No windfall for winner in Lloyd's case: Court story raises doubts about management of members' agents, say names

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MICHAEL Sword-Daniels, the dentist who this week won full compensation for his losses in the Lloyd's insurance market, yesterday had to explain to his students that he had not won a pounds 1m windfall.

Mr Sword-Daniels, who teaches one day a week at Guy's Hospital in London, successfully sued his members' agent to recover losses that already exceed pounds 500,000 and threaten to rise to nearly pounds 1m.

But he stressed yesterday: 'I've not won the pools. I'm not going to get the money. It's either going to pay future losses, or solicitors' fees, or past losses which I have not paid.'

On Wednesday, Mr Justice Gatehouse ruled that all losses should be borne by HG Poland, the members' agent now known as KMR Services. In an important victory for the thousands of members of Lloyd's who are suing their agents, the judge also ordered KMR to indemnify Mr Sword-Daniels against future losses.

Mr Sword-Daniels, who is 47 ('I feel 10 years older'), said his involvement in Lloyd's had destroyed his life. 'It's been three years of living hell. I've been frightened to look at the mail.'

The dentist said he had been introduced to Michael Pitel of the Poland agency through a mutual friend. Mr Sword-Daniels, of Burgess Hill, West Sussex, was earning less than pounds 35,000 a year and only got involved in Lloyd's to help pay school fees for his three daughters.

Yet despite his modest resources and need to avoid substantial losses, Mr Pitel placed Mr Sword-Daniels on several high-risk underwriting syndicates. He has so far paid about pounds 140,000 of losses.

He said: 'I'm personally gratefully relieved. I just feel very sorry for the other people because I feel that the whole system's corrupt.'

Other Lloyd's names believe the case raises serious doubts about the management of some Lloyd's firms. Trevor Marks, a former director of HG Poland, told the High Court how he had made untrue, unfair and exaggerated statements to justify the dismissal of Mr Pitel.

In April 1991, Mr Marks sent a memo to Colin Brand, who was joint managing director of the Poland agency, claiming that Lloyd's members no longer wanted to deal with Mr Pitel; that it was impossible to trust him; and that he had left 'a trail of disaster' at a previous firm.

Yet, in a statement to the court, Mr Marks claimed this memo created a misleading impression. He said he was told to prepare and send it to Mr Brand, 'who knew what I was going to put into the memorandum to justify the decision that had already been made'. In trying to achieve the aim of removing Mr Pitel, 'there was a tendency in this note to exaggeration'. It was untrue to say that names did not want to deal with Mr Pitel, and unfair to say that he was untrustworthy.

Mr Marks said he had been foolish to sign Mr Pitel's dismissal letter, since it was not warranted by his behaviour.