Heath Lambert Ltd v Sociedad de Corretaje de Seguros and another
| Jurisdiction | England & Wales |
| Judge | Jonathan Hirst QC,Mr Hirst |
| Judgment Date | 14 October 2003 |
| Neutral Citation | [2006] EWHC 1345 (Comm),[2003] EWHC 2269 (Comm) |
| Docket Number | Case No: 2002 Folio 734 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 October 2003 |
[2003] EWHC 2269 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEENS BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Jonathan Hirst Qc Sitting As A Judge Of The High Court
Case No: 2002 Folio 734
Jeffery Onions QC and Daniel Jowell (instructed by Cozen O'Connor) for the Claimant
Gavin Geary (instructed by Prettys) for the 1st Defendant
Richard Millett QC (instructed by LeBoeuf, Lamb, Green & MacRae) for the 2nd Defendant
Hearing date: 30 September 2003
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of the Judgment and that copies of this version as handed down may be treated as authentic
The First Defendants ("Scort") and the Second Defendants ("Banesco") each. apply to set aside the Order of Tomlinson J. made on 7 October 2002 granting the Claimant ("Heath Lambert") permission to serve the claim form on the Defendants in Venezuela.
Introduction
Venezuela, like many countries, requires insurance to he placed with local insurance companies. However, it permits local insurers to reinsure the risks assumed with foreign companies. This has led to a practice whereby the local insurer fronts the risk and reinsures the risk into the London market, which sets the premium. Often the reinsurance policy allows the original insured to "cut through" and make a direct claim against the reinsurer. This is to protect the insured against potential insolvency on the part of the local insurance company.
Instituto Nacional de Canalizaciones ("NC") is a dredging company and a substantial shipowner in Venezuela operating what has been called a major fleet, a medium fleet and a minor fleet of vessels. Until 1994 the local insurance was placed with Latino Americana de Seguros but in 1994 INC became seriously concerned as to the solvency of Latino Americana and Banesco was substituted as the local fronting insurer.
Scort, a firm of Venezuelan insurance brokers, were retained by INC to place its marine insurance. As part of its overall responsibilities, Scort was also involved in obtaining the reinsurance for Banesco in the London market —the exact nature of Scort's responsibilities for obtaining reinsurance is in dispute. For this purpose, Blackwell Green Limited, a firm of Lloyd's brokers, was retained as placing broker. Blackwell Green has since been subsumed into Heath Lambert. No point was taken as to Heath Lambert' s title to sue and I will not distinguish between them.
The 1996 reinsurance was duly placed by Heath Lambert with a number of Lloyd's syndicates and London market insurance companies. The Cover Note issued by Heath Lambert on 26 January 1996 and addressed to Scort recorded as follows:
"We confirm that in accordance with your instructions we have effected insurance on your behalf as follows:
Type:
Marine Facultative Reinsurance
Form:
MAR (Slip policy)
Reassured:
[Banesco]
Insured
[INC]
Vessels:
…
10) "ICOA"
…
Period:
12 months commencing Noon 31st December 1995…
No. 10 from date t.b.a. to common expiry.
CONDITIONS:
All clauses, terms and conditions as original and to follow settlement of same.
…
It is understood and agreed that the named insured hereunder can opt to obtain directly from Reinsurers the indemnification of any covered loss, subject to the terms and conditions of this policy up to the proportion written by reinsurers.
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 was in the following terms:
"Notwithstanding anything contained in this Policy to the contrary, [Heath Lambert], 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 Underwriters hereby agree to cancel this Policy on presentation of the request of [Heath Lambert] and to return any premium payable thereon in excess of a pro rata premium up to the date of cancellation"
The underlying insurance policy was not produced to the Court, but the 1995 Major Fleet policy, which was produced in evidence, had a Venezuelan arbitration clause. It also provided that the policy would be null and void in the event of change of ownership, bareboat charter or withdrawal of class.
The claims
Following the placement of the reinsurance in London, a number of extensions were agreed by underwriters. The premiums due on these extensions have not been paid by either Defendant and they form the subject of this action. The premiums outstanding arise as follows:
i) On 15 January 1996, following a request from Scort, underwriters scratched a slip noting and agreeing that the dredger "ICOA" attached on Port Risk basis from 16th January 1996 to 1st March 1996 on the same terms and conditions as per slip rates. Heath Lambert issued a debit note on 13 February 1996 addressed to Scort with the words "Payable NOW" below the $96,088.36 claimed. The net premium actually due after discounts was less (see (ii) below).
ii) On 4 March 1996 following a further request from Scort underwriters scratched a slip noting and agreeing that "ICOA" was extended on a Port Risk basis until 30 March 1996 on the same terms and conditions as per slip rates. Heath Lambert issued a debit note on 8 March 1996 addressed to Scort and indorsed "payable NOW" for $62,666.33. The net amount actually due after discount for the period 16 January —31 March 1996 (i.e in respect of (i) and (ii)) was $108,656.25.
iii) On 3 April 1996, following a further request from Scort, underwriters scratched a slip noting and agreeing that "ICOA" was extended on a Port Risk basis until 30 April 1996 on the same terms and conditions as per slip rates. Heath Lambert issued a debit note on 10 April 1996 addressed to Scort and indorsed "payable NOW" for $62,666.33. The net amount actually due after discount was $42,890.63.
iv) In early May 1996, following a further request from Scort, underwriters scratched a slip noting and agreeing that "ICOA" was extended on a Port Risk basis until 1 July 1996 on the same terms and conditions as per slip rates. A handwritten insertion on the slip stated "Premium to u/w's within 45 days". Below this was the following (also in handwriting): "S.D.D. 15.6.96." I was told that this was part of the original slip as scratched by underwriters. A debit note was issued on 3 July 1996 addressed to Scort showing the net amount due of $88,640.63.
v) On 3 July 1996, following a further request from Scort, underwriters scratched a slip noting and agreeing that "ICOA" was extended on a Port Risk basis until 31 December 1996 on the same terms and conditions as per slip rates. Heath Lambert issued a debit note on 15 July 1996 addressed to Scort showing a net sum due of $261,632.01.
vi) On 12 February 1996 Scort requested Heath Lambert to add the tug "Punta Brava III" to the policy. The slip has not been produced but a cover note was issued on 13 February 1996 confirming the addition of the tug. The debit notes issued on the same day addressed to Scort were for $14,882.58 (H&M) and $278.70 (War). They both stated "payable NOW" and the first also stated that the insurance had been arranged subject to a warranty that the premium due would be paid to underwriters by 31 March 1996. "You must ensure that premium funds reach us … in sufficient time prior to the warranty date to enable us to transfer funds to underwriters in time". The net sum due for the war risk was later reduced to $195.08.
vii) On 21 March 1996 Scort requested Heath Lambert to add the launches LS-01 and LS-02 to the policy. The slip and cover note has not been produced but the debit notes issued on 8 July 1996 addressed to Scort confirm the addition of the launches and state the net premiums due as $9,073.48 (H&M) and $118.94 (War).
None of the premiums due for these extensions has been paid. The claim form was issued on 23 July 2002 for a total amount of $687,366.44, reduced in the Particulars of Claim to $526,090.40, made up as explained above.
It is accepted by the Defendants that the Court has jurisdiction to permit service abroad under CPR Part 6.20(3), although they do not accept that all the gateways relied on by Heath Lambert were correctly invoked. No point is taken on the appropriateness of the English forum. The Defendants argue that permission for service of the claim form in Venezuela should be set aside because Heath Lambert cannot show that the claim has a reasonable prospect of success. Three main points are taken:
i) Scort contends that it is not liable to pay the premiums to Heath Lambert; the liability is Banesco's. Banesco's contention is to the opposite effect; Scort is liable and Banesco is not.
ii) Both Defendants contend that Heath Lambert had no liability to pay underwriters the premium under section 53(1) of the Marine insurance Act 1906 or otherwise. Insofar as it paid premiums, it did so as a volunteer and it has no right to be indemnified.
iii) Both Defendants contend that Heath Lambert's claims are barred by section 5 of the Limitation Act 1980.
In the course of their submissions, Counsel took these points in different orders. I shall follow the order I have set out above.
LIABILITY TO PAY PREMIUMS
Where a producing broker employs a placing broker at Lloyd's, the general rule is that there is privity of contract between those brokers, and no privity between the principal and the placing broker. The producing broker is liable to the placing broker for the premium, which the producing broker must collect from the principal. There may...
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