Note: In another of the series of cases involving standbys issued in favor of Lloyd's of London on behalf of various Names, several Canadian names challenged the registration of judgments entered against them in the United Kingdom resulting from actions against them by Lloyd's for deficiencies after the standbys had been exhausted. The basis for the challenge was "(1) There was a denial of natural justice because the appellants were denied the opportunity to litigate their allegations of fraud against Lloyd's; and, (2) Because Lloyd's contravened the Ontario Securities Act, R.S.O. 1990, c. S.5, by trading in securities without filing a prospectus, it would be against the public policy of Ontario to enforce judgments at the behest of Lloyd's based on agreements entered into in breach of the Securities Act." They also argued that the judgments had been satisfied. The trial judge ordered registration and enforcement of the judgments. on appeal, the Court of Appeal for Ontario, Laskin, Goudge and Feldman, JJ. A., affirmed. The appellate court noted that "the U.K. courts gave full consideration to the fraud defense by assuming that the appellants would be able to prove the frauds they alleged. In other words, they took the defense at its highest, but still held that it would not amount to a defence [sic] in law to prevent judgment going on Lloyd's [Name's] premium claims ... The English Court reached the legal conclusion that there could be no recission by the Names of their contracts with Lloyd's for fraudulent misrepresenta-tion for two reasons. First, recission would adversely affect third parties ... Second, because as a matter of law in England, membership in Lloyd's is essential for Names to conduct the insurance business, 'it is fundamentally incompatible with the business that has been carried on for Names to withdraw, retroactively, from membership of Lloyd's.'"


The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.