European International Reinsurance Company Ltd v Curzon Insurance Ltd & Ors

On an application to set aside joinder or strike out a claim, the court must ask whether the pleaded claim has a real prospect of success. The pleaded facts are assumed to be true and represent the claimant’s best case, but summary disposal is inappropriate where the issue is fact-sensitive and would require a mini-trial.

A Hedley Byrne duty depends on an objective assumption of responsibility and claimant reliance. Employees and agents may assume personal responsibility where their statements and conduct cross the line between defendant and claimant. Such responsibility is not ordinarily inferred where it conflicts with an existing contractual structure, but the issue may require determination of the contractual scope and factual context.

The claimant reinsurer sought to avoid a reinsurance contract with Curzon Insurance Ltd for alleged non-disclosure. Curzon brought a Part 20 claim against Sedgwick UK Risk Services Ltd, Sedgwick OS Ltd and Marsh USA Inc, alleging breaches of common-law and contractual duties in placing the reinsurance and advising Curzon.

The Part 20 defendants applied to set aside their joinder or strike out the claim. They argued that responsibility lay only with Sedgwick Ltd under a letter of engagement with T&N plc, and that the pleaded facts could not establish an independent assumption of responsibility to Curzon.

The central issue was whether the claims were bound to fail or had no real prospect of success.

1. Application dismissed. The joinder of Sedgwick UK Risk Services Ltd, Sedgwick OS Ltd and Marsh USA Inc was allowed to stand. The Part 20 claim was not struck out.
2. The court applied the summary disposal principles stated in Three Rivers DC v Bank of England [2001] 2 All ER 513; [2001] UKHL/16 and Wragg v Partco [2002] EWCA Civ 594. A claim should be critically scrutinised, but summary disposal is inappropriate where the dispute is fact-sensitive and resolution would involve a mini-trial. The Part 20 claim had to be treated as Curzon’s best case.
3. The governing Hedley Byrne v Heller [1964] AC 465 principle is an objective assumption of responsibility for the task, assessed from what the defendant said and did in context. Reliance is necessary. The principle extends to negligent performance of professional services, including insurance broking, and concurrent contractual and tortious liabilities may exist.
4. Following the reasoning in Punjab Bank v De Boinville [1992] 1 Lloyd’s Rep. 7, an employee or agent may incur personal liability. The relevant question is whether the individual’s statements and conduct crossed the line between defendant and claimant so that personal reliance was reasonable. However, an assumption of responsibility is not ordinarily inferred where it is inconsistent with a contractual chain or structure: Henderson v Merrett Syndicates Ltd [1995] 2 AC 145; White v Jones [1995] 2 AC 207; Williams v Natural Life Ltd [1998] 1 WLR 830.
5. On the pleaded facts, Hammond and Herrick had performed much of the work and were centrally involved in the insurance and reinsurance. There was sufficient material crossing the line to make personal assumption of responsibility arguable. The contractual-scope and reliance issues were fact-sensitive and could not properly be resolved summarily.
6. The claim against SRS would fail if based only on agency for Sedgwick Ltd. However, the alternative case that SRS acted on its own behalf, together with its substantial involvement and the uncertainty surrounding the letter of engagement, was not bound to fail. The agency wording on the correspondence did not justify summary dismissal.

At a case management conference, Cresswell J ordered the Part 20 defendants to be joined without determining the merits of Curzon’s joinder application. The present court dismissed the applications by Sedgwick UK Risk Services Ltd, Sedgwick OS Ltd and Marsh USA Inc to set aside that order or strike out the Part 20 claim.