Law Report: Shergar insurance claim fails: O'Brien and others v Hughes- Gibb & Co Ltd and another - Chancery Division (Mr Justice Rattee), 26 April 1994.

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The fact that some bloodstock insurance brokers regularly obtained cover against the theft of racehorses as an extension to mortality cover did not, in the absence of any generally accepted practice to that effect, give rise to a general duty on brokers to do so when simply instructed to obtain mortality cover.

Mr Justice Rattee dismissed an action in which the plaintiffs, Vincent O'Brien and other owners of a stud in Ireland trading under the name 'Coolmore', claimed damages against two defendants, Hughes-Gibb & Co Ltd, a firm of Lloyds brokers, and BBA (Ireland) Ltd, a bloodstock agency, over their failure to obtain insurance cover for the year 1982-83 against the risk of theft, as well as death, of the famous racehorse and breeding stallion Shergar, in which Coolmore had bought pounds 280,000 worth of shares in 1981. The horse was stolen on the night of 8/9 February 1983.

Richard Aikens QC and Richard Lord (Rustons & Lloyd, Newmarket) for Coolmore; Roger Toulson QC (Herbert Smith) for Hughes-Gibb; David Railton (Harbottle & Lewis) for BBA.

MR JUSTICE RATTEE said Coolmore had arranged insurance of their interest in Shergar against the risk of the horse's death through the agency of its bloodstock agents, BBA, who passed on their instructions to Hughes-Gibb, a leading Lloyds broker in the bloodstock insurance field. The insurance obtained for the year from 15 October 1982 included 'all risks of mortality and/or accidents necessitating slaughter' anywhere 'in UK/Eire/France including transit therein' and a 'berserk extension clause' covering the risk of the horse going berserk during transit by air and having to be put down to preserve the safety of the aircraft. It did not include cover against the event which happened, namely the theft of the horse.

It was not suggested that Coolmore had ever asked either of the defendants to obtain insurance cover against the risk of theft. It was plain from the evidence that Coolmore, like most bloodstock businesses, thought the theft of a racehorse exceedingly unlikely.

But Coolmore argued that when it instructed BBA, and BBA in turn instructed Hughes-Gibb, to obtain mortality cover, they each in turn came under a duty to ensure that the cover obtained included cover against theft, even though not specifically requested.

Coolmore sought to prove by calling, as expert witnesses, a number of Lloyds underwriters and brokers, that it was the practice for brokers, when placing bloodstock insurance on the open market, to include cover against theft. But by the end of their evidence those experts agreed with the experts called by the defendants that there was in fact no such settled practice in the period 1981-83. Although some brokers did include such cover, and it was readily available from underwriters in that period for no additional premium, other brokers did not do so as a general practice.

It was argued that Coolmore had no expertise in the insurance field and relied on Hughes-Gibb to supply that and to see that they were covered against 'all foreseeable insurable risks': see Fine's Flowers Ltd v General Accident Assurance Co of Canada (1977) 81 DLR 139. But unlike the client in that case, who had instructed his agent to obtain 'full coverage', Coolmore here had given specific instructions as to the cover they wanted, namely mortality cover. Hughes-Gibb were under a duty to use reasonable skill and care to procure that cover. They did so.

In the absence of any settled practice among bloodstock insurance brokers of obtaining cover against theft of a thoroughbred stallion when instructed to obtain mortality cover, Hughes-Gibb were under no general duty to obtain cover against the theft of Shergar.

Nor could BBA have been under any greater duty than Hughes- Gibb in this respect. It followed that neither defendant was in breach of duty.