COMMERCIAL COURT
ANDREW SMITH J
27 March 2002
[2002] All ER (D) 438 (Mar)
Practice
The defendant was elected as an underwriting member of Lloyd's in
January 1979 and resigned in 1986. Although she ceased to be an underwriting
member in December 1986, the effective date of her resignation from Lloyd's was
postponed because not all of her accounts had been closed. The defendant was
one of the names who declined to accept the settlement offer made as a part of
the reconstruction and renewal scheme of the Lloyd's market. The majority of
names did accept the reconstruction and renewal scheme and it was brought into
effect. One effect was that the defendant's remaining open year liabilities
were (compulsorily) reinsured by a company 'Equitas', incorporated for that
purpose. The defendant failed to pay her Equitas premium. The claim was
assigned to Lloyd's by Equitas, and LloydÕs issued proceedings against the
defendant. In 1997 and 1998, a number of test cases were heard by the
Commercial Court and, subsequently, the Court of Appeal, in order to determine,
inter alia, the vires of reconstruction and renewal. Lloyd's was in all
relevant respects successful and thereafter issued applications for summary
judgment against the defendant for payment of her premium. Summary judgment was
obtained against the defendant but overturned on appeal, as Lloyd's pleading
had been inaccurate (see [2001] All ER (D) 371 (Mar)). Lloyd's
subsequently amended its pleading by consent and applied again for summary
judgment. The defendant applied to overturn the consent order allowing an
amendment of the pleading, on the ground that LloydÕs had intentionally filed a
false pleading. With regard to the substantive claim, she argued that she had
never signed any agreement beyond her original agency agreement of 1979; in
particular, she had never signed the form of general undertaking, introduced in
1986 (the 1986 undertaking), which contained an express undertaking to comply
with the provisions of the Lloyd's Acts 1871-1982. Since reconstruction and
renewal had been implemented pursuant to bylaws, all of which had been passed
or amended pursuant to the powers conferred by the Lloyd's Act 1982, she was
not bound by reconstruction and renewal and not, therefore, liable to pay any
Equitas premium. Lloyd's submitted that the 1982 Act had effect in any event,
as an act of Parliament and thus it was immaterial that she had not signed the
1986 undertaking. The defendant also raised numerous other defences claiming
that bylaws had been unconscionable and that Lloyd's had committed fraud.
The court ruled:
There was no evidence that Lloyd's had deliberately misled the
court when filing its original, erroneous pleading and thus the application to
overturn the order granting Lloyd's permission to amend would be dismissed
(irrespective of the fact that it had not been made in the correct form). The
Lloyd's Act 1982 was a statute which did not depend for its efficacy on consent
of the names or former names. It was binding on the defendant, as were all
bylaws made thereunder. The other defences raised by the defendant would fail on
the facts or because they had already been raised in other litigation and
failed.
Society of Lloyd's v Fraser [1998] CLC 127 and Society of Lloyd's
v Leighs [1997] CLC 759
considered.
Richard Jacob QC (instructed by Lloyd's) for Lloyd's.
The defendant appeared in person.
James Wilson Barrister (NZ).