Society Of Lloyd's v Noel

For summary judgment, the claimant must show that the defendant has no reasonable prospect of successfully defending the claim. Permission to appeal requires a reasonable prospect of showing that summary judgment should not have been entered.

Where a statutory scheme authorises bye-laws, resolutions and directions binding on members, liability created through that scheme does not depend on a member’s separate contractual undertaking. Earlier decisions concerning substantially identical Lloyd’s defences may therefore govern a member who did not sign the undertaking relied upon in those cases. Allegations of unconscionability or irrationality cannot succeed where binding appellate authority has already rejected the underlying challenges.

The Society of Lloyd’s obtained summary judgment from Andrew Smith J against Mrs Noel for a premium payable to Equitas under the Lloyd’s reconstruction and renewal scheme. Mrs Noel had been a Lloyd’s member and Name during underwriting years 1979 to 1986, but had not signed the post-1982 undertaking used in claims against many other Names.

The judge held that the Lloyd's Act 1982, bye-laws made under it, and a resolution and direction appointing a substitute agent bound Mrs Noel and authorised the Equitas transaction. Mrs Noel sought permission to appeal, contending that her absence from the later undertaking and other alleged defects gave her a reasonable prospect of defending the claim.

1. Application refused. Mrs Noel had no reasonable prospect of persuading the Court of Appeal that summary judgment should not have been granted. Permission to appeal was therefore refused.
2. The correct summary judgment question was whether Lloyd’s had shown that Mrs Noel had no reasonable prospect of successfully defending the claim. Permission to appeal required a reasonable prospect of establishing that the judge should not have reached that conclusion.
3. The court agreed with Andrew Smith J that the Lloyd's Act 1982 operated as a statute and that its efficacy did not depend on Mrs Noel’s consent. Bye-laws made under the statutory power, together with the resolution and direction appointing AUA9 as substitute agent, applied to a Name in her position and authorised the reinsurance contract with Equitas.
4. The separate undertakings obtained from other Names were merely additional protection. They were not necessary to establish liability. Mrs Noel’s failure to sign a post-1982 undertaking, and her allegation that an earlier verification form was forged, were consequently irrelevant to the statutory and bye-law case.
5. The previous Court of Appeal authorities, including The Society of Lloyd's v Leighs [1997] CLC 759 and The Society of Lloyd's v Fraser, had disposed of challenges to the reconstruction and renewal scheme, including ultra vires, bad faith, set-off, unconscionability and irrationality arguments. Those authorities prevented the court from treating the scheme or bye-law as unconscionable or irrational.
6. The order was: application for permission to appeal refused.

• Court of Appeal (Civil Division) [2002] EWCA Civ 937: permission to appeal from summary judgment was refused.
• Queen’s Bench Division: Andrew Smith J entered summary judgment for the Society of Lloyd’s for the Equitas premium and rejected the proposed defences.