Chris O'kane (for and on Behalf of Himself, Syndicate 2020 and all Other and Another v Jonathan Jones (for and on Behalf of Himself, Syndicate 329 and all Other Lloyd's Underwriters Subscribing to Policy No. Aa111350t) and Others
| Jurisdiction | England & Wales |
| Judge | RICHARD SIBERRY QC |
| Judgment Date | 30 July 2003 |
| Neutral Citation | [2003] EWHC 2158 (Comm),[2003] EWHC 3470 (Comm) |
| Docket Number | 2001 Folio No. 922 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 30 July 2003 |
[2003] EWHC 3470 (Comm)
Mr Richard Siberry Qc, Sitting as a Deputy High Court Judge
2001 Folio No. 922
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Christopher Butcher QC and Mr Peter MacDonald Eggers (instructed by Elborne Mitchell) for the claimant
Mr Simon Rainey QC and Mr Guy Blackwood (instructed by Ince & Co) for the first defendant
Mr Charles Holroyd (instructed by Hill Taylor Dickinson) for the second and fourth defendants
Mr Gavin Geary (instructed by Hill Taylor Dickinson) for the third defendant
Hearing dates : 8, 9, 10, 14, 15 and 16 April and 9 May 2003
Approved Judgment
Introduction
In late 1999 the MV MARTIN P and the MV SEA RHINE were owned by the second defendant, Nanice Schiffahrts AG ("Nanice"). Both vessels were under the management of the third defendant, ABC Maritime AG ("ABC"), although the fourth defendant, Suisse Outremer Reederei ("SOR") retained a residual management role. They were insured at Lloyd's under hull and machinery ("H&M") Policy No. HD4057 ("the 2020 Policy"). This was led by Syndicate 2020, the Wellington Syndicate ("Wellington"), of which the claimant, Chris O'Kane, was the Active Underwriter: Mr O'Kane sues as representing the members of Syndicate 2020 and all other Lloyd's underwriters subscribing to the 2020 Policy. The MARTIN P was insured thereunder for US$ 5 million.
The vessels were mortgaged to Banque Cantonale Vaudoise ("BCV") as security for a loan to Nanice. Nanice was also indebted to ABC in a sum said to have been about US$800,000. By November 1999, premiums totalling some US$81,000 were outstanding under the H&M and related war risk insurances Nanice's brokers, Willis Corroon & Wuppesahl AG ("WCW") threatened cancellation of the 2020 Policy if the outstanding premiums were not paid within 10 days.
This threat, and Nanice's apparent unwillingness or inability to pay the outstanding premium or to put ABC in funds to do so, led ABC to seek quotations for alternative insurance cover, for an insured value, in the case of the MARTIN P, of US$ 2.5 million. On 16 December 1999, Mr Kent, an underwriter at Lloyd's Syndicate No. 329, the Jones Syndicate ("Jones" —of whom the Active Underwriter, Mr Jonathan Jones, is the first defendant, sued herein as representative underwriter), scratched a quotation he had previously given in respect of H&M insurance for both vessels, "agree bind as quoted". On the following day, he scratched a H&M slip, in MAR 91/Slip Policy form (Policy No. AA111350T), presented by Lloyd's placing brokers Cooper Gay & Co Ltd. ("Cooper Gay"), with a 100 per cent line for Jones The slip named as Assured
"ABC Maritime as Managers and/or affiliated and/or associated companies for their respective rights and interests".
This H&M insurance written by Jones is referred to as "the 329 Policy".
On 29 December 1999, the MARTIN P ran aground at Ambarli in Turkey. It broke its back, and became a constructive total loss ("CTL").
Shortly after hearing of the casualty, ABC learned that the 2020 Policy had not, after all, been cancelled. ABC thereupon sought to cancel the 329 Policy. On 30 December 1999, Jones agreed to the cancellation of the 329 Policy with effect from inception, the cancellation being recorded in an endorsement of that date.
On 7 January 2000, ABC, acting with the authority of Nanice, tendered notice of abandonment of the MARTIN P to underwriters on the 2020 Policy, and claimed for a CTL. On 10 February 2000, Wellington agreed to the settlement of the claim under the 2020 Policy on the basis that the vessel was indeed a CTL.
Shortly thereafter, Wellington became aware of the existence of the 329 Policy. Initially they declined to pay more than US$3,750,000 under the 2020 Policy, on the basis that Jones were co-insurers and were liable to contribute US$1,250,000 towards the loss. After being informed of certain legal advice received by ABC, however, Wellington agreed to pay the balance up to the insured value of US$5 million, while maintaining their position that Jones were liable to contribute.
In this action, Wellington contend that at the time of the casualty, there was overinsurance by double insurance within the meaning of sections 32 and 80 of the Marine Insurance Act 1906 ("MIA") and that, having paid the full insured value under the 2020 Policy, the 2020 Underwriters are entitled to a contribution from Jones, in the sum of either US$1,666,666.67 (Wellington's primary case) or US$1,250,000 (their alternative case).
Jones deny that there was over-insurance by double insurance within the meaning of MIA, or that they are otherwise liable to pay any contribution to the 2020 Underwriters. If, contrary to their primary case, there was such over-insurance by double insurance at the time of the casualty, Jones contend that they are not, by reason of the subsequent cancellation of the 329 Policy, liable to pay any contribution. Jones also contend that the 329 Policy was voidable for material nondisclosure, and that they validly avoided the same by service of their amended defence on 19 April 2002. As a third defence, Jones contend that the 329 Policy was void for fundamental mistake.
Wellington for their part contend that none of these three defences is valid. But if, contrary to Wellingtons' primary case, they lost their alleged right to contribution by reason of the cancellation of the 329 Policy, Wellington contend that they have a claim over against Nanice, ABC and SOR, for prejudicing their right of contribution by procuring or being a party to the cancellation of the 329 Policy —hence their joinder of these parties as additional defendants to this action. Nanice, ABC and SOR deny that any legal basis exists for any such claim over.
The issues
These basic facts, which I will elaborate upon as necessary below, have given rise to a series of interlocking issues of considerable complexity and interest, which have resulted in over 180 pages of written submissions, about five days of oral submissions extending over the seven days of the trial, and the citation of over 50 authorities. I am greatly indebted to all counsel involved for the quality and thoroughness of their submissions. Whilst I shall endeavour to summarise in this judgment the principal arguments advanced, it should not be taken as a comprehensive summary of the parties' submissions, all of which I have taken into account.
The parties were broadly agreed on what were the main issues, which were as follows:
Issue 1: Was Nanice insured under the 329 Policy?
Issue 1A: Did ABC intend to insure Nanice under the 329 Policy?
Issue 1B: If ABC intended to insure Nanice and itself had an insurable interest in the MARTIN P, was it entitled to insure Nanice by virtue of MIA section 14(2)?
Issue 1C: Did ABC have actual or ostensible authority to agree the 329 Policy on behalf of Nanice?
Issue 1D: Did Nanice fall within the description of the Assured in the 329 Policy?
Issue 1E: Did Nanice ratify the 329 Policy?
Issue 2: Was ABC an assured under both Policies?
Issue 2A: Did ABC have an insurable interest in the MARTIN P?
Issue 2B: Is any contribution payable by Jones referable to the full insured value of the MARTIN P under the 329 Policy?
Issue 2C: Given that both Nanice and ABC were insured under the 2020 Policy, and on the assumption that only ABC was insured under the 329 Policy, does the existence of a right to contribution depend on who made the claim under the 2020 Policy, and if so, who did?
Issue 3: Is there double insurance if ABC, but not Nanice, was insured under the 329 Policy and only Nanice's interest is relevant under the 2020 Policy?
Issue 4: Did the 2020 Underwriters lose the right to contribution by reason of the cancellation of the 329 Policy?
Issue 5: Has the 329 Policy been effectively avoided by Jones?
Issue 6: Was the 329 Policy void for mistake?
Issue 7: If the 2020 Underwriters lost a right of contribution by reason of the cancellation of the 329 Policy, can Wellington claim against the second to fourth defendants (or any of them) for the prejudice to their rights?
Issue 8: What is the value of the 2020 Underwriters' right to contribution (if any)?
Issue 9: Do the 2020 Underwriters hold their subrogated rights on trust for Jones?
I have included in the above list some but not all of the sub-issues which arose. In some cases I have revised or supplemented the parties' formulation of an issue to reflect the argument as it developed.
It may be helpful to those reading this judgment if I indicate at this point how the battle-lines were drawn in relation to the main issues Mr Christopher Butcher QC, who appeared, together with Mr Peter MacDonald Eggers, on behalf of Wellington, contended that the answer to each of Issues 1 – 3 was Yes; that to each of Issues 4 – 6 was No; that the answer to Issue 7, if it arose, was Yes; that the answer to Issue 8 was US$1,666,666.67; and that to Issue 9 was No (although they contended that it was unnecessary to answer Issue 9). Mr Simon Rainey QC and Mr Guy Blackwood appeared on behalf of Jones. They contended that the answer to each of Issues 1 – 3 was No; and that to each of Issues 4 – 6 was Yes; they supported Wellington in submitting that the answer to...
To continue reading
Request your trial
-
North Star Shipping Ltd and Others v Sphere Drake Insurance Plc and Others
...facts. They rely on a recent decision of Mr Richard Siberry QC sitting as a Deputy High Court Judge in this court in The Martin P [2004] 1 Lloyd's Rep 389, to the effect that facts going only to the credit risk of the potential insurers are incapable of being material. I shall have to consi......
-
Talbot Underwriting Ltd v Nausch Hogan & Murray [QBD (Comm)]
...... Kimmins (instructed by Russell Ridley & Co) for the claimant. . Peter MacDonald Eggers ... defendant to place builders' all risks policy in respect of vessel including shipyard as ... and intended to place the insurance on its behalf and to include it as co-assured. In this case the ... fulfilled by that entity or to any of the other wide range of circumstances which could influence ...Paragraph 7(3) contained another saving provision should further evidence come to ... underwriter only and to be binding on all others hereon subject to adjustment of premium at ... and shall be endorsed to require the underwriters to waive any rights of recourse including in ... Mr Atkin, the underwriter at the Talbot Syndicate, a joint statement from two of the following ......
-
Sea Glory Maritime Company and Another v Al Sagr National Insurance Company
...expert evidence and further factual evidence to meet it. 151 In this regard, reliance is placed by the claimants on O'Kane v Jones [2004] 1 Lloyd's Rep 389 at [230]-[232]). The facts, as the defendant points out, are different from this case. However in terms of principle, it was said at [2......
-
Bolton Metropolitan Borough Council v Municipal Mutual Insurance Ltd and another
...or claim has been given. 38 I note that Mr Richard Siberry QC sitting as a Deputy Judge of the Commercial Court in O'Kane v Jones [2004] 1 Lloyds Rep 389 would have preferred Legal and General to Eagle Star (if he had not thought that, in any event, he was bound by Legal and General) but t......
-
The Standard of Proof in Civil Cases: An Insurance Fraud Perspective
...low, but therepurchase value to the insured may be very high. For different examples on the relatedassessment, see O’Kane vJones [2004] 1 Lloyd’s Rep 389 and North Star Shipping Ltd vSphere DrakeInsurance Plc [2005] EWHC 665 (Comm), [2005] 2 Lloyd’s Rep 76, at first instance [169]–[170] and......
-
Insurance Law Reform by Degrees: Late Payment and Insurable Interest
...[2003] EWCA Civ 885 (CoA);Sharp vSphere Drake Insurance (The Moonacre) [1992] 2 Lloyd’s Rep. 501 (HC); O’Kane vJones(The Martin P) [2003] EWHC 3470 (Comm).50 n 47 above.498 C2017 The Author. The Modern Law Review C2017 The Modern Law Review Limited.(2017) 80(3) MLR Franziska Arnold-DwyerI......
-
Insurable interest in the law of marine insurance
...and Puller (New Reports) 269,127 E.R. 630. 6Feasey v Sun Life Assurance Co of Canada [2003] Lloyd's Rep IR 693; O’Kane v Jones [ [2004] 1 Lloyd's Rep 389, para. 145. 76 SSLR Insurable interest in the law of marine insurance Vol 1(2) insurable interest. In addition, a distinction between pro......