Heath Lambert Ltd v Sociedad de Corretaje de Seguros and another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Clarke |
| Judgment Date | 23 June 2004 |
| Neutral Citation | [2004] EWCA Civ 792 |
| Docket Number | Case Nos: A3/2003/2396 & 2397 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 June 2004 |
[2004] EWCA Civ 792
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Jonathan Hirst QC
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Phillips of Worth Matravers Mr
Lord Justice Clarke and
Lord Justice Wall
Case Nos: A3/2003/2396 & 2397
Jeffery Onions QC and Daniel Jowell (instructed by Cozen O'Connor) for the Respondent
Gavin Geary (instructed by Prettys) for the First Appellant
Richard Millett QC (instructed by Le Boeuf, Lamb, Green & MacRae) for the Second Appellant
Introduction
This is the judgment of the court in an appeal from part of an order made by Mr Jonathan Hirst QC in the Commercial Court sitting as a Deputy High Court Judge. The appeal is brought with the permission of the judge. It arises out of an order dated 14 October 2003 on applications by the defendants, which we will call "SCORT" and "Banesco" respectively, to set aside the order of Tomlinson J made on 7 October 2002 granting permission to serve the claim form out of the jurisdiction in Venezuela. The applications were made on a number of grounds, including the ground that all the claims were plainly time barred and could not succeed. The judge held that some of the claims were plainly time barred and some were not. The appeals are brought in respect of those claims which were held not to be plainly time barred. The claimant ("Heath Lambert") has not sought to appeal in respect of those issues which it lost.
The facts
A Venezuelan company called Instituto Nacional de Canalizaciones ("INC") placed insurance for its fleet of vessels with Banesco, which is or was a Venezuelan insurer which essentially operated as a fronting insurer. SCORT, which is or was a firm of Venezuelan insurance brokers, placed that insurance and was also instrumental in obtaining reinsurance for Banesco in the London market. There is an issue between the defendants as to whether, in acting in the latter capacity, SCORT was acting as a producing broker for Banesco or in some other capacity. Thus it is in dispute between the defendants as to which is liable for any premium due under the reinsurance. It is, however, common ground that one or other is liable and that for the purposes of the issues in this appeal it does not matter which. It is also common ground that, although there are two appeals before the court, they raise the same questions and either both succeed or both fail.
One or other of SCORT or Banesco successively asked Heath Lambert to place back to back reinsurance for Banesco in the London market. Heath Lambert did so and duly placed the reinsurance with a number of Lloyd's syndicates, some London market companies and a few companies outside London. The reinsurance was in the form of a slip policy, although no-one has produced the slip. It is, however, common ground for the purposes of this appeal that the agreement is evidenced by a cover note dated 26 January 1996 issued by Blackwell Green Limited, which is now Heath Lambert.
The cover note describes the cover as "Marine Facultative Reinsurance" and the form as an "MAR (Slip Policy)". It describes the reassured as Banesco and gives the names of the various assured and of the various vessels covered. There are ten such vessels, although the appeal relates only the tenth vessel, the dredger ICOA. The conditions include the following:
"All clauses, terms and conditions as original and to follow settlement of same.
…
Brokers Cancellation Notice Clause as attached.
…
Subject to Venezuelan Law and/or Venezuelan Jurisdiction if required.
…
Warranted premium payable on cash basis to London Underwriters within 90 days of attachment."
The Brokers Cancellation Clause included the following:
"Notwithstanding anything contained in this Policy to the contrary, Blackwell Green Limited, in addition to their lien on the policy, shall be entitled to cancel this Policy in the event of any premium not having been paid to them when due and the Underwriters hereby agree to cancel this Policy on presentation at the request of Blackwell Green Limited and to return any premium payable thereon in excess of a pro rata premium up to the date of the cancellation."
The only provision in the underlying insurance, which is governed by the law of Venezuela, to which it is necessary to refer is Article 3. It provides:
"ARTICLE 3 – Premium and Forms of Payment. The "Insured" is under obligation to pay to "The Company" the premiums stipulated in the Policy Schedule at the actual moment the Policy is contracted, against presentation of a printed Premium Receipt by "The Company", signed by an authorised representative."
It is not in dispute that Heath Lambert paid the premiums (or all but one tranche of them) to the reinsurers or that neither SCORT nor Banesco has reimbursed Heath Lambert in respect of any of them. The claim form was issued on 23 July 2002 claiming total premium of US687,366.44, which was reduced in the particulars of claim to US526,090.40. Details of how the claim was made up are set out in sub-paragraphs 7(i) to (vii) of the judge's judgment. All the claims were held to be plainly time barred except the claim for premium in respect of the extension agreed by reinsurers on 3 July 1966 for the period from 2 July until 31 December 1996.
The extension slip (which has been produced) was scratched by the leading underwriter. It is not (as we understand it) in dispute that the leading underwriter had authority to bind the following market. The slip includes the following:
"Dredge "ICOA" – Port Risk
Noted and agreed following original, cover is extended on Port Risk basis on same terms and conditions from 2 nd July 1996 to 31 st December 1996 at slip rates.
…
All other terms and conditions remain unaltered."
Heath Lambert issued a debit note on 15 July 1996 addressed to SCORT showing a net sum due of US261,532.81, which it can be seen is almost half of the total claim.
The judge's decision
Before the judge there were three issues. The first issue was whether SCORT or Banesco was liable for the premium. The judge took the view that the case against SCORT was much stronger than that against Banesco but concluded that there is a reasonable prospect that SCORT is not liable and that it is not possible to say at this stage which defendant is liable. He accordingly declined to accede to the application of either defendant on this point. Neither defendant has sought to challenge this part of the judge's judgment and, as already stated, it is common ground for the purposes of this appeal that one or other is in principle liable for the premium.
The second issue was whether Heath Lambert paid the premium to underwriters as a volunteer so that there was nothing in respect of which its principal (SCORT or Banesco) was liable to indemnify it. The judge discussed Mr Millett's submission to that effect in paragraphs 16 to 23 of his judgment. He rejected it and there is no appeal against that part of his decision. In the course of that discussion the judge held that section 53(1) of the Marine Insurance Act 1906 ("the 1906 Act") applied to a case of this kind. Section 53(1) provides:
"Unless otherwise agreed, where a marine policy is effected on behalf of the assured by a broker, the broker is directly responsible to the insurer for the premium, and the insurer is directly responsible to the assured for the amount which may be payable in respect of the losses, or in respect of returnable premium."
The third issue before the judge involved a consideration of two questions, first when Heath Lambert's cause of action to recover the premiums arose and second whether SCORT or Banesco acknowledged its liability so as to create a fresh accrual of the cause of action under section 26 of the Limitation Act 1980. As to the second question, the judge held that neither defendant acknowledged its liability and his conclusion to that effect is not the subject of this appeal.
As to the first question, (as already stated) he held that all the claims were plainly time barred except the claim for premium in respect of the extension agreed by reinsurers on 3 July 1966 for the period from 2 July until 31 December 1996. He held that the effect of the clause which provided
"Warranted premium payable on cash basis to London Underwriters within 90 days of attachment"
was that the premium was only due within 90 days of attachment and not earlier, with the result that the cause of action did not accrue more than six years before the claim form was issued on 23 July 2002.
Discussion
The defendants say that the judge was wrong so to hold and that he should have held that the premium was due when the contract extending the reinsurance was made on 3 July 1996, so that Heath Lambert's cause of action accrued more than six years before the claim form was issued. The sole question in this appeal is whether the judge was correct on this point.
In answering that question, it is important to note that it is not (as we understand it) suggested that the case falls outside section 53(1) of the 1906 Act. This is a case in which the policy was effected on behalf of the re-assured by a broker, namely Heath Lambert, so that the effect of section 53(1) is that, 'unless otherwise agreed', Heath Lambert was directly responsible to the reinsurers for the premium and the reinsurers would have been liable to the re-assured for any losses under the policy. It is also common...
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