The Divisional Court set aside leave given to the applicants to apply for judicial review of the cash call and draw down systems operated by Lloyd's.
The six applicants were Lloyd's names who were members of syndicates managed by Gooda Walker Ltd. The syndicates had sustained substantial losses in reinsurance of asbestosis and pollution claims in the United States and from the London Excess of Loss Market.
Eight names had issued writs against the agents concerned, and applied for interlocutory injunctions to restrain Lloyd's from drawing down on the names' deposits on the grounds that the agents owed to the names a duty of care to investigate cash calls made to ensure they had been properly made, and that several syndicates had made cash calls in breach of trust. On 16 April 1992 Mr Justice Saville refused the injunctions sought.
On 19 May 1992 the six applicants applied ex parte for leave to apply for judicial review of the cash call and drawing down systems. Mr Justice Potts was told by counsel then acting for the applicants that there was no overlap between the applicants in the judicial review proceedings and the plaintiffs in the proceedings before Mr Justice Saville and that the issues were different. Mr Justice Potts granted the leave sought.
Lloyd's applied to set aside that leave on the grounds that (1)the applicants had not made full and frank disclosure to Mr Justice Potts; (2) the application in relation to cash call statements was not made within the three month time limit for judicial review; (3) the basis of the application before Mr Justice Potts, that Lloyd's regulators had used their powers contrary to the policy of the Lloyd's Act 1871, had been abandoned; (4) the application was not seriously arguable; and (5) Lloyd's was not a body amenable to judicial review and the issues raised were not matters of public law.
Gordon Pollock QC, Mark Havelock-Allen and Alison Foster (Lloyd's Solicitors' Department) for Lloyd's. Anthony Colman QC and Richard Gordon (Bentley Stokes & Lowless) for the applicants.
LORD JUSTICE LEGGATT said that the circumstances in which the court's jurisdiction to set aside leave given might be exercised was not confined to cases of non-disclosure or cases in which new factual developments were demonstrated, but the jurisdiction should be exercised sparingly.
There was non-disclosure or misrepresentation to Mr Justice Potts about the duplication of identity of three plaintiffs in the proceedings before Mr Justice Saville and three applicants, the overlap of issues in the action and these proceedings and one applicant's participation in the voluntary drawdown procedure.
The requirements of disclosure on an ex parte application were summarised in Brinks Mat Ltd v Elcombe (1988) 1 WLR 1350. Where an extension of time was necessary in which to apply for judicial review there was an obligation on counsel to apply for it.
The application was now based on the contention that although there was no overriding duty owed by Lloyd's to the names which was disregarded, there were different duties owed by Lloyd's to different groups - policyholders, brokers, agents and names - and that it was the responsibility of Lloyd's to strike a balance so as to protect the interests of each.
However, it was unclear in what respects the cash call system operated demonstrated a failure to look out for the interests of the names. No bad faith was imputed; decisions had not been made with manifest unreasonableness.
The applicants had not shown that they had relied on representations made by Lloyd's or had conducted themselves on 'legitimate expectations' that certain practices would be followed.
Even if Lloyd's did perform public functions, for example, for the protection of policyholders, the rights relied on in the judicial review proceedings related exclusively to the contract governing the relationship between names and their members' agents.
Lloyd's operated within one section of the market. Its powers were derived from a private Act which did not extend to any person in the insurance business other than those who wished to operate in the section of the market governed by Lloyd's and who, in order to do so, had to commit themselves by entering into the uniform contract prescribed by Lloyd's.
Neither the evidence nor the submissions suggested that there was such a public element about the relationship between Lloyd's and the names as placed it within the public domain, rendering it susceptible to judicial review.
If Mr Justice Potts had had his attention drawn to the date of the cash call statements and audit reports in the context of the three-month time limit for applications for judicial review, had known that the main basis for seeking leave would not be maintained, if the deficiency in the public law argument had identified that the relationship between names and agents and Lloyd's was governed by contract and was of an essentially private nature, and if the court was to have control of its processes to avoid duplication, no leave would or should have been given to the applicants for leave to move for judicial review following Mr Justice Saville's refusal of like remedies in earlier proceedings.
The leave previously granted to the applicants to apply for judicial review would be set aside.Reuse content