Current Law Cases
|
Scope |
Lloyd's; premium trust deeds; trust funds to
discharge debts; Lloyd's power to amend trust deeds to include litigation
recoveries |
|
Case |
Society of Lloyd's v Woodard |
|
Court |
(Ch D) Chancery Division |
|
Jurisdiction |
|
|
Judgment |
May 17, 1996 |
|
Judges |
Sir Richard Scott V.C. |
|
Legislation |
Insolvency Rules 1986 (SI 1986 1925) r.6.4(4) |
|
Reported |
[2000] Lloyd's Rep. I.R. 453 |
|
Reference |
Times, May 24, 1996 |
|
Abstract |
Lloyd's applied by originating summons to
determine whether they were entitled to amend Names' trust deeds so as to
include in the trust funds moneys, to the extent that the Names were indebted
to Lloyd's, which might be recovered by Names in litigation in respect of underwriting
business. Some of the Names had recovered damages but failed to use them to discharge
their debts. The Council of Lloyd's asserted that sums recovered in
litigation were moneys becoming payable to the Name in connection with
underwriting, within the meaning of cl.2(a)(i) of the premium trust deeds,
and purported to exercise powers under cl.22 to vary or amend all or any of
the provisions of the deeds. Held, denying the declaration sought, that
cl.2(a)(i) could not be construed as including recoveries from litigation and
therefore the amendments were invalid because the Council had exceeded its
powers, Lloyd's v Morris [1993] 2 Re. L.R. 217 and Lord Napier and Ettrick v
RF Kershaw Ltd (No.1) (Unreported, May 14, 1992) followed. The dicta in
Morris were not obiter but were binding. Since the trust deeds were
identical, a judicial construction of one deed must apply in law to all the
others and although cl.22 conferred apparently unlimited powers of amendment,
nevertheless they had to be exercised consistently with the commercial
purpose of the deed, which was to ensure that business receipts from
underwriting were available to meet the losses and expenses of the Names'
underwriting. To include litigation damages would make the trust funds serve
an additional purpose. Lloyd's had contractual powers to require Names to supplement
their funds to discharge their debts, but to do so they would have to reach agreement
or take court action. The power to amend was not a means which was available
for this purpose.. |
|
Subject |
Insurance |
|
Keywords |
Lloyds, Insurance, Trusts, Variation, Damages |
|
Counsel |
For Lloyd's: Jules Sher Q.C., John Child and
Joanne Wicks. For the Names: Sydney Kentridge Q.C., Nicholas Warren Q.C. and
Paul Newman. For the second defendant: Richard Slowe |
|
Solicitors |
For Lloyd's: Simmons & Simmons. For the Names:
Richards Butler. For the second defendant: SJ Berwin & Co |
|
Transcript |
4449/98; 4450/98 |
|
Cases cited |
Lloyd's v Morris [1993] 2 Re. L.R. 217 Lord Napier and Ettrick v RF Kershaw Ltd
(No.1) (Unreported, May 14, 1992) |