In a judgement dated 31st
October 2016 presided by Mr. Justice Anthony Ellul, in the names
Atlas Insurance PCC Ltd and Middlesea Insurance plc in their name
and as subrogated in the rights of the insured Attard Bros Company
Ltd vs Elmo Insurance Ltd, the Civil Court, First Hall held that
the concept of double insurance in terms of English law was
recognised in Malta and therefore the defendant company was obliged
to contribute to the payment made by the plaintiff companies. This
decision makes an important contribution to the body of Maltese
insurance substantive law.
This case focused on two insurance polices that were issued in
relation to the project for the development of the site known as
Pender Place and Mercury House in St. Julians, Malta.
The plaintiffs had issued a 'Contractors All Risk
Policy' in favour of Pender Ville Ltd and/or Pender Gardens Ltd
and/or Pender Contracting Ltd as the principal contractors and/or
every sub-contractor for their respective rights and interest
intended to cover all risks mentioned therein, including fire.
Attard Bros Company Ltd was engaged as a sub-contractor
responsible for the construction of part of the site.
The defendant had issued a 'Contract Works Policy'
limitedly in favour of the sub-contractor Attard Bros Company Ltd
covering the risks mentioned therein, including fire, in relation
to the contract of works that Attard Bros. Company Limited had
entered in relation to this project.
On the 2nd of June 2009, a
fire broke out in the construction site for which Attard Bros
Company Ltd was responsible and the plaintiffs paid for the damages
that were suffered as a result of this incident in terms of the
insurance policy issued by them. Such payment was made without
prejudice, because the plaintiffs insisted that the defendant was
liable to contribute to the damages suffered.
The plaintiffs argued that this was a case of double insurance,
meaning that the consequential damage ought to be paid as to 50% by
the plaintiffs and 50% by the defendant since the policies issued
by both plaintiffs and defendant had covered the same risk.
The defendant argued that the policy it issued in favour of
Attard Bros Company Ltd was never intended to provide a similar and
current cover to that already provided by the plaintiffs, as this
policy was a contingent insurance policy, that is, the policy was
intended to serve only as an additional cover to that provided by
The court held that the contingent nature of the defendant's
policy was not adequately proved and therefore both the
plaintiffs' Contractors All Risk Policy and the defendant's
Contract Works Policy ought to provide cover for any material
damage caused during the course of works on the site and the
cleaning of the site from materials.
The court upheld the plaintiffs' argument that the concept
of contribution developed in English insurance law and based on the
principle of equity ought to apply in Malta:
"The contribution principle. If there is double insurance,
so that two or more insurers are potentially liable for the same
loss, the insurer called upon to make payment may have the right to
seek contribution from the other insurers. The right of contribution is an equitable
principle of some antiquity which does not rest on contract or
statute and which allows one insurer to recover from another by
reason of having made payment to the assured in respect of a sum
for which the latter was also liable...
There is a right of contribution only where the following
conditions ... are met:
(a) There is
double insurance [where] two policies cover the same assured, the
same interest and the same period and are more or less of the same
policies respond to the loss;
(c) The paying
insurer has paid under legal liability"
From the evidence brought before the case, it resulted that on
the date of the incident; there were two policies of indemnity; the
policies covered the same interest; the two policies covered a risk
for a loss which was suffered by the insured, that is, Attard Bros
Company Ltd; the policies covered the same object; and each policy
was responsible to make good for the loss suffered by the
Accordingly, the court declared that the defendant was obliged
to contribute to the payment made by the plaintiffs in connection
with the incident which occurred on the 2nd June 2009.
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