WISE Underwriting Agency Ltd v Grupo Nacional Provincial SA
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Simon,Mr Justice Simon |
| Judgment Date | 01 October 2003 |
| Neutral Citation | [2003] EWHC 3038 (Comm) |
| Docket Number | 2001 Folio no.982 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 01 October 2003 |
[2003] EWHC 3038 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Simon
2001 Folio no.982
Nigel Cooper (instructed by Waltons & Morse) for the Claimants
Huw Davies (instructed by Beaumont and Son) for the Defendant
Hearing dates: 23–24 and 28–29 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
During the night of 3/4 April 2001 a quantity of goods were stolen from a container parked outside the warehouse premises of Perfumeria Ultra S.A de C.V("Perfumeria") at Chac Chic lotes 34 y 26, Supermanzana 24, Cancun, Quintana Roo, Mexico. The goods stolen included over US$700,000 worth of watches and spare parts. The consignment was insured with Grupo Nacional Provincial S.A ("GNP"), the Defendant, in this action. GNP was, in turn, reinsured by the Claimants ("the Reinsurers").
In this action, the Reinsurers seek declarations that (1) they were entitled to avoid the contract of reinsurance with GNP on the grounds of non-disclosure and/or misrepresentation and that (2) they are not liable to GNP in respect of the loss suffered by Perfumeria. GNP denies that the Reinsurers are entitled to the declaratory relief claimed and counterclaims the sum of US$699,216, being the Reinsurers' share of the loss suffered by Perfumeria. At the heart of this case is Reinsurers' contention that they were not told, as they should have been, that the consignments covered by the reinsurance included Rolex and other high-value watches.
Background
Perfumeria is a retailer of luxury goods in Cancun, Mexico. It arranged for goods to be shipped from Miami to Cancun and GNP provided the transit cover for the shipments. In March 2000 GNP's southern office asked the central office to obtain quotes for reinsurance cover for the transit risk. GNP approached its reinsurance brokers, Grupo Internacional de Reaseguro ("GIR") to assist them in procuring reinsurance. GIR, in turn, approached Collard & Partners ("Collards"), who were London reinsurance brokers. At that time Collards held a contract of open cover with HIH Insurance (Asia) Ltd ("HIH"). Under this open cover, Collards could cede business from Mexican Insurers, including GNP. At the end of June 2000 reinsurance cover for the Perfumeria risk was placed on behalf of GNP with HIH with effect from 29 May. GIR were responsible for the preparation of 2 Slip Presentations. The first was shown to HIH and not to GNP; the second was shown to GNP but not to HIH. The documents differed in two relevant respects. First, the former was in English and the latter was in Spanish. Secondly, the Spanish version had two clauses which were not in the English Slip Presentation sent to Collards. The first clause related to packing and the second made specific reference to the packing requirements of Rolex watches. These clauses replicated conditions in the underlying insurance of Perfumeria. It appears that the reason why HIH and, later, the Reinsurers were not made aware of these clauses was that someone considered that Perfumeria might not always comply with these clauses and that, consequently, they should not be warranties in the contract of reinsurance. There was an issue in the hearing before me as to who made this decision or was party to it.
Sometime in November 2000, Collards decided not to renew the open cover with HIH due to concerns about its financial viability. Mr Lancaster-Smith of Collards decided to approach W.I.S.E to see if they would take over the cover. W.I.S.E were the underwriting agents of the Reinsurers and Mr Bennett was their cargo underwriter. There were discussions between Mr Lancaster-Smith and Mr Bennett that led to the drawing-up of a document entitled "Marine Cargo Reinsurance Open Cover". Although described as an open cover, it was common ground that the contract was, in fact, a facility available to Collards under which they could introduce business to W.I.S.E from various cedants, including GNP. Mr Bennett retained the right to refuse risks that Collards wanted to cede if he wished. In the course of negotiating this facility, Mr Lancaster-Smith showed Mr Bennett a schedule of proposed business for the 1999–2000 years of account. This document provided brief details of various accounts that had been ceded to HIH. The description of the Perfumeria account given in the schedule was 'cosmetics'. Mr Bennett indicated with a tick those accounts in the schedule that he was prepared to accept. These included the Perfumeria account.
On about 21 December, GNP asked GIR to arrange for the reinsurance with HIH to be cancelled and replaced with effect from 31 December 2000. GIR approached Collards and Collards agreed to offer the GNP account to W.I.S.E.
Again, GIR were responsible for the preparation of the slips that were sent to Reinsurers and GNP. The English version which was sent to Collards and shown to Reinsurers was entitled 'Perfumeria Ultra. Slip Presentation' and included the following terms:
| Cedant: | Grupo Nacional Provincial S.A. |
| Insured: | Perfumeria Ultra S.A de C.V. |
| Locations: | (1) Classical Gift Inc 9431 S.W. 65 Street Miami, Florida (2) Fragrances of the Word (sic) Inc 10840 S.W. 55 Street Miami, Florida (3) Jewelry Time Inc 13228 N.W. 11 Street Miami, Florida |
| Period: | From December 31, 2000 to December 31, 2001. |
| Type | All real and personal property of any kind and description, including property but not limited to property of other in care, custody or control of the insured or for which the insured has assumed responsibility. All shipments done by the insured consistent in but not limited to, cosmetics, perfumery, gifts, jewelry, lladró (kind of porcelain), accessories, and in general on any type of supplies related to the Insured's activity and in which it has an insurable interest. |
| Coverage: | Ordinary Transit Risk terrestrial, maritime and air.Total and/or partial theft … All risk of cargo as per GNP wording…Theft by bulk or hole (sic) |
| Activity: | Commercialisation of Perfumes, gifts lladro, and jewelry. |
| Geographic Limits: | From Miami Flo. US to Cancun Q.R Mexico From warehouse to any store in Cancun city. |
| Maximum Limit of Responsibility: | US$1,500,000 |
| Annual Estimated Shipments: | US$17,000,000. |
| Hereon: | 90% |
The Slip Presentation contained various further conditions that are no longer relevant and an Information Clause. Like the meaning of other parts of the English version of the Slip Presentation, the meaning of parts of the Information Clause (even making allowances for spelling mistakes) is not always clear.
| Information: | Loss Record: |
| Nil for the last 12 Twelve years. | |
| Maximum amount and rate of the merchandise: | |
| - Perfumes and cosmetics: US$700,000 US$250,000 | |
| - Gifts (crystals, porcelain, leather bags, clothes, silver | |
| - ware): US$ 250,000 US$150,000 | |
| - Clocks: US$1,000,000 US$200,000 | |
| - Jewelry (gold, diamonds, stones, precious pearls and semiprecious and over and lose: US$350,000 | |
| - Clocks: less expensive piece: US$40. Most expensive piece US$18,000 and average cost US$1,500. | |
| - Jewelry: more expensive piece (rare circulation); more expensive piece: US$30,000; Most expensive set US$50,000 average cost | |
| - Maximum Transport: US$ 1,500,000 (high season) | |
| - Average: US$500,000. | |
| - Average Transport: US$ 500,000 per trip | |
| - During the month: Three trips |
The Spanish version of the Slip Presentation sent by GNP to GIR included what has been set out above; and, in addition, the following (translated into English for the purposes of this action):
Packaging:
A safety container is consolidated in Miami, which is not opened until it reaches the shop of the insured in Cancun. Subject to inspection by the authorities.
There is no way of identifying the type of goods; there are no tags, only the form of handling and form of stowage. The packages comply with the manufacturer's indications.
Watches:
Packed in two types of packing as follows:
a.1) Special cases made in the factory
a.2) Watches in collective cases protected on an average of 10 in each pack. The packaging hold approximately 120 watches.
a.3) Rolex, each watch comes with its case and each packaging holds approximately 48 watches in packs of 16 rows, 3 rows high.
Two points should be noted. In the Spanish version of the Slip Presentation sent to GNP the word Relojes is always used. It seems that in Spanish Relojes can mean either watches or clocks. The Interpreter in the action before me distinguished the meaning by using reloj de pulsera for 'watch' and reloj de pared for 'clock'. In the Spanish version what was intended by the word Relojes would have been resolved by the specific reference to 'Rolex' in Clause a.3). However, as already noted, that Clause was omitted from the English version. In the English version the word 'clocks' was used throughout. One of the issues in the case is whether the word 'clocks' in the English version should have been understood to cover 'watches', and whether the use of the word 'clocks' was such as to put the Reinsurers on enquiry.
Mr Lancaster-Smith broked the Slip Presentation to Mr Bennett on about 28 December 2000. It is the Reinsurers case that, in the course of broking the risk, Mr Lancaster-Smith made two material misrepresentations. In...
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