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Contribution buffs have something substantial to chew on over Xmas in the CA decision in Drake Insurance plc v Provident Insurance plc [2003] EWCA CIV 1834, decided a couple of days ago on appeal from Moore-Bick J. [2003] All ER (Comm) 759.

K drove badly and injured B to the tune of a cool £ million plus a tad more. K was insured in her own right by Drake and also under her husband’s policy with Provident. Both policies had rateable clauses. Drake intimated that if they paid they would be looking for contribution from Provident. Provident said they were unamenable to contribution because they had the right to avoid as against K and her husband for non-disclosure, and proceeded to get an arbitration ruling against K's husband to that effect.

Drake paid B. Moore-Bick said, no contribution. Provident weren’t liable to K because of the non-disclosure: and even if they were Drake, however praiseworthy, were volunteers in so far as they paid over 50% owing to the effects of the rateable clause: see Legal & Gen v Drake [1992] 1 All E.R. 283.

So far so good. In the CA it is then decided that the arbitrator got it wrong and Provident were liable after all (though of course K is now barred from suing them by res judicata). So it is a case of double (valid) insurance with a rateable clause on both sides.

So Drake lose under Legal and General v Drake [1992] 1 All E.R. 283? Well, no. They’re not volunteers. Why? Rix and Pill LJ: because they paid with good reason, to protect the good name of the insurance industry, etc. Clarke: despite the terms of the Drake policy, K would have been entitled to wave the arbitration award in Provident’s favour at Drake and recover a full indemnity from them (!).

The majority decision looks rum to me, in that even though I’ve read Rix & Pill twice & fairly carefully I can’t see any valid distinction between this and the earlier Drake case - there too the plaintiffs paid to preserve the decent name of insurance companies, such as it was, and there they were held to be volunteers. The suggestion that the Privy Council somehow introduced a general right of contribution between rateable insurers under Eagle Star v Provincial [1993] 1 All E.R. 1 seems particularly unsupported, since that case dealt with two insurers who were *not* liable to their respective insureds (and who only paid under the Road Traffic Act provisions), and not two insurers who were.

Or does it simply mean that the requirement in contribution cases for compelled payment is being watered down, if only by stealth (as it already has been with statutory contribution under s.1(4) of the 1978 Act?

Happy holidays

Andrew

Andrew Tettenborn
Bracton Professor of Law, University of Exeter, England

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