SOCIETY OF LLOYD'S v DONNELL RUSSELL DALY (1998)

QBD Commercial Court (Tuckey J) 27/1/98

INSURANCE - CONTRACT - CONFLICT OF LAWS - INTERNATIONAL

LLOYD'S NAMES LITIGATION : PROPER LAW : ENFORCEABILITY : AVOIDANCE FOR BREACH OF FOREIGN LAW : PUBLIC POLICY : JURISDICTION : FOREIGN SECURITIES LEGISLATION : UNDERTAKING

Breach of foreign securities legislation was not sufficient cause to render a contract subject to English law void as a matter of public policy.

Claim by the plaintiff ('Lloyd's') against the defendant ('Mr Daly'), a representative dissenting name, for a premium due under the Equitas Reinsurance contract ('the Equitas contract') (see Society of Lloyd's v Lyons : Same v Leighs : Same v Wilkinson (1997) TLR 11/8/97 for the history of that litigation). Mr Daly became an underwriting member of Lloyd's with effect from 1 January 1988 after signing the Lloyd's General Undertaking ('the undertaking') in Toronto, Canada, where he was resident and domiciled, in 1987. The undertaking bound him to comply with the provisions of the Lloyds' Acts 1871-1982, and any direction imposed by the Council of Lloyd's, and was expressed to be subject to English law. The Equitas contract was also expressed to be governed by English law and the benefit thereof had been assigned to Lloyd's as part of the Reconstruction & Renewal ('R & R') settlement. The Council of Lloyd's had decided that members not accepting the R & R plan were liable for the premium under the Equitas contract. A number of dissenting members, including Mr Daly, argued that since they had been recruited as members in Canada, Australia or the United States of America and the method of recruitment was invalid by the securities legislation of those countries, their respective signatures to the undertaking which bound them to membership were illegal and void and they were therefore not bound to pay the premiums demanded.

HELD: (1) The proper law of the undertaking and the Equitas contract was English law and that law governed their validity and enforceability. (2) Under English law they were valid and enforceable unless, as a matter of public policy, the English court would decline to enforce them on the grounds that they were unenforceable in the place where the undertaking was signed. (3) The relevant securities legislation was regulatory only and did not prohibit contracts in the form of the undertaking, but merely regulated the conditions under which they could be promoted. (4) The illegality was not, therefore, of such a nature as to require the English court to avoid the undertaking on grounds of public policy.

Declaration accordingly.

LTL 1/9/98 (Unreported elsewhere)

Judgment Approved - 12 pages

Document No. AC7100115