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insured's liability. Thus, Bradley had first to establish that the mill was liable to
him for causing his illness before he would obtain any rights under the 1930 Act.
Brown & Davies v Galbraith [1972] 1 WLR 997. In this case the defendant's car
was damaged in an accident and the defendant took it to the plaintiff company
for repairs. The defendant's insurer then sent an assessor, who authorised
repairs to a certain price and provided the plaintiffs with a document
authorising such repairs stating that an excess of £25 was to be paid by the
defendant. The document stated that the defendant's consent should be
sought concerning the repairs, which it was not. The repairs were carried out,
but the defendant stated the repairs were inadequate, so the insurers refused
to pay. The plaintiffs therefore sued the defendant for the full value of the
repairs and in the meantime the insurers became insolvent. It was held by the
Court of Appeal that the situation had created two contracts, one between the
insurers and the plaintiffs whereby the insurers agreed to pay for the repairs
excess £25 and a second, implied contract between the plaintiffs and the
defendant that the repairs would be carried out quickly and with due care and
skill. However, this second implied contract did not provide that the defendant
should pay for the repairs beyond the £25 excess if the insurers failed to do so.
Cambridge Re [1992] 2 Lloyd's Rep. 415. This claim concerned a petition from a
reinsured in the liquidation proceedings of a reinsurer. Under the terms of the
reinsurance agreement, the reinsurer was liable to indemnify the reinsured for
Ultimate Net Loss. Ultimate Net Loss was defined in the contract as being "the
sum actually paid by the Reinsured in settlement of losses or liability…" The
court at first instance stated, in the context of a winding up, that "paid" must
mean "liable to pay." Consequently, the fact that the claims had not yet been
paid was not a barrier to a claim. This point was not disputed by the Court of
Appeal. The Court of Appeal did, however, find that the valuation of the claims
could be disputed on substantial ground and could not proceed without making
it clear “beyond peradventure and without more that the [reinsurer] was
indebted in the sum claimed.”
Carreras Rothmans Ltd v Freeman Mathews Treasure Ltd [1985] Ch 207. In this
case Rothmans used Freeman Mathews as an advertising agency to advertise its
various tobacco brands in newspapers and on posters and billboards. Freeman
Mathews undertook all Rothmans' placement work which involved buying
advertising space in newspapers and magazines. For this week Freeman
Mathews was paid an annual fee, paid monthly, and was reimbursed any fees it
incurred in the previous month at the same time. Freeman Matthews got into
financial difficulty, and so in July 1983 a special account was set up into which
Rothmans paid a sum of money to cover the next month's placing fees. On 3
August 1983 Freeman Mathews went into creditors' voluntary liquidation and
the special account was frozen by the liquidator. The third parties which had
been due to be paid from the special account threatened to sue Rothmans for
the fees, and to protect its advertising campaign, Rothmans paid the fees. In so
doing, it discovered that some of the May invoices had not been paid, despite
Rothmans paying an equivalent sum to Freeman Mathews in June. It refused to
pay those invoices. Rothmans brought an action for the balance of the special
account and the liquidator counterclaimed for £780,000, being the July
instalment of the yearly fee plus debts incurred by Freeman Matthews on
Rothmans' behalf. The liquidator resisted payment of the special account funds
on the grounds that the agreement creating was void as contrary to public
policy or because it purported to create a charge over the company's book
debts and such charge had not been registered.
Mr Justice Peter Gibson held that Rothmans was entitled to the balance of the
special account. This was because it was held on a Quistclose trust basis, and the
funds were never the property of Freeman Mathews. He went on to say that