A Lloyd's Syndicate v X
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE TEARE |
| Judgment Date | 03 October 2011 |
| Neutral Citation | [2011] EWHC 2487 (Comm) |
| Docket Number | Case No: FOLIO 2011 1089 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 03 October 2011 |
[2011] EWHC 2487 (Comm)
Mr. Justice Teare
Case No: FOLIO 2011 1089
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Hunter (instructed by Clyde & Co.) for the Claimant
Michael Holmes (instructed by Hogan Lovells) for the Defendant
Hearing dates: 30 September 2011
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application by the Claimant, a Lloyd's insurance syndicate acting on its own behalf and on behalf of other Lloyd's syndicates, for an injunction restraining the Defendant from giving expert evidence in an arbitration (between the Claimant and a Reinsurer) due to commence on 10 October 2011. The application was issued on 16 September and was heard on 30 September. In view of the proximity of the arbitration hearing the decision of the Court was required urgently.
This unusual, but not unprecedented, application has come about in the following way.
In July 2007, Clyde & Co., acting on behalf of the Claimant, instructed the Defendant (who had spent 35 years in the aviation reinsurance market) to act as an expert for the Claimant in relation to a reinsurance claim against another reinsurer ("the Other Reinsurer"). The claim concerned losses arising from the events of 9/11 which the Claimant claimed under an OLW reinsurance issued by a reinsurance pool, whose members included both Reinsurers. The Defendant's instruction is recorded in letters from Clyde & Co dated 26 July 2007 and 7 September 2007. His opinion was sought on a number of issues but they did not include what is known as the "Interlocking Clause". The Other Reinsurer had not, at that stage, relied upon that clause.
At the time the Defendant was acting as a consultant to the Reinsurer on unrelated matters. The Claimant and the Reinsurer were in dispute (the very dispute which is to be arbitrated in October 2011) and so on 20 September 2007 Clyde & Co emailed the Defendant and told him that the Claimant had a separate dispute with The Reinsurer and was "especially anxious that nothing about the [Other Reinsurer] claim leaks through to [he Reinsurer] ie totally confidentiality".
The Other Reinsurer arbitration was not progressed in 2007 and the Defendant closed his file in November 2007. However by January 2009 the matter had become live again and Clyde & Co wrote to the Defendant asking him to resume his role. At this stage the issues in the Other Reinsurer arbitration still did not include the Interlocking Clause.
However, by February 2009 the Reinsurer had rejected the separate claims made against it on the reinsurance on grounds which included the contention that the Interlocking Clause applied to reduce the claim. The Claimant believed that the Reinsurer and the Other Reinsurer might cooperate and on the 4 th March 2009 the Reinsurer told the Claimant that they and the Other Reinsurer had met to discuss their defences. It was feared that the Other Reinsurer might seek to raise the Interlocking Clause issue through expert evidence in its arbitration. That is exactly what happened. The Other Reinsurer served an expert report from a Mr Z on 13 March 2009 which raised the Interlocking Clause issue.
On 16 March 2009 the Defendant was provided by Clyde & Co. with a copy of Mr. Z's report. Up until this time he had been unaware of any reliance being placed on the Interlocking Clause. The next day he had a discussion with Mr. B of Clyde & Co. and spent about half an hour reading the report. Paragraphs 45 and 46 of the report dealt with the Interlocking Clause.
It is necessary to set out the Interlocking Clause:
"In the event of a loss occurring hereunder for any sum in excess of the Priority of this Contract involving two or more policies accepted by the Reinsured attaching to different periods of reinsurance, then such Priority shall be reduced to that percentage thereof which the Reinsured's settled loss(es) on such policy(ies) attaching to the period of this Contract bears to the total of the Reinsured's settled losses arising out of all such policies contributing to the loss. The Indemnity shall likewise be computed in the same manner."
The issue which has arisen with respect to this clause may, for the purposes of this application, be expressed shortly. It is whether the clause operates so as to apportion losses between different periods of reinsurance, irrespective of whether the insured had reinsurance for the periods in question.
Mr Z's view for the Other Reinsurer was that the Interlocking Clause applied irrespective of whether the insured had reinsurance for the periods in question.
When reading Mr. Z's opinion on the Interlocking Clause the Defendant wrote "agree" next to it and underlined the words "different periods of reinsurance" in the quoted Interlocking Clause. The Defendant has said that he disagreed with Mr. Z's use of the term "underwriting year" in his explanation of his opinion because the clause used the phrase "periods of reinsurance". Counsel for the Claimant cast doubt on this evidence but it is consistent with the Defendant's underlining of the phrase "periods of reinsurance." I do not consider that I can reject the Defendant's evidence.
Thereafter there were discussions between the Claimant, Clyde & Co. and the Defendant. Two of these are of significance; a telephone call lasting about an hour on 25 March 2009 between Mr. B of Clyde & Co. and the Defendant and a meeting on 7 April 2009 between Mr. B, representatives of the Claimant and the Defendant.
There is no note of the telephone call on 25 March 2009. Mr. B has a recollection of it, though it is common ground that his recollection was at fault in that he thought the conversation took place at a meeting. The Defendant's recollection of the call is that the Interlocking Clause was discussed and that he said that he generally agreed with Mr. Z's analysis of it. Mr. B's recollection of the meeting is more detailed. He recalls that Mr. Z's opinion was discussed and that they had a more general discussion about the Interlocking Clause and the steps that a placing broker would take when placing an RAD ("risks attaching during") reinsurance. There was also a discussion about making claims on such a policy. Mr. B put hypothetical scenarios to the Defendant. The Defendant remained of the view that Mr. Z's opinion was correct. After the discussion Mr. B thought that it would be necessary to "work through some examples with [the Defendant] to test his understanding, conclusions and thinking on the issue of interlocking." Accordingly a meeting was arranged which would be attended by representatives of the Claimant and the Defendant.
That meeting took place on 7 April 2009. An attendance note was kept of that meeting by Ms. K of Clyde & Co. The note commences by saying that the purpose of the meeting was to hear the Claimant's views on how the Interlocking Clause operated and to try to understand the differences between the Claimant's and the Defendant's interpretation of the clause. The Claimant's contention was that the clause did not apply to reinsurance periods in respect of which the Claimant did not have a policy of reinsurance. It is clear from that note that the Defendant maintained his opinion and relied in particular on the phrase "different periods".
"[The Defendant] said that LSW304A is a standard clause, and the wording does not say what [the Claimant] contends. The clause talks about "different periods", not just from 1 November 2000 onwards. If [the Defendant] were the broker and the intention was not to interlock backwards, he would have put specific wording to that effect. The fact that there is no prior policy does not matter; [the Defendant] would still expect a clause saying that the Interlocking Clause should not apply backwards."
It is also clear that Mr. B, having put forward the Claimant's interpretation of "periods of reinsurance", then put questions to the Defendant which were designed to persuade him that the Claimant's view of the clause was correct. The Defendant is recorded as saying that "he is now grappling with the idea of whether he would be happy to argue [the Claimant's] interpretation, now that he has been advised of the specifics of the case." There followed a discussion about the origin and purpose of the clause and how the members of the arbitration panel might decide the issue.
After that meeting, perhaps later that day, the Defendant informed Mr. B that he did not share the Claimant's view as to the interpretation of the Interlocking Clause. In due course in May 2009 the Defendant gave evidence in the Other Reinsurer arbitration on issues other than the Interlocking Clause.
In May 2010 the Claimant, in a separate arbitration, pleaded its case against the Reinsurer. At paragraph 24(d) it set out its allegations as to the proper construction of the Interlocking Clause.
In June 2010 the Reinsurer pleaded its case against the Claimant. Paragraph 24(d) of the claim was denied.
In October 2010 the Defendant accepted instructions to provide expert evidence for the Reinsurer in relation to the Interlocking Clause. He accepts that this is the same clause and same issue which arose in the Other Reinsurer arbitration. Prior to this time he had been unaware that the Reinsurer had raised any issue with the Claimant about the...
To continue reading
Request your trial
-
Sweeney v The Voluntary Health Insurance Board Ireland
...and these proceedings were not identical. Held by Barrett J that it follows from Teare J’s observations in A Lloyd’s Syndicate v. X [2011] EWHC 2487 (Comm) that, in an application such as the within, the burden of proof rests on the applicant to show that the expert will misuse confidential......
-
Shay Sweeney and The Limerick Private Ltd v The Voluntary Health Insurance Board Ireland
...Meat Corporation of Namibia Ltd v. Dawn Meats (UK) Ltd. [2011] EWHC 474 (Ch.) (“ Meat Corporation”) and A Lloyd's Syndicate v. X [2011] EWHC 2487 (Comm.), [2012] 2 Lloyd's Rep 123 (“ Lloyd's Syndicate”), where the judges had in turn relied on the earlier case of Harmony Shipping Co. v. S......
-
Sweeney v The Voluntary Health Insurance Board
...to protect the privilege. Where the use of privileged material is inevitable the court will intervene.” 39 72 A Lloyd's Syndicate v X [2011] EWHC 2487 was decided shortly after Meat Corporation of Namibia. The claimant sought an injunction restraining the defendant from giving expert eviden......
-
A Company v X
...use of privileged material is inevitable the court will intervene.” 49 Similar facts arose in the case of A Lloyd's Syndicate v X [2011] EWHC 2487 (Comm). The claimant sought an injunction restraining the defendant expert from giving evidence on the ground that he had obtained privileged a......