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• Law Reform Act 1936 Part III

Appendix B

Law Reform Act 1936 Part III

CHARGES ON INSURANCE MONEY PAYABLE AS INDEMNITY FOR LIABILITY TO PAY DAMAGES OR COMPENSATION

9 Amount of liability to be charge on insurance money payable against that liability

(1) If any person (hereinafter in this Part of this Act referred to as the insured) has, whether before or after the passing of this Act, entered into a contract of insurance by which he is indemnified against liability to pay any damages or compensation, the amount of his liability shall, on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance money that is or may become payable in respect of that liability.

(2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured has died insolvent or is bankrupt or, in the case of a corporation, is being wound up, or if any subsequent bankruptcy or winding up of the insured is deemed to have commenced not later than the happening of that event, the provisions of the last preceding subsection shall apply notwithstanding the insolvency, bankruptcy, or winding up of the insured.

(3) Every charge created by this section shall have priority over all other charges affecting the said insurance money, and where the same insurance money is subject to 2 or more charges by virtue of this Part of this Act those charges shall have priority between themselves in the order of the dates of the events out of which the liability arose, or, if such charges arise out of events happening on the same date, they shall rank equally between themselves.

(4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same Court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the Court shall have the same powers, as if the action were against the insured:

Provided that, except where the provisions of subsection (2) of this section apply, no such action shall be commenced in any Court except with the leave of that Court.

(5) Such an action may be brought although judgment has been already recovered against the insured for damages or compensation in respect of the same matter.

(6) Any payment made by an insurer under the contract of insurance without actual notice of the existence of any such charge shall to the extent of that payment be a valid discharge to the insurer, notwithstanding anything in this Part of this Act contained.

(7) No insurer shall be liable under this Part of this Act for any sum beyond the limits fixed by the contract of insurance between himself and the insured.

9A Claims for damages or compensation against estate of deceased owner where no administrator

(1) Where

(a) Any person desires to claim damages or compensation on account of any event, whether happening before or after the commencement of this section, in respect of which a contract of insurance was in force at the time of the happening of the event indemnifying the insured from liability in respect of those damages or that compensation; and

(b) The insured is deceased and there is in New Zealand no administrator within the meaning of [[the Administration Act 1969]] of the estate of the insured,

the person desiring to claim those damages or that compensation may give notice in writing to the insurer requiring the insurer to nominate some person to be the defendant in place of the insured in any action proposed to be brought in any Court claiming those damages or that compensation.

(2) Within 14 days after the service on the insurer of such a notice, the insurer may, by notice in writing served on the claimant, nominate some person (with his consent) to be the defendant in the proposed action, and thereupon the claimant may sue the defendant so nominated, describing him as the administrator ad litem of the estate of the insured.

(3) If within the said period of 14 days the insurer does not nominate a defendant as aforesaid, the Court in which an action claiming those damages or that compensation is intended to be commenced may, on the application of the claimant, appoint the Public Trustee to be the administrator ad litem of the estate of the insured for the purposes of the intended action, and it shall be the duty of the Public Trustee to act as such.

(4) Where any such appointment is made, the claimant may sue the Public Trustee, describing him as the administrator ad litem of the estate of the insured.

(5) The person nominated as the defendant by the insurer or, as the case may be, the Public Trustee shall be indemnified by the insurer in respect of any judgment against him (including the costs of the action and any costs awarded under subsection (6) of this section), and also in respect of all costs and expenses reasonably incurred by him in or in connection with the action irrespective of the result of the action, and, in the case of the Public Trustee, shall be entitled to recover from the insurer reasonable remuneration for his services:

Provided that, where in any such action the plaintiff obtains judgment against the administrator ad litem, the judgment shall not be enforceable against the administrator ad litem by execution or otherwise except to the extent to which the insured was entitled to be indemnified by the insurer under the contract of insurance, and, to the extent to which the judgment is not so enforceable, the amount thereof shall be deemed to be a liability of the estate (if any) of the insured, and shall be enforceable accordingly against that estate.

(6) Where in any action against the Public Trustee as administrator ad litem the plaintiff recovers judgment, the Court may award the plaintiff his costs of and incidental to the order appointing the Public Trustee as such administrator.

(7) No appointment or nomination of an administrator ad litem under this section shall confer any rights or impose any obligations on the Public Trustee or on the person so nominated in respect of any other assets of the estate of the insured or any liabilities in connection with that estate.

Origins: Law Reform Amendment Act 1957 s 2

10 Consequential repeals

Section 48 of the Workers’ Compensation Act 1922 and section 10 of the Motor Vehicles Insurance (Third Party Risks) Act 1928 are hereby consequentially repealed:

Provided that where the event giving rise to a claim for damages or compensation happens before the passing of this Act all rights under those sections, whether accrued on the passing of this Act or subsequently accruing, shall subsist for the benefit of the person having the claim.