EAGLE STAR INSURANCE COMPANY LTD V TOOMEY

(1993) 2 Re LR 139

Queen’s Bench Division Commercial Court

Before His Honour Judge Diamond QC (sitting as a judge of the High Court)

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.