Names win pounds 9.5m damages

Loss-making Lloyd's names were celebrating the first step in their fight for damages from the Merrett syndicate and its auditors, Ernst & Young, after the High Court awarded them an interim payment of pounds 9.5m, writes Nic Cicutti.

The order for payment follows an earlier judgement in October, in which the syndicate and its chairman, Stephen Merrett, were found guilty of negligence and incompetence.

Ernst & Whinney, as the auditors were then called were found to have been negligent in their closing of the syndicates accounts for several years in the early 1980s.

The High Court yesterday ordered that Mr Merrett and the Merrett managing agents should pay 80 per cent of the damages awarded to the names. As a result of the legal action Mr Merrett was personally ordered to pay pounds 500,000 within six weeks.

The pounds 9.5m interim payment will be held by the names' lawyers, More Fisher Brown, pending the result of an appeal by Ernst & Young.

Ernst & Young yesterday said that it felt "vindicated" by the 80-20 split between itself and Mr Merrett over the compensation order. But the company said it was still concerned that Mr Merrett's inability to pay might leave it facing virtually the entire compensation bill towards the names.

"In any event, we are progressing our appeal against the earlier judgement on liability and continue to be confident about the outcome," Ernst & Young said.

John Mays, chairman of the Merrett names association, said he was satisfied with the judgement: "One never gets 100 per cent of what one wants. At least we are now getting money to give to our lawyers. We will be going back in the spring to get back a lot more."