SOCIETY OF LLOYD'S v JOHN STEWART CLEMENTSON (NO.2) (1996)
QBD (Cresswell J) 7/5/96
COMPETITION - EUROPEAN
LLOYD'S NAMES LITIGATION : EUROPEAN COMPETITION LAWS AND LLOYD'S
Defence and counterclaim by a Lloyd's name formulated on 14 propositions designed to show that Lloyd's arrangements contravene Art.85 EC Treaty.
Defence and counterclaim by the defendant to the plaintiffs' claim to recover his underwriting deficiency formulated on 14 propositions that the Central Fund arrangements are void by reason of Art.85(2) of the EC Treaty and that Lloyd's claim under the Central Fund Byelaw must fail. The defendant counterclaimed that the Central Fund arrangements and/or other relevant arrangement, caused him loss and damage which he would not have suffered in conditions of undistorted competition and the quantum of such loss and damage is either the defendant's entire aggregated underwriting loss at Lloyd's or inter alia his unacceptable losses and/or his losses or reductions in profit resulting from opaque reinsurance, the XL spiral and/or inappropriate RITC. The trial followed a successful court of appeal in Society of Lloyd's v Clementson (1995) CLC 117 against the judgment of Saville J on 16/12/93.
HELD: In a 192 page judgment the court dealt with the 14 propositions which the defendant put forward in support of the defence and counterclaim. Their complexity and width were a reflection of the fact that the defendant's whole case was an attempt to dress up in Art. 85 guise allegations of regulatory failure on the part of Lloyd's. The particular of structure of Lloyd's had been recognised by European legislation. Each of the 14 propositions was successfully and convincingly controverted by the evidence of the expert witnesses given in court. In any event the defendant's losses were not caused by any of the matters complained of in the proceedings. They were caused by negligent underwriting to the extent that he has already established (or will establish) on this basis in LMX, Long Tail, PSL or other cases forming part of the Lloyd's litigation. Save as aforesaid the defendant's losses were caused by market conditions. Even if contrary to the court's findings there was any infringement of Art.85, the defendant's losses were not caused by any such infringement. With regard to the Central Fund arrangements, the rule of reason applied to the Central Fund arrangements which did not go beyond what was necessary to enable Lloyd's to function properly. In view of the Court's findings it was unnecessary to enquire into s.14 Lloyd's Act to ascertain whether or not it was available to deny the defendant a remedy against Lloyd's or to rule as to whether the defendant is a person who is entitled to invoke Art.85(1) EC Treaty as a basis for claiming compensation against Lloyd's.
LTL 9/5/96 : TLR 14/5/96 : (1996) CLC 1590
Document No. AC0004170