Summary

The fact that the requirements of the Lloyd's Bye-law (No.8 of 1988), the Agency Agreements Bye-law, had not been complied with did not have the result that the agreement between a managing agent and a Lloyd's Name to join a syndicate was void.

Facts

Appeal by the defendant Lloyd's Name ('W') from the decision of Andrew Smith J giving judgment for the claimant syndicate. On appeal W challenged: (i) the judge's conclusion of fact that documents making her a member of the syndicate were executed; and (ii) his conclusion of law that even if they had not been executed W nevertheless became a member of the syndicate. Issue (ii) depended on whether the fact that the requirements of Lloyd's Bye-law (No.8 of 1988), the Agency Agreements Bye-law, made under s.6(2) and Sch.2 para.15 Lloyd's Act 1982, were not complied with had the result that the "contract" was illegal and void.

Held

(1) The judge was clearly entitled to reach the findings of fact which he did and the appeal on the facts was dismissed. This alone was sufficient to dispose of the appeal. (2) If W's contention was correct, any deviation from the terms or form of the agreements scheduled to the Bye-laws would have the effect of depriving managing agents of actual authority to bind Names to policyholders for whose protection they had granted cover. It had always been a fundamental principle of Lloyd's that the interests of policyholders were paramount. (3) The Bye-law aimed to give effect to recommendations of the 1987 Report on Regulatory Arrangements at Lloyd's of the Committee of Inquiry chaired by Sir Patrick Neill QC. It set out in great detail the terms of the various agreements and provisions designed to ensure that the Names, members' agents and managing agents contracted on those terms. Failure to do so was a disciplinary offence that could result in disciplinary sanctions. There was no need to go further and to interpret the Bye-law in such a way as to make a contract conferring authority on a managing agent to bind a Name void unless all the requirements of the Bye-law were complied with. Such an interpretation would produce a perverse result in that it would tend to defeat the primary objective of Lloyd's, which was the protection of the policyholder.

Appeal dismissed.