Heath Lambert Ltd v Sociedad De Corretaje De Seguros & Anor

A marine insurance broker who effects a policy and advances, or becomes liable for, the premium may have a lien against the assured and intermediaries in the broking chain. The lien extends to insurance proceeds collected under the policy, to the extent necessary to satisfy the secured premium debt. Collection authority, an intermediary’s identity, or judgment for the premium does not by itself remove or merge the lien. The right may continue until the premium is paid or otherwise satisfied, although its practical effect is suspensory and its scope is limited to the secured amount.

Heath Lambert, a London insurance and reinsurance broker, sought unpaid premiums arising from reinsurance placed for Banesco. Banesco counterclaimed for approximately $325,000 in loss proceeds collected by Heath Lambert under a policy relating to an INC dredger, alternatively seeking set-off.

Heath Lambert asserted a particular lien under section 53 (2) of the Marine Insurance Act 1906. The issues were whether the lien attached to the proceeds, whether the parties had otherwise agreed that it would not attach, whether the lien had merged in a judgment for the premium against an intermediary, and what procedural order should be made on the counterclaim.

1. The lien. The court upheld Heath Lambert’s lien over the policy proceeds as against Banesco and any intermediary. The common law and statutory principles recognised a broker’s lien where the broker effected the policy and paid, or became liable for, the premium. Fisher v Smith supported the lien against intermediaries, and Eide Limited v Lowndes Lambert confirmed that a broker with a lien over a marine policy may retain collected proceeds so far as necessary to discharge the secured debt.
2. No implied waiver. The fact that Heath Lambert was authorised to collect and account to Banesco did not remove the lien. Nor did the circumstances establish an agreement under section 53 (2) of the Marine Insurance Act 1906 that the lien would not attach. The lien was limited to the amount of the premium claim, including interest.
3. Judgment and election. The lien did not merge in, or disappear because of, a judgment for the premium against Scort. Republic of India and another v India Steamship Co concerned different considerations and provided little assistance on liens. The court also rejected the submission that Heath Lambert had abandoned the lien by electing to proceed against Scort.
4. Order. Although the lien was suspensory in practical effect, it remained available. To avoid the possibility of double recovery and to protect both parties’ legitimate interests, the counterclaim was stayed under CPR Rule 3.1.2(f), with the parties invited to submit a draft order. The declaration that Heath Lambert was entitled to exercise the lien was upheld.

The judgment records that earlier issues had been considered by Mr Jonathan Hirst QC in September 2003 and by the Court of Appeal in June 2004. The present judgment determined the remaining lien and counterclaim issues at first instance.