(Re)insurance Weekly Update 20- 2018

A summary of recent developments in insurance, reinsurance and litigation law

R&Q Insurance (Malta) Ltd & Ors v Continental Insurance Company: Court decides whether reinsurance contracts had been placed and whether there had been an acknowledgement of liability

The main issue in this case was whether the defendant had entered into four reinsurance contracts with the claimants (and if so, on what basis). The contracts were said to have been made some 35 years ago. The underlying risk being insured was the liability of an Australian building company which is now the subject of very substantial mesothelioma claims arising as a result of asbestos used in its building materials.

The claimants were unable to produce the original slip, cover note or equivalent document evidencing the reinsurance in question and the defendant denied that it was a party to the reinsurance. Accordingly, that was a question of fact and the judge noted that there was no basis for saying that there should be any gloss on the normal standard of proof. So unlike cases where there are allegations of fraud (where the court bears in mind that fraud does not usually occur), there is nothing inherently unlikely about placing reinsurance.

The judge further accepted that extensive efforts had been made by both parties to find the relevant documentation, but that such documentation was genuinely unavailable and so he concluded that "the issue for me then is to weight the evidence which I do have about the existence or otherwise of the claimed reinsurance...taking into account as I do that the primary evidence is not now available".

He concluded that the defendant was a party to the reinsurance and that, furthermore, it had agreed to "front" a pool of reinsurers (ie it was liable for 100 per cent of the risk placed with the pool, but that it would then have rights of recourse against other reinsurers).

Having established that, the judge went on to consider whether the claimants' claims were now time-barred. The claimants accepted that most of the claims were time-barred, but sought to rely on what it said were two acknowledgements of liability.

Section 29(5) of the Limitation Act 1980 provides that where there is a right to recover "any debt or other liquidated pecuniary claim", and the liable person acknowledges the claim or makes any payment in respect of it, time will start running only from the date of acknowledgement or payment.

There is no particular format for an acknowledgement (other than that it must be in writing and signed by the person making it). The judge referred to prior caselaw in which it was held that a party who had said that he would "check on the amounts owed" had acknowledged the claim (and had not just acknowledged that there might be a claim): "So the question is whether the amounts owing can be ascertained by extrinsic evidence assuming there is an acknowledgement of outstanding indebtedness generally". Here, a representative of the reinsurer had referred to items which had been "agreed" and the judge said that that clearly meant that the items "at least are agreed in the sense that [the reinsurer] is liable for them", subject only to a calculation of the actual sums owed (which could be proved by extrinsic evidence). Similarly, a reference to having "booked... amounts due" amounted to an acknowledgement of...

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