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Commercial Court allows reinsurance claim without evidence of policy document

10 January 2018

(1)R&Q (Malta) Limited (2) AVIVA Assurances UK Branch (3) Societa Reale Mutua di Assicurazioni v Continental Insurance Co (2017) QBD

In October 2017 we reported on this matter in which, at that time, the claimants had applied six weeks before trial for a late amendment to their particulars of claim. That application was refused by the Commercial Court as being either unnecessary or prejudicial.

The Commercial Court has now heard the trial in this matter and handed down its judgment on the main issues in the case, which concern whether or not the claimants could evidence that the defendants were participating reinsurers on four facultative reinsurance contracts for the period 1981 to 1984.


The claimants’ case was that they had written four layers of excess liability umbrella coverage of an Australian company within a four-year period (1981-1984) and that each policy had been reinsured by the defendant under four facultative reinsurance contracts, via PWS (brokers) underwriting treaty pool arrangements. These, in turn, had been retroceded to different PWS pools.

The Australian company’s products contained asbestos, which had led to mesothelioma claims against its insurers in respect of the four-year period. The claimants had paid a number of claims which it sought to pass onto the defendant.

The claimants were unable to evidence the reinsurance from, for example, a policy document, slip or cover note. However, the claimants argued that there was enough evidence for the court to infer that the defendant had been the largest reinsurer with a 20% share and was liable for 100% of the risk due to the fronting arrangements.

The defendant argued that any claims more than six years before the issue of proceedings in 2016 were time-barred and that it would not be liable for costs and expenses of the underlying insureds or the reinsured in any event.

Commercial Court decision

The court applied Masquerade Music Ltd v Springsteen [2001] - where a party sought to adduce secondary evidence of the contents of a document it was a matter for the court to decide, in the light of all the circumstances of the case, what weight, if any, to attach to that evidence. In weighing the evidence presented, the court was satisfied that despite the claimants’ sincere and thorough efforts to find any relevant documents, they could not be found.

There was sufficient documentary evidence from PWS and the claimants for the court to conclude that the reinsurance had been placed in the relevant PWS pool and that the defendant reinsured a 20% share.

From the end of 1983, the defendant had agreed to front for the whole of the relevant PWS pool. PWS evidenced that fronting was both commercially necessary and a basic feature of the pool and that the defendant had agreed to front the pools for a fee and that was well known in the market.

The defendant failed to produce evidence as to why it could not or would not front the pools.

Whilst the court must be cautious in the absence of documents, it was satisfied on the facts that the retrocession agreement formalised the fronting arrangement and therefore that the defendant was 100% liable in respect of the pools.

It was held that there was sufficient evidence that claims had been paid and they were within the terms of the cover. It was too late to argue that the insureds’ costs and expenses were not part of the reinsurance cover and/or that there had been overpayment.

As for limitation/time-bars, time started running once liability was established but the defendant’s liability had been acknowledged for purposes of s. 29(5) Limitation Act 1980. Applying Dungate v Dungate [1965], a general acknowledgment was sufficient if the amount could be ascertained by other evidence. No time-bar existed in respect of the declaratory relief.


This case is helpful in clarifying points of law in relation to: (1) absence of documentary evidence of the existence of a reinsurance policy; (2) insurers and reinsurers’ extent of liability; and (3) limitation/time-bars.

The issues in this case are, perhaps, unlikely to resurface in relation to today’s policies, given the proliferation of electronic storage of both underwriters’ and policyholders’ files, but the judgment will remain relevant for many in the run-off market in relation to historic coverage/recovery disputes.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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