Brown v K.M.R Services Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 12 July 1995 |
| Date | 12 July 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Stuart-Smith, Lord Justice Peter Gibson and Lord Justice Hobhouse
Lloyd's litigation - breach of duty of care - scale of loss irrelevant
Whether loss suffered by underwriting names at Lloyd's was recoverable against their members' agent was to be determined by reference to the type or kind and not the scale of the loss.
The Court of Appeal so held, in a reserved judgment, dismissing an appeal by the defendants, KMR Services Ltd, formerly H G Poland (Agencies) Ltd, from a decision of Mr Justice Gatehouse in favour of the plaintiff, Mr Richard Kevin Brown.
The court, by a majority, Lord Justice Stuart-Smith dissenting, allowed a cross-appeal by the plaintiff against the judge's decision to set off the plaintiff's underwriting profits of other years against losses of the years in question.
Mr Peregrine Simon, QC and Mr Simon Bryan for the defendants; Mr Adrian Hamilton, QC and Mr Stephen Hofmeyr for the plaintiff.
LORD JUSTICE STUART-SMITH said that on April 13, 1994 Mr Justice Gatehouse delivered judgment ((1994) 4 All ER 385) in two related actions which formed part of what was known as the Lloyd's litigation.
In both cases the plaintiffs were underwriting names at Lloyd's; they sued their members' agents for breach of contract and negligence, claiming that substantial losses they had suffered as a result of underwriting on catastrophe excess of loss (CAT/XOL) and London market excess (LMX) reinsurance had been caused by the defendants' breaches of duty.
Syndicates doing a substantial amount of that type of business were, or should have been, regarded at the material time as high risk syndicates. The judge found in favour of each plaintiff. He held that they should have been warned of the high risk nature of underwriting on CAT/XOL and LMX syndicates.
In the appellant's case the judge held that if the plaintiff had been given the appropriate warning or advice he would have placed a lesser proportion of his premium income limit on those high risk syndicates. Accordingly, he gave judgment for the plaintiff for a pro rata proportion of his loss in each of the years of account in question, namely, 1988, 1989 and 1990, which totalled £415,717.
The defendants' case was that the judge should have found that even if he had been warned, the plaintiff would have done nothing different from what he did. Further, it was argued that the loss in fact...
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