The High Court has ruled that Karl and Wendy McKenna may sue Allianz over a claim under an insurance policy assigned to them by Kapada Limited, or may elect to join an existing arbitration. The court did not decide whether Allianz must indemnify anyone under the policy.
The dispute arose after building work carried out by Kapada at the McKennas’ home in August 2008. Their neighbour, Ann Stewart, alleged that the work damaged her property and began proceedings in July 2009. Allianz later declined to indemnify the McKennas and Kapada, citing policy exclusions and late notification. Those reasons and Allianz’s right to refuse cover remained disputed.
Kapada’s liquidator assigned the policy benefit and the right to recover any sums payable to the McKennas on 23 March 2011. Justice Barrett held that this was a valid assignment of policy number DN CPD 3544665. The judgment said Allianz had notice of it and would be bound to pay the McKennas if payment became due. A second assignment was unnecessary, the court said, because the first had already identified the policy.
The court rejected the McKennas’ argument that section 62 of the Civil Liability Act 1961 currently entitled them to claim insurance money directly. It said they had not obtained judgment against Kapada for the liabilities they said Kapada owed them, unlike the claimant in a Supreme Court case they relied on. Stewart had obtained judgment in default against Kapada, but the court said the assignment meant no policy money was payable to Kapada at that point.
On arbitration, the court found that a referral made for Kapada’s liquidator by solicitors on 13 October 2010 was valid and within the policy’s 12-month deadline. The arbitration had remained live, although no arbitrator had been appointed. The McKennas could join it by giving notice and submitting to an appointed arbitrator; they had not automatically become parties through the assignment. The court ruled that an extension under section 45 of the Arbitration Act 1954 was unavailable.
The McKennas were also entitled to sue Allianz in court as assignees, provided they had not proceeded to arbitration by submitting to the arbitrator. They could not pursue both routes. The judgment left the question of Allianz’s liability under the policy for determination in any arbitration or court action.