Insurance Contracts CP - Law Reform Commission

10.96 Leave to appeal to the Supreme Court of Canada was refused. 104
(5) Reform of Lister in the United Kingdom
10.97 There have not, as yet, been any legislative proposals regarding the public policy exceptions to
the subrogation principle. The January 2006 Law Commissions Scoping Paper 105 sought submissions on
Lister v Romford Ice. The Analysis and Responses Paper that the Scoping Paper 106 produced indicated
that 75% of respondents thought that subrogation generally should be examined. The Association of
British Insurers (ABI) said specifically that the Lister Gentleman‘s Agreement, which is administered by
ABI should be the subject of a review: whether such a review should be intended to form the basis of
legislation is unclear. Indeed, the extract from the submission quoted in the Analysis and Responses
Paper hints at the expansion of self regulation : The Review should consider, inter alia:
―the extension of the application of the principles ensconced in the Market Lister v Romford Ice
Agreement and clarify subrogation rules in scenarios, for example, involving members of the
policyholder‘s family.‖ 107
10.98 Two other submissions 108 suggested that consideration be given to allowing an insurer to sue
in the name of the insurer rather than that of the insured, this overcoming objections bases on
commercial grounds that are voiced by insureds.
10.99 In the event the Law Commissions concluded that subrogation was not a priority issue for the
Law Commission and that attention to the subject would be paid as a separate topic if time allows after
the Commission‘s other work has been concluded. 109
(6) Discussion and Recommendation
10.100 These two public policy exceptions are too important to be left to a self regulatory mechanism
such as the UK Gentleman‘s Agreement which, the Commission understands, is observed in Ireland. In
any event, the issue of subrogation within families and other analogous relationships remains unresolved,
at a regulatory level within the United Kingdom. The Commission are persuaded that the merits of
restricting subrogation rights in these cases are not seriously debated within the Insurance Industry. The
Commission also find it remarkable that an ad hoc solution such as the Market Lister v Romford Ice
Agreement, first put together in 1953, should still regulate the employee liability issue despite its arbitrary
results. As Gardiner pointed out in 1959; the 1953 Agreement only covered the employer‘s liability
market. Further, only employees whose employer is insured may benefit from the Agreement. Gardiner
concluded his view by remarking that while such a Gentleman‘s Agreement is not unique, ―[i]t may be
doubted whether, on general grounds, this rather peculiar method of law reform should be encouraged.
10.101 The Commission provisionally recommends that legislation provide that subrogation rights
should be limited in two situations: (a) claims between family members and (b) the employer-employee
relationship. The Commission invites submissions as to the precise form these restrictions should take.
H
Recasting Conditions and Warranties as Innominate Terms
10.102 The general approach to arguments that express terms or obligations are conditions, breach of
which entitles rescission or avoidance of the policy, is to require these terms to be clearly set out.
10.103 Some conditions precedent have been made out even if poorly drafted. In London Guarantie
Co v Fearnley 110 a policy of insurance was obtained which indemnified the proprietor of a tavern on Duke
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106
107
108
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(2008) Can LII 65718 (SCC).
Insurance Contract Law: A Joint Scoping Paper.
Insurance Contract Law: Analysis of Responses and Decisions on Scope (August 2006).
Paragraph 3.24. This was also the primary recommendation made in the Inter-Departmental-Review, (1959)
22 MLR 652 at 655.
X Changing Claims Services and the Liverpool Underwriters and Marine Association at paragraphs 3.26-
Paragraph 3.270.
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