Heath Lambert Ltd v Sociedad de Corretaje de Seguros
| Jurisdiction | England & Wales |
| Judge | Lord Phillips MR,Clarke,Wall L JJ |
| Judgment Date | 23 June 2004 |
| Date | 23 June 2004 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Lord Phillips MR, Clarke and Wall L JJ.
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.
The following cases were referred to in the judgment:
Chapman (JA) & Co Ltd v Kadirga Denizcilik ve Ticaret AS [1998] CLC 860.
Power v Butcher (1829) 10 Br & 329; 109 ER 472.
Prentis Donegan & Partners Ltd v Leeds & Leeds Co Inc [1998] CLC 1132.
Shee v ClarksonENR (1810) 12 East 507; 104 ER 199.
Universo Insurance Co of Milan v Merchants' Marine Insurance CoELR [1897] 1 QB 205.
Insurance — Reinsurance — Payment of premium — Cause of action — Limitation period — Insurance broker paid reinsurance premium in respect of extension of cover for port risks — Insurance broker's claim against re-assured for payment of premium —“Warranted premium payable on cash basis to London Underwriters within 90 days of attachment”— When cause of action for premium accrued depended on terms of policy — Warranty displaced usual rule that premium payable when contract made.
This was an appeal by the defendants, SCORT and Banesco, against the deputy judge's decision ([2003] EWHC 2269 (Comm)) that not all the claims of the claimant, Heath, were time barred.
A Venezuelan company, INC, placed insurance for its fleet of vessels with Banesco, which was a Venezuelan insurer which essentially operated as a fronting insurer. SCORT, which was a firm of Venezuelan insurance brokers, placed that insurance and was also instrumental in obtaining reinsurance for Banesco in the London market.
One or other of SCORT or Banesco asked Heath to place back to back reinsurance for Banesco in the London market. Heath did so. The reinsurance was in the form of a slip policy evidenced by a cover note which described the cover as marine facultative reinsurance and the form as an MAR (Slip Policy). It described the reassured as Banesco and gave the names of the various assureds and of the various vessels covered.
Heath had paid premiums to the reinsurers and neither SCORT nor Banesco had reimbursed Heath in respect of them. The claim form was issued on 23 July 2002 claiming those premiums. The judge held that all the claims were time barred except the claim for premium in respect of an extension of cover for port risks in respect of a dredger agreed by reinsurers on 3 July 1996 for the period from 2 July until 31 December 1996. The sum due in respect of that premium was US$261,532.81, which was almost half of the total claim. In respect of the extension the judge held that the effect of the clause in the reinsurance 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.
The defendants argued 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's cause of action accrued more than six years before the claim form was issued.
Held, dismissing the appeal:
1. This was a case in which the policy was effected on behalf of the reassured by a broker, Heath, so that the effect of s. 53(1) of the Marine Insurance Act 1906 was that, “unless otherwise agreed”, Heath was directly responsible to the reinsurers for the premium. It followed that SCORT or Banesco was in principle liable to Heath for the premium.
2. The question when the cause of action for the premium accrued depended upon the terms of the policy.
3. The broker's cause of action for payment of premium was not for an indemnity in respect of premium actually paid, in which case its cause of action would presumably accrue on payment, but for an indemnity in respect of premium deemed to have been paid. It followed that its cause of action accrued when the broker was deemed to have paid the premium. The only date on which the broker could be deemed to have paid the premium for that purpose was the date on which the premium was due as between the broker and reinsurer, which depended upon the terms of the policy.
4. In the absence of an express term in the policy the premium was payable when the contract was made. It followed that, in the absence of agreement to the contrary, but for the clause the premium would have been payable when the contract was made on 3 July 1996. The judge was right to hold that the clause “Warranted premium payable on cash basis to London Underwriters within 90 days of attachment” provided not solely for a warranty but also for payment of the premium. The word “payable” naturally referred to the moment when the duty to pay arose. Thus the premium was not payable when the contract was made but “on cash basis to London Underwriters within 90 days of attachment”. The effect of s. 53(1) of the 1906 Act (unless otherwise agreed) was that that obligation was the obligation of the broker and not the assured. It followed that Heath could not be in breach of its obligation to pay the premium until the 90 days expired. The clause also made it clear that the premium was payable in cash, not in any other way. The natural meaning of the clause was that the broker was agreeing to pay the premium in cash within the 90 days. Purported payment otherwise than in cash would not satisfy the clause.
5. Heath owed a duty to the underwriters to pay the premium in cash within 90 days of attachment of the risk. Failure to pay would put the assured in breach of warranty. If Heath had in fact paid the premium to the underwriters in cash within the 90 days, it would have been entitled to be indemnified by Banesco or SCORT. Heath did not pay the premium before the expiry of the 90 days. The judge rightly held that the effect of the clause was that it was the obligation of Banesco or SCORT to put Heath in funds in time to pay the premium in cash to the underwriters within the 90 days and that would be a short time before the premium was due to underwriters. Heath's cause of action did not accrue on or before 23 July 1996, so that it did not accrue more than six years before the claim form was issued on 23 July 2002. Therefore the claim for premium in respect of the extension was not time barred.
Clarke LJ:
1. 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.
2. 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...
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