Hamishmar Insurance Agency Ltd & Anor v Firstcity Partnership Ltd

Facts

The first claimant, Hamishmar Insurance Agency Limited, is an insurance agent and the wholly owned subsidiary of the second claimant, Harel Insurance Company Limited, an Israeli insurer. In the 1990s Harel became coverholder under a number of binding authority agreements with underwriters, including at Lloyd's, and the defendant, FirstCity Partnership Limited, was the Lloyd's broker operating the binders, paying premium to underwriters and collecting claims monies. Under most of the binders 60% of net premium was paid quarterly and 40% of gross premium retained as a claims float, released the following quarter. After the leading underwriters audited Hamishmar's records in 2003 and sued for breach of contract, that claim was settled in 2005 by commutation of the binders. In 2006 Hamishmar sued FCP, alleging that its mishandling of the business had provoked the audit and claim; FCP counterclaimed US$419,459.31 as premium it said it had funded on Hamishmar's behalf. By a joint letter of instruction dated 18 March 2008 the parties referred the counterclaim and certain other balances to an expert accountant, Mr James Stanbury. His draft determination of 8 August 2008 required Hamishmar to give credit for US$487,103. The claimants then applied to the Commercial Court for declaratory relief as to the scope of the reference, permission to amend, and strike-out or summary dismissal of the counterclaim.