Irish Shipping Ltd v Commercial Union Assurance Company Plc (Irish Rowan)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE STAUGHTON,SIR JOHN MEGAW,LORD JUSTICE PURCHAS
Judgment Date27 April 1989
Judgment citation (vLex)[1989] EWCA Civ J0427-6
Docket Number89/0412
Date27 April 1989
Between:
Irish Shipping Limited
Plaintiffs (Respondents)
and
Commercial Union Assurance

and

Alliance Assurance Company Limited (sued on their own behalf and on behalf of all other liability insurers subscribing to the insurances of Cast Shipping Limited)
Defendants (Appellants)

[1989] EWCA Civ J0427-6

Before:

Lord Justice Purchas

Lord Justice Staughton

and

Sir John Megaw

89/0412

1987 Folio 1538

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. JUSTICE GATEHOUSE)

Royal Courts of Justice

MR. GORDON POLLOCK Q.C. and MR. DAVID MILDON (instructed by Messrs. Clifford Chance, Solicitors, London, EC4V 6BY) appeared on behalf of the Defendants (Appellants).

MR. JONATHAN GILMAN and MR. J. LOCKEY (instructed by Messrs. Ingledew Brown Bennison & Garrett, Solicitors, London, EC3A 5AL) appeared on behalf of the Plaintiffs (Respondents).

1

LORD JUSTICE STAUGHTON
2

Irish Shipping Ltd., whom I shall call "the Shipowners", let their vessel IRISH ROWAN by a time charter dated 19th May 1978 to Cast Shipping Ltd. ("the Charterers"), a company incorporated in Bermuda. The charter period was about eleven to about thirteen months, and the vessel was destined for liner trading. She would carry a large number of different parcels of goods between various ports, and in the nature of things cargo claims were to be expected. The contract provided that, with certain exceptions, such claims were to be the liability of the Charterers.

3

The Charterers took out insurance against liability in the Belgian insurance market at Antwerp. That was one of the two places where they managed their operations, the other being in North America; Bermuda was, as it has been put, merely a convenient country in which to be incorporated. I shall have to consider later how the contract or contracts of insurance (for there is an issue as to one or many) was or were concluded. In all there were 76 or 77 insurers, including Commercial Union and Alliance, the two named defendants in this action. Commercial Union were the largest single insurer, with 8.15 per cent of the risk; Alliance had 6.6. per cent. In all about 33 per cent of the risk was insured by English companies. The other insurers were connected with a variety of different countries.

4

It is said that in due course claims were made by the owners of cargo carried on the IRISH ROWAN and were paid by the Shipowners, no doubt because they were liable under the terms of the Bills of Lading. The Shipowners then sought to recover an indemnity from the Charterers, but they were now in liquidation in Bermuda. Nevertheless the Shipowners commenced arbitration proceedings, and Mr. Bruce Harris became sole arbitrator under section 7(b) of the Arbitration Act 1950. Neither the Charterers nor their liquidator defended the proceedings. Mr. Harris made two awards in favour of the Shipowners. The first, dated 26th November 1985, was for £220,147.28 and Iraqi Dinars 2330; the second, dated 11th December 1986, for £4,374.36 and Iraqi Dinars 130. In each case there was also an award of interest and costs. The awards have not been honoured.

5

On 27th October 1986 a further winding-up order was made in respect of the Charterers, in this jurisdiction. That was preliminary to the claim which the Shipowners make in this action, to recover from the Insurers of the Charterers under the Third Parties (Rights against Insurers) Act 1930.

6

However, before commencing this action the Shipowners had on 22nd August 1986 started proceedings in the Commercial Court at Antwerp against all 77 of the Insurers, claiming from each its proportion of the liabilities owed by the Charterers. The Insurers accepted the jurisdiction of the Belgian court, and some modest progress has been made in those proceedings. Nevertheless Mr. Pollock accepts, for the purpose of this appeal, that the existence of those proceedings can be disregarded. I must explain in outline how that important concession comes to be made. The Shipowners contend that they were wrongfully deprived of information as to the terms of the contract of insurance, and indeed that they were positively misled by the Insurers or their solicitors. There are heated complaints on that topic in the evidence before us. It is said that the Shipowners were induced to start the Belgian action for fear that their claim might become time barred there. Without any confession Mr. Pollock avoids the effect of that reproach. He is content that this appeal be decided on the basis that the Shipowners did not deliberately choose to sue first in Antwerp. For practical purposes that means that we can ignore the present existence of the Belgian action, although we must bear in mind that the Insurers are ready and willing to submit to the jurisdiction of the Antwerp court.

7

On 29th December 1986 the present writ was issued in England. It is said that the date is significant, because in two or three days the Civil Jurisdiction and Judgments Act 1982 came fully into force, which would or might have entailed that the Antwerp proceedings had priority as the first in time.

8

The English writ is against

"COMMERCIAL UNION ASSURANCE COMPANY PLC and ALLIANCE ASSURANCE COMPANY LIMITED (sued on their own behalf and on behalf of all other liability insurers subscribing to the insurances of CAST SHIPPING LIMITED)

Defendants"

9

In the prayer to the Points of Claim it is said:

"AND the Plaintiffs claim against the Defendants and those whom they represent in the respective proportions due from them as subscribing underwriters"

10

the various sums that I have mentioned, with other relief.

11

By two summonses dated 18th December 1987 the Defendants applied (i) that the action be stayed pending the determination of the proceedings in Antwerp, or (ii) that the words of representation in the title to the action be struck out, leaving Commercial Union and Alliance as defendants for their own proportions of the risk only.

12

Those applications were heard by Gatehouse J. in the Commercial Court, and he gave judgment on 15th April 1988. Both applications were dismissed. The judge's preliminary view was that the contract or contracts of insurance was or were governed by English law, and that this brought into operation the Third Parties Act. He considered that the dispute would be resolved more quickly and at less expense in England than in Belgium, and refused a stay on the Shipowners' undertaking to take all necessary steps in their power to discontinue the Belgian proceedings. As to the representative character of the action, he attached importance to a leading underwriter clause in the contract(s) and thought that the action should continue as then constituted. From those two orders the defendants now appeal, by leave of the judge. The Shipowners have not, in fact, as yet attempted to discontinue the Antwerp action. That is understandable, because this appeal has been lodged and they would then lose all remedy if it were wholly successful. However, the importance of undertakings given to the court must never be overlooked; they ought to have asked for a stay of their undertaking or a variation of its terms by reference to the fresh factor of the bringing of this appeal.

13

The Issues

14

Both counsel agreed that it was convenient to consider first the application to strike out the representative character of the action. Only after it has been decided what the nature of the English action should be can we consider whether it should continue here. I shall follow that course, and consider the two main issues in that order. But before doing so I must set out further facts as to the making of the contract or contracts of insurance, and also give some preliminary consideration to the territorial application of the Third Parties (Rights against Insurers) Act 1930.

15

The Contract(s) of Insurance

16

The Charterers in April 1978 instructed Gault, Armstrong & Kemble Ltd., English insurance brokers in London Wall, to procure liability insurance on their behalf. They in turn approached Leon Van Eessel s.p.r.1., a Belgian concern carrying on business in Antwerp. It is apparent that Van Eessel reached agreement with nine underwriting agents in Antwerp and three individual insurance companies, as to the share in the insurance which each would take and possibly as to the terms also. We do not know whether that was done orally, or by telephone, or in writing.

17

Then on 15th April 1978 Van Eessel prepared and distributed a number of copies of a document which was called a cover note. It contained the terms of the proposed insurance, including the following:

" ON

CHARTERERS' LIABILITY (primary).

CONDITIONS:

Subject to non-entered form CL 345 NE (1/74) as attached.

ADDITIONAL

CLAUSES

This insurance is subject to:

War risks P. & I. Clauses SP-22B (amended) as attached (subject to 7 days notice), Priority and Leading Company Signature Clauses as attached.

SECURITY:

30.00%

J HAENECOUR & Co.

(please indicate your co-insurance)."

18

J. Haenecour & Co. S.A. were a Belgian concern, carrying on business in Antwerp where they had a binding authority to underwrite insurance on behalf of the nine members of their pool. They were the leading underwriting agents on this risk. The Cover Note went on to list other percentages, and other underwriting agents or insurance companies, who had agreed to take a share in the insurance.

19

Each underwriting agent or insurance company signed or initialled a copy of the cover note, after inserting, where appropriate, the names and proportions of the members of its pool. Thus it came about,...

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