“COLLECTED BALANCES PAYABLE TO EQUITAS We are instructed on behalf of Equitas and/or all relevant Lloyd’s syndicates in respect of 1992 and prior year business. Equitas has previously written to you enquiring as to the position regarding any balances collected on behalf of Lloyd’s syndicates for 1992 and prior years of account which you may hold. You have responded to the following broad effect: 1 That all identifiable balances have been paid. 2 All appropriate efforts have been made, are being made and will continue to be made to identify unpaid items. 3 Future balances discovered will be paid without delay under arrangements which already exist or will be put in place. If we have misrepresented your position or you do not accept that this does represent your position, we would be grateful if you would inform us immediately. However, as you may be aware, our clients have reason to be concerned as they continue to find on a regular basis that broker balances, whether premiums or reinsurance recoveries, have been held without remission on to the syndicates or Equitas for long periods. We consider that you are under a continuing duty to our clients:- 1 To inform them of all amounts you have received and still hold or hereafter receive on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas. 2 To make all appropriate efforts to identify any and all amounts you have received and still hold on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas and to pay to them without delay all such amounts subsequently identified. 3 To pay to them without delay all amounts you have received and still hold on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas. 4 To pay to them without delay any and all amounts you may subsequently receive or identify as having received on behalf of Lloyd’s syndicates for 1992 and prior years and/or Equitas. We believe our clients would be entitled to obtain a court order for an account from you at this stage but are prepared to forbear from doing so if you will return a signed copy of this letter as confirmation of your acceptance of the above duties and that you will comply with them now and at all times in the future.”
“7. Accounting 7.1 At an early stage in the business relationship, a Lloyd's broker should advise a client of his obligations to the Lloyd's broker and insurers concerning the timely payment of premiums. 7.2 Any insurance monies handled by a Lloyd's broker have to be kept in Insurance Broking Accounts. The operation of these accounts is the responsibility of the Lloyd’s broker and he receives and retains any interest or investment income earned on them. A Lloyd's broker should apply due diligence to the collection and payment of all insurance monies. 7.3 A Lloyd's broker should have proper regard for the settlement due date agree with the insurers for any contract of insurance. 7.4 A Lloyd's broker should remit money received and due to clients promptly. Where a risk is placed with a number of insurers, and claims monies are remitted to the Lloyd's broker at different times, the Lloyd's broker will need to consider whether, having regard to the amount received and the time when the balance will be received, and any other relevant factors such as amounts owed by the client to the Lloyd's broker, he should pass on to the client such proceeds as he has received as soon as possible, rather than await the balance and make payment in full.”
“At a very basic level, the flow of funds in [reinsurance] transactions consists of two types of transactions: (i) claims; and (ii) premiums. … the funds in relation to these transactions were typically first paid to the relevant broker, and that broker then paid those sums to the party to whom they were due. In the case of a claim payment, the money would flow from the reinsurer to the broker, and the broker would pay the relevant amount to the reinsured. In the case of a premium payment, this would be paid by the reinsured, via the broker, to the reinsurer. The upshot of this is that the broker was central to the flow of funds in the reinsurance market. … the broker not only handled the relevant sums, but took the role of effecting the processes necessary to ensure that the funds flowed at all. … the broker was responsible for obtaining the relevant agreements to the amounts to be paid so that the payments would be processed. The broker was involved in each step of the process, producing the relevant endorsements and debit and credit notes, and the other participants relied on the broker to keep them informed and to effect the relevant payments.”
“unless the broker in fact took steps to arrange the onward payment of the premium or claim amount (and as part of this sent to the syndicate the credit note), the relevant syndicate to which the funds should have been transferred would not ordinarily have any means of knowing that the funds had been received by the broker.”
“Approached as a matter of principle, therefore, it is right to attribute to that assumption of responsibility, together with its concomitant reliance, a tortious liability, and then to inquire whether or not that liability is excluded by contract because the latter is inconsistent with it. … I am of the opinion that this House, should now, if necessary, develop the principle of assumption of responsibility as stated in Hedley Byrne[1964] AC 465 to its logical conclusion so as to make it clear that a tortious duty of care may arise not only in cases where the relevant services are rendered gratuitously, but also where they are rendered under a contract.”
“If an obligation is to perform an act by a given time, once that time has elapsed and the act has not been performed, there is a breach of a single obligation and not of a continuing one. The fact that it still lies within the power of the lessee to perform the act cannot affect the nature of his obligation. In this field of law a reference to a continuing breach is a way of referring to breaches of a continuing obligation and does not refer to the ability to remedy a single breach.”
“It is further agreed that there will be no further obligation upon Walsham’s to provide accounting information after 12 months from the date the accounting information has been provided to and acknowledged by Equitas save as may be reasonably required by Equitas in relation to Walsham’s continuing obligations pursuant to paragraph 1.2 herein;”
“Walsham’s shall remain liable to account to Equitas on its own behalf and on behalf of the Syndicates for all funds received in respect of the Reinsurance Agreements, without deduction or set off, whether received prior to or after the transfer date, whether by way of claims, receipts, return premiums, salvages or otherwise to which, but for the Equitas Reinsurance (or any previous reinsurance to close at Lloyd’s), the Syndicates would have been entitled. Walsham’s shall pay to Equitas forthwith, any such finds which it currently holds.”
“Extent of waiver Subject to the following provisions of this clause, Equitas (on behalf of itself and each other member of the Equitas Group) hereby agrees with each Broker (on behalf of itself and each other member of that Broker’s Group) to waive and release all Relevant Claims against each member of the Broker’s Group in respect of any act or omission (or alleged act or omission) which occurred prior to the Effective Date.”
“Relevant Claim means a Claim howsoever arising out of, or in any way related to or connected with, whether directly or indirectly the underwriting business of any Syndicate for the 1992 underwriting year of account or any earlier year of account, including any such claim the benefit of which has been assigned or transferred to Equitas pursuant to the RITC Contract or Settlement Agreement or in respect of which Equitas is otherwise entitled pursuant to the RITC Contract or Settlement Agreement to the conduct of such claim on behalf of any such Syndicate or on behalf of the Names, or any of them, thereon or any managing or members agents thereof;”
“Exclusions from waiver 6.4 The waiver and release in clause 6.1 shall not apply to any Claim against any member of a Broker’s Group: (a) to account to Equitas for funds received whether prior to, or after the Effective Date, whether by way of claims, receipts, premiums, return premiums, salvages, profit commissions, or otherwise, to which, but for the RITC Contract (or any previous reinsurance to close at Lloyd’s), a Syndicate would have been entitled; (b) for failure to remit as instructed funds received from any Syndicate or Equitas, whether prior to, or after the Effective Date whether by way of claims payments, outwards premiums, outward return premiums subrogated recoveries or salvages, reinsurance premiums or which are otherwise due to third parties, any Syndicate or Equitas; …”
“We consider that you are under a continuing duty to our clients:- 1. To inform them of all amounts you have received and still hold or hereafter receive on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas. 2. To make all appropriate efforts to identify any and all amounts you have received and still hold on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas and to pay to them without delay all such amounts subsequently identified. 3. To pay to them without delay all amounts you have received and still hold on behalf of Lloyd’s syndicates for 1992 and prior years of account and/or Equitas. 4. To pay to them without delay any and all amounts you may subsequently receive or identify as having received on behalf of Lloyd’s syndicates for 1992 and prior years and/or Equitas.”
“(1) Walsham’s acted as broker on behalf of the Syndicates in the placing of reinsurance agreements protecting the Syndicates writings, identified on Schedule 1 attached hereto (hereinafter “the Reinsurance Agreements”) and/or subsequent processing, accounting and claims collection relating thereto. … (4) Equitas, acting on behalf of the Syndicates, wishes to assume control of the ongoing functions performed by Walsham’s in relation to the Reinsurance Agreements. (5) The parties have negotiated a settlement to permit this transfer of functions, in accordance with the terms set out herein. …”
“Walsham’s shall remain liable to account to Equitas on its own behalf and on behalf of the Syndicates for all funds received in respect of the Reinsurance Agreements, without deduction or set off, whether received prior to or after the transfer date, whether by way of claims, receipts, return premiums, salvages or otherwise to which, but for the Equitas Reinsurance (or any previous reinsurance to close at Lloyd’s), the Syndicates would have been entitled. Walsham’s shall pay to Equitas forthwith, any such finds which it currently holds.”
“52. We live in a world where interest payments for the use of money are calculated on a compound basis. Money is not available commercially on simple interest terms. This is the daily experience of everyone, whether borrowing money on overdraft or credit cards or mortgages or shopping around for the best rates when depositing savings with banks or building societies. If the law is to achieve a fair and just outcome when assessing financial loss it must recognise and give effect to this reality.”
“94. … in principle, it is always open to a claimant to plead and prove his actual interest losses caused by late payment of a debt. These losses will be recoverable, subject to the principles governing all claims for damages for breach of contract, such as remoteness, failure to mitigate and so forth. 95. In the nature of things, the proof required to establish a claimed interest loss will depend on the nature of the loss and the circumstances of the case. The loss may be the cost of borrowing money. That cost may include an element of compound interest. Or the loss may be loss of an opportunity to invest the promised money. Here again, where the circumstances require, the investment loss may need to include a compound element if it is to be a fair measure of what the plaintiff lost by the late payment. Or the loss flowing from the late payment may take some other form. Whatever form the loss takes the court will, here as elsewhere, draw from the approved or admitted facts such inferences as are appropriate. That is a matter for the trial judge. There are no special rules for the proof of facts in this area of the law. 96. But an unparticularised and unproved claim simply for ‘damages’ will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt would of itself cause damage. Loss must be proved.”
“16. … The reality is that every creditor who is deprived of funds to which he is entitled and which he needs to run his business will have to incur an interest-bearing loan or employ other funds which could themselves have earned interest. It is a short step to say that such interest losses will arise ‘in the ordinary course of things’ in such circumstances. 17. I also agree with Lord Nicholls that the loss of the late payment of a debt may include an element of compound interest. But the claimant must plead and prove his actual interest losses if he wishes to recover compound interest, as is the case where the claim is for a sum which includes interest charges. The claimant would have to show, if his claim is for ancillary interest, that his actual losses were more than he would receive by way of interest under the statute. In practice, especially where the period over which interest is sought is short or where the claimant does not have to borrow money to replace the debt, simple interest under section 35A of the [Senior Courts] Act 1981 is likely to be the more convenient remedy.”
“140. … Where a wrong committed by A has caused B to be wrongfully deprived for a period of time of a sum of money, the extent of the loss should be measured by the value to B of that sum for that period. There may be actual evidence of what B would have done with the money. The actual evidence may show that B has lost nothing. On the other hand, it may show that he has lost a great deal, but of course some of that loss may be too remote to enable a claim for its recovery to succeed. At the least it can usually be said that by being deprived of the money B has lost the opportunity of leaving it on deposit at the bank for the period in question. On that sensible footing B can claim compensation measured by the interest the sum would have produced if simply left with the bank for that period. Interest would have accrued at the bank’s usual rate of interest on deposits and the usual rests allowed by the bank’s terms. An award of interest compounded in the manner referred to would result, in my opinion, from an ordinary application of legal principles applicable to the assessment of compensatory damages for tort or breach of statute.”
“127. This order should stand so far as it relates to the claim for damages. The reference to a ‘conventional’ rate was intended to dispense with the need for protracted investigation of the financial affairs of the parties and of other claimants. On the claims for damages a conventional rate should be taken to refer to the rate at which a substantial commercial company could borrow the amounts in question in the market at the relevant time.”
“226. The judge had before him extensive evidence about Sempra’s financial position at the relevant times, which showed that it was in a net borrowing position. He was evidently satisfied that Sempra had incurred properly recoverable loss of interest on a compound basis. On one view he should or might have sought to assess Sempra’s actual loss by detailed calculation. He decided instead that ‘full compensation’ would be achieved by taking a conventional rate and by compounding that. As the Court of Appeal noted, a conventional rate will only give rise to full compensation in conjunction with compounding at the periodic intervals used in arriving at the rate.”
“103. In the ordinary course the value of having the use of money, sometimes called the ‘use value’ or ‘time value’ of money, is best measured in this restitutionary context by the reasonable cost the defendant would have incurred in borrowing the amount in question for the relevant period. That is the market value of the benefit the defendant acquired by having the use of the money. This means the relevant measure in the present case is the cost the United Kingdom Government would have incurred in borrowing the ACT for the period of prematurity. Like all borrowings in the money market, interest charges calculated in this way would inevitably be calculated on a compound basis.”
“48. … It was not that there was no actual benefit, but that the benefit was extremely difficult to quantify. It seems to me that, on this evidence, the assumption that the revenue derived some benefit from the receipt of money prematurely has not been displaced, and that this justifies resort to a conventional rate of interest as a measure of that benefit. 49. The proposition that a conventional rate should be used leaves open for further discussion questions of detail such as how that rate is to be arrived at and what rests should be adopted. The enrichment principal indicates that these questions should be resolved by looking at the circumstances of the enrichee. The use of ordinary commercial rates of interest, at ordinary rests, would be appropriate if those rates were relevant to the enrichee’s circumstances. But I would hold that it is open to the enrichee to show that it would have been able to borrow money at rates or on terms more favourable to it than those available in the ordinary commercial market. If it can do that, then ordinary rates and other terms must give way to those that are relevant to the circumstances of the enrichee. …”
“Reinstatement Brokerage Buy-Out I refer to our recent discussions and my conversation with Steve Berg last week regarding the above issue. As you are aware, we have now mutually agreed terms whereby Equitas has, on the basis set out herewith, agreed to pay Walsham Brothers & Co Ltd an amount of£225,000 on condition that it is agreed to be in full and final settlement of any and all claims by Walsham Brothers & Co Ltd, for brokerage arising out of or in any way connected with the administration (including, but not limited to claims collections) by Walsham Brothers & Co Ltd, or any predecessor thereof, of any 1992 or prior year Lloyd’s syndicate business. This payment is made entirely without prejudice to the question of Walsham Brothers & Co Ltd legal entitlement to this sum and is not to be regarded as creating any precedent or acknowledgement of legal liability.”
“the greatest difficulty in seeing how you can formulate an agreement which will have the effect (in such a case as the present) of binding the defendant contractually not to raise the plea of section 8 of the Act of 1911 in any action the plaintiffs may choose to bring … however long after the cause of action they may elect to start those proceedings.”
“Subject to clause 10, each Accepting Name unconditionally and irrevocably covenants with each Broker (for itself and as agent and/or trustee for each of its respective Broker Persons) that: (a) he hereby waives and releases all of his Broker Claims against each of the Brokers and the Broker Persons; …”
“Broker Claim means a Claim by an Accepting Name (whether directly, or by or through an Action Group for his benefit, on his behalf or otherwise) against a Broker or Broker Person howsoever arising out of, or in any way related to or connected with, whether directly or indirectly, an Accepting Name’s recruitment to underwrite insurance business at Lloyd’s through, or his membership at any time of, or the management of one or more Syndicates for the 1992 year of account or any earlier year of account (excluding for this purpose long term business, as defined in theInsurance Companies Act 1982 , underwritten by such Syndicate) and/or his 1992 and Prior Business (including the management thereof), except that a Broker Claim for this purpose shall not include: (a) an Equitas Claim, the benefit of which has been validly assigned or transferred to Equitas, or in respect of which Equitas is otherwise validly entitled; …” (a) an Equitas Claim, the benefit of which has been validly assigned or transferred to Equitas, or in respect of which Equitas is otherwise validly entitled; …”
“Equitas Claim means a Claim howsoever arising out of, or in any way related to or connected with, whether directly or indirectly, 1992 and Prior Business, the benefit of which is assigned or transferred to Equitas, or in respect of which Equitas is otherwise entitled, pursuant to the Reinsurance Contract, including, without limitation, Claims in respect of Syndicate reinsurances, premiums, premium returns, salvages or other assets receivable from any other person (or, in each case, any security therefor or other right relating thereto);”
“Subject to clauses 9 and 10, each Contributor and Broker unconditionally and irrevocably covenants with each Accepting Name that; (a) it hereby waives and released all of its Contributor’s Claims against any of the Accepting Names; …”
“Contributor’s Claim means a Claim by a Contributor or Broker (including a Claim by way of subrogation) howsoever arising out of, or in any way related to or connected with, whether directly or indirectly, an Accepting Name’s recruitment to underwrite insurance business at Lloyd’s through, or his membership at any time of, or the management of one of more Syndicates for the 1992 year of account or any earlier year of account (excluding for this purpose long term business, as defined in theInsurance Companies Act 1982 , underwritten by such Syndicates) and/or his 1992 and Prior Business (including the management thereof), including, without limitation, a Claim under an agency agreement in respect of an Accepting Name’s underwriting business on any such Syndicate …”
“Contributor’s Claim means a Claim by a … Broker … howsoever arising out of, or in any way related to or connected with, whether directly or indirectly, an Accepting Name’s … 1992 and Prior Business (including the management thereof) …”
“It is the intention of each of the Parties that, notwithstanding the possibility that any of the Parties subsequently obtains further information or understanding as to the facts, law or anything whatsoever which, if presently known or understood, would have affected that Party’s assessment of the Claims settled, waived and released by it under this Settlement Agreement, this Settlement Agreement shall nevertheless be deemed to have fully and finally settled, waived and released any and all such Claims.”
“Claim means a claim, potential claim, counterclaim, claim by way of enforcement of judgment, award or order of any kind (including as to interest and costs), right of appeal, claim by way of contribution, right of set off, indemnity, cause of action, right or interest of any kind or nature whatsoever, whether known or unknown, suspected or unsuspected, whether arising in contract, tort, equity, fraud, as a consequence of wilful, reckless or negligent conduct, or of any fiduciary, statutory, regulatory or other duty, or otherwise, howsoever and whenever arising and in whatever capacity and jurisdiction;”
“Proceedings against Brokers 8.6 Nothing in this Agreement shall: … (b) operate to restrict or prevent or in any way prejudice or waive any defence or set off or cross or counterclaim that a Broker or any member of a Broker’s Group may have or may be able to raise in respect of any proceedings brought against such Broker or any member of a Broker’s Group;” (b) operate to restrict or prevent or in any way prejudice or waive any defence or set off or cross or counterclaim that a Broker or any member of a Broker’s Group may have or may be able to raise in respect of any proceedings brought against such Broker or any member of a Broker’s Group;”
“Walsham’s shall remain liable to account to Equitas on its own behalf and on behalf of the Syndicates for all funds received in respect of the Reinsurance Agreements, without deduction or set off, whether received prior to or after the transfer date, whether by way of claims, receipts, return premiums, salvages or otherwise to which, but for the Equitas Reinsurance (or any previous reinsurance to close at Lloyd’s), the Syndicates would have been entitled. Walsham’s shall pay to Equitas forthwith, any such finds which it currently holds.”
“[Article III rule 6] amounts to a time bar created by contract. But, and I do not think that sufficient recognition to this has been given in the courts below, it is a time bar of a special kind, viz., one which extinguishes the claim … not one which, as most English statutes of limitation … and some international conventions … do, bars the remedy, while leaving the claim itself in existence. Therefore, arguments to which much attention and refined discussion has been given, as to whether the charterer’s claim is a defence, or in the nature of a cross-action, or a set-off of one kind or another, however relevant to cases to which theLimitation Act 1939 or similar Acts apply, appear to me, with all respect, to be misplaced. The charterers' claim, after May 1974, and before the date of the writ, had not merely become unenforceable by action, it had simply ceased to exist, and I fail to understand how a claim which has ceased to exist can be introduced for any purpose into legal proceedings, whether by defence or (if this is different) as a means of reducing the respondents' claim, or as a set-off, or in any way whatsoever.”
“33. … where A has a claim against B which A is entitled in equity to set off against a claim made by B against A, neither the existence or the exercise by A of his right of equitable set-off has the effect of extinguishing or reducing either claim.”
“43. … For all these reasons, I would underline Lord Denning’s test [in The Nanfri], freed of any reference to the concept of impeachment, as the best restatement of the test, and the one most frequently referred to and applied, namely: ‘cross-claims … so closely connected with [the plaintiff's] demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim’. That emphasises the importance of the two elements identified in Hanak v Green; it defines the necessity of a close connection by reference to the rationality of justice and the avoidance of injustice; and its general formulation, ‘without taking into account’, avoids any traps of quasi-statutory language which otherwise might seem to require that the cross-claim must arise out of the same dealings as the claim, as distinct from vice versa.”