Balfour v Beaumont
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS |
| Judgment Date | 06 December 1983 |
| Judgment citation (vLex) | [1983] EWCA Civ J1206-1 |
| Docket Number | 83/0477 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 December 1983 |
[1983] EWCA Civ J1206-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE WEBSTER)
Royal Courts of Justice.
The Master of the Rolls
(Sir John Donaldson)
Lord Justice Griffiths
and
Lord Justice Slade
83/0477
and
and
MR. ADRIAN HAMILTON, Q.C. and MR. JOHN THOMAS (instructed by Messrs. Ince & Co.) appeared on behalf of the Appellant.
MR. JONATHAN MANCE, Q.C. and MR. JONATHAN GAISMAN (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Respondents.
This is the judgment of the court. On the 3rd March, 1974 a DC 10 aircraft crashed near Paris. The McDonnell Douglas Corporation, who were its makers, were faced with massive claims. They were, of course, insured and have long since been paid what was due to them. Amongst those who insured McDonnell Douglas were the members of Lloyds Syndicate No. 619. They thought that they had reinsured part of their liability with Lloyds Syndicates Nos. 448 and 179 and with the Turegum Insurance Co. Ltd. Their claims were, however, rejected. Hence the action in which Mr. Balfour of Syndicate 619 sued Mr. Beaumont of Syndicate 448, Mr. Judges of Syndicate 179 and Turegum. Mr. Justice Webster in a judgment given on the 18th February, 1982 rejected Mr. Balfour's claims and he now appeals.
Before Mr. Justice Webster the issues seem to have been somewhat complex, but we think that so far as they are now relevant they can be summarised succinctly. The defendants had two basic defences. The first was the "time" defence. All the defendants contend that the reinsurance policy covered only losses occurring in the period 1st December, 1972 to 30th November, 1973. The losses which form the basis of the plaintiff's claim occurred on or about the 3rd March, 1974. The second was the subject matter or "interest" defence. All the defendants say that in the absence of some endorsement varying the terms of the reinsurance policy, the McDonnell Douglas losses fell outside the description of interest insured under the reinsurance policy. In fact, such an endorsement was initialled on behalf of Syndicate 448. That syndicate admits that they thereby deprived themselves of the "interest" defence, but they say that the "time" defence is sufficient for them to escape liability. The plaintiffs say that neither the "time" defence nor the "interest" defence avail the defendants and that even if the "interest" defence were otherwise effective, the endorsement initialled on behalf of Syndicate 448 also binds Syndicate 179 and Turegum.
The reinsurance policy itself took the form of what is called a "slip policy". This, as its name implies, is a slip which has been converted into a policy by the addition of a standard wording signed by Lloyds Policy Signing Office. Nothing turns on this standard wording and the slip is to be construed and takes effect as a policy of reinsurance.
The reinsurance policy refers, under the heading of "interest", to a "line slip". This calls for a word of explanation. It is a curious document, but one which serves in the present context a commercial purpose in addition to its main function as an authority enabling leading underwriters to buy in foreign underwriters. Suppose that a broker approaches an underwriter asking him to write a risk. The underwriter may be unwilling to do so unless he is certain that he can reinsure part of that risk. However, if he does not accept the risk, he has nothing to reinsure and if he does accept it he may find that he cannot effect reinsurance. The line slip and associated reinsurance policy provide an escape from this dilemma. The reinsurance policy evidences the agreement of the reinsurer to reinsure original risks accepted by underwriters in accordance with the line slip. Where risks are so insured, the contract between the assured and the original primary underwriter is contained in a separate contract called an "off slip", indicating that it is concluded under the auspices of the line slip and is reinsured under the reinsurance policy. A lawyer would rightly say that any loss suffered by the primary underwriter was suffered under the "off slip" contract and not under the line slip, but in the market such losses are referred to as occurring under the line slip.
The reinsurance slip policy was in the following terms:
"Aviation Products Liability and Incidental Liability Reinsurance.
RIJanson Green and Others (Synd 619) and/or Other Syndicates and/or Approved Companies.
O/A: Members of the Aircraft and Aerospace Industry.
Losses occurring during twelve months at 1st December 1972 and/or as original.
To reimburse the Reinsurred for all sums payable in respect of liability occurring under the London Market Aviation Products Line Slip which includes products policies placed on a vertical basis with American Domestic Insurors (mainly USAIG and ANU) and similar products policies.
Sit:—As...
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