Fordingbridge International Agencies Ltd v American Centennial Insurance Company and Associated Electric & Gas Insurance Services Ltd

• Jurisdiction: Bermuda
• Judgment Date: 26 March 1987
• Date: 26 March 1987
• Docket Number: Civil Appeal No. 15 of 1986
• Court: Court of Appeal (Bermuda)

In the Court of Appeal for Bermuda

In the Court of Appeal for Bermuda

In the Court of Appeal for Bermuda

Alastair Blair-Kerr, P.

H.L. daCosta, J.A.

Kenneth C. Henry, J.A.

Civil Appeal No. 15 of 1986

Civil Appeal 15 OF 1986

Civil Appeal 15 of 1986

Fordingbridge International Agencies Limited

Appellant (Plaintiffs)

and

American Centennial Insurance Company

First Respondent (First Defendant)

and

Associated Electric and Gas Insurance Services Limited

Second Respondent (Second Defendant)

BETWEEN

Fordingbridge International Agencies Ltd.

Plaintiff/Appellant

and

American Centennial Insurance Co.

1st Defendant/Respondent

Associated Electric and Gas Insurance Services Ltd.

2nd Defendant/Respondent

BETWEEN

Fordingbridge International Agencies Limited

Plaintiff/Appellant

and

American Centennial Insurance Co.

1st Defendant/Respondent

Associated Electric and Gas Insurance Services Limited

2nd Defendant/Respondent

Mr. John Riihiluoma for Plaintiff/Appellant

Mr. Coles Diel for Defendant/Respondent.

Mr. John Riihiluoma for Plaintiff Appellant

Mr. Coles Diel for Defendant Respondent

The Owners of the Atlantic Star v The Owners of the Bona SpesUNK [1972] 2 All ER 175

Rockware Glass Ltd v MacShannonELR [1968] AC 795

The Abidin DaverELR [1984] AC 398

Spiliada Maritime Corp. v Cansulex Ltd.UNK [1986] 3 All ER 843

Principles of application to obtain leave to issue and serve Writ out of the jurisdiction — Principles of adding a party — Appropriate forum — Discretionary power under Order 11 of the Rules of the Supreme Court — Application of forum non conveniens — Principle of comity — Forum where case may be tried suitably for the interests of all the parties and for the ends of justice

JUDGMENT

On 6th September 1984, a Bermuda exempted company named Fordingbridge International Limited (FIL) applied, ex parte, for leave to serve notice of a writ of summons out of the jurisdiction on the First Respondent (ACI), a corporation organised and existing under the laws of Delaware in the United States of America. The application was made pursuant to Order 11 rule 1(e) which reads:

‘1. Service out of the jurisdiction of a …………… notice of a writ of summons may be allowed by the Court or a Judge—

………………………………………………

• (e) whenever the action is founded on any breach, or alleged breach, within the jurisdiction of any contract wherever made, which, according to the terms thereof, ought to be performed within the jurisdiction.’

The notice of the writ simply said that the writ was endorsed for a claim the essential part of which read as follows:

‘1. An account of the monthly premium declarations for the period December 1983 to date showing what is due to the Plaintiffs from the Defendants in respect of brokerage commissions; and

2. An order for the payment by the Defendants to the Plaintiffs for what is found due on the taking of the said accounts.’

The application was supported by an affidavit by the then attorney for FIL (Mr. Hargun) by which it was alleged that the action related to a reinsurance agreement between Associated Electric and Gas Insurance Services Limited (AEGIS), a Bermuda exempted company, and ACI. A copy of the agreement exhibited to the affidavit appears to have been signed by someone on behalf of AEGIS at Bermuda and by someone on behalf of ACI at Morristown in the United States on 13th June 198O. ACI was described as ‘the Reinsurer’ and AEGIS was described as ‘the Company’, that is to say the Reinsured. The agreement was described as an ‘automatic facultative reinsurance agreement, reinsurance certificate number F000301’. It was for a period of five years, ‘non-cancellable’, effective from 31st December 1979 to 1st January 1985. According to the agreement, ACI agreed to give AEGIS reinsurance coverage for U.S.$1.5 million in excess of U.S./$1 million which was to be retained by AEGIS in respect of each occurrence of loss. Paragraph 2 of the Special Conditions read, as follows:

‘The Reinsurer accepts the Company's rating formula for the layer set forth in paragraph 1 above as part of the Company's underwriting policy. Such rating formula may allow for a reinsurance commission of 7.5 per cent from the effective date of this agreement until 31st December, 1980 ……… and 10 per cent for the period thereafter on the original gross layer premiums less cancellations and returns to compute the net written premium for the Reinsurer as reported on the bordereaux.’

In his affidavit Mr. Hargun said that he believed FIL were brokers acting for AEGIS and, as such, were ‘producing agents who negotiated the treaty with Underwriters Inc.’ (TUI) a company incorporated in the U.S.A. who were underwriting agents for (ACI)’. There was produced a copy of a letter dated 16th November 1979 written by a Mr. Paul Wilson, said to be Vice-president of another U.S. corporation (Ebasco Risk Management Consultants Inc.) to FIL with reference to the ‘reinsurance certificate F000301, reinsurance of AEGIS’ purporting to recognise FIL as ‘the broker of record’. The letter appears to have been endorsed on 20th November 1979 by a Mr. James R. Force (said to be Senior Vice-President of TUI) with the words ‘Totally Agreed’. There was also produced a copy of a letter dated 4th January 1980 by TUI to Mr. Nicholas Jones, President of FIL stating that they would recognise FIL as ‘intermediary’ and ‘broker of record’.

It was said in Mr. Hargun's affidavit that FIL was paid ‘commissions due under the treaty’ in Bermuda until November 1983 but that ‘for reasons which have not been made clear’, ACI then refused to make any further payments; and that as FIL had a good cause of action, the case fell within Order 11 rule 1(e).

Order 11 rule 1(4) provides that leave to serve shall not be granted unless it is made to appear that ‘the case is a proper one for service out of the jurisdiction’. At that stage, it must have appeared to Mr. Justice Collett that this was a simple action for an account and an order for any sum due; and that it was a proper case for service out of the jurisdiction. On 6th September 1984, FIL was given leave to issue a writ of summons against ACI and to serve notice of it upon ACI at their registered office in the United States. The notice was received by ACI on 11th October 1984.

A conditional appearance was entered by ACI on 6th November 1984; and by notice of motion dated 3rd December 1984, ACI indicated that the court would be moved for an order dismissing the order of 6th September 1984 or ‘alternatively that the proceedings herein be stayed on the ground that the action begun in the State of New Jersey ……… in which the Defendant herein is Plaintiff and the Plaintiff herein is one of several Defendants is completely dispositive of the issue in this action ……..and on the ground that the two actions ought not to continue at the same time.’

The New Jersey action was in fact commenced on 5th October 1984, that is to say six days before notice of the Bermuda action came to the attention of ACI.

The affidavit of a Mr. Miele (one of the attorneys for ACI) dated 4th December 1984 filed in support of ACI's motion put the dispute between the parties in a very different light. Exhibited to the affidavit is a copy of ACI's complaint in the New Jersey action. There are sixteen named defendants and 60 unnamed defendants in that action.

At this stage, a word or two about FIL and Fordingbridge International Agencies Limited (FIAL) may be appropriate. It appears that FIL was incorporated in 1977. Nicholas Jones was its sole beneficial owner. FIAL, a Bermuda exempted company, was incorporated about March 1980. It is wholly owned by Nicholas Jones. In the latter part of 1980, Jones transferred 25% of his interest in FIL to a third party and in September 1981, he disposed of the balance of his interest in FIL to other third parties. FIL then changed its name to Amberco Ltd.

On 28th November 1985, an order was made amending the name of the plaintiff in the Bermuda action to FIAL. We were informed by counsel for ACI that the name ‘Fordingbridge International Underwriters Ltd.’ (which appears in the complaint in the New Jersey action) will, in due course, be amended to read ‘Fordingbridge International Agencies Limited (FIAL)’.

The 16 named defendants in the order in which they appear in the New Jersey complaint are as follows:

The Underwriters Inc. (TUI)

Insurance Services of California Inc. (TUI California)

John A. Kraeutler

Joseph F. Ambriano

Davis Dorland & Co. Inc. (Davis Dorland)

Ebasco Risk Management Consultants Inc. (Ebasco Risk)

Ebasco Services Inc. (Ebasco Services)

Associated Company Management of Ebasco Ltd. (ACME)

Fordinbridge International Underwriters Ltd. (FIL) (To be changed to FIAL)

Nicholas Jones

E.W.I. S.A.INternational Insurance Brokers (EWI SA)

Paul Karrer

The Placer's Inc. (TPI)

Island Reinsurance Corporation (Island)

John A. Kraeutler Inc. (Kraeutler Inc.)

R.I.C.O.P. General Agency Inc. (RICOP)

The relationship of these companies and individuals, one to another, is set out in the complaint as follows: It is said that from 1st January 1977 to 1st June 1983, TUI was ACI's general managing agent; that TUI is owned by J.A.C.K. Holding Company Inc. which, in turn, is owned entirely by Kraeutler; that TUI California is a wholly-owned subsidiary of TUI; that Kraeutler owns 75% of the stock of Island, a Grand Cayman Corporation; that Ambriano was ‘agent and/or producer’ for Ebasco Risk; that he is President of Davis Dorland; that he ‘owns and/or controls’FIAL, EWI SA, and RICOP; that Ebasco Risk is a subsidiary of Ebasco Services; that ACME, a Bermuda Corporation, is a wholly-owned subsidiary of Ebasco Services; that a Mr. Paul Wilson (who died mysteriously on 19th June 1982) was Vice-president of Ebasco Risk; that EWI SA is a Swiss Corporation controlled by ‘Ambriano and possibly Kraeutler’; that Karrer is president of EWI SA...