Continuing representations

The Court of Appeal has, in Limit No 2 Ltd v Axa Versicherung AG [2008] EWCA Civ 1231, in part allowed an appeal against the decision of Jonathan Hirst QC, sitting as a deputy High Court judge, [2008] Lloyd’s Rep IR 330. The first instance decision raised a number of important points of principle, but the only real matter of significance on appeal was the approach of the Court of Appeal to the suggestion that a representation made to the insurers could operate in subsequent years. The leading judgment was given by Lord Justice Longmore. Ward and Jackson LJJ were content to agree with that judgment.

Limit: the facts

The case concerned Axa’s subscription to two facultative obligatory reinsurance treaties in respect of Lloyd’s syndicates’ direct cover for risks relating to oil rigs. Axa (or rather its predecessor in title, Albinga) subscribed to the first treaty in July 2006. The proposal for the treaty, contained in a faxed 43-page bundle of documents from the syndicates’ brokers, stated that ‘as a matter of principle … [the syndicates maintained high standards]’ and ‘would not normally write construction risks unless the original deductible was at least £500,000 and preferably £1,000,000’. On 20 June 1997 the treaty was extended by endorsement for a further seven months to 31 January 1998. The second treaty was thereafter written for 12 months to 31 January 1999. The treaties were unfavourable to Axa, and subsequent investigations showed that most of the risks written by the syndicates had deductibles less than £500,000 and that some of them had no deductible at all. The reinsurers purported to avoid the treaties, and were held by Mr Hirst QC to be able to do so.