EWHC 903 (Comm)
This judgment on costs is of interest because of the guidance it gives as to what will be expected of a broker in providing information to a cedant so as to allow the cedant to collect unpaid balances. Equitas sought a detailed account of monies held by Horace Holman, a Lloyd’s broker which has been in run-off since 2003. The claim arose from outward contracts of reinsurance or retrocession written to protect Lloyd’s Syndicates for 1992 and earlier years which Horace Holman were administrating. The poor state of Horace Holman’s records gave rise to the judge’s comments about a broker’s duties in this situation. The following points are of particular interest:
- Where the broker holds mixed records which cannot be separated out, he is obliged to give his client both the relevant and irrelevant information.
- Records created by the broker for his own accounts are disclosable to the extent that they record transactions carried out as agent for his client.
- Where the broker has provided unsatisfactory information, the cedant can demand a fresh account.
- The burden of proving or disproving the amounts in dispute rests first with the cedant to show that sums were received by the broker. It then shifts to the broker to prove which sums were passed on to the cedant.