“ This Term Sheet documents the agreement between the parties identified as Parties below with respect to the orderly termination of the contractual and other commercial relationships amongst them and the orderly handover by Cavell Management Services Limited (‘Cavell UK’) and Cavell USA Inc. (‘Cavell USA’) of run-off management and other services in connection with Seaton Insurance Company (‘Seaton’), Stonewall Insurance Company (‘Stonewall’), Unione Italiana (UK) Reinsurance Company Limited (‘Unione’) and Cavell Insurance Company Limited (‘CIC’) having regard to the regulatory responsibilities of Dukes Place (as defined below) and Randall (as defined below) and the interests of the policyholders of Seaton, Stonewall, Unione and CIC. Parties (1) Dukes Place Holdings LP for itself and on behalf of its partners, shareholders, directors, officers, subsidiaries, associated companies and affiliates (including but without limiting the generality of the foregoing Seaton, Stonewall, Unione and CIC)(‘Dukes Place’); (2) Randall & Quilter Investment Holdings Limited (for itself and on behalf of its partners, shareholders, directors, officers, subsidiaries, associated companies and affiliates (including but without limiting the generality of the foregoing Cavell USA and Cavell UK)(‘Randall’); …… 13. Dukes Place hereby releases and forever discharges Randall of and from all actions, causes of action, suits, claims and demands whatsoever, whether at law or equity, whether known or unknown, suspected or unsuspected, disclosed or undisclosed, fixed or contingent, accrued or unaccrued, asserted or unasserted, which Dukes Place ever had, now has or hereafter can, shall or may have against Randall for, upon, or by reason of any matter, cause or thing whatsoever arising out of or in connection with any business, commercial, contractual or other arrangements between or involving either of them as at the date of this Term Sheet, save (i) in respect of any obligations expressly set out in this Term Sheet, (ii) in respect of any actions, causes of action, suits, claims, and demands arising from any breach by Randall of any provision of this Term Sheet, and (iii) in the case of fraud on the part of Randall. This release will not inure to the benefit of any third party….. 29. This Term Sheet shall be governed by and construed in accordance with English law and the parties submit to the exclusive jurisdiction of the English Courts.”
“A. Whether, on a proper construction of the Term Sheet documenting the agreement between Dukes Place Holdings LP and Randall & Quilter Investment Holdings Limited and signed in February 2006 (‘the Term Sheet’) and in particular clause 29 thereof, the parties have agreed to submit all disputes (including claims in fraud against Randall (as that phrase is used in the Term Sheet)) to the exclusive jurisdiction of the English Courts. B. Whether, on a proper construction of clause 13 of the Term Sheet, the claims advanced by the Defendants in the First Amended Complaint in the US District Court for the Southern District of New York (‘the First Amended Complaint’) are claims in fraud within the meaning of that clause.”
“Article 2. Aggregate Limit Reinsurer hereby agrees to reimburse the Reinsured for Ultimate Net Loss paid by the Reinsured up to US$327,000,000 ….. Article 4. Definitions. A.……The Reinsured shall be the sole judge as to what constitutes a claim or loss covered by the Insurance Policies/ Reinsurance Contract reinsured under this Retrocession and as to the Reinsured’s liability thereunder and as to the amount or amounts which it shall be proper for the Reinsured to pay thereunder, and the Reinsurer shall be bound by the reasonable, good faith judgment of the Reinsured as to the liability and obligation of the Reinsured under the Insurance Policies/Reinsurance Contracts reinsured under this Retrocession, subject to the terms, exclusions and conditions hereof….. H. Whenever used in this Retrocession, the term ‘Claims Servicer’ shall mean Eastgate Group Limited, or any wholly-owned affiliate or subsidiary thereof, or such other person as Reinsurer approves in writing to manage Underlying Claims on behalf of Reinsured. Article 6. Premium As the consideration for the rights and obligations set forth in this Retrocession, Reinsurer agrees to accept and the Reinsured agrees to pay a premium of US$191,000,000 …. Article 10. Warranties Reinsured warrants and represents that it will not voluntarily undertake any material change in corporate structure, administrative practices in respect of the Insurance Policies/Reinsured Contracts which are reinsured under this Retrocession or its domicile, without prior written consent of the Reinsurer which consent will not be unreasonably withheld or delayed. Article 11. Conditions A. Reinsurer shall have the right to associate in the adjustment of all Underlying Claims. B. In addition to the Reinsurer’s general right to associate as set forth in A. above, the Reinsurer’s approval shall be obtained by the Reinsured prior to committing to the payment and/or settlement of (1) any gross claim settlements or other payments covered by this Retrocession in excess of US$ 250,000 ; (2) any payments not in settlement of specific claims, including insurance policy buy-backs return premiums or commutations of assumed reinsurance obligations, in excess of US$ 250,000 ; and (3) any commutations or assignments of ceded reinsurance regardless of value. With respect to items (1) and (2) herein, Reinsurer’s approval shall not be unreasonably withheld or delayed. C. No person may serve as Claims Servicer or otherwise manage the Underlying Claims other than Eastgate Group Limited, or any wholly-owned affiliate or subsidiary thereof, without the prior written consent of Reinsurer. In the event that, on or after the fifth anniversary of the Effective Date, Dukes Place Holdings LP sells 50% or more of the Voting Securities of Reinsured to any other person or persons, then Reinsurer shall have the right to become the Claims Servicer until this Retrocession is exhausted under the same terms and conditions as Eastgate Group Limited…… Article 18. Standard of care In undertaking the obligations and responsibilities described herein, the Reinsured and Claims Servicer will have a fiduciary duty to act in utmost good faith to the interests of Reinsurer. ”
“ 1. Interpretation ‘Company Representative’ means the individual notified in writing by the Company to Eastgate from time to time as being authorised to give instructions to Eastgate, the first such individual being named in Schedule 2; ‘Services’ means the services provided by Eastgate specified in Schedule 1; 2. Provision of services 2.1 The Company appoints and authorises Eastgate from the Effective Date to provide the Services in respect of the Business. Eastgate shall perform the Services with reasonable care and skill in a professional and efficient manner. 2.2 …….Eastgate warrants that it has read the Reinsurance Agreements in their entirety, that the Reinsurance Agreements create various rights and obligations with respect to the Run-Off Business between the Company on the one hand, and National Indemnity Company (‘NIC’), on the other, and that Eastgate will at all times cause the services to be performed in a manner consistent with the Company’s rights and obligations under the Reinsurance Agreements. 2.3 Eastgate will provide a representative of NIC with full time access to the Company’s offices and records and to allow such representative to monitor the payment of claims and to assist Eastgate and the Company in the settlement of such claims. 6. Post-termination 6.6 For the avoidance of doubt, the provisions of this clause 6 and clauses 3.2, 7, 10, 11, 15.6 and 15.7 shall survive the termination of this Agreement and continue in full force and effect. 8. Assignment and delegation 8.1 Neither party shall assign or deal in any other manner with any of their rights or obligations under this Agreement without the prior written consent of the other, such consent not to be unreasonably withheld or delayed, provided that, subject to clause 10.2, Eastgate shall have the authority to delegate to any person such functions as it deems necessary for the performance of its obligations under this Agreement. 10. Indemnification and Limitation of Liability 10.2 Eastgate shall indemnify the Company against any liability which the Company may reasonably incur to the extent such liability has been finally adjudicated by a court of competent jurisdiction to have resulted from …..(iii) any material breach of this Agreement by gross negligence or wilful misconduct attributable to any consultants, independent contractors or any third party engaged by Eastgate under clause 8 hereof. 14. Further assurance and good faith 14.1 Each of the parties agrees with the other that it will at all times take all steps so as to ensure that the provisions that are to be performed by it are properly performed in good faith. 15. General 15.1 This Agreement sets out the entire understanding of the parties with respect to the matters with which it deals…. 15.2 Each party acknowledges that it has not relied upon or been induced to enter into this Agreement by any representation other than a representation expressly set out in this Agreement and neither party shall be liable to the other in equity, contract, tort or in any other way for any representation not expressly set out in this Agreement. 15.6 This Agreement shall be governed by and construed in accordance with New York law without reference to that State’s law concerning conflicts of law, and any dispute arising in connection with this Agreement is subject to the non-exclusive jurisdiction of the New York courts. SCHEDULE 1 The Services 1. Processing and accounting services…. 2. Management services…. 3. Claims handling services… 4. Claims settlement/underwriting authorities…. 5. Commutations…. 6. Reports to the Company…. 7. Treasury and cash management functions… 8. Corporate functions…. SCHEDULE 2 The Company Representative The Company Representative shall be R.L. Barclay….”
“ WHEREAS Collaboration Agreement (G) NIC and Randall America now wish to collaborate, on the terms and subject to the conditions of this Agreement with the intent that (i) NIC will be responsible for the management of all Schedule 4 Services (as herein defined) in relation to ….Seaton and Stonewall and (ii) Randall America will provide all Schedule 1 Services (as herein defined), which are required to be performed by NIC pursuant to the Administration Services Agreement. For the avoidance of doubt, Randall America will continue to provide all services other than claims handling which it is obliged to provide pursuant to the Seaton Administration Agreement and the Stonewall Administration Agreement. 1. DEFINITIONS AND INTERPRETATION 1.1 In this Agreement, the following definitions shall have the following meanings: ‘Schedule 1 Services’ means the services to be provided by Randall America as set out in Schedule 1 ‘Schedule 4 Services’ means the services for which NIC is to assume responsibility as identified in Schedule 4 3. RESPONSIBILITY FOR CLAIMS HANDLING IN RELATION TO SEATON AND STONEWALL 3.1 …..Randall America hereby delegates to NIC and NIC accepts responsibility for the management of claims in respect of Seaton and Stonewall and NIC undertakes to provide the Schedule 4 Services on Randall America’s behalf. In particular, Randall America authorises and requires NIC to direct the Claims Handling Staff in the performance of their duties. 3.3 In carrying out its obligations under Clause 3.1 above, NIC shall perform to the professional standards reasonably to be expected from a professional provider of an equivalent service. SCHEDULE 1 Schedule 1 Services 1. Information Technology….. 2. Reporting and Accounting 3. Reinsurance Processing, Billing and Collections 4. Regulatory Compliance and Reporting 5. Corporate Services…. 6. Maintenance of Non-Claims Records SCHEDULE 4 Schedule 4 Services A. Seaton All such services as are set out in paragraphs 3 and 4 of Schedule 1 of the Seaton Administration Agreement, together with such assistance as is required to enable Randall America to comply with its obligations under paragraphs 5 and 6 thereof. B. Stonewall All such services as are set out in paragraphs 3 and 4 of Schedule 1 of the Stonewall Administration Agreement, together with such assistance as is required to enable Randall America to comply with its obligations under paragraphs 5 and 6 thereof. ”
“ (1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”
“ I would be very slow to attribute to reasonable parties an intention that there should in any foreseeable eventuality be two sets of proceedings.”
“ ….Further, Satyam confirms all assignments of intellectual property rights to Upaid by it and those assignments executed by Satyam employees as co-inventors of Upaid intellectual property and such assignments will survive and shall be governed by such Assignment agreements…. ”
“….the judge was plainly right…..Plainly it makes commercial sense for a dispute about the validity of the contract to be determined under an arbitration agreement (or a jurisdiction agreement). Whether a dispute under a different contract is within a jurisdiction agreement depends on the intention of the parties as revealed by the agreement. The effect of cl.3.1(b) is that any claims under the Assignment Agreement are governed by that agreement and not by the Settlement Agreement. Claims under an agreement preserved by the Settlement Agreement do not ‘relate’ to the Settlement Agreement.”
“…The settlement of the liabilities of Seaton and Stonewall are in part governed by limitations imposed by Berkshire Hathaway which reinsures the liabilities. This reinsurance protects the capital, but limits strategies to be adopted by Dukes Place to accelerate the run-off.”
“ …We recognise that any acceleration of settlement of the liabilities could prejudice the legitimate interests of NICO, and without NICO’s consent, would be likely to breach the terms of the Retrocession Agreements. We have no wish to breach our contractual obligations nor to damage our relations with NICO to the detriment of our current working relationship and future prospects for collaboration on new transactions…. For the avoidance of doubt we confirm that we shall not initiate any plans for the winding up of Seaton or Stonewall upon a solvent basis which have the effect of increasing the liabilities or accelerating the settlement of the liabilities of Seaton or Stonewall, the consequence of which would result in increasing recoveries or accelerating the collection of recoveries from NICO under the Retrocession Agreements, without first securing the consent and support of NICO.”
“ …I also confirm that the re-domiciling of Seaton and Stonewall to Rhode Island will have no impact on how the run-off of the claims of the companies is conducted by Randall America. The work will continue to be done in Boston. There are no plans to make any changes to the current arrangements. If Randall America was to plan to do so, I am sure that given their contractual relations with NICO for claims handling and other run-off administration, they would discuss their intentions with NICO. ” (Italics added.) It would appear that the reference to Cavell US’s “contractual relations” with NICO must relate to the Collaboration Agreement; certainly the Defendants, before me, made no positive suggestion to the contrary. Mr. Barclay signed the fax as President of Seaton and Stonewall and further indorsed it as Managing Director of Dukes Place. Pausing there, this is, self-evidently, an important communication with considerable apparent ramifications for the Dukes Place charge of concealment of the Collaboration Agreement. iv) The “Due Diligence Examination” report, prepared by the Rhode Island Department of Business Regulation Insurance Division, dated 26th November, 2003 and dealing with the re-domiciling of Seaton and Stonewall in Rhode Island, referred in terms to the Collaboration Agreement; it would appear that the report was reviewed in draft by both Mr. Patel and Mr. Barclay. v) In an e-mail exchange with NICO in December, 2004 relating to the handling of a particular claim, Mr. Barclay made express reference to the Collaboration Agreement, saying this (e-mail of 10th December, 2004): “ Stonewall has a Run-Off Management Agreement with Cavell America within which it is recorded that ‘Eastgate (now Cavell America) agrees to administer the Reinsurance Agreement (the agreement between Stonewall and NICO) consistent with the Company’s rights and obligations under the Reinsurance Agreement.’ Stonewall does not have any run-off management agreement with NICO. The relationship between Cavell America and NICO set out in the Collaboration Agreement ….is of no concern to Stonewall which can only look to Cavell America to fulfil its obligations under the Run-Off Management Agreement. The Collaboration Agreement has no effect upon the relationship between Stonewall and NICO which….is governed by the Aggregate Reinsurance Agreement…. ”
“ To avoid providing Randall with a further opportunity to put up obstacles we believe that you need to provide him with a series of decisions already made, not just inform him of ‘intentions’. Given his other relationships with Berkshire we need to have Berkshire ‘on side’ before talking with Randall.”
“ 2.6 In order to avoid answering questions asked by Randall, DS led Randall believe that the acquisition of Seaton/Stonewall was an Enstar initiative led by JO [John Oros – Executive Chairman of Enstar].”
“ The position of Castlewood and Enstar leading into the meeting was that both companies strongly feel that the possibility of joining forces with KR is remote, however, we considered that it was worth discussing the situation with KR as it would inevitably provide Castlewood and Enstar with useful information on the operations of Seaton/Stonewall.”
“…a commutation that had been negotiated by Randall which provided for a payment of$10 million from …[NICO]…which would remove approximately$30 million of exposure from Seaton. Randall said that ….[NICO]…exercised their right of refusing a commutation and according to Randall the reason is that such a settlement would cause the …[NICO]…reinsurance to be impacted more quickly than it would if the$30 million was paid out over many years.” iii) Seaton was “in need of proactive management”; such management would result in a “war” with NICO – a war he was ready to wage. iv) A “strong line” needed to be taken in the future with NICO as to both Seaton and Stonewall, because their (and their shareholders’) interests and those of NICO were “not aligned”
“ KR said that he believed that GSC was aware of the existence of the Collaboration Agreement but not the terms.”
“Dukes Place are aware of collaboration agreement but not the terms. The collaboration agreement gave KR power to enter into agreement with Berkshire & to delegate certain functions.”
“ …including actual misrepresentations, omissions where there is a duty to disclose, breaches of fiduciary duty that involve deception, and aiding and abetting another in committing a fraud.”
“ (1) a material misstatement or omission; (2) made with knowledge of its falsity; (3) and with intent to deceive; (4) upon which the plaintiff justifiably relies; and (5) that results in injury.”
“ …an omission with intent to defraud where one is under a duty to disclose has the same legal effect under New York law as an affirmative misrepresentation….”
“…where the parties are ‘in a fiduciary or confidential relationship with each other….”
“….it is not enough for the Defendants to say ….that because (e.g.) New York law imposes a fiduciary duty on a party (here, it is alleged, Cavell US), there is a ‘duty to disclose’ which gives rise to a liability in deceit under English law. That would be to subvert the (accepted) principle of double actionability – for it would render a party liable under the ‘fraud’ exception in circumstances where he would not be liable applying English law.”
“ (1) Claims arising from false representations as to Mr. Randall’s and Cavell US’s intention to act in Seaton and Stonewall’s best interests; (2) Claims arising from dishonest suppression of the fact that they intended all along to transfer decision making power to NICO; (3) Claims arising from misrepresentations that Seaton and Stonewall’s interests were being served throughout the currency of the Administration Agreements; (4) Claims arising from the dishonest suppression of the fact that they were not; (5) Claims arising from dishonest subordination of Seaton and Stonewall’s interests to the interest of NICO during the course of purported claims management.”
“’Fraud’ in ordinary speech means the using of false representations to obtain an unjust advantage: see the definition in the Shorter Oxford English Dictionary. Likewise in law ‘fraud’ is proved when it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false: see Derry v Peek, per Lord Herschell. In any case, ‘fraud’ involves a false representation. Robbery does not. ”
“ Robbery is not included in the ordinary meaning of the word ‘fraud’ – as the Oxford English Dictionary confirms……For at least 100 years (see Bullen & Leake’s, Precedents of Pleadings, 3rd ed. (1868)), ‘fraud’ in civil actions at common law, whether as a cause of action or as a defence, has meant an intentional misrepresentation (or, in some cases, concealment) of fact made by one party with the intention of inducing another party to act upon it, which does induce the other party to act upon it to his detriment…… In civil actions it [i.e., fraud] has long had a precise limited meaning as a term of art, and I see no reason for ascribing any wider meaning to it….”
“On the construction of the section I agree that this is not an action in which ‘a charge of fraud against….(the defendant)…. is in issue’. I agree with the Judge that fraud is used here in its ordinary and primary sense of deceit, and not as referring generally to dishonesty.”
“ Where a defendant makes a false representation, knowing it to be untrue, or being reckless as whether it is true, and intends that the claimant should act in reliance on it, then is so far as the latter does so and suffers loss the defendant is liable for that loss….”
“…but a very little is sufficient to affect the application of that principle. If a word, if a single word, is dropped which tends to mislead the vendor, the principle will not be allowed to operate.”
“ An implication may arise from the conjoint effect of several express statements, or from what is said, coupled with what is left unsaid; it may arise from acts and conduct or, in a limited class of case, from silence.”
“ As the judge appreciated it simply means dishonesty. I accept the formulation put forward by ….[counsel]…which is that it ‘connotes at the minimum an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferent whether it is contrary to their interests or not.’ It is the duty of a trustee to manage the trust property and deal with it in the interests of the beneficiaries. If he acts in a way which he does not honestly believe is in their interests then he is acting dishonestly. ”