Law Report: Lloyd's names can sue agents

Arbuthnott v Feltrim; Deeny v Gooda Walker Ltd; Henderson v Merrett Syndicates Ltd. - House of Lords (Lord Keith of Kinkel, Lord Goff of Chieveley, Lord Browne- Wilkinson, Lord Mustill and Lord Nolan), 25 July 1994

Where the relationship between parties was such that one party assumed responsibility to the other in respect of certain services and the other relied on those services, a duty of care arose in respect of negligent performance of those services which resulted in economic loss suffered, unless negatived by the terms of any contract between them.

The House of Lords dismissed appeals by Lloyd's underwriting agents from the Court of Appeal's decision (the Independent, 14 December 1993) affirming Mr Justice Saville's decision that the underwriting agents owed a duty of care to their Lloyd's names.

Lloyd's names who are not underwriting agents appoint underwriting agents who may be members' agents who advise the names on their choice of syndicates, or managing agents who underwrite contracts of insurance on behalf of the names, or they may be combined members' agents and managing agents.

The names brought actions against their underwriting agents to recoup part of the great losses they had suffered. The agents argued that the imposition of a duty of care in tort was inconsistent with the contractual relationship between the parties, and it was not permissible for the names to rely on the more favourable limitation regime for tort.

Anthony Temple QC, John Rowland and Aiden Christie (Reynolds Porter Chamberlain) for the Merrett managing agents; Anthony Boswood QC, Stephen Moriarty (More Fisher Brown) for the Merrett names; John Rownland and Kirsten Hough (Clifford Chance) for the Feltrim managing agents; Bernard Eder QC and David Foxton (Elborne Mitchell) for the Feltrim members' agents; Anthony Boswood QC and Stephen Moriarty (Richards Butler) for the Feltrim names; Bernard Eder QC and Christopher Butcher (Elborne Mitchell) for Gooda Walker members' agents; Geoffrey Vos QC, Jonathan Gaisman and David Lord (Wilde Sapte) for the Gooda Walker names.

LORD GOFF said that in Hedley Byrne & Co Ltd v Heller, bankers were held liable in tort in respect of the gratuitous provision of a negligently favourable reference of a customer when they knew the reference would be relied on, and when financial loss was suffered in consequence. The principle rested on a relationship between the parties, which might or might not be contractual, where one party assumed or undertook a responsibility towards the other.

The concept of 'assumption of responsibility' provided its own explanation why there was no problem in cases of this kind about liability for pure economic loss. Once the case was identified as falling within the Hedley Byrne principle, there should be no need to embark on any further inquiry whether it was 'fair, just and reasonable' to impose liability for economic loss.

The relationship between name and managing agent appeared to provide a classic example of the type of relationship to which the principle in Hedley Byrne applied, subject to the impact, if any, of the contractual context.

The problem of the possibility of concurrent claims arising from breach of duty was by no means only of academic significance. Foremost among practical issues was the question of limitation of actions.

Approached as a matter of principle, it was right to attribute to the assumption of responsiblity, together with its concomitant reliance, a tortious liability, and then to inquire whether or not that liability was excluded by the contract because the latter was inconsistent with it.

The House of Lords should develop the principle of assumption of responsibility as stated in Hedley Byrne to its logical conclusion so as to make it clear that a tortious duty of care might arise not only in cases where the relevant services were rendered gratuitously, but also where they were rendered under a contract.

There was no sound basis for a rule which automatically restricted the claimant to either a tortious or a contractual remedy. It was not objectionable that the claimant might be entitled to take advantage of the remedy which was most advantageous to him, subject only to ascertaining whether the tortious duty was so inconsistent with the applicable contract that the parties must be taken to have agreed that the tortious remedy was to be limited or excluded. The plaintiff who had available concurrent remedies in contract and tort might choose the remedy which appeared to him to be the most advantageous.

Applying those principles to the present case, the agency agreements here did not operate to exclude the tortious duty, leaving it open to the names to pursue either remedy against the agents.


Ying Hui Tan, Barrister

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
Life and Style
Google celebrates the 126th anniversary of the Eiffel Tower opening its doors to the public for the first time
techGoogle celebrates Paris's iconic landmark, which opened to the public 126 years ago today
Cleopatra the tortoise suffers from a painful disease that causes her shell to disintegrate; her new prosthetic one has been custom-made for her using 3D printing technology
newsCleopatra had been suffering from 'pyramiding'
Life and Style
Baroness Lane-Fox warned that large companies such as have become so powerful that governments and regulators are left behind
techTech giants have left governments and regulators behind
Arts and Entertainment
Coachella and Lollapalooza festivals have both listed the selfie stick devices as “prohibited items”
Nigel Owens was targeted on Twitter because of his sexuality during the Six Nations finale between England and France earlier this month
rugbyReferee Nigel Owens on coming out, and homophobic Twitter abuse
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Web Designer / Front End Developer

£28000 - £32000 per annum: Recruitment Genius: This fast expanding web managem...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

£40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor