Section 9 of the Law Reform Act 1936 - The legislative background

Abstract

It is commonly accepted that section 9 of the Law Reform Act 1936 is designed to secure the insurance money for the third party, as against other creditors, in situations where the insured is insolvent. Why should the third party obtain priority over the general body of creditors? In determining whether the third party should obtain the insurance money in priority to other creditors, it is useful to consider the legislative background to section 9. This analysis is intended to achieve three purposes: first, to identify the social purpose that section 9 was intended to achieve; second, to demonstrate that it is no longer equitable for the third party to obtain priority over other unsecured creditors; and third, that reform is necessary as the courts are now unable to reconsider the issue from first principles.