Charter Reinsurance Company Ltd v Fagan
| Jurisdiction | England & Wales |
| Judge | Mance J,Simon Brown L JJ,Staughton,Nourse |
| Judgment Date | 25 October 1995 |
| Date | 25 October 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Nourse, Lord Justice Staughton and Lord Justice Simon Brown
Insurance - reinsurance - liability - sum need only be payable
For reinsurers to be liable under a reinsurance contract which provided in the ultimate net loss clause for payment for "the sum actually paid", it was sufficient that the claim against which the reinsurance was to indemnify them had been established to be immediately payable and it was not necessary to have been actually paid.
The Court of Appeal so held in a reserved judgment by majority, Lord Justice Staughton dissenting, in dismissing an appeal brought by Mr Patrick Feltrim Fagan and all other members of Lloyd's Syndicates 540 and 542 for the 1989 and 1990 underwriting years of account, the reinsurers, against the decision of Mr Justice Mance on July 5, 1995.
Mr Gordon Pollock, QC, Mr Robert Hillyard and Mr Stephen Russell for the reinsurers; Mr Sydney Kentridge, QC, Mr John Rowland and Mr Andrew Neish for the insurers.
LORD JUSTICE STAUGHTON, dissenting, said that the dispute was about the meaning of two words "actually paid". There had to come a time when efforts to bend meaning had to stop.
The literal meaning of the words in the contracts required the insurers to have paid before the reinsurers were liable. To the extent, if at all, that that produced a result which was unreasonable, it was not so unreasonable that it required their Lordships to depart from the plain meaning of the words. Indeed, his Lordship doubted whether it was unreasonable at all.
LORD JUSTICE SIMON BROWN said that the point of construction raised on the appeal was whether the phrase in reinsurance policies "the sum actually paid" meant what it appeared to mean or whether it meant "the sum actually payable"?
In other words, for reinsurers to be liable, must the reinsured actually have disbursed, or otherwise satisfied, the claim against which the reinsurance was to indemnify them, or was it sufficient that such claim had been established to be immediately payable?
The main principle which emerged from the authorities governing the correct approach to construing a commercial contract was that the contractual words used might, whatever their context, be so abundantly clear that however unreasonable the result, they must be given that clear meaning.
Was the apparent meaning of the words used here, "the sum...
To continue reading
Request your trial
-
Marlan Homes Ltd v Walsh & Wedick
... ... Klaveness A/S v Arni Maritime Corp [1994] 1 WLR 1465 approved - Charter Reinsurance v Fagan [1997] AC 313 applied - Appeal allowed; High Court ... June, 2007, from the plaintiff's then solicitors, Messrs Callan & Company, are the defendants required to execute a further limited recourse ... ...
-
AGF Insurance Ltd v Lexington Insurance Company; Wasa International Insurance Company Ltd v Lexington Insurance Company
...National of Copenhagen v. Attorney General [1925] AC 639, 642, per Visc. Cave LC; Charter Reinsurance Co. Ltd. v Fagan [1997] AC 313, 392E-H, per Lord Hoffmann; Toomey v Eagle Star Insurance Co. Ltd. [1994] 1 Ll.R. 516, 522, per Hobhouse LJ and Marine Insurance Act 1906, s.9. (As noted in......
-
Bedfordshire Police Authority v David Constable
...of words and phrases 41 As Mr Kealey observed, both syntax and context have importance. Lord Hoffman said in Charter Reinsurance Co Ltd v. Fagan [1997] A.C. 313 at 391: I think that in some cases the notion of words having a natural meaning is not a very helpful one. Because the meaning of ......
-
MAE Engineering Ltd v Fire-Stop Marketing Services Pte Ltd
... ... Company Ltd and the project consultant was PWD Consultants ... In Charter Reinsurance Co Ltd v Fagan [1997] AC 313 , Lord Mustill noted (at 388): ... ...