Essex Insurance Company Ltd v Victor Posner 1995 Civil Jur. No. 528

• Jurisdiction: Bermuda
• Judgment Date: 18 August 1997
• Date: 18 August 1997
• Docket Number: Civil Jurisdiction 1995 No. 528
• Court: Supreme Court (Bermuda)

In the Supreme court of Bermuda

Meerabux, J

Civil Jurisdiction 1995 No. 528

Essex Insurance Company Limited

Plaintiff

and

Victor Posner

Defendant

Mr. J. Elkinson for the Plaintiff

Mr. J. Pachai for the Defendant

Great Australian Mining Co. v MartinELR (1876) 5 Ch.D. 1

Kinahan v Kinahan (1890) 16 Chancery Reports 78

Collins v North British and Mercantile Insurance Co.ELR [1894] 3 Ch.228

Seaconsar Far East Ltd. v Bank Markazi (H.L.(E))ELR [1994] 1 AC 438

Spiliada Maritime Corporation v Cansulex Ltd. (H.L.(E))ELR [1987] 1 AC 460

B.P. Exploration v Hunt [1976] 1 Lloyd's Law Rep. 471

The ‘Rewia’[1991] 2 Lloyd's Law Rep. 325

The EleftheriaELR [1990] P 94

Seaconsar Far East Ltd. v Bank Markazi (HL)UNK [1993] 4 All ER 456

Amin Rasheed Corporation v Kuwait Insurance (H.L(E))ELR [1984] 1 AC 50

R v International Trustee for the Protection of Bond-Holders AGELR [1937] AC 500

John Lavington Bonython and Ors. v Commonwealth of AustraliaELR [1951] AC 201

DuPont v AgnewUNK [1987] 2 Lloyd's Rep. 585 (C.A.)

RSC O.11 r.1(1)(f)(iii); 4(2); 39

Companies Act 1981 s.97

Service out of the jurisdiction — Forum conveniens — Appropriate forum — Proper law of insurance contracts

RULING

PRELIMINARY

This is an application by the Defendant for an Order that the Order of 15 December 1995 granted to the Plaintiff ex parte by the Chief Justice giving leave to issue and to serve the Generally Indorsed Writ of Summons on the Defendant out of the jurisdiction and the Concurrent Writ of Summons dated 18 December 1995 be set aside and that the costs of and occasioned by the application be paid by the Plaintiff to the Defendant in any event. The Defendant submits on numerous grounds that this is not a proper case for service out of the jurisdiction. The application raises issues in relation to Rules of the Supreme Court 1985 (the ‘RSC’) Order 11 Rule 1(1)(f)(iii).

FACTUAL BACKGROUND

I take the facts from the affidavit evidence filed on behalf of the parties.

The Plaintiff is an exempted company registered in Bermuda with its main object to provide reinsurance for the American International Group Inc. and to provide corporate insurance for Salem Furnace Company of Pittsburgh, Pennsylvania. The Plaintiff has a physical and active presence in Bermuda and its principal place of business is in Bermuda. The Plaintiff has a secretary, Directors and other officers who were appointed at its office in Bermuda. The Minutes of the meetings of the Plaintiff indicated that its meeting were held in Bermuda and that all decisions taken by the Plaintiff at Board level were made in Bermuda. The Plaintiff's business is independently controlled or managed from Hamilton, Bermuda.

The Plaintiff had never written home owners insurance policies and the Defendant was the only one to whom such policies were issued. The Defendant is the director.

The Plaintiff had never written home owners insurance policies and the Defendant was the only one to whom such policies were issued. The Defendant is the director, chairman and chief executive officer of the Plaintiff. The home owners insurance policies were created by a former director of the Plaintiff, a Mr. Dettore, who retired from the Plaintiff company in May 1993 and resides in Florida.

Mr. Dettore helped form the Plaintiff company, was its chief operating officer and was a director and vice-president of it during the years 1991 and 1992.

As chief operating officer he had responsibility for approving decisions such as determining which types of business that the Plaintiff would underwrite or reinsure, choosing specific policy terms or making any other decisions relating to underwriting or claims.

In 1991 Mr. Dettore learned that the insurance policies covering certain residential properties (‘the properties’) owned by the Defendant had been cancelled. Before that time the properties were insured under policies issued by domestic companies. Mr. Dettore determined that the Plaintiff would provide coverage for the properties and directed his assistant to use the documentation in respect of the previous home owners insurance policies as a guide in preparing the policies. His assistant in his office in Florida and under his direction in preparing the policies copied a substantial portion of the previous policies verbatim but deleted the name of each policy and inserted in its place. ‘Gold Elite Essex Homeowner's Plan’. The policies were brokered by Insurance Risk Management ‘(‘IRM’) a company located in Pittsburgh, Pennsylvania. As premiums came due on the policies, the Plaintiff would send the invoices from Florida to IRM's offices in Pittsburgh. IRM would then forward the bill to the Defendant. In turn the premiums due under the policies were paid to IRM in Pittsburgh which forwarded the payments to the Plaintiff.

The Defendant suffered a loss in and about September 1992 which loss was claimed against the existing homeowners policies purportedly issued by the Plaintiff whereby a payment in the sum of $29,556.00 was made to him by the principal representative of the Plaintiff.

In March 1993 the Defendant made a claim in the amount of $885,115.16 respecting damage to the four properties situate in Miami, Florida in the United States of America which arose as a result of hurricane Andrew.

It is common ground that nowhere in the purported policies of insurance is it stated that the policies are governed by the law of Bermuda or the law of Florida.

The Defendant whose address is at one of the properties in Miami is aged 77 years and has suffered from the rupture of an abdominal ancurism. He is ill, has been advised by his doctor not to travel outside of the South Florida area and has not done so since his hospitalization in 1994.

CONTENTIONS TO SET ASIDE

Leave to serve outside the jurisdiction was given on the basis of an affidavit by Mr. Richard Pearman whose contention was that the agreements were by their terms or by implication governed by Bermuda law pursuant to Order 11 Rule 1(1)(f)(iii) of the RSC.

Mr. Pachai on behalf of the Defendant submitted that the Plaintiff had not satisfied the requirements of Order 11 of the RSC specifically Order 11 Rule 4(2), that the Court lacked jurisdiction over the Defendant and that the ‘forum conveniens’ was other than the jurisdiction of Bermuda.

PROCEDURAL REQUIREMENT

Mr. Pachai submitted that an application under Order 11 Rule 1(1)(f)(iii) was governed procedurally by the requirements of Order 11 rule 4(1) and Rule 4(2), that Rule 4(1) required ‘an application for the grant of leave under rule 1 or 2 must be supported by an affidavit stating the grounds on which the application is made and that in the deponent's belief, the plaintiff has a good cause of action, and showing in what place or country the defendant is or probably may be found’ and that in the affidavit filed in support of the Ex Parte Summons the deponent did not swear that in the ‘deponent's belief, the plaintiff has a good cause of action’. He cited Great Australian Gold Mining Company v MartinELR(1876) 5 Ch. D.1, Kinahan v Kinahan(1890) 16 Chancery Reports 78, Collins v North British and Mercantile Insurance CompanyELR[1894] 3 Ch. 228.

Mr. Elkinson submitted that the procedural deficit argument should not be taken for the reasons that the law had advanced and that the present law was set out in Seaconsar Far East Ltd. v Bank Markazi (H.L(E))ELR[1994] 1 AC. 438.

I think that the present state of the law is set out in the Seaconsar case. Lord Goff after discussing the historical background to the rules in their present form at pages 450 and 451 said at 451E to 452E:

Perhaps the clearest and most authoritative statement of the position is to be found in the speech of Lord Davey, 90 L.T. 733, 735, where he said:

‘An injunction is sought to restrain the defendants from doing some act within the jurisdiction. Rule 4 of [Order 11] prescribes that the application is to be supported by evidence stating that in the belief of the deponent the plaintiff has a good cause of action, and no such leave is to be granted unless it be made sufficiently to appear to the court or judge that the case is a proper one for service out of the jurisdiction under this Order. This does not, of course, mean that a mere statement by any deponent who is put forward to make the affidavit that he believes that there is a good cause of action is sufficient. On the other hand, the court is not, on an application for leave to serve out of the jurisdiction, or on a motion made to discharge an order for such service, called upon to try the action or express a premature opinion on its merits, and where there are conflicting statements as to...