Starlight Shipping Company v Allianz Marine & Aviation Versicherungs AG

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLongmore,The Right Honourable Lord Justice Rimer,The Right Honourable Lord Justice Toulson,The Right Honourable Lord Justice Longmore,Toulson,Rimer L JJ
Judgment Date20 December 2012
Neutral Citation[2012] EWCA Civ 1714
Docket NumberCase No: A3/2012/0368, A3/2012/0369, A3/2012/0370 & A3/2012/0801
Date20 December 2012

[2012] EWCA Civ 1714

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

THE HONOURABLE MR JUSTICE BURTON

[2011] EWHC 3381 (Comm)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Right Honourable Lord Justice Longmore

The Right Honourable Lord Justice Toulson

and

The Right Honourable Lord Justice Rimer

Case No: A3/2012/0368, A3/2012/0369, A3/2012/0370 & A3/2012/0801

Between :
Starlight Shipping Company
Appellant/Claimant
and
Allianz Marine & Aviation Versicherungs Ag
Respondents/Defendants
Royal & Sun Alliance Insurance
Assicurazioni Gererali Spa
Rembrandt Insurance Co Ltd
Brit Uw Ltd (Sued on its own Behalf and on behalf of all Underwriting Members of Lloyd's Syndicate 2987 for the 2006 Year of Account)
Nicholas Burkinshaw (Sued on his own behalf and on behalf of all underwriting members of Lloyd's Syndicate 2003 for the 2006 Year of Account)
Hiscox Dedicated Corporate Member Ltd (Sued on its own Behalf and on behalf of all underwriting members of Lloyd's Syndicate 0033 for the 2006 Year of Account)
Hill Dickinson Llp
Hill Dickinson International
Michael Francis Mallin
Alexandra Julia Tytheridge
Maria Moisidou
Daniel Mccarthy
Dave Vale
Mark Watters
Simon Langridge
William Graham Hensman
Keith Richard Potter
Stephen Bishop
Richard Chown
Simon Vincent Stonehouse
Marion Susan Fraser
Daniel Tony Dobisz
Ian James Henstridge
Brendan Allan Flood
Charles Taylor Adjusting Limited
Gordon Elliot
and
Overseas Marine Enterprise Inc
Third Party/Appellant
"Alexandros T"

Mr Iain Milligan QC, Mr Michael Ashcroft QC & Mr Luke Pearce (instructed by Thomas Cooper) for the Appellants

Mr Michael Swainston QC & Mr Tony Singla (instructed by Clyde & Co LLP) for the 1 st– 4 th Respondents

Mr Steven Gee QC & Mr Tom Whitehead (instructed by Norton Rose) for the 5 th—7 th Respondents

Mr David Bailey QC & Mr Jocelin Gale (instructed by Mayer Brown International LLP) a watching brief for the 8 th– 9 th Respondents

Hearing dates: 9 th, 10 th, 11 th October 2012

Lord Justice Longmore

Lord Justice Longmore

Introduction

1

As a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim. The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately withholds sums which he knows to be due under a policy, see Sprung v Royal Insurance [1999] Lloyd's Rep IR 111 approving the decision in The Italia Express (No. 2) [1992] 2 Lloyd's Rep 28 If parties agree that English law is to apply to a policy of insurance, this principle is part of what they have agreed. English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim. In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment.

Brief Outline

2

On 3rd May 2006 the vessel "ALEXANDROS T" became a total loss 300 miles south of Port Elizabeth. Her owners Starlight Shipping Company ("Starlight") sued its insurers in respect of that loss by proceedings in the Commercial Court, 2006 Folio No 815, issued on 15th August 2006 ("the original action"). The first four Defendants in that action have been described as the Company Market Insurers ("CMI") and the Fifth to Seventh Defendants as the Lloyd's Market Insurers ("LMI"). There was an exclusive jurisdiction clause in the policies issued by CMI and LMI. It provided for English law and the jurisdiction of the courts of England and Wales, which is why Starlight commenced and continued its claims here in England. Liability was denied and vigorously contested. Overseas Marine Enterprises Inc ("OME") were identified in the policies as Managers. Ince & Co acted for Starlight in the proceedings, and Hill Dickinson LLP, then Hill Taylor Dickinson, (whom I shall call "HD") acted for the Insurers.

3

On 13 th December 2007 and 3 rd January 2008 these proceedings were settled for 100% of the claim, but without interest and costs, and Tomlin orders were made by consent in the light of those settlements. More than 3 years later Starlight (and other associated persons) began proceedings in Greece claiming damages from the insurers for late payment (whether deliberate or otherwise) and in respect of supposed misconduct by insurers in relation to the claim. Insurers have sought to enforce the settlement agreements referred to in the Tomlin Orders and Burton J has given them summary judgment for (inter alia) a declaration that the matters sought to be raised in Greece were part of the settlement of the claim and that Starlight (and their Managers) are bound to indemnify the insurers against any costs incurred and any sums that may be adjudged against them in the Greek proceedings. Starlight and their associates appeal with the permission of Burton J to this court.

The English Proceedings

4

I can take the facts very largely from the judgment below. The loss of the Alexandros T involved considerable loss of life, and the proceedings were fraught both for that reason and because the denial of liability was based in substantial part upon allegations of unseaworthiness, to which Starlight and/or OME were alleged to be privy, and upon allegations of a failure properly to report and repair damage to the vessel in accordance with Class Rules. In the course of the preparation for the proceedings, a number of specific allegations were made and pursued by Starlight, and Ince and Co on its behalf, falling into two general categories:—

i) serious allegations of misconduct by the Defendant Insurers and their underwriters involving alleged tampering with and bribing of witnesses, in particular the bosun, a Mr Miranda, to give false evidence, coupled with other allegations of spreading false and malicious rumours against Starlight in the course of purported investigation of its claims.

ii) deliberate failure by the Defendant Insurers to pay up under the policy, said to have had consequential financial impact upon Starlight, and to have led to substantial recoverable loss and damage.

5

These allegations had been made before the issuing of the proceedings by Starlight. They were referred to with some particularity in Ince & Co's letter to HD of 18th July 2006. Complaints were made about attempted covert contacts with Starlight's crew, and, in particular, an unspecified "instance of serious misconduct by one of the underwriters". As for the malicious rumours (quaintly described as "malicious scuttlebutt"), this was described and complained of, together with its alleged effect on the market. Further reference was made in Ince & Co's letter of 20th October 2006 to the underwriters "behaving in a reckless and irresponsible fashion in making … an allegation when they have no evidence to substantiate what they allege". It appears that those representing Starlight obtained a sworn affidavit dated 8th January 2007 from Mr Miranda and another member of the crew, a Mr Paulino, alleging that they were given money and offered more, in return for the giving of what they regarded as untrue evidence. A Request for Further Information was served on 24th October 2007 by Starlight in the proceedings, asking probing questions about payments made, inter alia, to Mr Miranda, and as to the circumstances of approaches to the witnesses, which led to a response, dated 19th November 2007. The allegations came fully out into the open in a witness statement of Mr Nicholas Shepherd of Ince & Co, on Starlight's behalf, dated 7th December 2007, served just prior to a Pre-Trial Review on 14th December 2007. Mr Shepherd referred (in paragraph 6) to Mr Miranda as being the apparent source of the very serious allegations which the Defendant Insurers were making, as had now become clear after exchange of witness statements, and Mr Shepherd addressed this in terms "so that the Court has some idea of what the Claimant will in due course say with regard to the bosun's veracity": he exhibited the joint affidavit of Mr Miranda and Mr Paulino.

6

Mr Shepherd referred both to that affidavit and to other affidavits from crew members dealing with alleged approaches made to them by a Mr Bernardo, on the Defendants' behalf, and suggested that "Mr Bernardo appears effectively to have been attempting to solicit untruthful evidence from those to whom approaches were made to say that the Vessel was unseaworthy". Counsel for Starlight, Mr Brenton QC, specifically stated to Tomlinson J at the Pre-Trial Review on 14th December 2007, as recorded by the transcript (referring to Mr Shepherd's fifth witness statement, which the judge had read), that Mr Bernardo had "approached a number of survivors and sought to persuade them to give false evidence in return for financial inducements".

7

This position is summarised by Mr Crampton of Lax & Co, the solicitors then acting for the purpose of these proceedings for Starlight, in his witness statement for the purposes of the applications before Burton J:—

"5. In their defence to the claim, the Underwriters alleged that the vessel was unseaworthy, that Starlight knew that the vessel was unseaworthy and that Starlight had in place an illegal practice, by which they refused to notify Class and the flag state authority of the vessel about defects to their vessels. These allegations were based on false evidence, which the Underwriters had obtained from the bosun, Aljess Miranda …

13. In their responses to the Request for Further Information, the Hull...

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  • Insurance and Reinsurance Review of 2013
    • United Kingdom
    • Mondaq United Kingdom
    • 23 Enero 2014
    ...clearly drafted to prevent any ambiguity arising. To read this Report in full, please click here. Footnotes 1 [2011] EWHC 3381 (Comm); [2012] EWCA Civ 1714; [2013] UKSC 70. We commented previously on the First Instance and Court of Appeal decisions between the insurers and the insured in ou......

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