Goshawk Dedicated Ltd & Ors v Tyser & Co Ltd & Anor

In the Lloyd’s insurance market, insurance contracts may contain an implied term requiring placing and claims documents previously shown to underwriters, and essential premium-accounting documents, to be made available through the insured’s brokers where reasonably necessary for operating the contract.

The obligation includes inspection and copying, but is limited by necessity and reasonableness. It does not require production of documents already held by underwriters, documents not retained by brokers, or material sought merely for a policing or investigatory exercise. In the absence of bad faith, the underwriters’ motivation is irrelevant. Before TOBA, business necessity also implied a direct contractual obligation between underwriters and brokers.

Lloyd’s syndicates appealed from Christopher Clarke J’s decision in the Commercial Court, reported at [2005] EWHC 461 (Comm), concerning access to placing, claims and premium-accounting documents held by their brokers.

The trial judge rejected the alleged binding market custom. He also rejected an implied contract between brokers and underwriters for the pre-TOBA period. Under TOBA, he held that the brokers’ duty to put clients’ interests first could prevail over the record-access clause for placing and claims documents, while accounting documents had to be disclosed.

The appeal raised whether a term should be implied into the insurance contracts and whether a corresponding direct obligation existed between the underwriters and brokers.

1. Appeal allowed. The brokers were declared obliged, on reasonable notice, to allow inspection and copying of the documents sought, subject to clarification or agreement concerning the accounting documents in Schedule 2.
2. Against the background of Lloyd’s practice, the insurance contracts contained an implied term. Previously shown placing and claims documents, and premium-accounting documents necessary to the operation of the contract, had to be available through the insureds’ Lloyd’s brokers where reasonably necessary. Availability included copying, and the requesting underwriters were to bear the costs of inspection and copying.
3. The implication was founded on business efficacy and supported by the insurance context of good faith. The duty of good faith informed the content of the contractual obligation at the time of contracting, consistently with Manifest Shipping Co Ltd v. Uni-Polaris Insurance Co Ltd (The Star Sea) [2001] UKHL 1, [2003] 1 AC 469. The reasoning was also supported by the example in Phoenix General Insurance Co of Greece SA v. Halvanon Insurance Co Ltd [1985] 2 Lloyd’s Rep 599.
4. The term was confined to reasonably necessary material. It did not require production of documents already held by underwriters or documents not retained by brokers. Premium-accounting access extended only to documents adequately revealing the basis on which premiums were calculated and paid, not to a general policing or investigation. In the absence of bad faith, the underwriters’ motive for requesting documents was irrelevant.
5. After TOBA, clause 8.1 created a direct contractual obligation to provide the relevant records. There was no conflict with clause 2.2 because the insureds had themselves agreed that their brokers could disclose the records. It was unnecessary to decide whether clause 2.2 otherwise prevailed over clause 8.1; that question was left open.
6. Before TOBA, business necessity required a direct contract between underwriters and brokers. The brokers dealt with the underwriters and were authorised and obliged to perform the insureds’ undertaking to make necessary documents available. The reasoning was reinforced by The Zephyr [1984] 1 Lloyd’s Rep 58 and SAIL v. Farex Gie [1995] 1 LRLR 116.

1. Court of Appeal (Civil Division): allowed the appeal and made a declaration requiring the brokers, on reasonable notice, to permit inspection and copying, subject to clarification of the Schedule 2 accounting documents.
2. Commercial Court, Queen’s Bench Division: Christopher Clarke J decided the case at [2005] EWHC 461 (Comm). The alleged binding market custom was rejected; pre-TOBA implied contractual liability was not established; and disclosure was ordered for accounting documents but not the disputed placing and claims documents.