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29 April 2010 / Andrew Burns KC
Issue: 7415 / Categories: Features , Insurance / reinsurance , Personal injury
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Toxic sofas

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Andrew Burns examines the insurance angles of recent PI claims

The “Toxic Sofas” litigation involves personal injury claims against Land of Leather (LoL) and other retailers for selling defective furniture manufactured in China. On 26 April 2010 the High Court approved a matrix for calculating settlement payments to claimants wishing to settle. However a number of claimants had already lost their recovery claims against the insurers of LoL, Zurich Insurance. Zurich refused to pay as LoL had settled with the Chinese manufacturer without its consent. The claimants brought claims directly against Zurich under the Third Party (Rights Against Insurers) Act 1930 after LoL went into admininstration.

LoL argued that there was no intention to settle personal injury claims—only its own direct losses. Nothing had been paid for such a wide-ranging settlement, which would have been an unreasonable deal for LoL. In Horwood v Land of Leather & Zurich Insurance [2010] EWHC 546 (Comm) Mr Justice Teare said that even if a particular construction leads to an unreasonable result, the fact that an agreement was

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