HARRIS V SOCIETY OF LLOYD’S

[2008] EWHC 1433 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice David Steel, 1 July 2008

Lloyd’s – Claim by Name against Society – Allegation of fraudulent misrepresentation and breach of fiduciary duty – Whether proceedings should be struck out for abuse of process – Whether claims time-barred – Whether action barred by legislation – Lloyd’s Act 1982, section 14 – Limitation Act 1980, sections 2 and 32

The claimant argued that the brochure furnished to him by Lloyd’s in 1983 contained representations as regards the process of reinsurance to close (RITC), which was said to be that the liabilities of a closed year of account passed to the next open year. He asserted that he relied on those representations for each year of his participation up to his last year of 1991, but that the representations were untrue because the names in the closed year remained liable. The allegation was not made until August 2007 and arose from documents which were provided in appeals in earlier proceedings. David Steel J struck out the proceedings. (1) The proceedings were an abuse of process. The claimants were all parties to the earlier proceedings Society of Lloyd’s v Jaffray 2001, unreported, which dismissed all arguments based on fraud; the present proceedings were founded on the same documents. (2) If that was wrong, the claimants did not have an arguable case on the merits. It was arguable that representations had been made as to RITC, but they were not false and in particular there was no statement that RITC operated to novate the business into the next open year. Further, it was not arguable that Lloyd’s had any knowledge of falsity and there was no possibility of proving reliance because the claimants appreciated that they were facing unlimited exposure on any open year. (3) If there was a cause of action, the limitation period began to run when the claimant joined the 1991 Syndicate, in December 1990. The claims were all time-barred in December 1996 under s 2 of the Limitation Act 1980. Even if time could be extended under s 32 of the 1980 Act for fraud, the problem was discoverable more than six years before the issue of proceedings in October 2007.  (4) Even if a fiduciary duty arose, which was doubtful, the claim was barred by s 14 of the Lloyd’s Act 1982 and it was also time-barred.