Home and Overseas Insurance Company Ltd v Mentor Insurance Company (U.K.) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PARKER,LORD JUSTICE LLOYD,LORD JUSTICE BALCOMBE |
| Judgment Date | 09 December 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J1209-8 |
| Docket Number | 88/1076 1988. F.NO. 1596 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 December 1988 |
[1988] EWCA Civ J1209-8
Lord Justice Parker
Lord Justice Lloyd
and
Lord Justice Balcombe
88/1076
QB/1182/88
1988. F.NO. 1596
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE HIRST)
Royal Courts of Justice
MR. C. CLARKE Q.C., and MR. S. RUTTLE (instructed by Messrs. Ince & Co., London EC3) appeared on behalf of the Appellants (Plaintiffs).
MR. J. MANCE Q.C., and MR. G. KEALEY (instructed by Messrs. Cameron Markby, London EC2) appeared on behalf of the Respondents (Defendants).
( )
This is an appeal by the Plaintiffs (Home) from an order of Hirst J. dated 28th July 1988. By that Order he (i) dismissed their application for 0.14 judgment for a declaration as to their rights under a number of reinsurance contracts made between themselves as reinsurers and the Defendants (Mentor) as reinsured and (ii) granted Mentor a stay of proceedings pursuant to section 4 of the Arbitration Act 1950. The appeal is brought by leave of the judge which was given on Home's undertaking to expedite any such appeal.
The relevant facts are few and simple. The contracts which are the subject of the action are in identical form and were entered into between 1973 and 1981. On the 23rd August 1985 Mentor went into voluntary liquidation and Mr. Christopher Morris of Touche Ross and Co. was appointed liquidator. There are outstanding valid claims in the liquidation by various insured some of which had been agreed between Mentor and the assured prior to the liquidation but others of which were not admitted or agreed until a later date.
The sole dispute between the parties is whether as Home contend, and I use the words of the declaration sought by their 0.14 summons, "the..…Reinsurance Agreements permits recovery by the Defendant from the Plaintiff in respect of those sums only that have been paid by the Defendant to its Insureds and Reinsureds; provided always that such claims by the Defendant against the Plaintiff otherwise fall within the said Agreement". Should the appeal succeed in substance Mr. Clarke Q.C. for Home accepts that the declaration will require to be amended to some extent but such amendment does not affect in any way the issues or argument on the appeal. I therefore, at this stage, ignore it.
Reduced to its essential point the contention of Home is that payment by Mentor to its insured is a condition precedent to its right to recover from Home. Mentor on the other hand contend that, whatever may have been the position prior to liquidation, once a liquidation occurred no such condition applied.
The contracts, so far as immediately material, provide as follows:
"THIS REINSURANCE is to cover the liability of the Reassured arising under Policies and/or Contracts of Insurance and/or Reinsurance which are allocated to the Reassured's Non-Marine Account, but only in respect of Casualty Business the Premiums for which are designated by the Reassured under Categories 'S' and 'T', and is to cover all losses howsoever and wheresoever occurring, subject however, to the following terms and conditions.
1. This Reinsurance is only to pay the Excess of an ultimate nett loss to the Reassured of #60,000 or U.S.$120,000 or Can.$120,000 in respect of each and every loss with a limit of liability to the Reinsurers of #60,000 or U.S.$120,000 or Can.$120,000 in respect of each and every loss…..
5. The term 'ultimate nett loss' shall mean the sum actually paid by the Reassured in settlement of losses or liability after making deductions for all recoveries, all salvages and all claims upon other Reinsurances, whether collected or not, and shall include all costs and adjustment expenses arising from the settlement of claims other than the salaries of employees and the office expenses of the Reassured.
All salvages, recoveries or payments recovered or received subsequent to a loss settlement under this Reinsurance shall be applied as if recovered or received prior to the aforesaid settlement and all necessary adjustments shall be made by the parties hereto. Provided always that nothing in this Clause shall be construed to mean that losses under this Reinsurance are not recoverable until the Reassured's ultimate nett loss has been ascertained.
Notwithstanding the foregoing, it is understood and agreed that Reinsurances if any, effected by the Quota Share Reinsurers protected hereunder shall not be taken into account in computing the ultimate loss or losses in excess of which this Reinsurance attaches, nor in any way affect the amount recoverable hereunder…..
15. All loss settlements made by the Reassured, provided same are within the conditions of the original Policies and/or Contracts and within the terms of this Reinsurance, shall be unconditionally binding upon the Reinsurers and amounts falling to the share of the Reinsurers shall be payable by them upon reasonable evidence of the amount paid being given by the Reassured…..
18. If any dispute shall arise between the Reassured and the Reinsurers with reference to the interpretation of this Reinsurance or the rights with respect to any transaction involved, the dispute shall be referred to two Arbitrators, one to be chosen by each party and such Arbitrators shall first choose an Umpire. If they are unable to agree upon an Umpire, they shall appeal to the Chairman of the Reinsurance Offices Association in London to nominate him and in the event of said Arbitrators not agreeing, the decision of the said Umpire shall be final and binding upon all parties. The Arbitrators and the Umpire shall interpret this Reinsurance as an honourable engagement and they shall make their award with a view to effecting the general purpose of this Reinsurance in a reasonable manner rather than in accordance with a literal interpretation of the language. Said Arbitration shall take place in London and the costs thereof shall be in the discretion of the Court of Arbitration."
Mr. Clarke's case is in essence simple. It is that there is only one possible construction of the words used. He relies in particular on:
i) the words in Clause 1 "This reinsurance is only to pay the excess of an ultimate nett loss".
ii) the words in Clause 5 "the term 'ultimate net loss' shall mean the sum actually paid by the reassured in settlement of losses or liability after making etc.
iii) the concluding words of Clause 15 "shall be payable by [the reinsurers] upon reasonable evidence of the amount paid being given by the Reassured." (Emphasis mine.)
These, he submits, show so clearly that payment is a precondition to the right of recovery that no arbitrators properly applying the law could come to any other conclusion. There is therefore no dispute and Mentor are entitled to judgment. The arbitration clause is of no avail because construction is a matter of law and, whatever the 'honourable engagement' provision does allow, it cannot allow the arbitrators to depart from the law.
I shall shortly consider the authorities relating to the way in which the court should deal with Order 14 applications when countered by an application for a stay based on an Arbitration Clause. Before doing so, however, I venture to make some general observations on the question of Order 14 applications both when standing alone and when countered by a stay application.
The purpose of Order 14 is to enable a Plaintiff to obtain a quick judgment where there is plainly no defence to the claim. If the Defendant's only suggested Defence is a point of law and the Court can see at once that the point is misconceived the plaintiff is entitled to judgment. If at first sight the point appears to be arguable but with a relatively short argument can be shown to be plainly unsustainable the Plaintiff is also entitled to judgment. But Order 14 proceedings should not in my view be allowed to become a means for obtaining, in effect, an immediate trial of an action, which will be the case if the Court lends itself to determining on Order 14 applications points of law which may take hours or even days and the citation of many authorities before the Corut is in a position to arrive at a final decision.
In cases where there is an Arbitration Clause it is in my judgment the more necessary that full scale argument should not be permitted. The parties have agreed on their chosen tribunal and a Defendant is entitled prima facie to have the dispute decided by that tribunal in the first instance, to be free from the intervention of the Courts until it has been so decided and thereafter, if it is in his favour, to hold it unless the Plaintiff obtains leave to appeal and successfully appeals.
In the case of a commercial arbitration the above remarks apply with even greater force, perhaps especially when the dispute turns upon construction, or the implication of terms or trade practice. Arbitrators and umpires in the same business or trade as the parties are certainly as well or better able than the Court to judge what the parties must be taken to have meant or intended by the words or phrases they have used, to judge what the parties would at once have replied if an innocent bystander had asked what was to happen in a certain event not dealt with by the contract, and to know what are the practices in the trade. Not only is the Defendant entitled to have the dispute decided in the first instance by such persons but the Court should not in my view, save in the clearest of cases, decide the question without the benefit of their views.
In very clear cases a Plaintiff is no...
To continue reading
Request your trial
-
Bee Cheng Hiang Hup Chong Foodstuff Pte Ltd v Fragrance Foodstuff Pte Ltd
...Punjab and Sind Bank (No. 2) [1983] 1 WLR 642 (flld) Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (In Liquidation) [1990] 1 WLR 153 (flld) LEGISLATION REFERRED TO Tradmarks Act (Cap 332), section 27(6) Copyright Act (Cap. 63), section 37 [Delivered by Chao Hick Tin JA] ......
-
Kwan Im Tong Chinese Temple and Another v Fong Choon Hung Construction Pte Ltd
...and Home Insurance Co [1990] 2 Lloyd's Rep 265 (refd) Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liquidation) [1990] 1 WLR 153; [1989] 3 All ER 74; [1989] 1 Lloyd's Rep 473 (folld) M Eregli, The [1981] 2 Lloyd's Rep 169 (refd) Peak Construction Ltd v McKinney Foun......
-
Multiplex Constructions Pty Ltd v Sintal Enterprise Pte Ltd
...to arbitrate. His Honour agreed with the observation of Parker LJ in Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd [1990] 1 WLR 153 at 158 that, except in a very clear case, in a situation where there was an arbitration clause, full-scale argument should not be permitted......
-
Ocean Chimo Ltd v Royal Bank (Jamaica) Ltd (RBC) and Others
...case. 49 Counsel also relied on the judgment of Parker LJ in Home and Overseas Insurance Co. Ltd v Mentor Insurance Co (UK) (in liq) [1989] 3 ALL ER 74, where it was held that applications under the rules (in this case RSC ORD 14 of the English rules as they then were) should not be used to......
-
STAY OF LITIGATION PENDING ARBITRATION
...Corp v Gatoil Overseas Inc [1987] 2 Lloyd’s Rep 46 at p. 51. 23 Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd [1989] 3 All ER 74. 24 In Ellis Mechanical Services v Wales Construction[1978] 1 Lloyd’s Rep. 33 25 Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill ......
-
Defending Mohammad: Justice on Trial.
...the apology of President Reagan to the Japanese American community. Julie Johnson, President Signs Law to Redress Wartime Wrong, N.Y. TIMES, Aug. 11, 1988. at (5.) See David Cole, The New McCarthyism: Repeating History, in the War on Terrorism, 38 HARV. C.R.-C.L.L. REV. 1, 16 (2003). (6.) S......
-
THE NEW ORDER 14A (SUMMARY DISPOSAL OF POINTS OF LAW OR CONSTRUCTION) — MORE THAN A CODIFICATION OF EXISTING PRACTICE
...European Asian Bank AG v Punjab & Sind Bank (No 2)[1983] 1 WLR 642, at p 654. 16 [1987] 2 MLJ 432. 17 [1992] 1 SLR 197. 18 Above. 19 [1989] 1 Lloyd’s Rep 473. 20 Ibid, at p 484. 21 Ibid, at p 481. Also see cases cited there for this proposition. 22 Ibid, at p 484. 23 [1989] QB 842. 24 Ibid,......
-
CHAPTER 9 SELECTION OF GOVERNING LAW
...International Petroleum Co. Ltd. [1990], AC 295; Home and Overseas Insurance Co. Ltd. v. Mentor Insurance Co. (U.K.) Ltd. (in liq.) [1989] 3 All ER 74. [8] See, for example, discussion on Rome Convention below, at p. 9-19. [9] See generally Michael S. Bonell, "The UNIDROIT Principles in Pra......