EAGLE STAR INSURANCE COMPANY LTD V TOOMEY

(1994) 3 Re LR 1

Court of Appeal

Before Lord Justice Ralph Gibson, Lord Justice McCowan, Lord Justice Hobhouse

Contract - Construction - Run-off “reinsurance” agreement - “Reinsurer” agreeing to “... pay and make good all claims, returns, reinsurance premiums and other outgoings” payable by “reinsured” - No “follow the settlements” clause - Whether “reinsurer” liable for all relevant payments which had been paid or settled honestly - Whether “payable” necessarily meant that claims must be legally payable under antecedent obligation deriving from original policies - Whether “reinsurer” precluded from challenging settlements effected by “reinsured” - Whether “reinsured”, if not legally liable to insured, could recover payments from “reinsurer” on proof that such payments constituted reasonable compromise on issue of liability - Whether “reinsured” had established requirements for rectification.