Specialist courts championed

The essential objectives of those who championed courts to resolve insurance disputes continue to influence the establishment and evolution of equivalent courts today, NSW Supreme Court Justice Anthony Meagher told APIC17.

He said insurance came to England in the 13th century via the Lombards, a Germanic tribe that had conquered Italy. They established themselves in what became known as Lombard Street, the street on which Lloyd’s stood from 1691 to 1986.

The earliest contracts were for marine insurance, the risk being loss of or damage to the vessel or goods carried.

In Elizabethan England, the Privy Council was responsible for advising the Queen on foreign trade and insurance, which, according to a petition to the Privy Council at the time, was "not grounded on the laws of the realm, but rather a civil and maritime cause, to be determined and decided by civilians, or in the high court of the admiralty".

Sir James Park, in 1787, wrote that before Elizabeth’s reign (1533-1603) "very few insurances had been effected or, if effected, no question had ever arisen upon them in any of the superior courts".

However, in the 16th century, the importance of insurance law became apparent with the growth of foreign trade. In 1574 the Privy Council asked the Lord Mayor of London to collect and certify the rules applied by merchants to insurance.

By the end of the 16th century, the Privy Council resolved to adopt two measures to encourage insurance and provide for speedy dispute resolution. The first was to set up an office for registering insurances. The second was to create a specialist court, referred to by Park as the Court of Policies of Assurance.

According to Francis Bacon (who sponsored the bill in the House of Commons), the court was thought more capable of dealing with insurance contracts than the existing courts.

However, the Policies of Assurance Court was not successful. One reason for its failure was the rival jurisdiction of the courts of admiralty and common law, including the Court of King’s Bench, which in its supervisory capacity enforced limits on the jurisdiction of its new competitor.

The specialist court formed in 1601 was no longer in use by the end of the 17th century.

As that court fell into disuse, insurance disputes were mainly dealt with in the common law courts and the Court of Chancery. However, law reports in the century or so before Lord Mansfield became Chief Justice of the Court of King’s Bench in 1756 contain only 60 insurance cases.

Justice Meagher said that period saw the formation of the Lloyd’s market. Under Oliver Cromwell (Lord Protector of England, Scotland and Ireland for the last five years of his life until 1658), coffee became a rare vice that escaped prohibition.

Keen to attract custom to his coffee shop (opened in 1686), Edward Lloyd made a concerted effort to attract a congregation of underwriters, merchants, shipowners and captains.

In December 1691, his coffee shop relocated to Lombard Street and, from 1697, he started publishing Lloyd’s News, a paper reporting on shipping schedules and insurance.

Justice Meagher said Park credited Lord Mansfield with "clearly developing the principles on which policies of insurance" were based.

As King’s Bench Chief Justice from 1756 to 1788, Mansfield was responsible for introducing practices directed to the speedy, efficient resolution of insurance disputes and for developing consistent principles of mercantile law in line with insurance and shipping practice.

Mansfield overcame numerous defects in procedures for commercial actions, which were frequently held in the Guildhall, in the heart of the City of London.

Under existing rules it was necessary to bring a separate action against each underwriter.

That led to a multiplicity of trials and insurers wishing to agitate a point of principle were put to enormous expense. In response, Mansfield introduced what became known as the "consolidation rule", enabling parties to consent to amalgamating causes or issues to avoid a multiplicity of actions.

At common law, a jury could elect whether to give a special verdict deciding the issues of fact or a general verdict in favour of one party (which would not be accompanied by any reasons and accordingly could not provide a basis for developing binding principles). A general verdict could be unqualified or subject to a question of law to be referred to the King’s Bench in banc (a sitting of all or most judges of that court, rather than a single judge).

Lord Mansfield adopted a "different mode of proceeding" with juries, so, as Park described: "Important questions are not now hastily and unadvisedly decided; but the parties have their case seriously considered and debated by the whole court."

Formulation of cases had previously been left to the parties to draw up at their leisure, which introduced considerable delays.

Mansfield required all cases reserved for the court in banc be set down for argument within the first four days of the term following the trial or judgement was entered according to the jury’s general verdict.

Mansfield included non-legal professionals in the trial process as special jurors to whom he delegated technical questions.

In 1865, Guildhall sittings were discontinued. A submission from the City of London to the Judicature Commission, which sat from 1869 to 1874, argued for dedicated tribunals of commerce or a system of judicial arbitration to address perceived shortcomings of the existing system.

The suggestion was rejected due to disagreement on several questions, including whether "the judges should be wholly commercial, or partly commercial and partly legal; whether commercial members of the tribunal should be judges having an equal voice in the decision, or assessors or advisers only to a legal judge who would be president of the court".

A joint committee of the Bar and Law Society demanded a separate list for commercial actions in London, manned by judges with business experience.

Justice Meagher said although Lord Coleridge CJ baulked at the (implicit) suggestion judges were not equally fit to try all civil disputes, in 1895 the Commercial Court was constituted as part of the Queen’s Bench Division. The court discouraged technical practice and pleading; had a single judge hear all interlocutory actions; encouraged settlement; and generally adapted its procedure to identifying the real issues between the parties.

However, its initial business-like practices were apparently lost by the time of the Second World War.

"Today, the existence of specialised business and commercial courts is widespread. The subject matter jurisdiction of those courts has, in some places, been extended to include financial market and technology disputes," Justice Meagher said.

One of Australia’s first commercial courts was the commercial list established in the common law division of the NSW Supreme Court. Chief Justice Andrew Rogers said its objective was to "provide a forum for the litigation and resolution of disputes between merchants and traders who desired an early opportunity of having their disputes decided".

In March 2016 the Federal Court established an insurance list for short matters. The objective was to provide "for the expeditious dealing with discrete insurance issues for the benefit of insureds and insurers", especially issues about policy interpretation and the application of insurance legislation.