In WR Berkley Insurance (Europe) Limited v Teal Assurance Company Limited [2017] EWCA Civ 25, the Court of Appeal upheld the first instance decision of Mr Justice Eder, and confirmed that the payment of monies into an escrow account did not constitute an insured loss under a liability insurance policy.

The appeal concerned a relatively short point of construction, namely whether a payment made by Black & Veatch Group Limited (BVGL) under an escrow agreement entered into with one of its customers generated an immediately enforceable obligation on the part of BVGL’s liability insurers (including Teal) to indemnify BVGL for the sum paid into the escrow account. This issue was relevant in determining the order in which insured losses were suffered for the purposes of allocating such losses to the various layers in BVGL’s insurance programme, and to the relevant responding reinsurance policies (one of which was written by WR Berkley).

The Court of Appeal held that the liability policy was not triggered by the payment of sums into the escrow account. Sir Stephen Tomlinson, delivering the judgment of the Court, held that the mere payment of monies into a fund from which compensation payments might then be made did not constitute an ascertainment of the insured’s liability. He stated that “There was no ascertainment of the insured’s liability, whether as to its minimum or as to its entirety, and thus no ascertained loss.”. The appeal was, therefore, dismissed.