Moran v Lloyd's
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS |
| Judgment Date | 02 March 1983 |
| Neutral Citation | [1983] EWCA Civ J0302-5 |
| Judgment citation (vLex) | [1980] EWCA Civ J0731-6 |
| Docket Number | 83/0095,1980 M. No. 845 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 March 1983 |
[1980] EWCA Civ J0731-6
The Master of the Rolls
(Lord Denning)
Lord Justice Cumming-Bruce
and
Lord Justice Ackner
In The Supreme Court of Judicature
Couet of Appeal (Civil Division)
On Appeal from the High Court of Justice
Oueen's Bench Division
(Mr. Justice Mustill)
MR. M. LITTMAN, Q. C. and MR. N. D. BRATZA and DR. J. FINNIS (instructed by Messrs. Goodman, Derrick & Co.) appeared on behalf of the Plaintiff (Appellant).
MR. P. SCOTT. Q. O. and MR. A. TOSWOOD (instructed by Messrs. Fresh fields) appeared on behalf of the Defendant (Respondent)
Everyone has heard of Lloyds. It is the greatest insurance market in the world. Its very existence depends on its good name. That is to say, on its reputation for integrity, for probity, and for meeting all its obligations - moral as well as legal - without demur and without delay. That reputation should be, and is, jealously guarded by the Committee of Lloyds. One of their most important functions is to see that the members conduct themselves honestly and properly: and, if any should fail to do so, to take disciplinary proceedings against him. Parliament has provided machinery in section 20 of Lloyds Act 1871. If any member is guilty of discreditable conduct, he can be brought before two arbitrators (one appointed by himself and one by the Committee) with an umpire nominated by the Recorder of London. In passing, I may say that I would have thought it perfectly proper and right that the umpire should sit throughout with the two arbitrators - as is done in every commercial arbitration in the City of London.
In April 1979 there was much concern in Lloyds about the dealings of one of the members named Christopher John Moran. Independent auditors had examined the books of Mr, Moran and his group and had found some apparent irregularities. They consulted Mr. Charles Gibb the Deputy Chairman of Lloyds. In consequence the Chairman set up an ad hoc committee called a "Rota Committee". That is recognised machinery at Lloyds for investigating any matters that need investigation. On this occasion the members were Mr. Paul Dixey and three others -all highly respected members of Lloyds. Mr. Dixey had himself been Chairman of Lloyds in his time. So had his father before him None of those on the Rota Committee were on the Committee of Lloyds itself.
The Rota Committee held many hearings in May and June 1979. Their procedure was this: They had before them the auditor's report, and the appendices to it with all the documents, such as the slips and so forth. They had studied all those documents. They called before them the auditors and book-keepers of the Moran Group. They also called before them Mr. Moran and all the executive officers of his group. Mr. Moran was always accompanied by his solicitor. The Chairman and members of the Committee asked questions of Mr. Moran and the others - seeking to discover whether there were any irregularities - and to receive any explanations. They had a tape recording made of all that was said.
On the 9th June, 1979 the Rota Committee submitted their report to the Chairman of Lloyds. The Chairman did not at that stage refer it to the whole Committee of Lloyds. Instead he referred it to a sub-committee, well-known - in Lloyds, called "The Three Chairs". It consists of the Chairman himself and the two Deputy Chairmen. He asked the Three Chairs to consider whether disciplinary proceedings should be taken against Mr. Moran. The result is given in the words of Mr. Charles Oliver Gibb, one of the three. He said this in his affidavit:
"After anxious consideration of the Rota Committee Report I, the current Chairman, and the immediate past Chairman of Lloyds, came to the conclusion that the prima facie evidence available to us indicated that Mr. Moran had been guilty of the gravest misconduct, involving the misappropriation by the broking company of funds belonging to the members of Syndicate 566, grave breaches by the broking company and the underwritingagent of their respective duties to others within the Lloyd's Community, and behaviour generally which was wholly inconsistent with his continued presence as a member of that Community. It seemed to us, and still seems to us, that the interests of Lloyd's (and indeed, the public interest) required that such disciplinary powers as Lloyd's has should be invoked in this case".
That is a responsible affidavit by a responsible Deputy Chairman of Lloyds as a result of their anxious and careful consideration.
The Three Chairs made their recommendations on the 18th October, 1979 They recommended that the circumstances would justify the institution of proceedings under section 20 of the 1871 Act. They prepared draft "Particulars of Complaint" setting out the acts or defaults of Mr. Moran which they alleged were discreditable. These were served on Mr. Moran. Lloyds appointed their arbitrator and called upon Mr. Moran to appoint his. But he for three months failed to do so. On the 21st January, 1980 Lloyds told Mr. Moran that, if he failed to appoint his arbitrator, they would ask their arbitrator to proceed as sole arbitrator in accordance with section 7 of the Arbitration Act 1950.
Then - and then only - did Mr. Moran make any complaint about the proceedings that had taken place before the Rota Committee or by the Three Chairs. On the 1st February, 1980 his solicitors wrote this letter, which is the first letter of complaint:
"However, it is our view and that of Counsel that the Rota Committee Report does not form any proper basis or foundation for any charges or proceedings against our client,whether by way of arbitration or otherwise. The reason for this is that the evidence indicates that the proceedings leading up to the Report were not conducted fairly or in accordance with natural justice and that the Report itself is unmerited, unfair and not supported by the evidence. Indeed, it is considered that the defects are so serious and prejudicial as to cast the gravest doubts on the possibility of securing any fair and impartial arbitration under the Act".
That letter by Mr. Koran's solicitors was a counter-attack. They attacked the proceedings of the Rota Committee. On the 26th February, 1980 the solicitors for Mr. Moran followed this up by a writ against Lloyds claiming an injunction to stop that arbitration, it was supported by an affidavit by Mr. Moran in which he set out several respects in which he said that the Rota Committee had misconducted them selves. It was followed on the 24-th March, 1980 by further evidence.
This claim for an injunction was so urgent that the judge heard it at once. The hearing took three days He gave his decision on the 2nd April, 1980. He held that there were several triable issues - so the action by Mr. Moran had to go for trial - but he held that on the balance of convenience he would not grant an injunction to stop the arbitration. There is now an appeal to this court.
It was argued on behalf of Mr. Moran that the balance of convenience was all his way: that the proceedings of the Rota Committee, or anything based upon them, should be postponed: that the arbitration should be stopped until after his action had been tried. That would mean a long delay.
There would obviously be some time before it came on for trial: and, if there were appeals, some time before the appeals would be decided.
I must say at once that I think the arbitration proceedings should proceed at once. They should not be held up. I will come back to that later. But first and foremost I do not think that there are any real triable issues in this case.
The complaints made by Mr. Moran are numerous. I will not go through them in detail. They are all directed at the Report of the Rota Committee. It is said that the Rota Committee made mistakes such as in their use of the word "deduction" or the word "commission" and as to this "slip" or that. Such mistakes if there were any - are not evidence of bias or of any misconduct at all in the conduct of the proceedings. Hot enough to found any basis for setting them aside. All of us make mistakes in giving reasons. If you disregard all the passages complained of, and confine yourself to the rest of the Rota Committee's Report, it is plain that there is a prima facie case against Mr. Moran - sufficient to warrant the proceedings.
Then it was said that the Chairman, Mr. Dixey, was hostile: that "he asked questions in a hostile manner of the witnesses. It seems to me that he was only seeking to elucidate the points which arose. He was probing - just as any of us do when trying a case. It seems to me that there is nothing whatever in the suggestion that the conduct of the Rota Committee proceedings was in any way unfair or hostile to Mr. Moran.
These allegations reached their peak when it was said thatMr. Dixey was actuated by "bias". What did that come to? It came to a lot of tittle-tattle which is said to have gone the rounds at Lloyds. (1) Mr. Moran said that in 1974 he had a meeting with Mr. Dixey during which Mr. Dixey showed vigorous animosity towards him. (2) Mr. Archer, a member of Lloyds, said that some time ago he had a talk with Mr. Dixey during which Mr. Archer said: "All the good people are leaving Lloyds", and Mr. Dixey replied: "Well: there are others whom I should like to see leaving". Mr. Archer asked Mr. Dixey: "Who are you referring to?", and he said: "People like Moran". (3) Mr, Posgate, also a member, said that in about 1975 – four years earlier - "Mr. Paul Dixey said to me in the course of conversation "I wish I had never agreed to admit Christopher Moran & Company as Lloyd's brokers".
There it is. Those are the sort of allegations which are made to impugn the good conduct of the Rota Committee. To my...
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