The Law Debenture Trust Corporation (Channel Islands) Ltd v Lexing Insurance Company and Others
| Jurisdiction | England & Wales |
| Judge | Colman J.,Mr Justice Colman |
| Judgment Date | 09 October 2003 |
| Neutral Citation | [2003] EWHC 2297 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2001 Folio 211 |
| Date | 09 October 2003 |
[2003] EWHC 2297 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Colman
Case No: 2001 Folio 211
Mr J Flaux QC and Mr S Picken (instructed by Holman Fenwick Willan) for the
Intervenors
Mr C Vos QC, Mr J Lockey and Mr J Davies-Jones (instructed by Eversheds) for the 2 nd Defendants
Hearing dates: 17 July 2003
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
1. This is an application for disclosure to HIH, which is not a party to these proceedings, of the pleadings and written opening submissions in these proceedings in so far as they relate to particular allegations of fraud. The application raises issues which are important because they are likely to re-occur in future commercial litigation.
2. The application is made by HIH because it is believed by its legal advisors that the contents of the pleadings and written submissions may provide information on the basis of which HIH could in other pending proceedings raise similar allegations of fraud against JLT (the Second Defendants in these proceedings).
3. The present proceedings have now settled. They have become known as "Hollywood 4 and 5". They involved issues of considerable complexity. However, in brief and very broad outline they involved a claim by the trustee insured under a contract of insurance, which was designed to cover the risk that the revenue engendered by various projected films and television programmes would not be sufficient to meet sums payable to the beneficiary investors in certain financial packages which had been marketed to them as investments in the film industry.
4. The insurers under the policies issued in the present proceeding were the first defendants, Lexington, and the brokers who had placed the risk were the second defendants, JLT. The primary originator and orchestrater of these financial transactions was a corporation called Flashpoint. For this purpose it worked closely with JLT.
5. Lexington's pleaded defence to the claim on its policy included certain allegations of fraudulent misrepresentation and non-disclosure of material facts by JLT as well as allegations of non-fraudulent breaches of duty as placing brokers in the somewhat unusual circumstances of the setting up of the financing operations in this case. The non-disclosure case pleaded by Lexington included allegations of fraud by JLT and Flashpoint in similar film financing transactions, not the subject of these proceedings, in which JLT had also acted as placing broker.
6. The proceedings in which HIH are presently involved, to which I refer as "Hollywood 1 to 3", arise out of film financing transactions similar in structure to those in the present proceedings relating to three "slates" of films (7.23, Rojak and Award). The insurer was HIH, but the originator was Flashpoint and the brokers were JLT. HIH paid out the primary assured under its policies and it then endeavoured to recover from its reinsurers, to whom it had laid off most of the risk. It having been decided by David Steel J., and confirmed by the Court of Appeal, in the course of the trial of preliminary issues, that the contracts of reinsurance included warranties as to the number of films to he made and further that the policy wording excluded avoidance for non-disclosure or misrepresentation, in November 2001, HIH joined JLT as co-defendant. HIH alleged that in negligent breach of duty and/or breach of contract JLT failed to obtain reinsurance which met HIH's requirements and/or to advise HIH about the warranties as to the number of films to be made and their effect and/or to procure the reinsurers' agreement to reduction in the number of films to be made and/or to inform HIH that such agreement had not been given. The total amount claimed exceeded US$55 million.
7. Shortly after JLT had been joined in Hollywood 1–3 one of the reinsurers, AxA, obtained summary judgment against HIH dismissing its claim in respect of Hollywood 1 and 2 (7.23 and Rojak) on the grounds of breach of warranty as to the number of films to be made. That led HIH to abandon its other claims against the reinsurers under Hollywood 1–3, leaving only its claim against JLT.
8. As presently pleaded, Hollywood 1–3 includes no allegations of fraud and in particular no allegation similar to those raised in Hollywood 4–5 involving dishonest projections of revenue or failure to disclose dishonesty in the course of similar transactions on the part of Flashpoint or JLT. It follows that documents in JLT's possession relating to such allegations raised in this case would not be disclosable in Hollywood 1–3 because they would not be relevant to any pleaded issue. Consequently, the only possible routes by which HIH can obtain access to such documents is by means of its present application. For this purpose it relies on CPR 5.4(2)(a) and/or (c) and/or CPR 31.22 and/or CPR 32.13 or the inherent jurisdiction of the court. Although the applications, as originally framed, covered a wide spectrum of documents in Hollywood 4 and 5, including disclosed documents relating to the fraud case and any witness statements or expert reports addressing the fraud case against JLT and Flashpoint, Mr Julian Flaux QC on behalf of HIH, has confirmed that his clients' application can at least at this stage be treated as confined to the pleadings and written openings to the extent that they relate to any allegation of fraud against JLT/Flashpoint in relation to any of the three slates comprising Hollywood 1–3.
9. JLT objects to the disclosure to HIH of any of the written openings, did not object to disclosure of allegations against JLT in the pleadings but did not consent to disclosure of allegations against Flashpoint in the pleadings of such part of the pleadings as contained allegations of fraud against JLT or JLT and Flashpoint, in relation to Hollywood 1–3, as distinct from allegations against Flashpoint alone.
The Pleadings
10. CPR 5 .4(1) provides for the supply to any party to proceedings from the records of the court of a copy of any document relating to those proceedings. CPR 5.4(2) provides as follows:
"Any other person who pays the prescribed fee may, during office hours, search for, inspect and take a copy of the following documents, namely —
(a) a claim form which has been served;
(b) any judgment or order given or made in public;
(c) any other document if the court gives permission."
11. Since these proceedings comprise not only the claim form but also the defence and reply and perhaps replies to requests for information, the permission of the court is necessary under CPR 5.4(2)(c).
12. The purpose for which HIH require access to these pleadings is an entirely appropriate one. They wish to consider whether to make similar allegations of fraud against JLT in Hollywood 1–3 which clearly relates to similar film finance transactions to those involved in Hollywood 4–5 and in which Flashpoint was also involved.
13. As I see it, there can be no public policy in withholding access to such documents in so far as there is some basis for their relevance. The particulars of claim in Hollywood 4 and 5 do not contain allegations that JLT were fraudulent in relation to Hollywood 1 or 2, although there are allegations only against Flashpoint. The only allegations of fraud against JLT in Hollywood 1–3 are in respect of the Award slate, Hollywood 3. In these circumstances, HIH has an entirely legitimate interest in inspecting the pleadings to the full extent necessary to follow the allegations of fraud against JLT and Flashpoint in respect of Hollywood 1–3 and if those allegations overlap with the allegations of fraud against Flashpoint, to that extent there should be access also to the allegations of fraud against the latter.
The Written Openings
14. The allegations of fraud made in the written opening by Lexington are wider than in the pleadings, in as much as they extend to Hollywood 1 and 2. Those allegations of fraud, unlike those pleaded in respect of Hollywood 3, were not to be deployed by way of defence under the policy or for the purpose of founding a claim against JLT, but, according to leading counsel for Lexington, Mr David Railton QC, for the purpose of attacking the veracity of JLT's case in relation to the other (pleaded) allegations of fraud. When Mr Railton was about to open these points to the court, leading counsel for JLT, Mr Geoffrey Vos QC, objected that it was wrong for these allegations to be raised in opening or alleged at the trial when they had not been pleaded. It was left on the basis that these matters should be the subject of further argument when the hearing resumed. It never did resume because the case settled and the question therefore remained unresolved.
15. Upon these applications it is submitted on behalf of HIH as follows:
(i) By the time the case settled the judge had already read the written openings upon which counsel's oral openings were based and, in particular, had already read those parts of the Lexington opening which related to unpleaded allegations of fraud against JLT, to the oral opening of which JLT's counsel had objected.
(ii) The written openings are required by HIH for the entirely legitimate purpose of ascertaining whether they have a claim in fraud against their placing brokers for the reinsurance.
(iii) Until seeing allegations in the pleadings and oral openings in...
To continue reading
Request your trial
-
Cape Intermediate Holdings Ltd v Mr Graham Dring (for and on behalf of The Asbestos Victims Support Group)
...office; they are advocates' documents rather than party documents; they represent argument. As Colman J stated in Law Debenture Trust [2003] EWHC 2297 at [17]: “…opening written submissions are merely tools of advocacy and, unlike pleadings, or case memoranda or case management questionnair......
-
UXA v Merseycare NHS Foundation Trust
...be satisfied that the courts are acting justly and fairly”: Law Debenture Trust Corp (Channel Islands) Ltd v Lexington Insurance Co [2003] EWHC 2297 (Comm) (§24 below) at §34. My determination must engage that “public policy in the administration of justice”, as to which “public knowledge ......
-
Cape Intermediate Holdings Ltd v Mr Graham Dring (for and on behalf of The Asbestos Victims Support Group)
...effective public hearing at which they were deployed (see Law Debenture Trust Corpn (Channel Islands) Ltd v Lexington Insurance Co [2003] EWHC 2297 (Comm); (2003) NLJ 1551), and the same would apply to other advocates' documents provided to the court to assist its understanding of the case......
-
Re Guardian Newspapers Ltd
...jurisdiction to make such orders existed: see The Law Debenture Trust Corporation (Channel Islands) Ltd. v. Lexington Insurance Co. [2003] EWHC 2297 (Comm) and Dian AO v. Davis Frankel & Mead [2004] EWHC 4830. Accordingly, on the basis that I have jurisdiction to give the permission reques......