Case Analysis Of Lister V. Romford Ice And Cold Storage

In Lister v. Romford Ice and Cold Storage ltd(1957), a worker injured his fellow employee(his father) during the working hours.The employer paid to the victim since it was vicariously liable for the damages caused by its employee.After paying for the damages,the insurers tried to apply their subrogation rights against the victim’s son.Though the court accepted the argument that the negligent person(son) was liable to pay the recovery amount,but because of public policy pressure the insurers had to give up their subrogation rights here.
Also the Zurich Insurance Co. v. Shield Insurance Co.(1988), also helps us to understand that there are situations in which the damage is covered under two policies which are different in nature and the overlap
Here we can say that the,since the policyholder is a long-standing customer,therefore even after the breach of policy terms,he received the claim amount.This payment was done merely as a favour i.e. ex gratia payment.These kind of payments are basically done as favour from the insurance company,and it is totally the choice of the company whether it wants to do it or not.
The subrogation rights can be made only for valid claims i.e. for those payments which are as per the terms of the policy.In ex gratis kind of payments.the payment is done outside the terms of the policy.Therefore the insurer is not entitled to apply its subrogation rights against the negligent third party for the payment done.In this case, since the claim is accepted even after knowing that its not a valid claim,therefore the insurer cannot sue the negligent third party i.e. the plumber in this case for the damages
Co. v. Republic Nat Life Ins. Co.[1969], the insurance company paid for a claim which was not valid as per the insurance policy i.e. basically it made an ex gratis payment.After making the payment,it tried to collect 95% of the claim from its reinsurer.The court rejected the claimant’s demand on the ground that the reinsured is not eligible to be paid for the claim amount for which the reinsurer is not legally liable.Thus the payments done in favour are completely the insurance company’s choice and thus they are not eligible to apply their subrogation rights in this case.
(c)The subrogation rights are basically given to the insurance company ,to recover the damage amount from the individual who is legally responsible for the loss suffered by the insured.This right can arise in the following three