Overseas Union Insurance v Home and Overseas Insurance: Reinsurance, Retrocession, and Commutation Agreement Dispute
Overseas Union Insurance Ltd (OUI), a Singapore-incorporated insurance company, sued Home And Overseas Insurance Company Limited (Home), a UK-incorporated insurance company, in the High Court of Singapore, seeking payment under a retrocession contract. The dispute arose from a commutation agreement OUI entered into with C.J. Warrilow (CJW) Syndicate No 553, its reinsured, without Home's participation. OUI sought to bind Home to this agreement, but Home disclaimed liability. The High Court dismissed OUI's appeal, finding that the commutation agreement was not binding on Home.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed with costs to be paid by Overseas Union Insurance Ltd to Home and Overseas Insurance Co Ltd.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
OUI's claim against Home for payment under a retrocession contract was dismissed due to a commutation agreement with reinsured CJW not binding on Home.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Overseas Union Insurance Ltd | Appellant, Plaintiff | Corporation | Appeal Dismissed | Lost | |
| Home and Overseas Insurance Co Ltd (No 2) | Respondent, Defendant | Corporation | Judgment for Defendant | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judicial Commissioner | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Liew Teck Huat | Niru & Co |
| P Jeya Putra | Joseph Tan Jude Benny |
| Wendy Leong | Joseph Tan Jude Benny |
4. Facts
- Overseas Union Insurance Ltd (OUI) entered into reinsurance contracts with C.J. Warrilow (CJW) Syndicate No 553 between 1980 and 1984.
- One contract, NM 8100270 dated 18 August 1981, was for Excess of Loss (XOL) Reinsurance regarding a Casualty Account.
- OUI's liability under the XOL contract was retroceded to Home And Overseas Insurance Company Limited (Home).
- In 1995, OUI negotiated a commutation agreement with CJW for US$625,650, releasing OUI from all claims by CJW.
- OUI sought US$74,773 from Home based on a mathematical apportionment after the commutation agreement.
- Home disclaimed liability, arguing the sum represented loss for which liability had not attached and that it did not participate in commutation negotiations.
- OUI's claim was dismissed by the District Court, leading to an appeal to the High Court.
5. Formal Citations
- Overseas Union Insurance Ltd v Home and Overseas Insurance Co Ltd (No 2), DA 600020/2001, [2002] SGHC 109
6. Timeline
| Date | Event |
|---|---|
| Overseas Union Insurance Ltd entered into various insurance and/or reinsurance contracts with C.J. Warrilow (‘CJW’) Syndicate No 553. | |
| Overseas Union Insurance Ltd suffered losses and began to run-off its XOL reinsurance business. | |
| Reinsurance slip was dated. | |
| Contract NM 8100270 dated for Excess of Loss (or ‘XOL’) Reinsurance in respect of So-Called ‘Casualty Account’ (‘the XOL contract’) was entered into. | |
| Policy of reinsurance dated. | |
| Overseas Union Insurance Ltd commenced negotiations with CJW to commute all reinsurance claims under various contracts between them. | |
| A commutation agreement was achieved in respect of ten such contracts. | |
| Overseas Union Insurance Limited (‘OUI’) is the Plaintiff in DC Suit No 51197 of 1999. | |
| Judgement in Leefon Corporation (Pte) Ltd v Stone Tec Material Supplies Pte Ltd, DCA No 600003 of 2001. | |
| Overseas Union Insurance Ltd v Turegum Insurance Co [2001] 3 SLR 330. | |
| Decision Date |
7. Legal Issues
- Failure to Plead Contractual Provision
- Outcome: The court held that Overseas Union Insurance Ltd was not entitled to rely on Article XVIII of the XOL contract because it was not pleaded.
- Category: Procedural
- Binding Effect of Commutation Agreement
- Outcome: The court held that the commutation agreement between Overseas Union Insurance Ltd and CJW was not binding on Home and Overseas Insurance Co Ltd.
- Category: Substantive
- Interpretation of 'Compromise Settlements'
- Outcome: The court determined that 'compromise settlements' in Article XVIII must be in the nature of loss settlements, and a commutation agreement does not fall under this definition.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Indemnification
9. Cause of Actions
- Breach of Contract
- Indemnity
10. Practice Areas
- Commercial Litigation
- Reinsurance
- Insurance Coverage
11. Industries
- Insurance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| The Geo W McKnight | Unknown | Yes | [1947] 80 Lloyd’s Rep 419 | England | Cited regarding the court's ability to consider evidence beyond the pleadings of parties. |
| Thai Kenaf Co Ltd v Keck Seng (S) Pte Ltd | High Court | Yes | [1993] 1 SLR 92 | Singapore | Cited for approval of the principle that a court can consider evidence beyond the pleadings of parties. |
| K.E.P. Mohamed Ali v K.E.P. Mohamed Ismail | Unknown | Yes | [1981] 2 MLJ 10 | Malaysia | Cited regarding the object of modern pleadings to prevent surprise. |
| The Ohm Mariana | Court of Appeal | Yes | [1993] 2 SLR 698 | Singapore | Cited regarding the principle that cases must be decided on the issues on the record and the importance of pleadings in defining the issues. |
| American Airlines Inc v Hope | Unknown | Yes | [1974] 2 Lloyd’s Rep 301 | England | Cited to describe the procedure of insurance contracts placed in the London market. |
| Insurance Co of the State of Pennsylvania v Grand Union Insurance Co | Unknown | Yes | [1990] 1 Lloyd’s Rep 208 | England | Cited to describe the procedure of insurance contracts placed in the London market. |
| The Zephyr | Unknown | Yes | [1984] 1 Lloyd’s Rep 58 | England | Cited to describe the procedure of insurance contracts placed in the London market. |
| Youell v Bland Welch & Co | High Court | Yes | [1990] 2 Lloyd’s Rep 423 | England | Cited to describe the procedure of insurance contracts placed in the London market. |
| Youell v Bland Welch & Co | Court of Appeal | Yes | [1992] 2 Lloyd’s Rep 127 | England | Cited to describe the procedure of insurance contracts placed in the London market. |
| Overseas Union Insurance Ltd v Turegum Insurance Co | High Court | Yes | [2001] 3 SLR 330 | Singapore | Cited for a useful account as to how such contracts come about. |
| Pine Top Insurance Co Ltd | Unknown | Yes | [1987] 1 Lloyd’s Rep 476 | England | Cited regarding the interpretation of 'All terms clauses and conditions as original'. |
| In Re a Company No. 0013734 of 1991 | Unknown | Yes | [1992] 2 Lloyd’s Rep 415 | England | Cited regarding the settlement of claims. |
| The Insurance Co of Africa v Scor (U.K.) Reinsurance Co Ltd | Unknown | Yes | [1985] 1 Lloyd’s Rep 312 | England | Cited regarding the interpretation of the ‘follow settlements’ clause. |
| Insurance Company of the State of Pennsylvania v Grand Union Insurance Co and Lowndes Lambert Construction Ltd | Court of Appeal | Yes | [1990] 1 Lloyd’s Rep 208 | Hong Kong | Cited regarding the interpretation of the ‘follow settlements’ clause. |
| John Robert Charman v Guardian Royal Exchange Assurance Plc & another | Unknown | Yes | [1992] 2 Lloyd’s Rep 607 | England | Cited regarding the issue of onus of proof. |
| Hill v The Mercantile & General Reinsurance Co Plc | Unknown | Yes | [1996] Lloyd’s Reinsurance LR 341 | England | Cited regarding the provisos in the ‘follow settlements’ clause. |
| Commercial Union Assurance Co Plc v NGR Victory Reinsurance Ltd | Unknown | Yes | [1998] 2 Lloyd’s Rep 600 | England | Cited regarding the ‘follow settlements’ clause. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Reinsurance
- Retrocession
- Commutation Agreement
- Excess of Loss Reinsurance
- Loss Settlements
- Compromise Settlements
- Follow the Settlements Clause
- Known Outstanding Losses
- Incurred But Not Reported Claims
- Ultimate Net Loss Clause
15.2 Keywords
- reinsurance
- retrocession
- commutation agreement
- insurance
- contract law
- singapore
- high court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Reinsurance | 90 |
| Retrocession | 80 |
| Insurance | 75 |
| Civil Practice | 60 |
| Contract Law | 50 |
16. Subjects
- Reinsurance
- Contract Law
- Civil Procedure