http://www.geocities.com/lloyds_cases
mirror site:
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The most startling conclusion from reading the collected documentation — case reports, diplomatic correspondence, lobbyists' submissions, law review articles — is the politicization of what, a decade or two before, would have been addressed (in America at least) purely in securities regulation terms.

The failure of most Lloyd's investors to have their cases heard on the merits in the United States is an accident of history and politics. Defendant-friendly judges, judicial appointees of the Reagan-Bush era, have made the federal courts more friendly to Lloyd's and other corporate interests: this is a political choice, and we remark on it as fact and not out of criticism. Not entirely unconnected with this is the accident of Supreme Court decisions responding to inappropriate use of antitrust, RICO and securities law claims, and a belief inherited from a few influential professors at Hne searches in the U.S. Code (http://www.gpo.gov) for the phrase "contrary stipulations void". There are only three occasions where Congress used this phrase, one of them being pre-dispute waiver of rights under the U.S. securities laws. The Courts have held that notwithstanding this clear language, Lloyd's (and other sellers of securities) could force a waiver of such rights.

For those who profited at Lloyd's from passing off their own risks cheaply on newly-recruited investors do not deny their own good fortune: they deny any legally cognizable link between them and the aggrieved investors: for there were multiple layers between the two, staffed by independent contractors kept ignorant of the true facts. To read the proceedings of the Jaffray fraud trial is to see the "perps" stumble and stammer over the hard questions.

Whatever may be the outcome for particular investors in state courts (i.e., the West case), in the Jaffray fraud trial, or in bankruptcy courts (where about half the petitioners, American, Canadian and British have achieved a "fresh start"), the failure of the "System" to offer any remedy to more than 20,000 others is the inevitable result of the lobbyist spoils system of American and British politics today. That is, after all, the thrust of the Time Magazine articles linked here. What is surprising and worthy of examination by every law student — and this is the reason for this site — is that the British, American and Canadian legal systems have shown themselves, at least in extreme cases, susceptible to the same criticism leveled at certain less developed jurisdictions: the courts are reliable arbiters as between political equals, but not necessarily otherwise.

The job of the lawyer is to guide the client in affairs so as to avoid legal surprises. One must conclude here that not through negligence or incompetence but through juridical surprise (cumulative decisions tipping the interpretation of statutes in favor of the corporate defendant) no such guidance was possible here, and Lloyd's investors — especially non-British, and more specifically American ones — were disadvantaged. (But all the investors, the British ones too, can reasonably complain that they were misled, and worse, by successive investigatory reports. The law, to the surprise of many, is not there to do justice but rather to keep the peace. How disputes are settled really means less to the law than that they are settled.

Lloyd's is sui generis. It was given broad immunity from the law of the outside world not just because its directors managed to "buy" a private Act of Parliament, but because it had the trappings of its own justice system and a code of secrecy that has been compared to the Masonic. Par of the problem was that Lloyd's was not just an "investment", but a Club: one considered oneself privileged to be a member, even when profits were slim or nonexistent. To understand this, one must look at the Scientology cases for, like the Church of Scientology, Lloyd's is a notorious and vindictive litigant, jealous of its secrets.

Of course, like any such organization, secrets were best maintained by having layers and cells. Few were aware of the truth; loyalty was assured among the large number of incompetent underwriters and managers totally incapable of making elsewhere the kind of money they were able to earn or skim at Lloyd's. Little skill was needed where an underwriter only had to follow the lead of a lead underwriter. That the leader subsequently might lay off his risk, or reinsure his personal risk with personal stoploss or "facultative reinsurance" on his own or a neighboring syndicate would go unnoticed. The judgments published here in the cases against Feltrim, Gooda and Bullen say much about how that strategy worked -- how the insiders were able to pass off their own risks cheaply on newly recruited investors.

It has been asked why European Union and European Convention of Human Rights law has not provided any useful remedy for Lloyd's investors. The ECHR provides limited protection in financial matters: relevant to the Lloyd's cases is Art. 6(1) (right of prompt access to a court), but the Strasbourg court is a conservative institution and the Convention remedy of uncertain applicability here. Appreciation of the relationship between English and European Union law demands an understanding of Britain's policy towards Europe since 1950, something which General de Gaulle understood only too well. When Britain did "enter Europe", it sold out its farmers and fisherman in exchange for a veto in financial services law and policy (among other things). Brussels never understood Lloyd's. And since it would be up to the British judiciary to refer any issue to Luxembourg (aside from a Commission action under competition law or, even less likely, insurance law) reliance by Names on the EU for help is misplaced.

Lloyd's New York law firms have succeeded in clouding the eyes of bureaucrats generally, and most especially of the U.S. Internal Revenue Service (see the 1990 Closing Agreement) and the SEC (see the Regulation D prepared on behalf of the Members Agents by Lloyd's law firms — in which Lloyd's managed to befuddle the bureacrats' notion of what was a security and who was the issuer).

There are some remarkable lessons to be learned all 'round from reading these cases. And instructive comparisons to be made with other great financial crises and frauds: BCCI, Maxwell, Barlow Clowes, the South Sea Bubble. The Barlow Clowes comparison is apt: here, as there, the promoters promised not riches, not easy wealth, but a "small profit from a low-risk investment". What Lloyd's investors never knew was that the risk was, in fact, horrendously great; the reward, if any, derisorily small.

These case reports speak for themselves. That the legal systems of at least three countries have at so many turns re-interpreted law to protect the cheaters at the expense of the victims is a notable chapter in modern jurisprudence.

The preceding paragraphs were written two years ago, in 2000. We have now seen that cynical manipulation of accounts, skimming off of profits, shifting risk and otherwise enriching management at the expense of outside investors is not unique to Lloyid's or to Britain. And, interestingly, British firms and the British Government are expressing concern that they may be subjected to the full force of the Sarbanes-Oxley Act -- imprisonment fof top executives for cooking the books. Lloyd's, Enron, WorldCom, Global Crossing, Imclone... they all are made of the same cloth: arrogance, greed, dishonesty (but the perpetrators have redefined "honesty" and "integrity" in such away that they are accountable for their copnduct only to their own inner circle. Politicians are so beholden to that sort of modern Robber Baron that we should not expect any real change. The authors of this site certainly do not expect any. What we have done is to facilitate the scientific examination of the great Lloyd's Robbery so that the damage done to the legal system, and to the supposed system of investor protection -- and the particular gapin cross-border investor protection -- as well as the misuse of diplomacy may be scrutinized. — Crepulax

Click HERE for additional English cases in summary form - Case Summary Page updated Aug. 31, 2003 with new cases- (includes numerous unreported cases digested on lawtel.co.uk)

Click HERE for Bankruptcy and Fraudulent Conveyance cases and materials - Bankruptcy Page links updated Sept. 21, 2003 - Click HERE for statutes and Lloyd's administrative documents (this page of statutes and documents has not been updated since 2000; it will be repaired soon)

Canadian Judgments

Ash v. Corp. of Lloyd's, 60 O.A.C. 241 (Ont. C.A. 1992)

Crockett v. Corp. of Lloyd's, 2000 A.C.W.S.J. 512251, 100 A.C.W.S.(3d) 569 (P.E.I.Sup. Ct. Trial Div. 2000) (refusal of stay) — same, from CANLII server

Royal Bank of Canada v. Darlington, Ont. Ct. of J., Gen. Div., Apr. 19, 1995, 1995 ACWSJ 77120; 54 A.C.W.S.(3d) 738

Royal Bank of Canada v. Darlington, Ont. Ct. of J., Gen. Div., Feb. 16, 1994, (1994) 112 D.L.R. (4th) 210; 1994 ACWSJ 16828; 45 A.C.W.S. 3d 890 (same case; motion for production of documents; question of professional privilege)

Drummie v. Society of Lloyd's, 94 A.C.W.S.(3d) 472 (N.B. Ct. App. 2000) (forum non conveniens) — same, from CANLII server

In re Drummie (Q.B.N.B., Bankruptcy, Feb. 1, 2002) — from CANLII server

Royal Bank of Canada v. Drummie (Q.B.N.B. Bankruptcy, July 25, 2002) — from CANLII server

In re McDonough, 2001 A.C.W.S.J. 614276, 107 A.C.W.S.(3de) 363 (Ont. Suyper. Ct. Bankr. 2001) (debtor required to answer questions regarding his financial dealings occurring more than 5 years prior to bankruptcy)

Society of Lloyde's v. Meinzer (Ct. App. Ont., Aug 29, 2001) (reciprocal enforcement of judgments; denial of natural justice) — same, from CANLII server — same case, ruling on costs, from CANLII server

Bank of Montreal v. Mitchell, 143 D.L.R. (4th) 697 (Ont. Ct. Gen. Div., Feb. 19, 1997) (Bank of Montreal paid letters of credit in favor of Lloyd's following suit in English court; banks granted judgment against Canadian Lloyd's investors for reimbursement) same, Acrobat PDF format

Morrison v. Society of Lloyd's, 1999 ACWSJ LEXIS 11080; 1999 ACWSJ 18279; 85 A.C.W.S. 3d 43; [2000] I.L.Pr. 92 (N.B. Q.B. Jan. 11, 1999) (forum non conveniens)

Society of Lloyd's v. Philip, Ct. App. Ontario, Apr. 11, 2003 (denial of adjournment to prepare evidence) — from CANLII server

In re Regan, 2001 A.C.W.S.J. 612023, 105 A.C.W.S.(3d) 14 (N.B. Q.B. Bankr., Apr. 24, 2001) (Lloyd's motion to deny debtor's discharge denied despite transfer of marital home)

In re Regan, 2002 A.C.W.S.J. 690723, 109 A.C.W.S.(3d) 685 (N.B.Q.B. Trial Div., Nov. 13, 2001) (Lloyd's entitled to all documents held by debtor's accountants) — same, from CANLII server, 2001 NBQB 2002

Rozsa v. Barclays Bank, 2001 A.C.W.S.J. 611854, 104 A.C.W.S.(3d) 1046 (refusal of stay; forum non conveniens)

Society of Lloyd's v. Saunders, Ont. Super. Ct. of Justice, Feb. 9, 2000 (enforcement of English judgment)

Society of Lloyd's v. Saunders, 55 O.R.(3d) 688, 210 D.L.R.(4th) 519 (Ct. App. Ont. 2001) , affirmed on appeal, Ont. Ct. App., Aug. 21, 2001 same, Acrobat PDF format

Society of Lloyd's v. Van Snick, 95 A.C.W.S.(3d) 846 (N.S. Sup. Ct. 2000) (reciprocal enforcement of judgments) — same, from CANLII server

Society of Lloyd's v. Van Snick, 98 A.C.W.S.(3d) 77 (N.S. Ct. App. 2000) (same case in Court of Appeal)

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