L. J. Korbetis v Transgrain Shipping Bv
| Jurisdiction | England & Wales |
| Judgment Date | 09 June 2006 |
| Neutral Citation | [2006] EWHC 1345 (QB) |
| Docket Number | 202 Folio No 734 |
| Court | Queen's Bench Division |
| Date | 09 June 2006 |
[2006] EWHC 1345 (QB)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand
London
His Honour Judge Mackie Qc
202 Folio No 734
Mr Daniel Jowell instructed by Cozen O'Connor appeared for the Claimant
Mr Richard Millett QC instructed by LeBoeuf, Lamb, Greene & Macrae appeared for the Second Defendant
This judgment decides the question of lien left over from the hearing on 27 March 2006. I then gave judgment in default against the First Defendant, gave the Claimant permission to discontinue against the Second Defendant and made a costs order against the First Defendant in effect sharing the risk between the other two parties. At the end of the hearing an apparently new issue of election arose so I allowed each party to send me a short note about this.
I now decide:-
a) The Claimant's application for reverse summary judgment in respect of the Second Defendant's counterclaim.
b) The Claimant's claim for a declaration that it is entitled to exercise in lien over the insurance proceeds.
c) The Second Defendant's application for summary judgment on its counterclaim against the Claimant.
Background
I do not repeat the background facts which are set out in the judgments of the Court of Appeal and Mr Jonathan Hirst QC.The facts relevant to the question of lien which I have to decide are more limited and not in serious dispute.
The Claimant ("Heath Lambert") is a London market insurance and reinsurance broker. Both the First Defendant ("Scort"), an insurance broker, and the Second Defendant Banesco, an insurance company, are from Venezuela. INC is a Venezuelan dredging company that owns a fleet of vessels. In 1996, INC used Scort to place insurance for its fleet with Banesco. Scort acted as broker for INC in obtaining direct insurance for INC with Banesco which was, in turn, reinsured in the London market under marine facultative reinsurance covering hull and machinery risks. Heath Lambert was the placing broker for Banesco's reinsurance. Scort was also involved in obtaining reinsurance for Banesco in the London market.
Originally the Defendants disputed whether Scort's involvement was as the producing broker for Banesco (as Banesco said), or as a facilitator for INC, with Banesco using Heath Lambert directly as its placing broker (as Scort said). If Scort was merely a facilitator and Heath Lambert was the direct agent of Banesco then Heath Lambert must look to Banesco for reimbursement of premium: If Scort was Banesco's agent and producing broker and Heath Lambert was the sub-agent and placing broker then, Heath Lambert must look to Scot for reimbursement of premium (with Scort then entitled to seek over against Banesco) .It was common ground that at least one of the Defendants was liable to reimburse Heath Lambert for the premiums.
Heath Lambert as instructed placed the reinsurance contracts in the London market with a number of Lloyd's syndicates and market companies. The reinsurance was placed by means of various extensions and additions to cover. Heath Lambert paid the premiums to the reinsurers (or came under a liability to pay such premiums) but neither Defendant reimbursed it.
On 23 July 2002, Heath Lambert sued in this Court to recover the premiums of US$ 526,090.40 plus interest. The Particulars of Claim are pleaded in the alternative and seek the unpaid premium either from Scort on the grounds that it was the producing broker for the reinsurance and must reimburse Heath Lambert acting as a sub-agent placing broker, or from Banesco, on the grounds that Heath Lambert was acting directly as Banesco's broker. Each Defendant claimed that the other was liable.
Issues came before Mr Jonathan Hirst QC in September 2003 and before the Court of Appeal in June 2004 with which I am not concerned except to the extent that the amount claimed by the Claimant was reduced to $261,632.81 for a limitation reason . Costs which the Defendants were ordered to pay to the Claimant remain unpaid.
There were subsequent Part 20 steps and amendment to the pleadings. In particular in December 2004 Banesco sought in its counterclaim recovery of some $325,000 collected by Heath Lambert in September 2002 from London reinsurers for a particular average claim sustained by an INC dredger the Carabobo. Banesco claim payment of the sum or the right to set it off against what if anything it owes to Heath Lambert.
On 7 December 2004 Scort disappeared from the scene and their solicitors came off the record.
On 13 July 2005, Heath Lambert served a defence to Banesco's counterclaim asserting a particular lien over the loss proceeds $325,000 under section 53 (2) of the Marine Insurance Act 1906 for the premiums which it seeks in the action.
The Defence to counterclaim also raises a claim for unjust enrichment in the event that Banesco is paid the loss proceeds.
Heath Lambert asserts its right to a lien over the loss proceeds. Banesco disputes both the existence of that lien and, if t wrong about that, the extent of the rights afforded by it.
Submissions of the Claimant
Mr Jowell points out that section 52(2) of the Marine Insurance Act gives the broker "as against the assured, a lien upon the policy for the amount of the premium and its charges in respect of effecting the policy".
He also relies upon 2 passages from Arnould, the Law of Marine Insurance, 16th Edition as follows:-
a)"the agent who effects a policy for his principal and advances the premium or becomes responsible for it, and retains the policy in his hands, has a lien upon it for his commission and the premium until the same are paid to him or he is supplied with funds for the payment, whether his immediate employer is the assured himself or an intermediate agent, and in the latter case whether the intermediate agency was known or not known to the sub-agent claiming the lien"
b) "Where the broker is authorised to collect losses or returns of premiums his right to retain the sum for which he has a lien out of moneys received by him under the policy has been expressly recognised and seems clearly established".
Heath Lambert's position is that this is a straightforward matter. The law permits and justice requires that it retain the proceeds to secure the unpaid premium.
Banesco's submissions
Arguments put forward in the witness statement of Mr Cleary are refined in the skeleton argument of Mr Millett QC which raises 3 points.
First it is submitted that any lien is limited to the amount of Heath Lambert's claim to the premium. That is plainly...
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