Names face financial ruin after Lloyd's action fails

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The Independent Online

About 70 private investors in Lloyd's, who were crippled by the asbestos claims in the Eighties, are now facing bankruptcy after an attempt to bring the insurance market to trial for misfeasance in public office failed.

A High Court judge yesterday threw out the charges brought by the Names, who alleged that Lloyd's failed to keep proper accounts and hid from investors the extent of the losses they faced.

As Lloyd's was incorporated by an Act of Parliament, the Names claimed that it was in public office and committed the offence of misfeasance.

But Mr Justice Smith said there was "no real prospect" of proving this at a trial. About 70 of the 100 Names in the case will now be made bankrupt over their Lloyd's debts. They had been granted a reprieve while the High Court case was pending.

The Names claimed that they were duped into investing in Lloyd's. A number committed suicide in the face of their debts. Most of the Names accepted a settlement with Lloyd's in 1996.

A spokeswoman for Lloyd's said: "Every organisation has a responsibility to collect the debts that it is owed. We consider bankruptcy to be the last resort when a case cannot be resolved through a settlement."

While yesterday's ruling leaves few legal avenues left for the Names to take against Lloyd's, some individuals are still fighting on. Yesterday's proceedings were interrupted by Sally Noel, another former Name. She was not part of the case but stood up in court to tell the judge that she had evidence of fraud at Lloyd's that had yet to be heard in court. She is pursuing her own proceedings against Lloyd's.

Lloyd's has been successful in previous fraud trials, however.

The Names believe that the High Court ruling does not bode well for the Government, which is facing a court case this year on claims that it failed to properly regulate Lloyd's. It has argued that some of its regulatory duties were carried out by Lloyd's, but the Names now believe that the Government can no longer dodge its responsibilities because the judge threw out their case.