Society of Lloyd's v Henderson & Ors

Permission to amend a statement of case should be refused where the proposed claim is statute-barred, does not arise from the same or substantially the same facts as the existing claim, or has no realistic prospect of success. The tort of misfeasance in public office requires a public officer exercising public power, an unlawful act or omission, bad faith or subjective recklessness, standing, causation and non-remote damage. Lloyd’s was not a public officer exercising public powers merely because it possessed statutory regulatory powers within a commercial, privately governed market. A failure to recognise public-law constraints, without more, did not establish the required dishonest or recklessly indifferent state of mind. Delay and the previous management of related litigation also justified refusing the amendments.

Society of Lloyd’s applied for permission to amend pleadings in several long-running actions involving Names. The Henderson applications concerned proposed counterclaims for misfeasance in public office. In the Stockwell applications, the respondents accepted that summary judgment should follow unless they could amend to pursue the same tort. The Lowe applicants sought to amend existing claims against Lloyd’s and resisted strike-out or summary judgment applications.

The proposed pleadings alleged failures by Lloyd’s to regulate the insurance market, provide information, address asbestos and other long-tail liabilities, control market practices and prevent later insurance spirals. The court considered limitation, whether the amendments arose from the same facts as the earlier threshold fraud litigation, the elements and prospects of the proposed tort, causation, abuse of process and delay.

1. Amendments and limitation. The applicable limitation period for the proposed misfeasance claims had expired. Under CPR Part 17.4, an amendment adding a new claim could be allowed only if it arose from the same or substantially the same facts as a claim for which a remedy had already been sought. The proposed pleadings introduced new issues concerning Lloyd’s public status and duties, non-disclosure, non-asbestos long-tail liabilities, the LMX and PA spirals, agents’ practices, the Central Fund, baby syndicates, reconstruction and renewal, and a different case on causation. The Henderson applications therefore failed this requirement.
2. Elements of misfeasance. Applying Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1, the tort required a public officer, exercise of public power, the requisite intentional or subjectively reckless state of mind, standing, damage and non-remote causation. Reckless indifference had to concern illegality and probable injury; negligence or inadvertence was insufficient.
3. Lloyd’s’ status. The proposed claims had no realistic prospect of showing that Lloyd’s was a public officer exercising public powers. Its statutory powers under section 6 of the Lloyd’s Act 1982 operated within a commercial, privately governed section of the insurance market. The reasoning in R v Lloyd’s of London ex p West [2004] EWCA Civ 506 and R v Lloyd’s of London ex p Briggs [1993] 1 Lloyd’s Rep 176 applied. The fact that some Names might also have been policyholders was incidental to the complaints.
4. Unlawfulness and bad faith. The Lowe pleading did not identify an unlawful act. The Lloyd’s Act 1982 imposed no absolute duty to ensure how syndicates conducted business; European directives did not impose obligations upon Lloyd’s; and Lloyd’s was a commercial body regulated by statute, not the statutory regulator. Nor did failure to recognise public-law powers establish reckless indifference. The allegations did not plead knowledge of unlawfulness or recklessness as to it with sufficient particularity.
5. Causation and outcome. The LMX spiral was materially different from the deliberately dishonest PA spirals. The alleged coding failures, lack of information, absence of written plans and qualifications requirements were not shown capable of causing the claimed losses. All applications by the Names were refused. Further submissions were required on the consequential order.

First-instance decision. The judgment records earlier decisions in related Lloyd’s litigation, including the Court of Appeal judgment in Lloyd’s v Jaffray [2002] EWCA Civ 1101 and the decisions concerning Lloyd’s v Laws, but this court determined the present applications.