Punjab National Bank v de Boinville
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STAUGHTON,LORD JUSTICE MANN,LORD JUSTICE DILLON |
| Judgment Date | 17 May 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0517-1 |
| Docket Number | 91/0497 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 May 1991 |
[1991] EWCA Civ J0517-1
Lord Justice Dillon
Lord Justice Staughton
Lord Justice Mann
91/0497
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 HOBHOUSE)
Royal Courts of Justice
MR IAIN MILLIGAN Q.C. and MR ANDREW BAKER, instructed by Messrs Waltons & Morse, appeared for the Appellants (First and Fourth Defendants) and, instructed by Messrs Outram Kilpatrick & Co., for the Appellant (Second Defendant).
MR ROBERT WEBB Q.C. and MR GEORGE LEGGATT, instructed by Messrs Cameron Markby Hewitt, appeared for the Appellants (Third Defendants).
MR STUART ISAACS Q.C. and MR DAVID OWEN, instructed by Messrs Slaughter & May, appeared for the Respondents (Plaintiffs).
MR STEPHEN RUTTLE, instructed by Messrs Clyde & Co. and Messrs Ince & Co., appeared for the Underwriters (Intervenors).
Punjab National Bank are the plaintiffs in this action, in respect of the affairs of their London branch; I shall call them the Bank. They asserted claims under four policies of insurance issued in 1983 by Lloyds underwriters ("the Insurers"), against political and exchange control risks and the like. The Insurers do not dispute the title of the Bank as an assured under the first and second policies. But they resist the claims on grounds of non-disclosure, misrepresentation etc. What is more, they seek to recover a substantial sum already paid to the Bank under a fifth and earlier policy.
In case the Insurers' allegations succeed, the Bank seek to exercise an alternative remedy against the brokers who placed the insurance. There are two preliminary difficulties which the Bank face. First, the brokers deny that the Bank were an assured under the policies, although this is admitted by the Insurers as I have said. Secondly, the placing of the insurance was carried out for the most part by two individuals, Mr de Boinville and Mr Deere, who changed their employment on several occasions during the period in which the insurances were placed. In the hope that some of these problems would be resolved, Hobhouse J. first ordered and then tried five preliminary issues, in what is now a consolidated action. This is an appeal by some of the broking parties against the judge's conclusions on some of those issues.
The four consolidated actions comprise the following:
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(i) A claim by the Insurers to recover from the Bank moneys paid under the earliest policy. That has been called "the Rome Policy", from the name of the leading underwriter.
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(ii) A claim by the Bank against the Insurers on the Bathurst policy and the Murphy/Forrest policy. These are called "the First Policy" and "the Second Policy"
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(iii) A claim by the Bank against the Insurers on the Murphy policy and the Edmunds policy ("the Third Policy") and "the Fourth Policy").
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(iv) A claim by the Bank against seven defendants who are said to have taken part in the placing of the policies mentioned at (ii) and (iii) above, as brokers. Those will be referred to collectively as the Policies, leaving out the Rome policy.
The preliminary issues only arise in that part of the consolidated action which started as action no. (iv).
The seven defendants in that action were originally (1) Mr de Boinville, (2) Mr Deere, (3) F.E. Wright (UK) Limited ("Wrights"), (4) Fielding Juggin Money & Stewart Limited ("Fieldings"), (5) Bain Clarkson Limited, (6) Pacrm International, (7) Pacrm Limited. The claim against Bain Clarkson Limited was struck out as disclosing no cause of action. Judgment was given against the two Pacrm companies in default of notice of intention to defend. So four defendants remain: the two individuals, Wrights and Fieldings. It was argued before the judge that the default judgment against the Pacrm companies provided a defence to some or all of the remaining defendants. That argument was rejected, and has not been renewed in this court.
The preliminary issues, and the judge's answers, were as follows:
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(A) Who was the assured under each of the Policies?
Answer: The Bank were an assured under the First Policy and the Second Policy. Esal (Commodities) Ltd were the assured under the Third Policy and the Fourth Policy.
(Note: This answer left open the question whether Esal (Commodities) Ltd were a co-assured under the First Policy and the Second Policy.)
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(B) Was there a contractual relationship between Esal (Commodities) Ltd and any of the relevant defendants?
Answer: No answer required.
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(C) Has an assignment transferred to the Bank any cause of action which Esal (Commodities) Ltd may have had against any of the relevant defendants?
Answer: No.
(Note: Hence it was unnecessary for question (B) to be answered.)
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(D) Was there a contractual relationship between the Bank and any of the relevant defendants?
Answer: There was a contractual relationship between the Bank and Wrights in respect of the First Policy and the Second Policy, and between the Bank and each of Wrights and Fieldings in respect of the Third Policy and the Fourth Policy.
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(E) In the absence of a contractual relationship, did any of the relevant defendants owe a duty of care to the Bank?
Answer: Yes, duties of care were owed by Mr de Boinville, Mr Deere, Wrights and Fieldings to the Bank.
There is no appeal against the judge's decision on issue (B) or issue (C), but only on issues (A), (D) and (E)—which is enough in all conscience. The broad effect of the decision on those issues was that the Bank could sue in respect of any failure to exercise reasonable skill and care by those concerned in placing the Policies; but there are or may be important points of detail affecting the Bank's position.
The Outline Facts
Esal (Commodities) Ltd, whom I shall call "Esal", were in business buying various types of goods and selling them for carriage to the Sudan. They are now in liquidation. This dispute arises from two shipments of gasoil, which they bought from suppliers. The Bank apparently provided letters of credit to pay for those cargoes. This is of no particular importance, except that it may have led to Esal owing the Bank money until the price was received from the buyers in the Sudan.
The terms of sale to those buyers provided for a confirmed letter of credit to be opened by the Bank of Sudan with Punjab National Bank, payable 180 days from the date of the bill of lading. The Bank of Sudan did open a letter of credit. The judge records that there is a dispute whether the Bank confirmed it; but this is not a problem for us. If it was confirmed, the terms upon which this was done are set out in an agreement which purports to be dated 31st March 1983; but it is said on behalf of Fieldings that the date is false, and that a part of the terms was only agreed at some later date.
The agreement recited that a letter of credit had been opened, and that the Bank had agreed to confirm it and to negotiate documents under it,
"subject to (inter alia), the Customer procuring at its own cost and expense an insurance policy or policies issued by insurers acceptable to the Bank and in form and substance acceptable to the Bank…each such policy to cover the Bank in respect of non-payment of the Letter of Credit and interest due, or to become due, thereunder."
("The Customer" there referred to is Esal.) In essence the Bank thus agreed to negotiate 180 day bills drawn on the Sudanese buyers, against the security of the promise by the Bank of Sudan that the bills would be honoured at maturity, and also the obligation of the Insurers if the letter of credit was not honoured. But there was also a provision, in clause 3, that Esal would indemnify the Bank if the amounts recovered by the Bank under the letter of credit and the insurance policy fell short of the face value of the letter of credit with interest. It is this third means of recourse for the Bank which is said by Fieldings to have been a late addition to the terms agreed between Esal and the Bank. It may have made a significant difference. Without it the Bank would have been confirming the letter of credit with recourse only against the opening bank and the Insurers; with it, the Bank became the financiers of Esal.
The first shipment with which the preliminary issues are concerned was made on 21st March 1983. It consisted of 22,000 m.t. of gasoil at a price amounting with interest to $8,861,142.15. The First Policy and the Second Policy relate to this shipment. The second shipment of gasoil, with which the Third Policy and the Fourth Policy were concerned, was made on 29th April 1983, with a total value of $8,755,989.15.
The process of placing insurance was entrusted to Mr de Boinville and Mr Deere. Until 30th November 1982 they were employees of Wrights, a Lloyds broking company. From that date they became employed by Bain Dawes Ltd, which subsequently became Bail Clarkson, the fifth defendants (against whom the claim has been struck out). At the end of February 1983 they returned to Wrights for a short period. Then at or towards the end of May they moved to Fieldings, also Lloyds brokers. It is that move which caused a good deal of the difficulty in this dispute, and the precise date when it took effect is controversial. I shall have to return to the topic later. It will also be relevant to consider when each of Esal and the Bank came to know of the change.
Mr de Boinville and Mr Deere also had an interest in the sixth and seventh defendants, Pacrm International and...
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