Current Law Cases

Scope	Lloyds names; reinsurance contracts; calculation of premium; market regulation; mental harassment
Case	Prices v Society of Lloyd's
Court	(QBD (Comm Ct)) Commercial Court
Judgment	October 22, 1999
Judges	Colman, J.
Legislation
Reported	[2000] Lloyd's Rep. I.R. 453
Reference
Abstract	In proceedings commenced by P, a former Lloyd's name, against L, L sought an order striking out P's claim as disclosing no real prospect of success together with summary judgment on its counterclaim. P sought summary judgment on his claim and dismissal of L's counterclaim. P contended that (1) the Equitas reinsurance premium as calculated by L and payable by P, was manifestly wrong. P maintained that when multiple reserving of the same risk or "double counting" had been identified and accounted for, a substantial reduction in the amount of the premium due was required. Such a reduction had been made in the case of other syndicates operating in a similar market to P's syndicate and in particular those syndicates which were participants in the LMX spiral; (2) L had breached its duty to disclose to P the contents of a report into the management of P's syndicate indicating serious cause for concern or, in the alternative, to close down the managing agents of the syndicate, and (3) the mental health of P's wife had suffered as a result of the action taken by L to recover monies owed to it, such as to constitute the tort of harassment. Held, striking out P's claim and granting summary judgment to L, that (1) P was required to demonstrate an arguable error in relation to the calculation used by L to formulate the additional premium. P had failed to do so and accordingly clause 5.10 of the reinsurance contract operated to preclude any further challenge to the figures, v Fraser [1998] C.L.C. 1630 applied; (2) L owed no statutory or common law duty to regulate the market and furthermore P had been unable to adduce cogent evidence to establish a prima facie case that L's actions had been motivated by bad faith, v Clementson [1995] 1 C.M.L.R. 693 and Ashmore v Corp of Lloyd's (No.2) [1992] 2 Lloyd's Rep. 620 considered, and (3) whilst conduct designed to result in mental stress culminating in psychiatric harm could amount to the tort of harassment at common law, the conduct complained of had not been calculated to cause such harm but instead constituted a legitimate attempt to recover monies owing, Khorasandjian v Bush [1993] Q.B. 727 considered.
Subject	Insurance
Keywords	Bad faith, Lloyds Names, Reinsurance contracts, Syndicates
Counsel	For P: In person. For L: Mark Templeman and James Collins.
Solicitors	For L: Company Solicitor
Cases cited	Society of Lloyd’s v Fraser [1998] C.L.C. 1630, [1999] C.L.Y. 3405 Society of Lloyd’s v Clementson [1995] 1 C.M.L.R. 693, [1994] C.L.Y. 2684 Ashmore v Corp of Lloyd's (No.2) [1992] 2 Lloyd's Rep. 620, [1993] C.L.Y. 2407 Khorasandjian v Bush [1993] Q.B. 727, [1993] C.L.Y. 3251