Royal & Sun Alliance Insurance Plc v Textainer Group Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 26 July 2021 |
| Neutral Citation | [2021] EWHC 2102 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2020-000802 |
[2021] EWHC 2102 (Comm)
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2020-000802
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Peter MacDonald Eggers QC (instructed by Kennedys Law LLP) for the Claimants
Christopher Smith QC (instructed by BDM Law LLP) for the Defendants
Hearing date: 16 July 2021
| (A) INTRODUCTION | 3 |
| (B) KEY FACTS AND ISSUES | 3 |
| (C) TEXTAINER'S CPR 19.3 OBJECTION | 9 |
| (D) ANALYSIS | 13 |
| (E) CONCLUSIONS | 16 |
(A) INTRODUCTION
This judgment follows a Case Management Conference, at which was also listed the Claimants' application for orders under CPR 19.6(1)(b) that the First Claimant (“ RSA”) be permitted to act as representative of four other insurers who participated as followers in the Primary Policy in issue in this case, and that RSA also be permitted to act as representative of the only other insurer who participated in the First Excess Policy. As noted below, a further question was raised as to whether the action is properly constituted having regard to CPR 19.3, and that topic is the main subject of this judgment.
(B) KEY FACTS AND ISSUES
It is convenient for present purposes to take the basic facts largely from a combination of the Agreed List of Issues and Common Ground, the draft Amended Particulars of Claim and the Defence, as follows.
The Claimants (and those they seek to represent) are companies engaged in the business of insurance and reinsurance. The First Defendant and its subsidiaries (“ Textainer”), the Second to Eleventh Defendants, are (or were) companies engaged in the business of leasing intermodal containers, with more than 3.5 million twenty-foot equivalent units in their owned and managed fleet.
Textainer entered into a number of insurance contracts which together represented an excess of loss insurance programme. By these insurance contracts, the subscribing insurers agreed to indemnify Textainer against specified types of loss relating to marine containers, for specified layers up to US$80,000,000 in excess of the “ Assured's Retention” (which was defined to be US$5,000,000 other than in respect of Off-hire Equipment and the General Average & Salvage Extension) for the period from 1st October 2015 to 30th September 2016. The insurance contracts comprised:
i) the Primary Policy, issued by seven insurers led by RSA, subject to a sum insured of US$5,000,000 in excess of the Assured's Retention;
ii) a First Excess Policy, issued by RSA and XL Insurance Company SE (“ XL”), subject to a sum insured of US$5,000,000 in excess of the limits of the Primary Policy;
iii) a Second Excess Policy, issued by RSA and the Fourth Claimant (“ TT Club”), subject to a sum insured of US$5,000,000 in excess of the limits of the First Excess Policy;
iv) a Third Excess Policy, issued by the Second Claimant (“ IGI”) and the Third Claimant (“ HDI”), subject to a sum insured of US$25,000,000 in excess of the limits of the Second Excess Policy;
v) a Fourth Excess Policy, issued by XL, subject to a sum insured of US$10,000,000 in excess of the limits of the Third Excess Policy; and
vi) a Fifth Excess Policy, issued by a number of insurers led by IGI (“ the Fifth Excess Insurers”), subject to a sum insured of US$30,000,000 in excess of the limits of the Fourth Excess Policy.
The Primary Policy contained the following Recoveries Condition:
Although not every section of this Policy may relate to a marine adventure, all the terms, conditions and warranties of the Marine Insurance Act 1906 shall apply to the insurance under this policy …
CLAIMS CONDITIONS
…
SUBROGATION AND MITIGATION
The Assured shall at the Insurers' request and expense do and concur in doing and permit to be done all such acts and things as may be necessary or reasonably required by the Insurers for the purpose minimising losses under this Policy and/or of enforcing any rights and remedies or of obtaining relief or indemnity from other parties to which the Insurers shall be or would become entitled or subrogated upon the Insurers agreeing to provide an indemnity under this Policy whether such acts and things shall be or become necessary or required before or after the Insurers indemnify the Assured.
RECOVERIES
Following the payment of a claim under this policy and in the absence of an indemnity from any other Policy specified herein any sums recovered from any other source whatsoever as or towards payment of the amount indemnified shall be shared between the Insurers and the Assured as follows:
i) all sums shall be allocated to the Insurers until the amount paid under this policy (including costs) has been recovered and
ii) all further sums shall inure to the benefit of the Assured.
When sums are received as recoveries in respect of amounts indemnified both under this policy and the other policy(ies) specified herein and the recovered sums cannot be clearly assigned to losses indemnified by any specific policy then the recovered sums shall be allocated to the Insurers and such other insurers in the same proportions as each has borne of the total loss.
Once all the insurers' claims payments (including costs) have been [sic] any further sums recovered shall insure [sic] to the benefit of the Assured.
This Condition shall not apply when recovered sums have been assigned to losses sustained and indemnified by a specific policy …
Other policy:
Credit Insurance policy with AIG Europe Limited …”
The Excess Policies incorporated the terms of the Primary Policy, including but not limited to the above-quoted Recoveries Condition, as follows:
“All terms and conditions as per the primary insurance … as amended, and subject to the conditions of this insurance, to follow the settlements of the primary underlying insurance in all respects as far as applicable hereto …
Unless as otherwise stated, it is understood and agreed that this insurance shall apply on a ‘following form basis’ to all terms and conditions stated in the primary insurance, but insofar as applicable to the insurance terms hereto …”
The Fifth Excess Policy included the above-quoted incorporating language, but the first paragraph read: “… subject to the conditions of this insurance, to follow the settlements of the primary underlying insurance in all respects as far as applicable hereto, but excluding loss of earnings in respect of this excess layer only”.
Each of the Policies is expressed to be governed by English law.
Textainer had leased more than 112,000 containers to Hanjin Shipping Co Ltd of South Korea (“ Hanjin”). On 31st August 2016, Hanjin applied to the Seoul Central District Court for its receivership. This prompted Hanjin's default under its various leases with Textainer and Hanjin ceased to perform its contractual obligations under those leases. As a result, Textainer suffered losses of or damage to the containers leased to Hanjin and related loss of earnings. Textainer alleges that it has suffered approximately US$102 million of losses as at March 2018.
Textainer claimed an indemnity in respect of such losses under the Policies. It received indemnity payments from each of the subscribing insurers, and those indemnities represented payment in full under the Primary Policy and the First, Second, Third and Fourth Excess Policies.
With respect to the Fourth Excess Policy, XL paid Textainer's claim. Subsequently, XL and Textainer entered into a settlement agreement in June 2019 which included a promise by Textainer to pay XL US$1,300,000. The agreement contained the following provisions:
“WHEREAS:
…
(D) Textainer made a formal written presentation of its claim to the underwriters of the container lessee default insurance program. Insurers paid the full limit under the Policy. As a result, Insurers became subrogated to certain rights of Textainer and are entitled to recovery monies received by Textainer. Textainer wishes to make a payment to Insurers in full and final settlement of those rights of subrogation such that Textainer is entitled to retain any sums recovered by Textainer.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. Textainer will pay the sum of US$1.3 million … to Insurers (the “Settlement Funds”) in full and final settlement of all and any rights arising by reason of subrogation under the Policy. If and to the extent that Textainer make any further recovery against Hanjin which would otherwise be payable to Insurers under the Policy, Textainer are entitled to keep such proceeds …
3. Payment and receipt of the Settlement Funds shall be in full and final settlement of Insurers claim against Textainer under the fourth excess layer of the container default insurance program and the Policy in relation to the Hanjin Claim … relating in any way to the Hanjin Claim.
4. The Insurers waive any claim that they have or may have in relation to (i) the...
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Rare Authority On CPR 19.3: Representative Claim By And On Behalf Of Insurance Companies Is Properly Constituted (Royal & Sun Alliance Insurance Plc And Others v Textainer Group Holdings Ltd And Others)
...Sun Alliance Insurance plc and others v Textainer Group Holdings and others [2021] EWHC 2102 (Comm): Phillip Patterson takes a look at this case in which permission was granted to the insurer, Royal & Sun Alliance (RSA) to bring a representative claim on behalf of a number of other insurers......
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Rare Authority On CPR 19.3: Representative Claim By And On Behalf Of Insurance Companies Is Properly Constituted (Royal & Sun Alliance Insurance Plc And Others v Textainer Group Holdings Ltd And Others)
...Sun Alliance Insurance plc and others v Textainer Group Holdings and others [2021] EWHC 2102 (Comm): Phillip Patterson takes a look at this case in which permission was granted to the insurer, Royal & Sun Alliance (RSA) to bring a representative claim on behalf of a number of other insurers......