Life insurance - Policy - Insurance policy having cap on liability

Pope v Energem Mining (IOM) Ltd: Court of Appeal, Civil Division (Lords Justice Rix, Patten): 5 September 2011

The claimant was acting in the capacity of personal representative of her son. Her son had been employed as a geologist by the defendant company. Under the terms of his contract, the defendant was required to insure his life for sixty times his basic monthly salary, then $4,000. The defendant had not carried any such insurance, but its parent company had.

However, the policy had a cap of £400,000 on liability arising out of any one event. In November 1998, the claimant's son was working at a mine in Angola when it was attacked by rebels. Four employees were killed and four other employees, including the claimant's son, were abducted. The insurance company eventually proposed an ex gratia payment of £400,000 in respect of the four abducted employees who had been presumed dead. Prior to payment the parent company required a waiver from the beneficiaries, including the claimant, of all and any further claims against the defendant or the group.

The claimant wished to obtain the benefit of the defendant's full responsibility to insure her sons' life in the sum of $240,000 and was not willing to give the waiver. In August 2004, she began proceedings against the defendant for breach of contract. During the course of the proceedings, the claimant's share of the ex gratia payment was paid into court. Three interim payments out of court were subsequently made in respect of costs orders made against the claimant. In December 2009, the remaining funds were transferred to the claimant.

In January 2010, judgment was given in favour of the claimant, in the sum of £273,711.60, representing a payment of $240,000 plus interest. The judge subsequently deducted the sum paid into court by the insurers, giving a final judgment sum of £115,890.60.

The claimant sought permission to appeal against the judgment on the grounds that: (i) the judge had deducted the balancing figure rather than the sum which she had received from the insurer; (ii) the judge should not have deducted the funds paid into court to meet the interim costs order. She also sought permission to appeal in respect of a number of earlier appeals. Permission for appeal was granted on the first ground only. She submitted, inter alia, that the judge had erred in his calculation of the proper net sum payable by the defendant.

The court ruled: In the instant case, the defendant's adjudged liability in total was £273,711.60. The claimant had received a total out of the insurers' funds paid into court of £152,477.77, being the £36,587.17 paid out to fund the interim costs orders and the £115,890.60 paid out on 8 December 2010. If the sums received by the claimant were deducted from the defendant's adjusted liability, the balance ought to be £121,233.83, and not the £115,890.60 referred to in the judge's order (see [19]-[21] of the judgment). The claimant appeared in person.

The defendant did not appear and was not represented.