Bloxham liquidators back mediation with insurance broker

The liquidators of stockbroking firm

Bloxham

have agreed to mediation with the firm’s former insurance broker,

Robertson Low

, of their claim for more than €15 million in damages arising from Bloxham allegedly being “chronically underinsured”.

Although the firm paid some €16 million in settlement of claims by clients related to certain Saturn Dresdner investment bonds, the total sum recovered from its insurers was a tenth of that, the High Court heard.

'Cruelly mistaken'
The liquidators claim Bloxham believed that, in 2007, it had insurance cover on the basis of up to €3 million a claim but that belief turned out to be "cruelly mistaken" when the total cover for all claims turned out to be €1.275 million. This was in a context where the firm's business was expanding and it had more than €1 billion under discretionary management by 2008 for fees of €35 million, the court was told.

Robertson Low has denied the claims and contends Bloxham understood the cover it had.

The president of the High Court, Mr Justice Nicholas Kearns, was told on the second day of the case yesterday the sides had agreed to enter mediation. When the case was being opened, the judge noted it was listed for three weeks and said it was likely to be "a very costly exercise". He was "somewhat surprised" mediation with a suitably qualified expert had not been considered and suggested they consider the option.

In his opening, Brian O’Moore SC, for the liquidators, said Bloxham was placed in liquidation in 2012 on foot of a petition by the firm’s partners. One reason for that was because the firm was subject to claims by former clients arising from the sale of investments known as the Saturn Dresdner bonds, counsel said.

Bloxham sold up to €30 million of those bonds and later agreed to pay almost €16 million in settlement of those claims or legal fees but received just €1.6 million from its insurers, Novae. The liquidators were seeking damages for the remainder.

Bloxham’s civil liability cover was on a claims-made basis, meaning the cover available was that existing when the claim was notified to the insurers and the Saturn bonds claims were notified in June 2009, counsel said.

'Radical transformation'
Until 2005, Bloxham had cover for up to €1.275 million for each claim but in 2005 that €1.275 million became on the basis "of each and every claim and in the aggregate". That meant, no matter how many claims were made in one year against Bloxham, its total cover was limited to €1.275 million. Bloxham was never told this "radical transformation" in its insurance had occurred but was given correspondence "steeped in insurance-speak" and never plainly told the cover had changed, counsel said.

Bloxham understood it had €3 million cover for every claim from 2007 but was “cruelly mistaken” in this belief, counsel claimed.