Markel International Insurance Company v Surety Guarantee Consultants Ltd and Others

JurisdictionEngland & Wales
JudgeMr. Justice Teare
Judgment Date17 December 2008
Neutral Citation[2008] EWHC 3087 (Comm),[2008] EWHC 1135 (Comm)
Docket NumberClaim No.2006 Folio 1287
CourtQueen's Bench Division (Commercial Court)
Date17 December 2008

[2008] EWHC 1135 (Comm)




Royal Courts of Justice

Strand, London, WC2A 2LL


Mr. Justice Teare

Claim No.2006 Folio 1287

Claim No.2007 Folio 67

Markel International Insurance Company Limited
(1) Surety Guarantee Consultants Limited
(2) Timothy Patrick Thomas Higgins
(3) Barry Williams
(4) Clifford Edward Felstead
(5) Ralph Brunswick
(6) General Commercial Limited
Qbe Insurance (Europe) Limited
Amalfi Underwriting Limited
(1) Surety Guarantee Consultants Limited
(2) Timothy Patrick Thomas Higgins
(3) Barry Williams
(4) Clifford Edward Felstead
(5) Ralph Brunswick General Commercial Limited

Michael Swainston QC and Stephen Midwinter (instructed by Reynolds Porter Chamberlain) for Markel

Derrick Dale (instructed by Davies Arnold Cooper) for QBE and Amalfi

Richard Lynagh QC and Ben Quiney for the Second Defendant (instructed by Hannah & Mould)

The Third Defendant represented himself

The Fourth Defendant was not represented

The Fifth Defendants was unrepresented until 3 March when he represented himself

Approved Judgment

Hearing dates: 11–14, 18–21, 25–28 February and 3–6 and 12–13 March 2008

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.


Mr. Justice Teare

This is the judgment of the Court in two separate actions. The issues in the two actions are very similar and the defendants to both actions are the same. For these reasons the two actions have been tried together.

The Claimants


The first Claimant is Markel International Insurance Company Limited (“Markel”), a UK insurance company which is part of the Markel Corporation, a United States insurance group. 1 The second Claimant is QBE Insurance (Europe) Limited (“QBE”), a UK insurance company which is part of QBE Insurance, an Australian insurance group. The third Claimant is Amalfi Underwriting Limited (“Amalfi”), a managing general agency established in 2005 to act for underwriters who wrote speciality lines of business. 2

The Defendants


There are six defendants to each action. 3 The first defendant is Surety Guarantee Consultants Limited (“SGC”), an underwriting agent. The action against that company has been stayed because it is in liquidation. The second Defendant is Timothy Higgins, a director of SGC. He was represented at trial by counsel. The third Defendant is Barry Williams. He was also a director of SGC. He represented himself at the trial. He had been represented in the past but I was told that he was unable to continue funding that representation. The fourth Defendant is Clifford Felstead. He was an employee of SGC in a management or administrative role. He was not represented at the trial and did not appear at the trial. He wrote to the Court on the opening day of the trial indicating that his means were such that he could not afford to travel to court and that he had a heart condition. By a letter dated 13 February 2008 a Dr. James of the Pall Mall Surgery (in Leigh-on-Sea) informed me that Mr. Felstead was under investigation and treatment for an atrial fibrillation problem and that, unless it was necessary, it would be much better for him to avoid daily attendance at Court. The fifth defendant was Ralph Brunswick. He was a director of Templeton Insurance Limited (“Templeton”), an insurance company incorporated in the Isle of Man, from June 1994 until June 2006. Until the opening day of the trial Mr. Brunswick was represented by counsel. But on that day I was told that he was no longer able to continue funding that representation and so his counsel (who had submitted a lengthy Skeleton Argument and bundle of authorities the previous week) withdrew from Court, as did Mr. Brunswick himself. He indicated that he would not be giving evidence but reserved the right to comment on the issues in the case if he wished. At the end of the third week of the trial he informed me and the other parties that he would attend Court on 3 March 2008 (the beginning of the fourth week) to be cross-examined. In the event he gave evidence on 4 and 5 March 2008. Thereafter he remained in Court and represented himself. The sixth defendant was General Commercial Limited, a company registered in the British Virgin Islands. QBE had

entered judgment in default of defence against the sixth defendant and I gave leave for Markel to do so on the opening day of the trial.

The claims


The Claimants allege that the Defendants practised a fraud on Markel, QBE and Amalfi between January 2005 and August 2006 in connection with the writing of surety bonds. The burden of proving this fraud lies upon the Claimants who must do so on the balance of probabilities. But cogent evidence, commensurate with the gravity of the allegations made against the defendants, is required to prove the allegation on the balance of probabilities; see Ikarian Reefer [1995] 1 Lloyd's Rep. 455 and Re. H [1996] AC 563.


Surety bonds are undertakings given at the request of a client by the surety (usually an insurance company or a bank) to pay the beneficiary a sum of money (up to a stated limit) in certain events, usually the failure by the client to discharge his contractual obligations to his customer, the beneficiary. In the construction industry the type of bonds normally required are advance payment bonds, performance bonds, maintenance bonds and retention bonds. A premium is paid by the client to the surety as the surety's fee for bearing the risk implicit in issuing the surety bond. The UK surety market is relatively small and specialised. The premium income accruing to insurance companies from the writing of surety bonds is unlikely to exceed £100m. per annum. Clearing banks also provide surety bonds. Their income from such business is thought to be about three times that of the insurance companies.


Markel granted SGC a Binding Authority commencing on 1 January 2005 authorising SGC “to bind surety bonds” for the account of Markel. The principal reason for granting this Binding Authority was that Mr. Higgins was known to have much experience in writing surety business and was regarded as being skilled and successful in doing so. But Markel's speciality underwriter left to join Amalfi and in the light of indications that SGC's business was to follow him the Binding Authority was terminated by Markel by letter dated 1 November 2005. QBE granted Amalfi a Binding Authority commencing on 1 October 2005 “to bind surety bonds” for the account of QBE and Amalfi in turn entered into an Underwriting Management Agreement with SGC commencing on 1 October 2005 which authorised SGA “to submit for approval Surety Bonds.” The agreement between Amalfi and SGC was terminated by Amalfi on 21 August 2006.


The Claimants allege that SGC wrote bonds which exceeded the limits, in particular the financial limits, of the Binding Authority with Markel and of the Management Agreement with Amalfi. This exposed the Claimants to greater liabilities than they had agreed to bear and enabled SGC to obtain premium payments in excess of those to which they would have been entitled had they kept to the terms of the agreements. The excess was not paid to the Claimants. In these actions the Claimants seek to recover their losses and the unpaid premium from the four individual Defendants. Several causes of action are relied upon; breach of fiduciary duty (against all four save Mr. Brunswick), conspiracy to defraud, dishonest assistance in breach of trust or fiduciary duty by SGC and procurement of a breach of contract by SGC. The Claimants allege that each of the four defendants acted dishonestly.


The four individual defendants deny that they practised a fraud on the Claimants. Mr. Higgins, Mr. Williams and Mr. Felstead deny that they owed any fiduciary duties to the Claimants. Each defendant denies that he acted dishonestly. A theme common to the defences of Mr. Higgins, Mr. Williams and Mr. Felstead (but not Mr. Brunswick) is that Templeton was a “silent co-surety” on those bonds which exceeded the financial limits so as to ensure that the Claimants' ultimate liability did not exceed those limits.

The facts not in dispute


Mr. Higgins had been a leading figure in one sector of the surety bond market, namely, the writing of bonds for small to medium construction companies in the UK and Ireland. His business was incorporated as College Hill Underwriters Ltd. (“College Hill”). From 1995 until 2003 he had written surety business for Euler Hermes, part of the Allianz Group and one of the small number of underwriters in the surety bond market. In 2003 that arrangement came to an end when Euler Hermes purchased Mr. Higgins' business.


At some stage Mr. Higgins had begun to write surety business for Templeton. Templeton had reinsurance for such business and prior to June 2004 Markel had participated on a quota share reinsurance of the surety bond account written by Templeton.


As a result of Mr. Higgins' wish to continue his involvement in the surety bond business he had discussions with Mr. Brunswick (of Templeton), Mr. Felstead (who had had some experience of the surety bond business) and Mr. Godwin (a general insurance broker). These discussions led to the incorporation of SGC on 6 February 2004 and to the incorporation of Godwin Higgins Insurance Brokers Limited (“GHIBL”) on 9 February 2004. SGC was to conduct business as an underwriting agent in the surety bond business and GHIBL was to provide insurance for the construction industry on the strength of contacts made by SGC in the surety bond business.


On 30 June 2004 there was a meeting between Mr. Peter Smith, the speciality underwriter at Markel (“Mr. Smith”), Mr.Higgins...

To continue reading

Request your trial
2 cases
  • David Jackson v Thompsons Solicitors (A Firm)and Others
    • United Kingdom
    • Queen's Bench Division
    • 6 Febbraio 2015
    ...where Mr Brunswick's honesty has been in issue. He was found to have acted dishonestly in two cases: in Markel International Insurance Co. Ltd v. Surety Guarantee Consultants [2008] EWHC 1135 (Comm), by Teare J, and in Templeton v. Brunswick [2012] EWHC 1522 (Ch), by HHJ Simon Barker QC. He......
  • Barry Williams v The Financial Services Authority
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 30 Novembre 2011
    ...3 June 2008 in the case of Markel International Insurance Company Limited and others v Surety Guarantee Consultants Ltd and others [2008] EWHC 1135 (Comm) (the “High Court proceedings”) in which Mr Williams was the third defendant. In those proceedings Mr Justice Teare found that three of M......
2 firm's commentaries
  • Insurance: Personal Responsibility For Breach Of Binding Authorities: Who Pays What?
    • United Kingdom
    • Mondaq United Kingdom
    • 22 Gennaio 2009
    ...this finding failed for estoppel reasons. Further reading: Markel International Ins Co v Surety Guarentee Consultants Ltd and Others [2008] EWHC 1135 (Comm) This article was written for Law-Now, CMS McKenna's free online information service. To register for Law-Now, please go to
  • International Round Up
    • Australia
    • Mondaq Australia
    • 24 Ottobre 2008
    ...International Insurance Co Ltd v Surety Guarantee Consultants Ltd and others [2008] EWHC 1135 Markel International Insurance Co Ltd, QBE Insurance (Europe) Limited and Amalfi Underwriting Limited (collectively the Claimants), brought proceedings in England's High Court against Surety Guaran......
1 books & journal articles
  • When the court finds a breach of fiduciary obligations, should equitable or legal remedies flow?
    • Canada
    • University of New Brunswick Law Journal No. 66, January - January 2015
    • 1 Gennaio 2015
    ...(2002) 11 Wm & Mary Bill Rts J 343. (37) See e.g. Market International Insurance Company Ltd v Surety Guarantee Consultants Ltd, [2008] EWHC 1135 (Comm), [2009] Lloyd's Rep IR 77 (38) Angela Swan, Canadian Contract Law, 2nd ed (Markham, ON: Lexis Nexis, 2009) at 653, citing Redgrave v H......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT