A major English insurance company acted as placing broker in respect of insurance cover on intervention beef valued at some £30 million which was destroyed in a fire in Co Roscommon seven years ago, the High Court decided yesterday.
The decision was made on a preliminary issue arising out of complicated litigation concerning the loss of meat stored at the United Meat Packers plant at Ballaghaderreen following a fire there on January 7th, 1992. Several insurance companies have denied liability for the loss.
Last year, Mr Justice McCracken ordered the trial of a preliminary issue between Mike Murphy Insurance Brokers, of Trinity Street, Dublin, and an English company, Nelson Hurst Marine Ltd, sometimes known as Citicorp Insurance Broker (Marine) Ltd.
The issue was whether Nelson Hurst acted as placing broker in respect of the Department of Agriculture's marine assurance policy reference number 90.100 with Alliance France Lardt.
Yesterday, the President of the High Court, Mr Justice Morris, found that Nelson Hurst did act as placing broker. The judge said the Minister for Agriculture had made a claim in respect of the lost meat, which Alliance France claimed it was entitled to repudiate because of an alleged failure by the Minister to disclose a material fact (related to UMP's claim that under a storage contract it was not liable for any loss).
Mike Murphy brokers had been entrusted with placing the insurance and it was claimed DB Agencies SA was used by Mike Murphy for that placing. The Minister claimed if there was any failure to disclose a material fact to Alliance, that responsibility was on Mike Murphy or DB Agencies. Those companies in turn claimed Nelson Hurst carried the same or similar responsibility to make disclosure.
Mr Justice Morris said, in the present hearing, Nelson Hurst had claimed it was never a placing broker insofar as placement of insurance on the French market was concerned. It accepted it was placing broker where the English share of the risk was concerned.
The judge said Mike Murphy had in the early 1980s transacted insurance business with Mr David Gresty of DB Agencies, who placed business for him on the French market, and with Mr Raymond Cudby of Nelson Hurst, for placing on the London market.
Mr Murphy had anticipated his business would expand but had certain difficulties about which he consulted with Mr Gresty and Mr Cudby. The judge said he was satisfied the latter two men composed a "slip" which it was hoped would be acceptable on the continental and London market. He said a meeting was arranged for January 29th, 1990 in Paris at which all relevant parties attended to put in place what was described as a "collective open policy", "a binder" or "a facility". He was satisfied Mr Murphy had regarded himself as in the hands of two experts - Mr Gresty and Mr Cudby.
The objective of the meeting was to create "policy 90.100", issued by Alliance France. That policy had certain features including an agreement that the lead insurance company would be Alliance and an arrangement where the French market would cover 52.5 per cent and the British market 47.5 per cent of any risk up to £7.5 million and vice versa for the next £5 million.
It was also agreed the handling of the day-to-day workings of the cover would be done through DB Agencies and it would communicate with Alliance, Nelson Hurst, Mike Murphy and other interested parties.
The judge said it was significant that Mr Gresty had secured insurance companies prepared to assume a percentage of the 52.5 per cent to be covered by the French market, and Mr Cudby placed his risk on the London market. In due course, the risk was underwritten in full and 16 insurance policies were issued.
The judge said he was satisfied Mr Murphy's account of the Paris meeting was correct and that he had put himself in the hands of two placing brokers whom he regarded as experts.
Mr Justice Morris said a valid distinction could not be drawn between the business placed on the English market and that on the French market, because the entire transaction was governed by the lead broker, Alliance. Its decision would govern not only the French part of the business but also the English part. To regard the transaction as having two separate parts was erroneous.