Petition of Robert Cheyne Turcan and Another as executors of the late Peter Douglas Miller Stirling-Aird for directions as to the distribution of the estate of a deceased underwriting member of Lloyds of London (Court of Session)

Factual and Procedural Background

The Petitioners are the surviving executors and testamentary trustees of a deceased underwriting member of Lloyd’s of London, who died in 2004. They sought to distribute the residue of the estate but were concerned about personal liability if a creditor’s claim arose after distribution. [1][2]

The Petitioners applied under RCS 63.6A for directions permitting full distribution without retaining assets or making further provision for potential claims concerning insurance contracts underwritten by the Deceased. The court remitted the petition to a Reporter, whose report recommended granting the directions. [2][3]

The application concerned underwriting years from 1993 onwards, for which the relevant liabilities had generally been protected through reinsurance to close, an Exeat policy, and possible assistance from the New Central Fund. [4][5][6][7]

Legal Issues Presented

1. Whether the Petitioners could properly carry out the Deceased’s testamentary instructions and fully distribute the estate without retaining assets or making further provision for potential claims arising from insurance or reinsurance contracts underwritten by the Deceased as a Lloyd’s underwriting member. [8][9]

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court accepted that reinsurance to close is intended to transfer responsibility for future claims from a closing-year syndicate to a succeeding syndicate. A former underwriting member would generally face liability only if that reinsurance failed or became exhausted, which Lloyd’s had described as a rare event. [10][11][12]

The Deceased’s post-1993 liabilities had been reinsured to close through succeeding syndicates. Although the precise terms of the Exeat policy could not be located, the available evidence indicated that it was intended to cover remaining liabilities and that no outstanding underwriting liabilities were known. [13][14][15]

The Reporter found no present reason to believe that the relevant reinsurance had generally failed or been exhausted, and expressed no concern that the New Central Fund would refuse or be unable to meet a claim if one arose. [16]

The court concluded that the remaining risk was very remote. Traditional reinsurance to close was designed to prevent that risk, while the Exeat policy provided an additional layer of protection. The court therefore considered it appropriate to protect the Petitioners by granting the requested directions. [17]

Holding and Implications

THE QUESTION WAS ANSWERED IN THE AFFIRMATIVE. The Petitioners were permitted to distribute the Deceased’s estate fully without retaining assets or making further provision for potential claims relating to the Deceased’s Lloyd’s underwriting activities. [8][9]

The Petitioners were also found entitled to the expenses of the application from the executry estate. The direct effect was to allow completion of the estate’s winding up; no broader implication or new precedent is stated in the opinion. [17][9]