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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> European International Reinsurance Company Ltd v Curzon Insurance Ltd & Ors [2003] EWHC 321 (Comm) (28 February 2003) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2003/321.html Cite as: [2007] Lloyd's Rep PN 30, [2003] EWHC 321 (Comm), [2003] Lloyd's Rep IR 454

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		28 February 2003

Mr Justice Gross:

INTRODUCTION

1. By order of Cresswell, J made at a Case Management Conference ("CMC"), on the 13^th December, 2002, the Part 20 Defendants ("SL", "SRS", "SOL", and "Marsh", respectively) were joined to these proceedings on the following basis:

"The Part 20 Defendants are ordered to be joined to these proceedings without any determination of the merits of the Defendant's application that they be joined, i.e. as if the Defendant's application for permission to make a Part 20 Claim against them had been made without notice. The Part 20 Defendants are to have the right to apply to have Paragraph 1 of this Order set aside and/or to strike out the Part 20 Claim form and/or the Particulars of the Part 20 Claim (or any part thereof)."

2. SRS, SOL and Marsh now apply to set aside that order of Creswell, J or, in the alternative for the Part 20 Claim Form and/or the Particulars of the Part 20 Claim to be struck out insofar as they are concerned; no objection is made to the joinder of SL. In a nutshell, SRS, SOL and Marsh submit hat there are no proper grounds for joining them: put broadly, their case is that it is fanciful to suppose that they or any of them "assumed responsibility" to the Defendant ("Curzon"), within the meaning of Hedley Byrne v Heller [1964] AC 465, as that decision has been interpreted.
3. The relevant test was not in dispute. The application can only succeed if (1) the Part 20 Claim has no real prospect of succeeding, or, put another way (2) if, upon the facts and matters pleaded, the Part 20 Claim is unwinnable on the merits or bound to fail as a matter of law. For present purposes, the facts contained in the Part 20 Claim must both be assumed to be true and, as Mr Barnes QC for the Part 20 Defendants submitted, must be taken to represent Curzon's best case. It is plain that if the Part 20 Claim has a real prospect of succeeding, then joinder of SRS, SOL and Marsh should not be set aside and must go to trial, at least unless any order is made for the trial of preliminary issues. I turn at one to the facts which, for present purposes, can be very shortly summarised.

THE FACTS

4. The main action concerns a claim by the Claimant reinsurer ("EIR") that it is entitled to avoid a contract or reinsurance concerning asbestos liabilities dated 27^th December, 1996 ("the contract or reinsurance") with its reinsured. Curzon, on the ground, inter alia, of non-disclosure. The pleadings in the main action alleged that "Sedgwick" acted as Curzon's broker in the placing of reinsurance. The gravamen of the allegation of non-disclosure is that the content of London insurance market report dated 28^th August, 1996 ("the Mendes & Mount report") was not disclosed to EIR.
5. For its part, Curzon denies the alleged or any non-disclosure. If, contrary to Curzon's defence, EIR is entitled to avoid the contract of reinsurance for non-disclosure, then Curzon seeks to ague that the Part 20 Defendants were in breach of "their respective common law and/or contractual duties of care in that they failed to exercise reasonable skill and care in placing the reinsurance and advising Curzon in connection therewith" (Amended Particulars of Part 20 Claim, paragraph 17). In essence, the Curzon allegation is that the Mendes & Mount report was known to the Part 20 Defendants by no later than the 13^th November, 1996, when they disclosed it to the other reinsurers (who have not sought to avoid Curzon's cover).
6. As to the dramatis personae, Curzon was an insurance company incorporated and carrying on business in Guernsey and was the captive insurance company of T&N plc ("T&N").
7. The Part 20 Defendants are all members of what may loosely be termed the "Sedgwick group" of companies. SL was formerly SG Services Limited. SRS is a subsidiary of SL. At all material times, SOL employed a Mr Michael Hammond ("Mr Hammond") and Marsh employed a Mr Robert Herrick ("Mr Herrick").
8. As to the factual history, it can be taken largely from the Amended Particulars of the Part 20 Claim ("the Part 20 Claim") and, for reasons which will already be apparent, must (for present purposes) be assumed to be established.
9. The starting point, as pleaded, is that in 1996 T&N sought insurance to cover a number of risks, including the risk of liability of claims made after 1^st July, 1996 against T&N and certain of its subsidiaries for personal injury caused by exposure to their asbestos products (paragraph 2).
10. By a contract in writing, dated 20^th September, 1996 ("the letter of engagement"). Coblence & Warner, New York attorneys acting on behalf of T&N engaged SL to provide various services in this regard (paragraph 3).
11. The letter of engagement loomed very large in the cases of SRS, SOL and Marsh on this application. It was addressed to SL and provided, insofar as material, as follows:

"On behalf of our client T&N …(the "Client") we hereby confirm that SG Services Limited ("Sedgwick") is instructed to provide for the Client … the services set out in the specification below (the "Services") and on the terms and conditions set out below. It is agreed that this letter … shall (when counter-signed by Sedgwick) constitute the contract ("the Contract") between Sedgwick and the Client for the provision of the Services …

A. The Services Specification

a. to investigate the possibility of developing and executing a cap for asbestos liability of £500 million in excess of £500 million retained liabilities ….

b. to investigate the possibility of some part or all of the £500 million retained liability being transferred or funded.

c. To provide recommendations outlining the economics (pricing), transparency (accounting and legal position of the chosen recommendations) and the security of the providers of the cap and/or shared retained liabilities.

B. Terms and Conditions

1. Fees, Expenses and Payment

1.1 Fees to be charged to the Client by Sedgwick will comprise two elements: a) time based fees ("the Basic Fees") … and b) a fee dependent on the successful achievement of the objective ("the Objective") more particularly described in Condition 1.6 below (the "Success Fee")…

1.6 The Success Fee shall become due and payable on the fourteenth day after the day on which Sedgwick achieves the objective of notifying the Client of the name(s) of an insurer or insurers who have indicated to Sedgwick that they are willing to enter into an insurance policy or policies or other form of insurance contract(s) (the "Insurance"), which would provide the Client and/or other company or companies in the T&M group of companies with cover for asbestos related liability up to £500 million in excess of £500 million or such other level of cover and excess as the Client may previously have notified to Sedgwick as being acceptable, provided that Sedgwick is able to confirm on such fourteenth day that such insurer or insurers have entered into or remain willing to enter into the Insurance (or, to the extent that any such insurer does not remain willing, that the insurer has been replaced by another insurer or insurers of the same or equivalent credit-rating.

1.7 The Success Fee shall be an amount equal to 0.25% of the total limit of the insurance Cover (the "Limit of Cover") …(it being provisionally anticipated that the limit of Cover shall be £500 million …)

1.8 The Client acknowledges and agrees that it will not hold Sedgwick, its subsidiaries or any of Sedgwick's authorised sub-contractors liable for any failure to achieve the objective set out in Conditions 1.6. The Client agrees to indemnify and hold harmless Sedgwick, its subsidiaries and any such sub-contractors against any claims or law suit by any third party that seeks damages as a result of any failure of the Client … to obtain the Insurance.

1.10 It is agreed that any sub-contractor that is not a Sedgwick subsidiary must be give prior approval by the Client before such sub-contractor commences any work….

5. Liability

5.1 Sedgwick will use reasonable skill, care and diligence in the provision of the Services.

5.5 Sedgwick accepts liability for loss or damages suffered by the Client as a direct result of the provision of the Services hereunder where the same arises as a consequence of breach by Sedgwick of the undertaking in Condition 5.1 … above, … up to a maximum of either £1 million or the amount payable to Sedgwick by the Client hereunder, whichever is the higher amount.

5.6 The liability accepted by Sedgwick in Condition 5.5 is, to the extent permissible by law, the absolute limit of Sedgwick's liability in providing the Services and all other liability is hereby expressly excluded, in particular (but without limitation) and loss, damage, costs and expenses of any kind whether direct or consequential and incurred or suffered by the Client or any third party including without limitation product liability claims, economic loss or other loss of turnover, profit or goodwill arising out of the provision of the Services by Sedgwick to the Client.

6. Personnel

6.1 Sedgwick shall be entitled to sub-contract the provision of any of the Services under the Contract with the prior written consent of the Client, which shall not be unreasonably withheld or delayed.

8. General

8.2 Neither party may assign any of the rights and obligations hereunder without the prior written consent of the other party, save that the Client may nominate any one or more of its wholly-owned subsidiary companies to be the purchaser of, or the contracting party in relation to, the insurance."

12. Paragraph 4 of the Part 20 Claim reads as follows:

"Between September and November 1996, [SL] and/or [SRS] and Mr Hammond and Mr Herrick held discussions on behalf of T&N with various insurers and reinsurers investigating the possibility of developing and executing the cap for asbestos liabilities. Mr Hammond and Mr Herrick took personal control of the negotiations with the said insurers and reinsurers and were entrusted by [SL] and/or [SRS] with nearly the whole of the task that [SL] were engaged by T&N to provide…"

Particulars were then supplied of Mr Hammond and Mr Herrick's activities. These included initial meetings with the following underwriters to explain the scope of the cover, various further meetings and communications and specific mention of a meeting held on 22^nd November, 1996, between (amongst others), Mr Hammond, Centre Re, Swiss Re and Munich Re "to finalise the insurance and reinsurance arrangements." Additionally, it is pleaded that Mr Herrick co-ordinated the "finalisation of the draft policy wording", as evidence, inter alia, by a memorandum from him to reinsurers' representatives, dated 27^th November, 1996.

13. The involvement of Curzon is introduced by Paragraph 8 of the Part 20 claim:

"On or about 22 November 1996, it was decided that the insurance should be structured as follows: (a) Curzon would issue a policy of insurance covering T&N and its relevant subsidiaries, (b) the proposed reinsurers would enter into a facultative reinsurance of that insurance policy for 100 per cent of the risk."

14. The Part 20 Claim then goes on to allege (paragraph 9) that from around the 22^nd November, 1996, SL and/or SRS undertook to act and acted as brokers on behalf of Curzon in connection with the placing of that reinsurance. Further or alternatively, it is alleged that SL, SRS, Mr Hammond and Mr Herrick voluntarily assumed responsibility to Curzon in connection with that placing, by acting for Curzon in dealings with the reinsurers in connection therewith, knowing that Curzon would rely on them as professional insurance brokers to exercise reasonable care and skill in that regard. These allegations are then particularised in the following terms:

"(a) At a meeting with representatives of Curzon held prior to 21 November 1996, Mr Hammond raised the possibility of Curzon being asked to provided insurance to T&N in respect of its asbestos liabilities.

(b) In a telephone conversation held on or about 21 November 1996 with David Harding and Peter Houseden of Curzon, Mr Hammond stated that Curzon would be invited to provide fronting insurance which would be reinsured by Swiss Re, Munich Re and one other top class Swiss insurer (…later confirmed to be Centre Re). Mr Hammond stated that the arrangements had to be in place within a week or thereabouts and invited Curzon to convene a board meeting for the following day for the purpose of considering his proposal.

(c) A board meeting was convened by Curzon on 22 November 1996 at which it was agreed in principle to provide insurance to T&N in respect of its asbestos liabilities.

(d) In a further telephone conversation held on or about 25 November 1996, Mr Hammond stated that he was faxing a copy of the slip to be signed as soon as possible by Curzon. He further stated that he would visit Guernsey in the following two weeks in order to brief the board of Curzon.

(e) Curzon will say that it is to be inferred that, by reason of his close involvement in the transaction as a whole, Mr Herrick must have known of the approach by Mr Hammond to Curzon.

(f) Further, in all the circumstances, Mr Hammond and Mr Herrick knew or ought to have known:

a. Curzon did not have and, in the timescale available, could not have been expected to have had any broker, independent of Mr Hammond or Mr Herrick, acting on its behalf to obtain reinsurance of the insurance cover which it had been invited to provide to T&N as aforesaid.

b. Accordingly, such reinsurance would be (and could only have been) provided by the reinsurers with whom Mr Hammond and Mr Herrick had controlled and carried out, and would continue to control and carry out, negotiations as aforesaid.

c. Such negotiations were substantially complete at the time when Curzon was invited to provide insurance cover to T&N.

d. In all the circumstances, Curzon had no independent opportunity to carry out negotiations with reinsurers and/or to ensure that past negotiations had been properly conducted and/or to ensure that all material matters had been disclosed to the reinsurers and/or to ensure that no material misrepresentations had been made in the course of negotiations.

e. Accordingly, Curzon relied and was bound to rely on Mr Hammond and Mr Herrick having exercised and continuing to exercise reasonable care and skill in placing reinsurance on behalf of Curzon."

15. In these circumstances, the Part 20 Claim (paragraph 10) then goes on to deal more specifically with the position of Mr Hammond, Mr Herrick, SOL and Marsh. It is said that from about the 21^st or 22^nd November, 1996, Messrs Hammond and Herrick acted for Curzon as its brokers in relation to the placing of the reinsurance and took instructions from Curzon in this regard "as prospective reinsured and as their client". Messrs Hammond and Herrick were in all such respects acting in the course of their employment by SOL and Marsh respectively, so that SOL and Marsh:

"… assumed common law duties to Curzon to sue reasonable skill and care in and about the placing of the reinsurance and/or … became vicariously liable for the breach of such duties owed by Messrs Herrick and Hammond personally."

Further or alternatively it is alleged that the services rendered by Messrs Herrick and Hammond were rendered on behalf of SL and/or SRS.

16. In the event, on or about the 25^th November, 1996, EIR was substituted by reinsurers for Swiss Re and agreed to reinsure Curzon for one third of the risk to be assumed under the insurance contract. By this time, two other reinsurers were already in place, Centre Re and Munich Re having already signed a reinsurance slip on the 22^nd November, 1996.
17. Also on the 25^th November, 1996, Mr Easton of SRS wrote, it would seem twice, to Mr Powell of Curzon, enclosing both the insurance and reinsurance slips plus the draft policy wording. Mr Easton asked Mr Powell to sign and date Curzons's line of 100% marking beneath his signature words to the effect of "subject to 100% R/I at Inception Date".
18. Mr Powell duly signed: accordingly, Curzon became the 100% insurer of T&N (and its subsidiaries and subsidiary undertakings) in respect of the insured's Ultimate Net Loss arising from asbestos personal injury claims first notified after 1^st July 1996 from losses incurred before 1^st July, 1996, until commutation or exhaustion, for £500 million excess of £690 million. In accordance with the terms of Mr Powell's signature, the contract of insurance was "subject to 100% reinsurance at slip signing date".
19. Pausing there, it is to be noted that Mr Easton wrote to Mr Powell on notepaper headed "Sedgwick" and underneath that "Sedgwick Global". Mr Easton's signature was unqualified. In small print at the foot of the page, there is wording to the effect that Sedgwick Global is a division of SRS "A Lloyd's Broker acting as agent of [SL]", members of the Sedgwick Group.
20. Turning to the slip documentation sent to Mr Powell for signature, it appears that at least one cover page was on paper headed "Sedgwick" and underneath that, SRS and underneath that "A Lloyd's Broker acting as agent of [SL]" followed, again, by "Members of the Sedgwick Group". However, the insurance slip itself, simply has on each page the name, SRS, without qualification. The reinsurance slip likewise, bears the name, SRS, without qualification.
21. Returning to the Part 20 Claim, Curzon goes on to allege (paragraph 13(d) that by writing to Curzon in the terms used by Mr Easton, SL and/or SRS represented that there was in place effecting reinsurance for 100% of the risk; Messrs Hammond and Herrick are said to have been aware of and to have assented to that representation, by reason of their close involvement in the transaction.
22. As to the wording on Mr Easton's letter referring to SRS as a Lloyd's Broker acting as agent of SL, it is alleged that (paragraph 13(e)):

" In relation to the placing of reinsurance for Curzon with corporate reinsurers carrying on business outside the London Market, it was not clear whether [SRS] was purporting to act on its own behalf or as agent of [SL] or in both capacities."

23. Finally for these purposes, the Part 20 Claim (paragraph 13A) says this:

"In the circumstances, [SRS], on its own behalf and/or as agent for [SL], in drawing up and presenting the said slips to Curzon and in advising Curzon to subscribe to the direct insurance for a line of 100% "subject to 100% reinsurance at inception date", assumed towards Curzon as prospective reinsured contractual and/or common law duties to use reasonable skill and care in and about the placing of the reinsurance. For the avoidance of doubt, it is Curzon's case that [SRS's] possible status as agents is irrelevant to its liability in tort."

THE RIVAL CASES IN OUTLINE

24. For SRS, SOL and Marsh, Mr Barnes QC's forceful submissions proceeded as follows:

i) The Part 20 Claim could only be seen as a Hedley Byrne claim, depending on a voluntary assumption of responsibility. Although the Part 20 Claim alleges in the alternative that SRS acted "as brokers", this allegation adds nothing; no particularised contract is pleaded as between Curzon and SRS.

ii) The Part 20 Claim represented Curzon's "best shot"; given that a Hedley Byrne claim depended on reliance, all the facts had to be available to Curzon at the time of pleading the Part 20 Claim; by its nature such a claim could not be improved subsequently. Moreover, at the CMS, Cresswell, J had given Curzon ample warning to put its pleaded case in order. The question accordingly arose as to whether the Part 20 Claim disclosed an assumption of responsibility on the part of SRS and Messrs Hammond and Herrick (thus bringing in SOL and Marsh vicariously), with a real prospect of success. To that question, Mr Barnes invited a negative answer.

iii) The reality was that SL and SL alone had undertaken any responsibility; but that responsibility was contractual, under the letter of engagement and SL's liability was limited by cll. 5.5 and 5.6 thereof, in effect to an amount of about £1.6 million. The introduction of Curzon as insurer of T&N did not mean that any of the other "Sedgwick" parties had independently assumed responsibility. Indeed, the whole point of these proceedings was an impermissible attempt by Curzon to circumvent the limits of SL's liability under the letter of engagement. It was neither here not there that arguments remained as to the scope and efficacy of this contractual limit; if need be, any such arguments could be resolved by way of preliminary issue(s).

iv) Founding himself on the letter of engagement, with its carefully drawn limit of liability, Mr Barnes argued that it would be extraordinary or absurd to suppose that SRS of the two individuals, Messrs Hammond and Herrick undertook to assume unlimited responsibility to Curzon.

v) Furthermore, there was no or no sufficient basis from which any assumption of responsibility, independent of the letter of engagement, could be inferred. As to SRS, the Part 20 Claim was revealing; if Curzon did not know whether SRS was acting on his own behalf or as agent for SL, it could not be said that Curzon relied on any assumption of responsibility on the part of SRS. Insofar as the correspondence between Mr Easton and Curzon was relied upon (1) the letterheads(s) made it clear that SRS was acting as agent for SL and (2) the Part 20 Claim, prior to amendment had itself pleaded that SRS acted as agent for SL. Turning to SOL and Marsh, it had not been suggested that they had themselves assumed responsibility towards Curzon; accordingly, they were only sought to be joined on the basis of vicarious liability. Necessarily, therefore, Curzon had to argue that Messrs Hammond and Herrick had personally assumed responsibility to Curzon. That argument was fanciful; they had done nothing other than carrying out the work which SL had undertaken to do pursuant to the letter of engagement.

vi) In summary, there was no independent assumption of responsibility, direct or vicarious, on the part of SRS, SOL or Marsh. Such involvement as they had was throughout within the framework of the letter of engagement. However, involvement as agents or sub-contractors of SL was insufficient, without more, to give rise to an assumption of responsibility by these parties or any of them.

25. For Curzon, Ms Prevezer QC's essential response was straightforward.

i) The fact, if it be the fact, that responsibility to T&N was confined to SL, did not mean that only SL had assumed responsibility to Curzon. Curzon was not a party to the letter of engagement; it was a separate entity, with separate interests from T&N, not least a £500 million exposure as T&N's insurer, Curzon needed and received separate advice; such advice and the provision of related professional services formed the basis of its claim against SRS, SOL and Marsh.

ii) In any event, the scope of the letter of engagement was in dispute. The "Services" thereunder did not extend to the broking or placing of the reinsurance; it was very much in dispute that the limitation of liability contained in cl.5.5 applied (1) to the placing of the reinsurance as distinct from the provision of the "services" as defined therein (2) to protect any agents or sub-contractors of SL: (3) to any "Sedgwick" liability in tort. Against this background, the letter of engagement could not tell against the joinder of SRS, SOL and marsh to these proceedings.

iii) Turning specifically to SRS, it had drawn up the insurance slip and presented it to Curzon; in this regard, SRS dealt with Curzon as its broker; SRS's name appeared on both the insurance and reinsurance slips. Questions as to the capacity in which SRS acted were arguable but not such as to preclude its joinder.

iv) Messrs Hammond and Herrick did the work and performed the professional services in question relating to the placing of the reinsurance. In the circumstances, it was unremarkable that they should assume responsibility in this regard, giving rise to a free-standing Hedley Byrne duty. The argument that they were doing no more than assisting SL perform its undertaking was a matter for the trial, not a bar to the joinder of SOL and Marsh. Further, even if it be the case that SL acted as broker under the letter of engagement, that fact did not preclude SOL and Marsh (and SRS) from assuming a duty of care arising out of the performance of professional services.

v) The case concerned some £166 million (EIR's 33.33% line on the £500 million reinsurance). It should go to trial.

THE RELEVANT LAW

26. As to setting aside the joinder of SRS, SOL and Marsh, alternatively striking out the Part 20 Claim, the applicable principles are those which relate to the summary disposal of claims. A Hedley Byrne claim is no different from any other claim. The normal rule is that disputes are resolved after a trial; to that rule, summary disposal is, of course, a well-established and valuable exception, permitting the disposal of (inter alia, and as here relevant) claims which are unfit to go to trial by reason of having no real prospect of success. To this end, it is right that a claim should be critically scrutinised, so see whether it is fanciful on the facts or bound to fail in law. Ordinarily at least, summary disposal is appropriate for claims which it is plain and obvious should be struck out. However, summary disposal is or may be inappropriate where a dispute is fact sensitive and it is prudent to guard against an application for summary disposal turning into a mini-trial, without disclosure, evidence and cross-examination. See, generally: Three Rivers DC v Bank of England [2001] 2 All ER 513 [2001] UKHL/16, esp. at paras. 92-97; Wragg v Partco [2002] EWCA Civ 594 (1^st May, 2002) (unreported), esp. at paras. 26-27 and 45-53.
27. Turning to the substantive law:

i) A number of general matters are now well-established. The principle underlying Hedley Byrne is an assumption of responsibility. The test is whether the defendant has made a conscious assumption of responsibility for the task rather than a conscious assumption of responsibility to the claimant for its careful performance. The principle is applicable, at least ordinarily, where the relationship is equivalent to a contract and the test, of whether there has been a relevant assumption of responsibility, is objective; the touchstone is not the defendant's state of mind but rather what he has said and done, judged in context. Reliance by the claimant on the assumption of responsibility by the defendant is necessary for the existence of a cause of action. The principle is not confined to statements but instead extends to provide a remedy for the recovery of damages in respect of economic loss caused by the negligent performance of services; the authorities recognise that insurance broking is one such service which may give rise to a duty of care of the type in question. Here, as elsewhere, there may be concurrent liabilities in tort and contract. However, an assumption of responsibility will not ordinarily be inferred, when it is inconsistent with a contractual chain or contractual structure; so, for instance, in a typical building contract, at least in respect of a claim for economic loss, it will generally not be possible to establish an assumption of responsibility by the sub-contractor or supplier direct to the building owner; see, Punjab Bank v De Boinville [1992] 1 Lloyd's Rep. 7, at pp.17-19 and 35-37; Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, esp. at pp. 178-182, 195-196 and 204; White v Jones [1995] 2 AC 207, at p. 274; Williams v Natural Life Ltd [1998] 1 WLR 830, at pp. 834-837.

ii) With particular regard to employees acting in the course of their employment or agents acting on behalf of principals;

a) There is no doubt that individual may incur Hedley Byrne liability: Punjab Bank v De Boinville (supra).

b) However, as expressed by Lord Hoffmann in Standard Chartered Bank v Pakistan Shipping Corpn. [2002] 1 WLR 1547; [2002] UKHL 43, at para 21;

"…just as an agent can contract on behalf of another without incurring personal liability, so an agent can assume responsibility on behalf of another for the purposes of the Hedley Byrne rule without assuming personal responsibility …"

This reasoning turns on the fact that establishing a relevant Hedley Byrne duty owed by the individual concerned to the plaintiff is or may not be self-evident or straightforward; by contrast, such reasoning is or is very likely inapplicable in respect of liability for fraud and in the case of liability for negligence causing physical damage (eg. The negligent lorry driver).

c) As to whether the employee or agent has assumed a personal responsibility, the primary focus must be on statements and conduct which cross the line between defendant and claimant; the test is not simply reliance in fact but whether the plaintiff could reasonably rely on an assumption of personal responsibility by the individual who performed the services on question on behalf of his employer or principal: Williams v Natural Life Ltd (supra), at pp 835-837.

DECISION

28. I agree with Mr Barnes that if the joinder of SRS, SOL and Marsh is to stand, (1) it can only do so on a Hedley Byrne basis and (2) the Part 20 Claim must be taken as representing Curzon's best case. As to (1), although the relevant paragraphs in the part 20 Claim, namely, paragraphs 8 and following, do refer to a claim against SRS in respect of a contract other than the letter of engagement, this separate contract is unparticularised: I do not think an unparticularised contract can be given any weight for present purposes. As to (2), for the reasons given by Mr Barnes, the nature of a Hedley Byrne case is such that the claimant must know the relevant facts at the outset and, in any event, Cresswell J at the CMC made it clear that Curzon must put its pleadings in order.
29. Next, I put to one side certain arguments which, thought understandably raised, did not seem to me to advance the matter.

i) SRS, SOL and Marsh submitted that the only reason for the joinder was an attempt to circumvent the limitation of liability contained in the letter of engagement. While it is plainly right that if Curzon has no case against these parties with a real prospect of success, then a joinder cannot stand simply to permit circumvention of the contractual limit of liability, this argument begs the question. If Curzon does have a case with a real prospect of success, then the fact that its motive is to overcome any hurdles to which the contractual limit gives rise, is neither here nor there. Realistically, it may be doubted whether "Sedgwick" would itself have been nearly as concerned about the separate identity of its various component entities had there not been a contractual limit.

ii) Conversely, the fact that the Part 20 Claim concerns a very substantial amount of money, as urged by Ms Prevezer, cannot assist Curzon if its case against SRS, SOL and Marsh is bound to fail. For similar reasons, the fact that individuals such as Messrs Hammond and Herrick are in any event likely to be caught up in the trial (at least unless "Sedgwick" succeeds on some trial of preliminary issues as to the scope and efficacy of the contractual limit under the letter of engagement), so that convenience is not a factor or a significant factor in the equation, cannot influence the decision on joinder. In short, there either is or is not a case fit to go to trial against SRS, SOL and Marsh.

30. I turn to Mr Barnes's first principal argument; namely, that given the careful contractual limit of liability contained in the letter of engagement, it would be extraordinary or absurd to suppose that SRS or the two individuals, Messrs Hammond and Herrick undertook to assume unlimited responsibility to Curzon. To my mind, this argument, though attractive at first blush, lacks force, at least for present purposes. The reason is simply; irrespective of the true scope of the letter of engagement. T&N was a party to it but Curzon was not. It these circumstances, even if it be the case that under the letter of engagement only SL had assumed responsibility to T&N, it does not follow that only SL had assumed responsibility to Curzon.
31. Mr Barnes's second principal argument, although on one view a variant of the first, was more formidable. There, as already noted, Mr Barnes contended that there was no independent assumption of responsibility by SRS, Mr Hammond (SOL) and Mr Herrick (Marsh) towards Curzon, outside the scope of the letter of engagement. In support of this argument Mr Barnes invited a close focus on what was alleged in the Part 20 Claim, including the services allegedly performed and the (overlapping) dates in question. It was simply insufficient, he argued, to found a claim with a real prospect of success. At most, SRS and the two individuals were carrying out the task entrusted to SL under the letter of engagement; however, no Hedley Byrne claim could realistically be developed, either generally or, more specifically, when regard was had to the terms of the letter of engagement, on the basis solely of these parties acting as agents or sub-contractors of SL.
32. After careful consideration, I am unable to accept this argument; my reasons are these:

i) It is convenient to begin with Messrs Hammond and Herrick. While a personal assumption of responsibility may not be an everyday occurrence and is anything but automatic, there is nothing unreal, fanciful or necessarily unreasonable about it. Punjab Bank v De Boinville (supra) is very much in point; in that case, both Hobhouse J (as he then was) at first instance and Staughton LJ in the Court of Appeal, carefully considered the actual facts applicable to the individual defendants; as professional men entrusted with the whole or nearly the whole of the task which their employers had undertaken, they were held to owe a personal duty of care to the claimant bank. In the present case, a similar analysis is legitimate and the resulting claim is not bound to fail. On the pleaded facts, much of the work was done by these two individuals who were centrally involved in both the insurance and reinsurance. On those facts, without more, it cannot be said that a Hedley Byrne claim against them (and, hence, against SOL and Marsh vicariously) had no real prospect of success. There was certainly enough material "crossing the line" to support such a claim. Upon analysis, the real SOL and Marsh answer to this claim is that reliance on any apparent individual assumption of responsibility would be unreasonable and is negatived by virtue of the existence and scope of the letter of engagement. Plainly, however, such an argument is fact sensitive and, to my mind, inappropriate for summary determination, at least in advance of resolving the issue(s) as to the true scope of the letter of engagement.

ii) I confess to entertaining more doubts about SRS but have ultimately come to the view that it would not be right to set aside its joinder. First, the fact that my view has fluctuated, may itself tell against disposing of the claim against SRS on a summary basis, though I do not rest my decision on that. Secondly, I am satisfied that the true basis of the plea against SRS is that it is couched in the alternative; either it was an agent for SL or it was acting on its own behalf. For my part, the claim against SRS would not survive if it rested only on the allegation that it was an agent for SL. That said, I do not think that Curzon should be shut out from advancing its alternative plea, namely, that SRS was acting on its own behalf. Again, to my mind, the SRS level of involvement was such that the claim against it is not bound to fail, at least in advance of a determination as to the true scope of the letter of engagement. Thirdly and for completeness, I do not think that the "agency" wording on the letterheads used by Mr Easton is so compelling as by itself to warrant the summary dismissal of the claim against SRS without any exploration of the factual context.

iii) Looking at the matter in the round, given the (undisputed) residual uncertainty as to the true scope of the letter of engagement, it is difficult and, I think, invidious on a summary basis, to reach a final conclusion as to whether that which SRS, Mr Hammond and MR Herrick did was done independently of it. White the pleaded Part 20 Claim must be taken as Curzon's best case, it takes its colour from the context; the true nature of that context remains to be determined. The matter may be tested this way; were it indeed the case that the letter of engagement did not extend to placing the reinsurance, it would plainly be arguable that the activities of SRS and Messrs Hammond and Herrick were capable of giving rise to free-standing Hedley Byrne duties. In this regard it should not be overlooked that the "Sedgwick" case rests on the need for precise analysis of the separate positions of closely related corporate entities: if that be right, it is likewise pertinent to keep in mind that Curzon's position was separate from T&N, to the very real extent of exposure to a £500 million liability. At all events, before reaching a conclusion on a summary basis that joinder of SRS, SOL and Marsh must be set aside, it would be necessary first to reach a conclusion favourable to those parties as to the true scope or ambit of the letter of engagement.

33. In all the circumstances, while Mr Barnes has done more than enough to induce a considerable degree of scepticism as to the claims against SRS, SOL and Marsh, I remind myself that that is not the test. I say nothing of the probability of these claims succeeding at trial; again, that is not for me. I am, however, unable to conclude that the proposed claims have no real prospect of succeeding or, if it is at all different, that they are unwinnable on the merits or bound to fail as a matter of law. It follows that the SRS, SOL and Marsh application must be dismissed.
34. I shall be grateful for the assistance of counsel as to (1) the form of the order; (2) any questions of costs and (3) any other matters which arise.