Society of Lloyd's v Laws & Ors

The court considered applications for permission to amend pleadings by a number of "Names" to add causes of action in negligent and statutory misrepresentation and related negligent regulatory failures against the Society of Lloyd's following the Threshold Fraud proceedings. The judge applied the test for late amendments under CPR 17.3/17.4 and s.35(5) Limitation Act 1980 and examined whether proposed claims were time-barred under the Limitation Act 1980 (including ss.2, 14A and 14B), whether s.32 (fraudulent concealment) applied, and whether section 14(3) of the Lloyd’s Act 1982 immunised Lloyd’s from damages. The court held that the Threshold Fraud findings precluded further fraud claims, that Lloyd’s did not owe the Names a general duty to regulate, advise or disclose beyond established authorities, and that section 14(3) of the 1982 Act (effective from 23 July 1982) provides a substantive immunity from damages unless bad faith is shown. The Human Rights Act 1998 could not be used to read down or defeat that immunity retrospectively; Article 6 was not engaged so as to require a different result. In consequence most proposed amendments were time-barred or foreclosed by statute and authority; a narrow class of Names who had previously notified particular negligent-brochure claims and who met precise temporal and knowledge criteria were given limited leave to particularise and pursue amendments subject to conditions.

This was an application for permission to amend long-standing pleadings after the "Threshold Fraud" litigation between Lloyd's and many Names. The Names sought to add negligent misrepresentation and statutory misrepresentation causes of action (and related negligence/duty claims) based on representations in Lloyd's brochures and other publications about the market's audit and reserving system.

Background and procedural posture: After the Threshold Fraud trial (Cresswell J) and dismissal on fraud grounds, the Court of Appeal reformulated certain representations and again rejected the Names' fraud claims. The Court of Appeal nevertheless left open the possibility of further applications to amend. The current applications came after that history and were brought under the Civil Procedure Rules (CPR) for amendment after limitation (CPR 17.4) and the Limitation Act 1980 (s.35(5)).

Nature of the application: permission to amend pleadings to add negligent and statutory misrepresentation claims (and some broader negligence/regulatory claims) arising from brochure and Global Report representations about Lloyd’s audit and reserving systems.

Key issues identified by the court:

• the test for allowing late amendments (CPR 17.3/17.4 and the relevance of s.35 Limitation Act 1980);
• when a cause of action in negligent or statutory misrepresentation accrues and the applicable limitation period (s.2 Limitation Act 1980);
• whether s.32 Limitation Act (fraudulent concealment) postpones limitation;
• the operation of ss.14A and 14B Limitation Act 1980 (knowledge-based start and 15-year long stop);
• whether s.14(3) Lloyd’s Act 1982 immunises Lloyd’s from damages for the matters complained of, and the date from which it operates;
• whether the Human Rights Act 1998 permits a Convention-compatible construction of s.14(3) or otherwise disapplies the immunity retrospectively; and
• discretion and prejudice in allowing amendment at a late stage.

Reasoning and outcome: The judge analysed accrual of loss (reliance, contracts with agents and signing syndicate lists meant damage could be suffered on entering or renewing underwriting arrangements), and concluded most claims were time-barred under s.2. Section 32 did not assist because there was no evidence Lloyd’s deliberately concealed facts they knew. Section 14B provided a 15-year long stop that barred many claims. Section 14(3) Lloyd’s Act 1982 was held to have effect from 23 July 1982 and to give substantive immunity from damages except for bad faith or limited clerical exceptions; the Human Rights Act could not be employed to reinterpret s.14(3) retrospectively or to engage Article 6 so as to override that immunity. The court exercised discretion to permit amendment only for a small, identified group of Names who had previously notified relevant negligent-brochure claims and whose operative representations, reliance and dates fell within a narrow window (post-11 October 1981 and before 5 January 1983, with reliance prior to 23 July 1982), subject to strict particularisation and proof of s.14A knowledge where relevant.

Permission to amend was refused in most respects. The court held that: (a) fraud claims in respect of asbestos matters were finally determined by the Threshold Fraud proceedings and Court of Appeal and cannot be re‑run; (b) Lloyd's owed no general duty to Names to advise, inform or regulate the market in the way alleged; (c) most negligent and statutory misrepresentation claims are time barred under the Limitation Act 1980 (including the 15‑year "long stop" in s.14B); (d) section 14(3) Lloyd's Act 1982 operates from 23 July 1982 and gives Lloyd's substantive immunity from damages in the relevant field except for bad faith; (e) the Human Rights Act 1998 cannot be used to read down section 14(3) retrospectively or to engage Article 6 to defeat the immunity. As a result, only a narrow class of Names who had previously notified negligent‑brochure claims and who meet precise temporal and knowledge criteria were given limited leave to particularise and pursue amendments; all other proposed amendments were refused. The judge explained these conclusions in detail and directed further particularisation for any permitted amendments.