Current Law Cases



Lloyd's; premium trust deeds; trust funds to discharge debts; Lloyd's power to amend trust deeds to include litigation recoveries


Society of Lloyd's v Woodard


(Ch D) Chancery Division




May 17, 1996


Sir Richard Scott V.C.


Insolvency Rules 1986 (SI 1986 1925) r.6.4(4)


[2000] Lloyd's Rep. I.R. 453


Times, May 24, 1996


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..




Lloyds, Insurance, Trusts, Variation, Damages


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


For Lloyd's: Simmons & Simmons. For the Names: Richards Butler. For the second defendant: SJ Berwin & Co


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)