Hayter (John) Motor Underwriting Agencies Ltd v R.B.H.S. Agencies Ltd

Court:Court of Appeal
Judge:LORD JUSTICE BUCKLEY, LORD JUSTICE GOFF, LORD JUSTICE ORR
Judgment Date:09 Dec 1976
Jurisdiction:England & Wales
Neutral Citation:[1976] EWCA Civ J1209-2

[1976] EWCA Civ J1209-2

In The Supreme Court of Judicature

Court of Appeal

(Civil Division)

(On appeal from His Honour Judge Thomas sitting as a Deputy High Court Judge of the Chancery Division)

Before:

Lord Justice Buckley,

Lord Justice Orr and

Lord Justice Goff

John Hayter Motor Underwriting Agencies Limited
Plaintiffs (Appellants)
and
R.B.H.S. Agencies Limited and John Stanley George Brice
Defendants (Respondents)

MR. D.W. FALCOMER, Q.C., and MR. M. PLATTS-MILLS (instructed by Messrs. Elborne Michell & Co.) appeared on behalf of the Appellants.

MR. G.B.H. DILLON. Q.C., and MR. C. ALDOUS (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Respondents.

1

(as approved)

LORD JUSTICE BUCKLEY
2

I will ask Lord Justice Goff to deliver the first judgment.

LORD JUSTICE GOFF
3

This is an appeal by the plaintiffs from an order made on 28th July 1976 by His Honour Judge Thomas sitting as an additional judge of the Chancery Division, whereby he refused interlocutory relief. The plaintiffs are managing agents of a syndicate of Lloyd's underwriters specialising in motor insurance. The syndicate was formed in 1965 under the name or style of "J.S.B. Motor Policies at Lloyd's" and it has carried on business in that name ever since and still does. The first defendants are the managing agents of another Lloyd's syndicate which was not formed, or did not start business until 1st January of this year, and it adopted and uses the name or style of "B.J.S. Motor Syndicate at Lloyd's". There is no significance in the fact that both use the words "at Lloyd's" since, if that be not an actual requirement of Lloyd's, it is at least common practice and no complaint is made of that. When the plaintiff syndicate was formed the managing agents were a company called Brice Cregan & Co. Ltd., in which the second defendant was, and still is, a director and shareholder. He was also the underwriter, from which position the company removed him in June 1975. That led to litigation between them, which I understand has since been decided or settled and we are not concerned with the rights and wrongs of that dispute, but it resulted in the formation by him of the defendants' syndicate.

4

Legal proceedings were commenced by the plaintiffs by a writ against the first defendants only, served on 12th February 1976, followed by another writ against the second defendant, served on the 16th of that month. To avoidcomplexity the plaintiffs withdrew both those proceedings and started the present action by writ dated 16th March 1976.

5

By that writ the plaintiffs claim in paragraph 1, on the ground of passing-off, an injunction against both defendants in these terms, "from directing enabling counselling or procuring any motor insurance business not being the plaintiffs business as motor insurers from being passed off as and for the plaintiffs business as motor insurers by the use in connection therewith and in the course of trade of any name, style, telex or telegraphic address consisting of or including the letters B.J.S. or any confusingly similar name, style, telex or telegraphic address"? and as against the second defendant only an injunction to restrain him "from acting in breach of contract by breaking a written agreement made between the second defendant and Brice Cregan & Co. Limited dated 20th December 1965".

6

By notice of motion dated 23rd March 1976 the plaintiffs applied for an injunction in the terms of paragraph 1 of the writ, originally against both defendants but amended to seek that relief against the first defendants only. They also sought an injunction against the second defendant in the terms of paragraph 2 of the writ. In the course of the hearing the first defendants offered, and the learned judge accepted, an undertaking the nature of which I will explain later; but subject to that he refused to make any order on the motion save that the defendants' costs be costs in the cause.

7

By their notice of appeal the plaintiffs sought to reverse this order so as to give them both injunctions, but at the hearing they abandoned their claim for interlocutory relief against the second defendant for breach of his said contract,though they reserved the right to go on with that claim at the trial.

8

This court, therefore, is concerned only with the passing-off aspect of the matter.

9

In order to make the facts clear I must refer at a little length to the manner in which business is carried on at Lloyd's.

10

A syndicate consists of a number of names all of whom are underwriting members, but although they share the profits and losses they do not all take an active part. Every member must have an agent who acts for him and with whom he is required to enter into an agency contract.

11

The form of this contract will he found in Bundle A at page 46. I need read only certain parts of this. I go straight to the operative part, clause 2: "The Agent may appoint or employ any person firm or body corporate to carry on or manage the underwriting or any part of it and may delegate to or confer upon any such person firm or body corporate all or any of the powers authorities discretions rights and duties given to the Agent by this Agreement including the powers conferred by this Clause".

12

Clause 4(a): "Subject to the provisions of Clause 2 hereof the Agent shall have the sole control and management of the underwriting and absolute discretion as to the acceptance of risks and settlement of claims whether such claims shall in the opinion of the Agent be legally enforceable or not".

13

Clause 16(a) deals with goodwill: "The Name hereby agrees and declares: that the goodwill attaching to, and the exclusive right to use, any word or phrase used in connection with any Motor Insurance Business or any other form ofinsurance business managed by the Agent hereunder and the exclusive right to use all devices or identifying words or phrases at any time used for the purposes of the Syndicate and all copyrights connected therewith shall be vested in the Agent (or any person or persons appointed by the Agent under Clause 2 hereof) and that the Name has not now and (except by express assignment in writing) shall not acquire hereafter any right title or interest thereto or to any part thereof".

14

A syndicate is formed by the agreement of the agents of the members who are to be comprised in it. The agents under their power to delegate appoint one of their number to be the managing agents, the position occupied in relation to their respective syndicates by the plaintiffs and the first defendants.

15

The managing agents then appoint an underwriter for the syndicate and he has the sole right of deciding what risks are to be underwritten and the rates of premiums and generally as to the terms of the policies and the conduct of the business. He is not necessarily a member of the syndicate and is employed because of his skill and expertise. Each agent enters into a separate agreement in the same form with the agent who is to become the managing agent. This form is at page 34 of Vol. A and I read from that as follows: Recital (1): "The Agent is the Underwriting Agent at Lloyd's for the Underwriting Members of Lloyd's whose names are set out in Part I of the First Schedule hereto (hereinafter called 'the Original Names'). (2) It has been arranged between the Agent and the Sub-Agent that the Sub-Agent shall act as Sub-Underwriting Agent for the motor insurance business of the Original Names and any other Underwriting Members of Lloyd's whose names may from time to time be added to Part II of the First Schedule hereto with the prior agreement of the Agent and the Sub-Agent (hereinaftercalled 'the Additional Names') and upon the terms hereinafter mentioned".

16

Clause 3, "(a) The Sub-Agent shall underwrite for the Agent's Names as a separate group of Names forming part of the Sub-Agent's Motor insurance Syndicate at Lloyd's at present numbered 253 (hereinafter called 'the Syndicate') as the Syndicate may from time to time be constituted by the Sub-Agent. — (b) Each of the Agent's Names shall have such share in the Syndicate as the Sub-Agent with the consent of the Agent shall from time to time determine".

17

Clause 5: "The Agent delegates to the Sub-Agent the exercise of all such powers authorities discretions and rights conferred upon the Agent by the Underwriting Agency Agreement as are appropriate to the underwriting to be conducted under this Agreement and which are in any way necessary for the Sub- Agent to have to enable the Sub-Agent or any underwriter or agent appointed by the Sub-Agent to carry on the underwriting for the Agent's Names".

18

Clause 17: "The goodwill attaching to the name of the Syndicate or any other word or phrase used in connection with the Syndicate shall vest in the Sub-Agent and the Agent shall not without the consent in writing of the Sub-Agent use or authorise any other person firm or company to use any such name word or phrase in connection with any insurance business other than that conducted by the Sub-Agent hereunder".

19

No. 253 is the internal reference number at Lloyd's of the plaintiffs' syndicate, which was formerly 155 but nothing turns on this change.

20

It is common ground that their respective managing agents agreements sufficiently vest the goodwill in theplaintiffs and the first defendants to constitute them the proper persons to sue and be sued for passing off.

21

A special point arises, however, with regard to goodwill, because the plaintiffs were not the original managing agents of Syndicate 253. When Brice Cregan & Co. and the second defendant parted company there was considerable reorganisation and the plaintiffs were incorporated and took over as managing agents from Brice Cregan & Co. as from 1st October of that year under a new managing agents agreement dated 12th September 1975, which is in Bundle B at page 34.

22

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