outcome
Pursuers' challenge to the Settlement Agreement rejected; Settlement Agreement held binding on Scottish claimants/statutory assignees.
Legal Topics
Third Party Rights Against Insurers, Settlement Agreements, Breach of Contract, Breach of Statutory Duty, Personal Injury, Product Liability, Assignatus Utitur Jure Auctoris, Bad Faith and Collusion, Statutory Assignation, Prejudice to Creditors
Insurance Law Contract Law Insolvency Law Civil Procedure Third Party Rights Against Insurers Settlement Agreements Breach of Contract Breach of Statutory Duty +6 more

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Parties

AB

Pursuer

CD

Pursuer

Transform Medical Group (CS) Limited

Defender

Travelers Insurance Company Limited

Defender

CD

Minuter

Procedural Posture

Personal Injury/damages Action / Preliminary Proof on Enforceability of Settlement Agreement

Legal Issues

  1. 1 Whether the Settlement Agreement between Transform and Travelers was entered into in bad faith or collusively to defeat Scottish claimants' rights under the Third Parties (Rights against Insurers) Act 1930
  2. 2 Whether the Settlement Agreement is binding on Scottish claimants/statutory assignees
  3. 3 Whether the court has power to set aside or decline to enforce such an agreement

Ratio Decidendi

The court found no evidence of collusion or bad faith in the Settlement Agreement between Transform and Travelers. The agreement was negotiated at arm's length, with independent legal advice, and for sound commercial reasons. The fact that Transform entered administration shortly after did not render the agreement fraudulent or collusive. The pursuers, as statutory assignees, were in no better position than Transform and had no contractual right to challenge the agreement. The Settlement Agreement is binding on the Scottish claimants.

Court Disposition

Pursuers' challenge to the Settlement Agreement rejected; Settlement Agreement held binding on Scottish claimants/statutory assignees.

Orders

  • Cases to be put out by order to discuss further procedure, including possible exclusion of averments from probation.
  • Questions of expenses reserved.