European International Reinsurance Company Ltd v Curzon Insurance Ltd & Ors

At the permission-to-join stage, the question is whether the claim has a realistic prospect of success. An insurance or reinsurance broker, sub-broker, or the employer of an individual who carried out the broking work may owe a duty of care in tort where the pleaded facts arguably establish an assumption of responsibility and reliance. A contractual agency relationship does not automatically negate personal responsibility. Nor does the fact that the client was unaware of the relevant employing company prevent reliance on that company’s employees and a possible vicarious liability. Whether responsibility was assumed, whether reliance occurred, and whether agency ultimately defeats liability are generally matters for trial where the allegations are properly pleaded.

Curzon Insurance Ltd became the fronting insurer for asbestos-related liabilities of T&N Plc and obtained 100 per cent reinsurance through arrangements involving Sedgwick Ltd and related companies. Curzon alleged that Sedgwick Ltd, Sedgwick UK Risk Services Ltd, Sedgwick OS Ltd and Marsh USA Inc, and their employees, had acted as its brokers or had assumed responsibility for placing the reinsurance with reasonable skill and care.

Gross J refused applications by the three Part 20 defendants other than Sedgwick Ltd to set aside permission to join them. The appeal concerned whether Curzon had a realistic prospect of succeeding against those defendants, principally on assumption of responsibility, reliance, vicarious liability and agency.

1. Appeal dismissed. The court upheld Gross J’s decision that Curzon had an arguable claim against Sedgwick UK Risk Services Ltd, Sedgwick OS Ltd and Marsh USA Inc.
2. The pleaded case against Hammond and Herrick alleged activity after Curzon entered the transaction, an assumption of responsibility to Curzon, knowledge that Curzon would rely on them, and that they acted as Curzon’s reinsurance brokers. Those allegations were sufficient to leave for trial whether they assumed responsibility and whether Curzon relied on them.
3. The court rejected an unduly rigid reading of Henderson v Merrett