The House of Lords has thrown out an appeal by 71 members' agents, finally establishing that they were contractually liable for negligent underwriting by Lloyd's syndicates. The decision will benefit the 17,000 members who are suing over losses of more than pounds 3bn.
Separately, Mr Justice Gatehouse yesterday ruled that members agents' are liable if they expose members to syndicates involving greater risks than the members desired. The judge awarded Richard Brown, a Yorkshire businessman, 70 per cent of the pounds 1.5m losses he has incurred to date, with an indemnity to cover 70 per cent of any future losses. This bill will fall to Mr Brown's members' agent, KMR Services, which previously traded as HG Poland. It is expected to appeal.
David Tiplady of DJ Freeman, Mr Brown's solicitor, said the decision was critically important, the most significant to emerge from any Lloyd's action so far.
Dr Tiplady said: 'The members' agents always say: 'We are just a postbox'. This case establishes that the members' agent should properly research and investigate the syndicates before putting their names on them, and advise their names of the result of that research.'
The House of Lords' decision, taken after an expedited hearing, clears the way for the Gooda Walker Action Group to pursue its claim for more than pounds 600m against firms of agents. The case, due to start the week after next, is expected to last about 12 weeks.
Johnston Brown, company secretary of Sturge Holdings, one of the largest agency groups involved, said: 'The names still have to prove negligence. All the members' agents will be defending vigorously. In a lot of cases, they have got pretty good defences.'
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