Royal & Sun Alliance Plc v T & N Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Judge | Lord Justice Chadwick,THE VICE-CHANCELLOR,LORD JUSTICE BUXTON,LORD JUSTICE LAWS,Lady Justice Arden |
| Judgment Date | 29 October 2003 |
| Neutral Citation | [2003] EWCA Civ 1599,[2002] EWCA Civ 1964 |
| Docket Number | A3/2003/1254,Case No: 2002/2535 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 October 2003 |
[2002] EWCA Civ 1964
Lord Justice Chadwick and
Lady Justice Arden
Case No: 2002/2535
2002/2730
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE LLOYD)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Jeffrey Terry and Mr David Hoffman (instructed by Davies Wallis Foyster of Harvester House, 37 Peter Street, Manchester M2 5GB) for the First Appellant
Mr Ronald Walker QC and Mr Richard Ritchie (instructed by DLA, 3 Noble Street, London EC2V 7EE) for the Second Appellant
Mr Edelman (instructed by Denton Wilde Sapte, Five Chancery Lane, London EC4A 1BU) for the Respondents
There were before the Court two applications for permission to appeal from case management directions given in orders made on 18 November and 5 December 2002 by Mr Justice Lloyd in proceedings brought by T & N Limited (formerly known as Turner & Newall Plc and Turner & Newall Limited) and other companies in the T & N group for declarations that their former insurers, Royal Insurance Company Limited (now known as Royal & Sun Alliance Insurance Plc) ("the Royal") and Syndicate 45/177 at Lloyds ("the Syndicate") are liable to provide indemnities against the claims of former employees and their dependants in respect of asbestos related diseases. The applications were listed on notice with appeals to follow if permission to appeal were granted. In the course of the hearing we indicated that we were minded to grant permission to appeal; and that we would treat the hearing as a hearing of the appeals.
T & N Limited and the other T & N group companies (together "T & N") are in administration pursuant to orders made on 1 October 2001 under Part II of the Insolvency Act 1986. There are parallel orders under Chapter 11 of the US Bankruptcy Code. The need for administration and the protection of Chapter 11 has arisen, in part at least, from the very large number of claims in respect of injury or death suffered, or said to have been suffered, as a result of exposure to asbestos during the course of employment.
The administrators are faced with applications made, or threatened, under section 11 of the Insolvency Act 1986 by the individual claimants for leave to commence and pursue proceedings against T & N. The purpose of the present proceedings is to determine whether or not T & N has insurance cover in respect of the individual claims. If cover is in place, the administrators have no interest in opposing applications to pursue the individual claims in litigation. In those circumstances, it is said, the burden of defending and meeting those claims would be borne by the insurers, against whom the individual claimants will be entitled to recover under the Third Party (Rights against Insurers) Act 1930. If, on the other hand, there is no insurance cover in place, the administrators take the view that the claims of former employees and their dependants should be dealt with by a scheme within the administration. In those circumstances it would be contrary to the purpose of the administration to allow many thousands of individual claimants to bring proceedings in the courts.
The Royal were T & N's employers' liability insurers between 1969 and 1977. Thereafter, and until 1995, T & N were insured at Lloyds; the Syndicate being the principal underwriter in respect of the employers' liability cover. The defendants to these proceedings are the Royal, Mr Brian Smith, representing the Syndicate, certain T & N companies not in administration and a former employee joined to represent those having or asserting claims as former employees or their dependants.
The procedural history
These proceedings were commenced on 30 May 2002 by the issue of a claim form under CPR Part 7, following directions given by Mr Justice Patten in the administration. By 14 June 2002 defences had been served on behalf of each of the two insurers.
The defence served on behalf of the Royal took three main points. First, that the employers' liability policies under which it was insurer were not intended to and did not cover employees' claims in respect of disease or bodily injury arising from exposure to asbestos. It is said that the intention of both insurer and insured under those policies was that T & N would self-insure in relation to all claims arising from exposure to asbestos. In particular, the "Pneumoconiosis Exclusion" endorsed on the policies was intended to, and did, extend to all such claims, which (on a true construction of the policies) were excluded from cover. Second, that that position did not change following the enactment of the Employer's Liability (Compulsory Insurance) Act 1969; notwithstanding that statutory certificates confirming the existence of insurance in compliance with that Act were issued by the Royal from time to time. Third, that if the Pneumoconiosis Exclusion did not, as a matter of construction, exclude all claims arising from exposure to asbestos, T & N were estopped from contending to the contrary; such estoppel arising, it was said, by convention from a shared assumption that the Pneumoconiosis Exclusion did have that effect. The defence, as served, did not assert that the Royal was entitled to avoid the policies on the grounds of misrepresentation or non-disclosure. By counterclaim the Royal sought a declaration that, if (contrary to its primary contentions) it was liable to indemnify T & N, or third parties under the 1930 Act, in respect of disease or injury arising from exposure to asbestos, it was itself entitled to a counter-indemnity from T & N. A reply and defence to counterclaim was served on or about 21 June 2002.
The defence served on behalf of the Syndicate also took three main points. First, that the insurance cover provided to T & N companies from 1 April 1977 and thereafter (so far as any particular company was insured from time to time) was subject to a condition ("the Asbestos Condition") under which the insured company undertook to pay the full cost of handling and disposing of all claims in respect of asbestos related diseases (including, but not limited to, asbestosis and mesothelioma) arising from exposure to asbestos dust in the course of employment; that the effect of that condition was to exclude from cover liability for asbestos related diseases; alternatively, that the Syndicate's liability to indemnify was conditional upon the insured company complying with that undertaking. It was said that that position was not affected by the issue of certificates of employers' liability insurance in order to conform with the requirements of the 1969 Act. Second, that if (contrary to that first and primary contention) the Syndicate was, upon a true construction of the Lloyd's policies which it had issued, liable to indemnify the T & N companies insured under those policies in respect of employees' claims for asbestos related diseases, the insured companies were estopped by convention from enforcing such indemnity; such estoppel arising from a shared assumption that the policies did not have that effect. Third, that the Syndicate was entitled to avoid each and every one of the policies which it had issued "by virtue of material non-disclosure and/or misrepresentations made to it" prior to the issue of the first Lloyd's policy in 197By counterclaim the Syndicate sought a declaration that, if (contrary to the assertions made in its defence) it was liable to indemnify T & N in respect of employees' claims for asbestos related diseases, the insured companies were liable to pay to the Syndicate the full cost of handling and disposing of such claims. The Syndicate also claimed, under CPR Part 20, against Curzon Insurance Limited on the basis that Curzon was liable as a co-insurer. A reply and defence to counterclaim were served on 25 June 2002.
On 8 July 2002 the proceedings came before Mr Justice Neuberger for a case management conference. He directed that a trial be fixed to commence not before 28 October 2002 with a time estimate of five to seven days. In the event, the date fixed for the commencement of the trial was 23 January 2003.
The contention that the Syndicate was entitled to avoid each and every one of the policies which it had issued "by virtue of material non-disclosure and/or misrepresentations made to it" prior to the issue of the first policy in 1977 was advanced in paragraph 23 of the Syndicate's defence as originally served. Paragraph 23(a) contained the assertion that, prior to entering into the first Lloyds' policy in 1977, the Syndicate was told that T & N subsidiaries had ceased their asbestos operations and that T & N Limited and its subsidiaries were making full reserves internally for asbestos related claims. Further, it was said that the Syndicate had been told in or about 1979 that T & N had set up a "captive" insurance company (Curzon) in order fully to reserve for asbestos related claims. The order of 8 July 2002 required particulars of the representations, non-disclosure and inducement alleged. Those particulars (which were extensive) were provided on 23 July 2002.
On 25 September 2002 the Syndicate obtained permission from Mr Justice Lloyd to amend paragraph 23 of its defence. The amended defence contained further allegations of non-disclosure and misrepresentation. In particular, at sub-paragraphs 23(e)(i) and 23(i)(i), it was alleged that (notwithstanding a representation to the contrary) there remained, after March 1977, a significant risk to employees of T & N of dangerous...
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