Hiscox Underwriting Ltd v Dickson Manchester & Company Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE COOKE |
| Judgment Date | 05 March 2004 |
| Neutral Citation | [2004] EWHC 479 (Comm) |
| Date | 05 March 2004 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | 2004 FOLIO 165 |
[2004] EWHC 479 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand
London WC2
Mr Justice Cooke
2004 FOLIO 165
MR STEPHEN HOFMEYR QC appeared on behalf of the CLAIMANT
MR JULIAN FLAUX QC appeared on behalf of the DEFENDANT
This is an application for an order that the defendants, to whom I shall refer as DM, give access to the claimants, to whom I shall refer as Hiscox, to various documents in their possession which they hold by virtue of being underwriting agents under a binding authority agreement.
The documents sought are as follows:
“Any certificate, wording, policy, endorsement, schedule, renewal notice or other document evidencing the insurances bound under the Binding Authority Agreement which was issued to the assured or the assured's producing broker or other person acting on behalf of the assured and the letter or letters under cover of which the same or any of the same documents were sent to the assured or the assured's producing broker or other person acting on behalf of the assured;
“Any correspondence with the said assured or producing broker or any other person acting on behalf of the assured evidencing mid-term changes in insurance cover;
“Any proposal form submitted by or on behalf of the said assured;
“Any lists of risks written by the Defendants under the Binding Authority Agreement including, in particular but without limitation, any lists identifying (a) The name of any of the assureds; (b) The address of any of the assureds; (c) The identity of any of the producing brokers or others acting for the assured; (d) The limits of cover and deductibles of the insurances bound under the Binding Authority Agreement; (e) The gross and net premium on the insurances; (f) The inception date of the insurances; (g) The period of cover of the insurances; (h) The terms of cover of the insurances.
“Without limitation, any records relating to or concerning insurances bound by the Defendants on behalf of the Claimants under the Binding Authority Agreement prepared by the Defendants as agents of the Claimants.”
Hiscox seeks an order that DM provide access to these documents for the purposes of inspection, photographing, taking copies and taking extracts within 72 hours during normal business hours and, having permitted Hiscox to have access, to allow access to continue within normal business hours until all the documents had been inspected, photographed or copied.
Clause 6 of the binding authority agreement provides for the issue of certificates, wordings, documents, schedules and renewal notices by DM, and clauses 14 and 15 provide as follows:
“You must keep a complete record of all insurances bound. You must bear and pay all charges and expenses incurred by you.
“We, or our representatives, have the right without restriction or limitation to inspect and audit any of your records relating to insurances bound at any time during reasonable business hours and have the right to make copies of or take extracts from any such records.”
DM resist access for inspection of certain documents within the categories I have mentioned. The point was expressed in a letter of 26 February 2004 in answer to Hiscox's notice of arbitration in which they sought the agreement of DM to an arbitrator nominated by them in accordance with the arbitration clause, which was clause 18 of the binding authority agreement. That clause required:
“Any dispute or claim of whatsoever nature arising out of this Agreement must be referred to an arbitrator appointed by agreement between you and us within 14 days of a written request for arbitration being received by one party from the other.”
In the letter of 26 February from the solicitors acting for DM the following appeared:
“Our clients will consider your nomination of Mr Ruttle as arbitrator and we shall let you have their response within 14 days from 25 February 2004, the effective date of receipt of your Arbitration Notice, as provided for under Clause 18 of the Agreement, for the period 1. 1.2003 to 31.12.2003, the last written agreement between our respective clients.
“Without prejudice to any other arguments that we may deploy, the purpose of clause 15 [of the Binding Authority Agreement] is to allow Hiscox access to records in order to satisfy itself that the binding authority is being operated according to the agreed terms and conditions. On its true construction, it does not operate to allow Hiscox access to confidential information belonging to Dickson Manchester which would allow it to compete with them, especially in circumstances where they have specifically agreed not to compete with them for such business. Events towards the end of 1999 form part of the factual matrix of this case, and our clients’ decision to enter into the binding authority incepting 1. 1.2000 and all subsequent such arrangements was made against the background of that factual matrix.
“In particular, your client agreed not to compete with our clients in relation to the business which is the subject of this binding authority. Your client is now in breach of its agreement not to do so in that it has approached and continues to approach insurers and their brokers to solicit business away from our clients. Your client's intentions to do so are unambiguously set out in their letter to our clients dated 17 February 2004 and in your letter of 24 February 2004. We are seeking full details of such breaches, and all our clients’ rights in relation to that issue, in particular, are reserved. By this letter we put you on notice of our clients’ concerns in that regard and we request that they desist forthwith from further attempts to solicit business introduced to them via Dickson Manchester under this binding authority.”
As explained in DM's skeleton argument, DM maintained that the claimants are seeking to use the inspection of records clause in the agreement to obtain inspection and copies, not just of documents relating to the business under it and the operation and management of the agreement, but to obtain details of all the respondent's producing brokers, which is confidential information to which DM says that Hiscox is not entitled. DM maintained that Hiscox was not entitled to information as to DM's clients, the producing brokers. It was said that the dealings and relationships with those producing brokers took place independently of any agency relationship between Hiscox and DM, given that any particular risk could be accepted under one of a number of binders held by DM from various insurers and not just under the binder from Hiscox. That information, it was said, had been built up through DM's time and effort over the years and was confidential to DM.
The information concerning producing brokers was therefore not, it was said, information to which Hiscox was entitled under common law since it did not form part of the records or documents created or held by DM as agents for Hiscox pursuant to the binding authority agreement. It was said that the position was not altered by clause 15 of the agreement since the details of producing brokers did not form part of the records relating to the insurances bound under the binding authority agreement.
It was further said that in consequence of matters described in the statement of Mr Patten in paragraph 14, undertakings had been given by Hiscox in October 1999 not to contact DM's clients directly or indirectly through other brokers in order to act in competition with DM. That undertaking had, it was said, been relied on in renewing the agreement thereafter.
The points raised as to the nature of the documents, and in particular the documents relating to producing brokers, as they are described, were not maintained in argument before me because they were incontestably bad. Insofar as risks were written under the binding authority agreement to original insureds, whether through producing brokers or not (and whatever mechanism was employed in relation to the underwriting operation), the papers relating to such risks written under the binding authority agreement were part of the agency business conducted by DM for Hiscox. In accordance with the ordinary rules of agency, quite apart from the express terms of clause 15 of the binding authority agreement, these documents belonged to Hiscox as the principal and Hiscox were entitled to inspect them and photocopy them.
The business is indubitably that of Hiscox and the identity of the “producing” brokers, as revealed in DM's correspondence with them when DM were acting as agents for Hiscox, is something that Hiscox is entitled to know. The point now at issue, however, to which reference was made in the letter of 26 February, was set out in a witness statement of Mr Patten of Elborne Mitchell to which I have just referred. Mr Patten said this at paragraph 14:
“The position is that the claimants have previously expressly agreed not to use information about the Respondents’ clients to compete with the Respondents.”
He then made reference to events which are in issue in October 1999 but went on to say that correspondence and oral discussion took place between the parties, culminating in a letter from Mr Madden of Hiscox to Mr Manchester of DM, dated 29 October 1999. In referring to that letter he said this:
“In this letter the claimants gave the assurance that they had no intention of contacting clients or prospective clients, either directly or in conjunction with a competitor broker. The claimants accordingly undertook not to act in competition with the respondents or to contact the respondents’...
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