NAPIER & BARON ETTRICK & ORS v R F KERSHAW LTD & ORS : SOCIETY OF LLOYD'S v WOODARD & ANOR (1996)

CA (Nourse LJ, Hobhouse LJ, Pill LJ) 24/10/96

INSURANCE - DAMAGES

LLOYD'S NAMES LITIGATION : LLOYD'S UNDERWRITING CLAIMS : RECEIPTS : AGENTS : PREMIUM TRUST DEED : S.83(2) INSURANCE COMPANIES ACT 1982

Whether recoveries made by Lloyd's names in their negligence claims against their underwriting agents must be treated as receipts of underwriting business for the purposes of the premium trust deed to which every Name at Lloyds was a party.

Appeals against the decision of Saville J in Napier v Kershaw and the decision of the Vice-Chancellor in Lloyd's v Woodard & Anor that the fruits of litigation recovered by a Lloyd's Name from a Lloyd's agent as damages for negligent underwriting were not receipts of the same character as premiums and other receipts of the Name's underwriting business covered by the pre-1995 form of premiums trust deed which every name at Lloyd's must enter pursuant to s.83(2) Insurance Companies Act 1982.

HELD (Hobhouse LJ dissenting): (1) The question which had to be resolved was whether litigation recoveries in respect of negligent underwriting fell within clause 2(a)(i) of the trust deed. After reciting and considering the relevant terms of the trust deed, the court was of the clear opinion that litigation recoveries in respect of negligent underwriting did fall within clause 2(a)(i). The court was not constrained by authority to hold to the contrary. That therefore disposed of (1) the Napier v Kershaw appeal. (2) The Lloyds v Woodard appeal would also be allowed in regard to litigation recoveries in respect of negligent underwriting and, by a majority, dismissed in regard to amendments to the premium trust deed. The further fate of the appeal with all consequential matters would be discussed after judgment.

Jules Sher QC and Joanne Wicks instructed by Simmons & Simmons for Lloyds. Nicholas Warren QC and Paul Newman instructed by Richards Butler for Lord Napier. David Woodward and David Stowe (Solicitor) instructed by S J Berwin & Co for Anthony Wilson.

LTL 28/10/96 : TLR 7/11/96 : (1996) CLC 1875

Judgment Official

Document No. AC0005029