International Management Group(UK) Ltd v Simmonds

In this action the claimants (IMG) claim against the defendant insurers under a cancellation policy in respect of losses suffered as the result of the cancellation of a cricket tournament organised by IMG and scheduled to take place between India and Pakistan in Toronto in September 2000. This tournament was known as the Sahara Cup. The quantum of IMG’s losses has been agreed between the parties and the sole issue for the court to determine is the question of liability under the policy. Issues arise with regard to the coverage of the policy, alleged breach of warranty and fair presentation of the risk to underwriters.

India and Pakistan are both keen cricketing nations. In both countries, cricket is the major sport and attracts enormous interest. There have from time to time been difficulties in India and Pakistan playing each other at cricket because of political tensions between them. One of the causes of tension is the continuing dispute over the Kashmir, which has been an issue between them since 1948.

In 1996, the Cricket boards of India (BCCI) and Pakistan (PCB) each entered into an agreement with Transworld International Inc (TWI), which is one of the companies in Mark McCormack’s group of companies known as IMG. TWI was responsible for the televising and distribution of sporting events. The contracts with the two cricketing boards were for each to play the other in a series of one-day matches in Toronto in each of the years 1996 to 2000. Although initially known as the Friendship Cup, it became known as the Sahara Cup because of the name of the sponsor, Sahara India Pariwar. The competition proved a great success in cricketing and financial terms and took place without incident in 1996, 1997 and 1998.

In circumstances to which I will refer later in this judgment, the 1999 Sahara Cup matches between India and Pakistan did not take place. Instead, two mini-series were played in Toronto between India and the West Indies on the one hand and Pakistan and the West Indies on the other. This replacement tournament was organised by IMG and was known as the Toronto Cricket Festival. The exact reasons for the Indian team and the Pakistani team not playing each other at the Sahara cup in 1999 are the subject of dispute, but, were connected with the tension between the two countries over the Kashmir. In consequence of the hasty rearrangement of the Sahara Cup into the format of the Toronto Cricket Festival, IMG/TWI suffered various losses which were not the subject of insurance. For the purposes of the balance of this judgment, I need draw no distinction between IMG and TWI and will uniformly refer to them as IMG.

In 2000, IMG sought and obtained insurance cover from the defendant insurers in terms to which I shall shortly refer. This insurance operated in respect of the cancellation of the Sahara Cup in 2000 on the basis set out in the policy wording. It is common ground between the parties that the Sahara Cup did not take place in 2000 because the BCCI, taking note of a letter from the government of India dated the 10^th August 2000, decided not to participate in that competition. It was not possible to make an alternative arrangement of the kind made in 1999 so no matches of any kind took place by way of substitution. It is the losses arising out of this cancellation which are the subject of the claim in this action.

The Government letter of 10^th August 2000 to the Honorary Secretary of BCCI reads as follows:-

Under the terms of the agreement between them, BCCI agreed with IMG that they would ensure that the full Indian Cricket team would play in the scheduled matches in the years 1996 to 2000. The series was to comprise 5 one-day games played over a consecutive ten-day period. IMG agreed to guarantee a fee to BCCI of US$500,000 for each of the five years and in addition to pay BCCI further sums once the revenue exceeded given levels. In consideration of this, IMG was given exclusive entitlement to media coverage of the series of games and the right to exploit all commercial opportunities relating to the series itself. The terms of the contract between IMG and PCB were materially identical. Both contracts included a general force majeure clause, giving rise to suspension of the agreement and, in the case of force majeure continuing for over six months, an entitlement to terminate the agreement without liability on either side. In addition, there was a more specific force majeure clause in each contract relieving IMG of obligations in respect of the payment of fees in specific circumstances such as the withdrawal of India or Pakistan from the series or IMG’s inability to produce or deliver some or all of the coverage required. Mr Dalmiya, on BCCI’s behalf, insisted however, on the inclusion of a further sub-clause in the BCCI contract in the following terms:-

The late insistence on this special clause must have alerted Mr Sinrich and Mr Wildblood, who negotiated the contract with Mr Dalmiya, to the prospective need for BCCI to obtain Government permission, although they said that they did not ask why Mr Dalmiya wanted its inclusion and did not think much about it at the time.

Prior to 1999, IMG used a number of different brokers for their business. For the majority of their business they used Aon with whom they had a close relationship in the United States. They placed their contingency business in London through a firm of London brokers, Robertson Taylor, but in the course of 1999, Aon acquired this part of IMG’s business also. Aon did not have great experience of broking cancellation covers of this kind and they therefore worked with Adam Brothers who were specialists in this field. IMG obtained a policy which was 100% insured under one of Adam Brothers line-slips. Under this arrangement, some risks could be bound without reference to underwriters up to a certain level, but over and above that, agreement was required from the two leading underwriters of the line-slip who were David Knight at Simmonds, Syndicate 994 and Chris Rackliffe at ASU Syndicate 9072. The largest contingency covers and those with special features had however to be negotiated separately and could not be placed under the line-slip by either of these two methods.

In January 1999, Robertson Taylor had obtained premium indications for IMG in respect of the 1999 Sahara Cup, prior to the Pakistan tour of India, which was scheduled for later in the month. Premium indications were obtained for ordinary cancellation cover on the standard Lloyd’s Contingency Forms which excluded losses arising from war and kindred risks, riot and civil commotion and government or civil intervention. The ordinary cancellation cover operated in respect of conventional risks such as weather. The ordinary cancellation cover included a warranty in the following form:-

IMG chose not to take up either quotation at this stage considering that the premium for the political risks cover was very high at approximately US$91,000.

In about June 1999, IMG purchased ordinary contingency cover for the 1999 Sahara Cup but not war / kindred risks / political risks cover. In August 1999, at a time when India’s participation in the 1999 Sahara Cup was already in doubt, because of hostilities between India and Pakistan in the Kashmir, IMG once again made inquiries of Robertson Taylor in an effort to obtain insurance cover for the cancellation of the 1999 Sahara Cup due to PCB or BCCI withdrawing their team or the respective governments refusing to allow the teams to take part. On the 5^th August, Mr Silcock of Robertson Taylor informed Mr Wildblood of IMG that underwriters had been approached regarding the cover and had come back to him with information in the shape of Indian newspaper articles which made it extremely difficult to obtain any cover for cancellation of the tournament on the basis suggested. The articles variously referred to BCCI seeking guidance from the Indian Sports Ministry as to participation in the Sahara Cup, to the need for the Indian government’s permission, or to government clearance or a “green signal” for the competition to go ahead. He asked for comment on those articles, if they were inaccurate. It seems that there was a further phone call, noted on a document, between Mr Silcock and Mr Wildblood where Mr Silcock told him that there was “still no chance of cover”. At this point it appears that efforts to obtain political risks cover were abandoned.

In circumstances where IMG had not taken out any such cover, events occurred which resulted in the rearrangement of the 1999 Sahara cup in the manner I have already described. IMG reformulated the event and then sought cancellation cover in respect of the revised arrangement known as the Toronto Cricket Festival. The risk was broked by Adams Bros. for Aon to the lead underwriters under the line-slip, as an ordinary cancellation cover, with the usual exclusions for war and political risks. Both leading underwriters refused to consider any political risk and specifically excluded in the wording “any claim arising directly or indirectly as a result of the current political situation between India and Pakistan or any escalation thereof.”

In the year 2000 in the circumstances described hereafter, IMG again sought and obtained both ordinary contingency cover and cover for war / kindred risks / political risks in addition, in respect of the Sahara Cup 2000, in one policy. The relevant parts of the wording were as follows:-

In the standard conditions which formed part of the insurance, the following provision appeared:-

Diligently made all necessary enquiries and truthfully declared all material facts likely to influence a prudent underwriter in determining:-

Whether or not to accept the risk,

The premium,

The conditions, exclusions and limitations:

No knowledge at inception of any matter, fact or circumstance, actual or threatened that increases or could increase the possibility of a loss under this insurance: ”.

The Claimants called Messrs. Sinrich and Wildblood, Miss Smith and Miss Trott from IMG London, Mr. Krishnan from IMG India and both the producing broker Mr. Davies of Aon and the placing brokers Mr. Norris and Mr. Rice of Adam Brothers.

With the exception of Miss Trott I regret to say that I did not find the evidence of any of the IMG representatives satisfactory. They were prepared to give answers they thought were best fitted to the case that IMG had chosen to make and to give a version of events which was contradictory to the letters, faxes, e-mails and other documents to which they were referred in evidence, including those they had personally written or received and acted upon. Their efforts to explain away the contents of these documents were not credible and did not reflect well on their integrity. Where their evidence ran counter to the documents, I rejected it without hesitation. In particular there was correspondence where IMG’s representatives referred to the approach to the Indian Government by BCCI for approval to play in the 1999 Sahara Cup and to the decision of the Government as to whether to give approval or not and, in due course, their refusal to do so. Attempts to explain this away, as using language in which they did not believe, either in order to accommodate BCCI, or to stave off hostility or law suits from PCB, or to say that, where it appeared in internal correspondence, it merely reflected press comment, did them no credit at all.

As will become plain later in this judgment, whilst IMG had no knowledge of the details of any process of application for permission to the Indian Government, not only did BCCI tell them in 1999 that there was a Government decision to be made but the press was full of articles about the need for Government approval and clearance, whilst the comment of the Sports Minister, that it was not a matter for the Government, was one which I find Mr Sinrich did not believe, the issue here being essentially a matter for the Ministry for External Affairs. BCCI expressly informed IMG in 1999 by fax that they had approached the Government and that the Indian team participation in the 1999 Sahara Cup was dependent upon Government permission. Mr. Sinrich accepted that he was so informed, whilst saying in evidence that he did not believe what Mr. Lele, the Honorary Secretary of BCCI was telling him. Mr. Sinrich said that he did not believe a formal permission process existed but he accepted that he never enquired of Mr. Lele about it, or of Mr. Dalmiya (the former President of BCCI, but by then the President of the ICC) with whom he had a very good relationship and who was helping to resolve the issue. The evidence of Mr. Sinrich and Mr. Wildblood was that IMG was prepared to write things that they knew to be untrue to placate the PCB or to humour BCCI. I find that, despite their denials, they believed the information given to them by BCCI as to the need for Government permission and understood the need for an approach by BCCI to obtain that permission, in some shape or form, in order for the Indian team to be able to participate in any foreign tour. Whilst this would normally be a routine matter, it gave rise to different considerations when it concerned Pakistan where inter-governmental relations were difficult, as the two of them well knew. Miss Smith and Mr. Krishnan were likewise prepared to give evidence that was at variance with documents for which they were responsible, in relation to this subject.

Mr. Davies had, as might be expected, no satisfactory explanation for three related significant actions that he had taken. The first was his confirmation of cover to IMG when all he had obtained was a temporary “held covered” position from one leading underwriter over the weekend. Secondly he failed to tell IMG that the cover he had obtained in March (apart from the temporary “held covered” position) had express “subjects” to it, made by nearly all the major underwriters who had subscribed the slips. I find that under pressure from IMG to obtain cover, he issued a cover note in the hope that the “subjects” would be lifted and the cover confirmed. Thirdly, his desire to conclude the placement, having already confirmed it to IMG, led him to change the terms of the questions posed to him by Mr. Norris at underwriters’ behest, with the result that the answers obtained and shown to underwriters gave a false picture of the position to them. He must have been conscious of the difficulties that were posed by the original questions and the possibility that answers might be given which would render it more difficult for the cover to be obtained. There is no other explanation for the receipt of questions in writing in a fax from Mr. Norris and then asking different questions in his fax to IMG.

Mr. Norris was for the most part an acceptable witness but was categoric on some points where I am satisfied that his recollection was at fault and he was prepared to argue a corner from time to time. Mr. Rice, as he candidly said, had limited recollection of specific meetings with the underwriters he saw. Here, on placement issues, the documents were the best guide as to what actually took place between brokers and underwriters.

The defendants produced most of the underwriters who had subscribed the slip whose recollection of events was, for the most part, somewhat sketchy. I found this unsurprising and again found that the documents were the best source of information together with the evidence given by the underwriters of their general approach and the broad thrust of their underwriting philosophies.

I heard evidence from Mr. Bindra who was President of BCCI from 1993 to 1996 and was involved in prior years with BCCI. He was also President of the Punjab Cricket Association which was a constituent member of the Board of Control in the years 1999 to 2002 but, because of his allegations about match fixing, he was banned from attending meetings of BCCI for the period from January 2000 until comparatively recently. Mr. Lele also gave evidence. He was Honorary Secretary of BCCI either jointly or on his own from 1990 to 2000 inclusive. Having examined their evidence with care, I make the following findings of fact in relation to the disputed issue of applications for permission and the grant of permission from the Government of India for the Sahara Cup.

Prior to the issue of the 1997 guidelines for National Sports Federations, BCCI had to make applications to the Government in respect of foreign cricket teams visiting India and the Indian team playing in a foreign country. The applications were on a prescribed form and to Mr. Lele’s knowledge, this had been done from at least 1982 onwards.

In 1997, Guidelines were issued but these were inapplicable to BCCI both because the scheme dealt with National Sports Federations which did not include BCCI and because BCCI was in any event self financing and did not need to apply to the Government for any funding assistance, nor for any foreign exchange permission. BCCI had been self-financing in rupees since the late 1950’s and became self financing in foreign exchange in about 1994 or 1995. Whereas, prior to that date, there was a necessity to apply to the Government on the prescribed forms and to give the information required by those forms, thereafter the contents of the form were of no real relevance to BCCI as no such permissions were needed. The prescribed form which was headed “Form of Application for obtaining approval of Government of India for sending teams/sportsmen abroad” was therefore essentially designed for the pre 1997 situation or for use by National Sports Federations after 1997.

This prescribed form went to four Government departments, the Ministry of Sports and Youth Affairs, the Ministry of Finance, the Ministry of External Affairs and the Ministry for Home Affairs. The former replied on behalf of all departments. The main purpose of the application under the 1997 Guidelines was for financing and foreign exchange reasons, as those Guidelines make clear: but it still had additional purposes. This is plain from the fact that the application form was sent to both the Ministry of External Affairs and the Ministry of Home Affairs who would be concerned with political issues and security issues.

As a matter of history and practice, BCCI continued to make applications on these prescribed forms for every foreign team visiting India and for every match to be played outside India by the Indian cricket team after1994 and1997. These applications were invariably made to the Government and invariably a response was received. It was, in the ordinary way, a routine matter save for circumstances where there was a delicate political situation such as that which obtained in relation to Pakistan in 1999 or 2000 or that which obtained following the match fixing scandals in relation to the application made in 2001. Whether or not there was any basis in law for an application to be made, BCCI considered that it had to make such an application and did so after the need for foreign exchange permission had disappeared and after the new 1997 guidelines came into force.

If the Government refused permission in response to an application on the prescribed forms, in practice BCCI would not act contrary to that Government permission, whether or not there was a juridical basis for the application and grant of permission. Both BCCI and the Government treated the application for permission and the granting of such permission as necessary for BCCI to send teams abroad or to play matches against foreign teams in India. Indeed, if an application was not made at least three months in advance of the event, as the prescribed form required, it had been known for Mr. Lele to be reprimanded by the Government department.

Whatever the legal position therefore, on a practical basis I find that a Government permission was necessary for participation by the Indian team in the Sahara Cup in 1999 and 2000. BCCI would not play Pakistan without Government approval because it was politically inexpedient and, in practice, impossible to ignore the Government’s lack of approval.

In 1999, BCCI never made an application for permission for India to play in the 1999 Sahara Cup because of the difficulties which had arisen in Kashmir and because the BCCI President had written a letter of 22^nd July to the Government seeking guidance as to what to do. The President had a meeting on 20^th July with the Ministry who were not optimistic about the position but told him he should write and that a letter would be written in reply to his. This letter was written by the Ministry of Sport on the 17^th of August 1999 in the terms referred to later in this judgment, advising BCCI that it would be inappropriate for them to play in Toronto. The letter concluded with a paragraph requesting BCCI “to take a decision in this regard accordingly and apprise the Department about the same”.

Although it was framed as an advice, the letter was tantamount to an instruction and I accept Mr. Lele’s evidence that BCCI had, effectively, to decide not to go ahead with the tournament. If BCCI had decided to ignore the letter BCCI would have had to apply for Government permission and the Government would then have refused approval. The moment therefore that the letter came, it was clear that, from BCCI’s viewpoint, the Sahara Cup 1999 could not go ahead. On that basis BCCI did not apply for permission and informed the press and IMG of the letter on 20-21^st August, as appears below.

BCCI’s letter of August 13^th 1999 to IMG was therefore correct in stating, as it did, that “the Indian teams participation in the Sahara Cup 1999 is dependent on the permission of the Government of India” and that BCCI had already approached the relevant Ministries and were awaiting their response. The letter went on to say that if the Government’s permission was received, the Indian team would take part in the 1999 Sahara Cup. IMG were therefore aware of the general position, but not perhaps aware of all the details of what was going on, although Mr. Lele’s evidence, which I accept, was that he kept IMG in close touch with developments on a regular basis, by speaking to Messrs. Sinrich or Wildblood of IMG London or Mr. Hutton of IMG India. IMG was not however told of the terms of the letter until BCCI’s working committee had met on the 20^th of August and informed the press of the position and the Government’s stance.

On the 20^th of August 1999, BCCI decided not to go ahead with the Sahara Cup 1999 (and therefore not to apply for permission for it) but to take up the prior discussions which had been initiated by IMG about a revised version of the tournament involving two mini series with the West Indies. This was then negotiated and put into practice. Though IMG asked in March 2000 for a copy of the letter of the 20^th July 1999, under the subterfuge that their insurers required it, they were not sent it by Mr. Lele because he himself did not have a copy of it. It had been read to him over the telephone before the working committee meeting, on its receipt by the President of the BCCI, and it was again read out at the working committee meeting by the President. Its terms were also largely given to the press on 20^th and 21^st August.

It was indeed plain from the terms of that letter, as Mr. Lele maintained, that had the BCCI decided to ignore the advice in that letter, any subsequent application for permission to the Government would have been refused.

Everyone in India who followed cricket was aware of the Government’s position as reported in the press and so were IMG, both because they followed the matter in the press and because they were given information direct by Mr. Lele.

On 30^th August 1999 Mr. Lele wrote to the Government of India seeking permission for participation in the revamped mini series with the West Indies in Toronto. Such permission must have been obtained.

On the 5^th April 2000 Mr. Lele in his capacity as Hon. Secretary of BCCI wrote to the Government with the prescribed forms, seeking permission for the Indian team to participate in the 2000 Sahara Cup. The response received was the Government’s letter of 10^th August 2000.

In practice, the effect of the Government’s letters of August 17^th 1999 and 10^th August 2000 was the same. Both were framed in terms of advice and expressed the Government’s view that it would be “inappropriate” for the Sahara Cup to take place in the year in question. One was written in response to an application for permission in the prescribed form (2000), whilst the other (1999) was made in response to a letter of 22^nd July which was made in advance of such an application for permission, in order to sound out the Government’s view. There was no practical distinction between the effect of those two letters.

In 2001, on the 5^th of January, Mr. Lele again wrote to the Department of Youth Affairs and Sport enclosing the usual application forms asking for the Government’s permission for the Indian team to play in a triangular series in Sharjah in April. By a letter of the 3^rd of April, the Government of India wrote back to say that after careful consideration the

What also appears very clearly from the letter of 17^th August 1999 from the Government is that the Government then had a different policy for bi-lateral tournaments between India and Pakistan and triangular or multilateral tournaments in which both India and Pakistan were involved. The 1999 Sahara Cup fell into the former category and approval was not given whereas, in principle, approval for the latter was given and in the first six months of the year 2000 India participated in triangular tournaments in Australia and Sharjah and in the Asia Cup.

Thus it was that, as at 1^st of March 2000, Mr. Krishnan’s e-mail to Messrs. Sinrich, Wildblood and Hutton expressed the view of “well connected people” with the Board that there was “no way” in which the Indian Government would allow India and Pakistan to play a head to head series such as the Sahara Cup whilst India and Pakistan could play each other in tournaments including other teams. This reflected Mr. Lele’s view at the time. This point had been clearly set out in the press reports in August 1999 in relation to the Government’s letter to BCCI of 17^th August 1999. A view formed on that basis in March 2000 was therefore a realistic view to hold. By the end of April 2000, as reflected in Mr. Lele’s letter of the 25^th of April, it seems there was greater cause for optimism.

I heard evidence from two senior advocates of the High Court of India, Messrs. Kapur and Kumar as to the status of the letters from the Government of 17^th August 1999, 10^th August 2000 and 3^rd of April 2001, all addressed to the BCCI concerning the participation of the Indian team in the various tournaments to which those letters referred.

It was common ground between the Indian lawyers that there was no legislation making it a requirement that BCCI should apply to the Government for permission to tour abroad or to invite foreign teams to tour in India. The 1997 Guidelines, to which I have already made reference, were not applicable to BCCI. Nonetheless, in circumstances where applications were in practice made and the Government invariably responded to those applications, the status of the Government’s response assumes importance.

I find that, under the law of India, the Union Government had power to issue executive instructions under Article 73 of the Indian Constitution in respect of foreign affairs. Article 73 of the Indian Constitution confers upon the Union (Government of India) executive power in respect of all matters with respect to which the Union Parliament has the power to make laws. Under the Indian Constitution there are three lists called List 1 (The Union List), List 2 (The State List) and List 3 (The Concurrent List). List 1 enumerates those areas in respect of which the Indian Parliament can make laws, whilst List 2 sets out those in respect of which the State Legislature can make laws and List 3 contains those areas in respect of which both the Parliament and the State Legislature can make laws. However if Parliament has already made a law in respect of a List 3 item, then the State’s power to make such law is taken away. List 1 includes Entry 10 which covers “foreign affairs; all matters which bring the Union into relation with any foreign country.”

I find that Article 73 empowered the Government to give directions to or order the BCCI not to play in tournaments abroad, or indeed not to play foreign teams in tournaments in India. The proviso to Article 73 does not impinge on this power merely because the subject matter is connected with sport. The proviso which circumscribes the Article 73 power, refers only to matters which fall into List 3 of the Constitution which are matters where the Union and individual states have concurrent legislative powers. The proviso is inapplicable to the List 2 functions of States, which list includes the power to legislate in relation to sport. If the subject matter of an instruction falls within the compass of foreign affairs, this is pre-eminently a matter for the Union of India and the Government has undoubted power to make executive orders in relation to it, even if the instruction also concerns sport. Under the terms of the proviso,

The issue is therefore whether or not the letters constitute executive instructions from the Union Government under Article 73. It is pointed out by IMG that there is no express reference in any of the letters to Article 73. It is also said that, because any such executive order would impact upon fundamental rights guaranteed by the Constitution, in the shape of the right to play cricket, an order would have to be clearly framed to achieve this end. The terms of the letters differ but do not use the word “order “, “instruct” or “direct”. I do not find that any of these points take the matter very much further, the real question being as to the substance of each letter in the context in which each was issued.

I refer elsewhere in this judgment, to the terms of those letters and the fact that the letter of 3^rd April 2001 is more direct. I do not see how this Government letter in 2001 can be seen as anything other than an executive instruction, notwithstanding the use of the word “intimated”. The letter refers in express terms to the Government’s decision that the Indian Cricket team should not participate in the tournaments referred to. Similarly, the letter of 10^th August 2000 was written in the context of an application for permission to play and the response referred both to consideration by the Government and to a decision that it would be inappropriate for the Indian team to play in the 2000 Sahara Cup. Although this letter also refers to the Government’s advice not to participate in that tournament, this also must be seen as an executive instruction. As for the letter of 17^th August 1999, the situation is different because that letter was written in advance of any application for permission, unlike the two letters in the later years. This was indeed a response of the Government advising BCCI to take a decision in accordance with that advice. The implication was absolutely clear, namely that if BCCI decided to ignore that advice, Government approval would not be forthcoming on any application made for clearance to play in Toronto. Thus this letter was not in itself an executive instruction but was tantamount to one inasmuch as much as a failure to heed the advise would give rise to an executive instruction which would be effective under Article 73.

In January and February 1999, three test matches took place in India between India and Pakistan, though not without incident, including riots. In March 1999 the Pepsi Cup took place, a triangular tournament of one-day games between India, Pakistan and Sri Lanka. This was held in India and India played Pakistan on three occasions at the end of March and beginning of April. Following this, about a week after the last of those games, the Coca Cola Cup occurred in Sharjah, UAE. This too was a triangular tournament of one-day games but in this case between India, Pakistan and South Africa, as part of which India played Pakistan on three occasions. These tournaments preceded the World Cup which was held in England in June 1999 in which India and Pakistan played each other in the early stages.

About the end of June 1999, following the outbreak of hostilities between Pakistan and India in the Kargil area of the Kashmir, Kapil Dev, the former cricket captain of India and a legendary figure in Indian Cricketing circles visited Indian soldiers who had been injured in the conflict. Kapil Dev stated publicly, as reported in the press, that India should not play cricket matches with Pakistan whilst the conflict continued. He continued to make public statements of this kind which were widely reported in the Indian press, copies of which were sent by IMG India to IMG London. The sponsors, Sahara India Pariwar, of which Kapil Dev was a director, endorsed his comments, which the press widely interpreted not only as a withdrawal of sponsorship by Sahara but also as a cancellation of the Sahara Cup itself. At this point IMG were doing their utmost to calm matters down, to maintain a publicly neutral stance but to put pressure upon the BCCI to participate in the 1999 Sahara Cup and upon Sahara to resume their sponsorship, whilst pursuing alternative potential sponsors.

On 3^rd August 1999, an article appeared in the Indian Express which included the following:-

The exchanges between Mr Sinrich and Mr Wildblood of IMG London, Mr Dalmiya of the ICC, Mr Rehman of the PCB, Mr Lele of BCCI and Mr Krishnan of IMG India reveal the same picture of an approach by BCCI for Government approval. In a fax of 7^th August 1999 from Mr Krishnan to Mr Sinrich, the former speaks of two possible scenarios. The first is where the government does not clear the team to participate and the second is the situation where the team does participate but Sahara refuses to sponsor. In a further fax of 9^th August 1999, in which Mr Krishnan, who is a qualified Australian solicitor ( and who was in regular contact with Mr Sinrich and Mr Wildblood), instructs Mr Cole, the in-house IMG London lawyer as to the situation, in order to obtain advice about suing Sahara for withdrawal from the sponsorship, Mr Krishnan says the following:-

On August 13^th 1999 in response to Mr. Sinrich’s fax of 9^th August in which he refers to communications between BCCI and the Indian Government about participation in the 1999 event, Mr. Lele says the following :-

This is endorsed by the reference in the Pakistani press to Mr. Rehman saying that in a conference call with Mr. Sinrich and Mr. Lele, Mr. Lele had said that BCCI was awaiting approval from his Government.

On the 17^th August 1999 the Ministry of Human Resources Development, Department of Youth Affairs and Sports of the Government of India sent a letter to the President of BCCI in the following terms

As I have already found, BCCI had made an approach to the Government by a letter of 22^nd July 1999 which has not been provided by BCCI to the parties in this action. In consequence the Government gave “advice”, drawing a clear distinction between two nation tournaments between India and Pakistan and other tournaments where other teams were involved also. It was inappropriate for the former to take place but there was no difficulty with regard to the latter.

It is clear that on 18^th and 19^th of August 1999, Mr. Sinrich was unaware of this letter but his evidence was that he knew that the BCCI working committee was due to meet on Friday August 20^th and had been told that he would be informed of the position following that meeting, which was an agreed deadline for BCCI’s decision whether or not to participate.

Press reports on August 20^th refer to Mr. Lele, the secretary of BCCI saying, following that meeting, that the national team would not play in the Sahara Cup and that this decision was the result of the Government’s advice to the BCCI that it would be inappropriate to hold the matches in the present circumstances, whilst saying that there was no difficulty in participating in future series involving Pakistan in the case of a triangular tournament. This was followed on 21^st of August 1999 by a series of press reports in India which refer to the application of the BCCI for permission to play Pakistan in Toronto, to subsequent follow up and to the letter being received from the Government, the contents of which are accurately summarised.

Despite the evidence of Mr. Sinrich that he did not know of the decision until much later, it is to be inferred that he was aware of it on Saturday August 21^st because he agreed a deadline for the BCCI decision, because of the terms of his fax to Mr. Dalmiya on the 20^th August and because it was public knowledge in the Indian press by that time, of which he was kept informed by IMG India.

I accept the evidence of the IMG witnesses which corresponds to that of Mr. Lele that they had, before the 20^th August, been making preparations for this eventuality and seeking to set up an alternative arrangement in case the Indian team was prevented from travelling to Toronto to play Pakistan. Mr. Wildblood had a good relationship with Mr. Camacho, the Chief Executive of the West Indies Cricket Board with whom he had a series of discussions which culminated in the arrangement which was finally made on about 24^th August for India and Pakistan each to play the West Indies in a series of three one day games. This was doubtless the subject of discussions all round before letters were written to PCB on 23^rd of August and BCCI on 24^th August by IMG.

Whereas an impasse may have been reached in early August 1999, because no decision was being taken by BCCI or the Indian Government about whether or not the Indian team could go to Toronto, by 21^st August the Government position was clear and the BCCI had told IMG so. Messrs Sinrich and Wildblood gave evidence that the issue was a “hot potato” in India and neither BCCI nor the Government wished to be seen to make the decision about the Tournament. Although IMG had been seeking to negotiate provisional arrangements prior to August 20^th, and had put together a proposal for 2 mini series, on the basis no doubt of Mr Dalmiya telling Mr Sinrich that if permission was refused for the Sahara Cup , it was unlikely to be forthcoming for a triangular series, it was the BCCI decision not to participate which caused IMG to finalise those arrangements in the course of the next few days. At the time the written statements were given by the IMG witnesses in this action, the letter from the Indian Government of the 17^th August had not been made available. Nonetheless, as I have already found, Mr. Sinrich was made aware of the letter and although prior preparations had been made so that re-arrangements could speedily be put into place, it was undoubtedly the decision of the BCCI, following the letter from the Indian Government which precipitated the conclusion of those arrangements as set out in the letters of 23^rd and 24^th of August to the respective cricketing boards.

Equally, IMG also realised that the fulfilment of the rearranged “Toronto Cricket Festival” was subject to approval of the respective Governments also. This appears clearly from the draft press release sent by Mr. Sinrich, then in New York, to Mr. Krishnan on 24^th August, the fax from Mr. Lele to Mr. Sinrich of 26^th August in response to his fax of 24^th August and his further reply of 26^th August to that fax. The phrase “subject to the permission of the Government of India” was the basis of the arrangements for the reformulated tournament going ahead.

In fact, because of the terms of the Government letter of the 17^th August, BCCI had no reason to think there would be any problem at all in participating in the reformulated tournament. The reformulated event was not even a triangular series but one which did not involve India and Pakistan playing each other at all, but each playing against the West Indies. None the less, on the 30^th August 1999, Mr. Lele of BCCI made an application to the Government of India in the following terms

The evidence of the IMG witnesses was that a triangular tournament would naturally have been their preference and I heard evidence from Mr. Sinrich that Mr. Dalmiya of the ICC, who Mr. Sinrich said, was the eminence grise behind BCCI, had told him that a triangular tournament was not possible and that he had only one chance to make a proposal to BCCI which had to be acceptable as a replacement for the Sahara Cup. In those circumstances, the proposal was not for a triangular tournament but for the two independent mini series. Mr. Wildblood said that BCCI refused to have the Indian team in Canada at the same time as the Pakistani team. I find that all of this is explicable on the basis that IMG and BCCI wish “to play safe” and to avoid any possible problems in what was clearly a tense and difficult situation, where the triangular deal had already been aired with Mr Camacho and Mr Dalmiya before the BCCI decision was known. No doubt in the discussions which took place before 21^st August, the proposal was framed on the basis of two mini series, because of what Mr. Dalmiya was saying and because the attitude of the Indian Government and BCCI to a triangular tournament could not be known. Given the intimation that only one proposal could be put to BCCI by way of substitution, the obvious course to adopt was to go ahead with the safe option of a mini series which had already been proposed before 21^st August rather than suggest a triangular tournament, not withstanding any knowledge that IMG had of the terms of the government letter, as reported in the press and, as I find, undoubtedly made known to them by Mr. Lele.

In these circumstances, when seeking insurance for the 2000 Sahara Cup, IMG were well aware that an approach had been made for Government approval for BCCI to play in the 1999 Sahara Cup and that this had been refused. Moreover, in the persons of Messrs. Sinrich, Wildblood and Krishnan, they knew that:

By the end of August 1999, these IMG witnesses knew, because they had been told it by BCCI (and had read it in the Indian Press) that BCCI had sought approval from the Indian Government to participate in the 1999 Sahara Cup and that this had been refused. What BCCI said to the press, it said to IMG. IMG knew too that an application would have to be made in 2000 in respect of the Cup that year. They knew that the reason for BCCI pulling out of the 1999 Cup was the Indian Government’s refusal to approve participation and they feared that this might happen in 2000. I do not accept their evidence that they did not believe what BCCI had told them, and that they did not know that permission would be required in practice for the Indian team to play in the 2000 Cup, even if they were unaware of the details or formalities of the process of seeking such Government approval. Although they denied it in evidence, the fact is that what occurred in 2000 in this respect was effectively a repeat of 1999- a Government refusal to sanction the tour. They knew that the issue of Government approval was a key issue for BCCI and that in practice BCCI would never go against any refusal of approval, whether expressed in terms of advice, refusal of permission or outright ban.

On the 2^nd February 2000, a meeting took place between the cricket division representatives of IMG, Mr. Wildblood, Mr. Guest-Gornall and Miss Diane Trott, a risk management executive employed by IMG. The purpose of this meeting was to discuss insurance for the 2000 Sahara Cup. In the discussion it was noted that war and kindred risks cover had not been taken in 1999 and it was recognised that war risks were distinct from other risks such as government refusal to sanction the team’s attendance at an event (political risks). Following that meeting, on the 3^rd of February 2000 Miss Trott faxed Mr. Davies of Aon saying that there were a number of issues which she wanted to discuss with him in relation to cover for the 2000 Sahara Cup. She stated that in addition to usual cover, IMG wanted to look at taking “war and kindred risks” insurance for the event and would like to a see a definition of that cover. She said that there were also other risks such as non-appearance by either team due to government intervention which they would looking to cover. She also said that, in the light of the relatively calm situation between India and Pakistan at that time, IMG would be looking at the possibility of buying this cover to take effect as soon as possible. She asked Mr. Davies to investigate the possibility of purchasing one policy for war and kindred risks as soon as possible whilst leaving over the ordinary cancellation policy to a later stage. Following receipt of that letter, Mr. Davies of Aon wrote to Mr. Norris at Adam Bros, the specialist contingency brokers in virtually identical terms to the fax sent to him.

This letter was then taken by Mr. Norris to the two lead Lloyds underwriters on the Adam Brothers contingency line slip, namely Mr. Knight of Simmonds and Mr. Rackliffe of ASU, in the hope that this risk would be bound under the line slip. Mr. Norris had prepared a quotation sheet which he took to them both on the 8^th February with the letter from Mr. Davies. Because he had been involved in the placement of the risk with these two underwriters for the Toronto Cricket Festival, following the reformulation of the tournament, he had some knowledge of his own and, by reference to the broker’s line slip file, he was able to put together the quotation sheet. Both lead underwriters quoted a 2.25% rate for ordinary cancellation insurance but were not prepared to give any indication in respect of the war/political risks cover, which they were persuaded to keep under review. The quotation sheet contained a number of subjects, including some specifically added by Mr. Rackliffe to those already inserted by Mr. Norris before seeing the underwriters. The relevant subjects on the sheet after the underwriters had made their additions included sight of IMG’s budget and contracts, “confirmation from PCB and ICB(BCCI) that both teams are able to participate and have been contracted to do so” and “contingency plans to restructure tournament should India/Pakistan situation deteriorate”.

Mr. Norris reported this to Mr. Davies in a fax and Mr. Davies then e-mailed Diane Trott to tell her the position, whilst saying that underwriters would like details of the contractual position between IMG and both PCB and BCCI, including copy contracts, together with details of any contingency plans to restructure as per 1999, together with an idea of the costs involved. On the 17^th February 2000 Diane Trott forwarded to Mr. Davies copies of the various contracts, a budget for the 1999 Sahara Cup and a budget for the 1999 Toronto Cricket Festival showing the lost income and increased expenses. No information was provided on the budget for the 2000 Sahara Cup, nor the contingency plans nor any confirmation that both teams were able to participate. The same material was passed on the 18^th February to Mr. Norris who replied on the 21^st of February pointing out the absence of any information on contingency plans.

On the 1^st March 2000 Ms. Lobo on behalf of Mr. Krishnan of IMG India sent an e-mail to Mr. Sinrich and Mr. Wildblood, amongst others. The message read as follows:-

On the 6^th March 2000 Miss Trott e-mailed Mr. Davies to say that,

In consequence, on the 10^th March 2000 Mr. Norris, armed with this information, went back to see Mr. Knight and Mr. Rackliffe both of whom declined to make any offer in respect of war/political risks, endorsing the fax accordingly.

This created some difficulty for IMG because it had not gone unnoticed by Mr. McCormack that a significant loss of profit had occurred in 1999 by reason of the reformatting of the tournament, which had not been insured. Both Mr. Sinrich and Mr. Wildblood felt under some pressure from Mr McCormack as a result of this. Mr. Wildblood had been reprimanded by Mr McCormack for the lack of cover. Efforts were made by Aon themselves, without using the sub-brokers Adam Brothers, to obtain quotations, but they were unable to get any offer, as they confirmed to Diane Trott on the 13^th March.

In consequence, Miss Trott, having obtained information from the cricket division at IMG then sent an e-mail to Aon dated 14^th March 2000, albeit not to Mr. Davies who was away for that week. The e-mail included the following:-

Armed with this information and the quotation sheet, on 16^th March Mr. Rice of Adam Brothers, in the absence of Mr. Norris, approached leading underwriters once again, hoping that the standard cancellation insurance would be written off the Adams Brothers line slips. He saw Mr. Knight at syndicate 994 who endorsed the quotation sheet with an offer of a combined rate of 7½ % for the standard cancellation risk and the war/political risk cover “subject support from ASU” in respect of the war/political risks as well as the earlier subjects. He then went on to see Mr. Mercer at ASU a colleague of Mr. Rackliffe’s, who gave his scratch in support of Mr. Knight’s quotation with the endorsement “wdg TBA”

Mr. Knight had agreed to give this quotation after telephoning an organisation called Control risks, who provide a subscription service enabling subscribers to obtain information about various parts of the world on its web site or by telephone. He enquired as to the political situation, particularly in relation to the Kashmir and was encouraged by the view of Control Risks that cricket was very important to both India and Pakistan and that political tensions between them over Kashmir, which were longstanding, were unlikely to affect a cricket tournament between them in Canada. His evidence was that he was given comfort by this information and the 14th March e-mail from IMG, the latter of which suggested that, notwithstanding the cancellation of the Sahara Cup in 1999, India and Pakistan had been playing each other since then. The cricketing information in the email was more important than the political information in it as he made his own enquiries into the latter, and the Control Risks information appears to have carried great weight with him. Control Risks had however no specialist cricket knowledge. I find that, as he said in evidence, Mr. Knight relied on both the email and the Control Risks information in deciding to quote for the risk and therefore ultimately in writing it.

Mr. Mercer’s evidence was that he had a telephone call with Mr Knight about Control Risk’s views on the matter. He had little recollection of the terms of that call, save that they discussed the rate, the no claims bonus and the information supplied by IMG. His evidence was that he also relied on the email of 14^th March emanating from IMG together with what he had heard from Mr Knight in agreeing to give this indication. He plainly gave great weight to what Mr Knight told him about Control Risks’ view as the vital factor which ultimately swayed his judgment, but I find that he was influenced by both sources of information and did rely on both forms of information, when giving his agreement to quote and ultimately to subscribe.

News of this unsupported quotation was passed to IMG who replied to say that they were interested in cover at the rate quoted (which included 5.25% for the political risks). They also said they would like to see a copy of the policy wording relating to the war/political risks in order to see that it addressed all the concerns they had. An e-mail in these terms was passed down the chain to Mr. Rice on Friday March 17^th, but on Monday March 20^th, Mr. Norris was back in the office and took up the reins once more. He drafted a further quotation sheet to reflect the 16^th March indication, which he took into Mr. Knight and Mr. Rackliffe on the 20^th March 2000, setting out the premium rates for standard cover at 2.25% and war/political risks cover at 5.25% with differing limits of cover for each of the two categories of risk. The quotation sheet was endorsed with the words “subject to copy amended agreements plus as before”, to indicate that all the prior subjects still remained in being. On the 22^nd March Mr. Norris drafted wording for the insurance cover based upon the war and kindred risks premium indication wording given in 1999 for the 1999 Toronto Cup, prior to its reformulation, which was the cover which had not been taken out by IMG. This wording included cover for

It was on the 22^nd of March 2000 also that Mr. Knight and Mr. Rackliffe each subscribed, for 25% and 15% respectively, to a slip with this approved wording, but in each case with express “subjects”. In Mr. Knight’s case he deleted the syndicate number and added “TBE” together with words “sub amended guarantee contracts and copy budgets”, whilst in the case of Mr. Rackliffe, he deleted the syndicate number and added the words “sub contracts budget”. The slip was a combined cover with two sections, one for ordinary cancellation risks and the other for war/political risks.

At 6.24 pm Mr. Davies e-mailed Mr. Norris to say that IMG wished to go ahead with the war risks/political cover at once at the rate quoted and the lesser insured sum to which I have already referred. He said that it was necessary to find cover that evening for those risks and to discuss the issue of the ordinary cancellation cover on Monday 27^th March, even though the quotation and slip had been for both the standard cover and the war risks/ political risks cover combined in one policy, which the underwriters had expected to be taken up as a whole. Mr. Davies said in the e-mail that if there was a problem concerning the ordinary cover, they would have to sort that out, but that he had spoken to Mr. Rackliffe who had agreed to hold IMG covered in full for both sets of risks over the weekend. Because of the pressure put upon him, Mr. Davies had bypassed his placing broker in order to speak directly to one of the two lead underwriters in order to ensure cover was in place over the weekend, despite the various matters which had still to be resolved, including the question whether or not separate insurance covers could be agreed at separate rates.This matter was of sufficient importance for Mr. Davies to report, that evening, by e-mail to two Aon representatives in the US who were responsible for the IMG account, which was a significant account so far as Aon was concerned.

Whilst there was a “held covered” situation over the weekend, matters were still under discussion during the course of the week commencing the 27^th March and a revised wording was produced which included on the face of the slip the warranty that IMG should ensure that all necessary licences, visas and permits were obtained in sufficient time prior to the insured event. The difficulty over the question of one insurance policy or two was overcome during the course of the week, after negotiation, by agreement for one policy to be issued with two sections, one covering ordinary cancellation risks and the other covering war risks/political risks but with different periods of insurance for each, different limits and different times for the payment of the premium. Other underwriters had to be found who were willing to complete the 100% placement and this was the course upon which Mr. Norris and Mr. Rice embarked that week.

On Monday the 27^th March Mr. Norris obtained a subscription of 15% from Mr. Anscombe of the Kingsmead Consortium and Mr. Rice obtained a 6% line from Mr. Howland Jackson of the Euclidean syndicate. I find that both of these lines were unconditional although each underwriter maintained otherwise and may have understood otherwise. I find that both were shown the 14^th March e-mail. Neither was ever shown the 19^th April fax to which I refer below. Each of these underwriters was bound on 27^th March 2000. On the 29^th March Mr. Ward of the Leisure Consortium subscribed to 7.5% line, “subject to contracts and budget as per leading underwriters”.

On the 28th March 2000 Miss Trott faxed Mr. Davies with various amendments to the information section of the cover, referring to a conversation the previous day when she said she was told that underwriters had agreed to bind the cover with immediate effect. On the 30^th March she forwarded the 2000 Sahara Cup budget which was forwarded to Mr. Norris the same day with a request from Mr. Davies for confirmation from Mr. Norris of confirmation as soon as cover was bound, because he was under pressure from the client.

It was in these circumstances that Mr. Norris sent a fax to Mr. Davies dated Friday the 31^st of March 2000. In that fax he stated the following:-

There was a dispute between parties as to who had raised the query referred to in the first paragraph. The question in the second paragraph was raised by Danny Burns of the Goshawk Syndicate, Syndicate 102, who on 30^th March had refused to subscribe. It is plain from the first paragraph that the request made was made by one of the underwriters constituting the alleged 80% placement already achieved. It appears that, only 67.5% had been placed at that stage of which 46.5% had subjects.

I find that the author of this request was Mr Knight, who raised the point with Mr. Norris on 22^nd March 2000 when he scratched the slip and included his “subject”. Although this question does not appear in the slip as a “subject”, it was clearly a “subject” as Mr. Norris accepted and told Mr. Davies in his fax. Mr. Norris said in evidence that it was not one of the leaders who had raised the question but he could not say who did raise it. His suggestion that it might have been Mr. Burn’s was inconsistent with Mr. Rice’s evidence of placement with Mr. Burns and with the documents, as Mr. Norris accepted. Mr. Rice’s evidence was that none of the followers he saw raised the question and Mr. Norris saw only one follower himself, namely Mr. Anscombe. Mr. Knight however had a recollection of discussing the formulation of the question with Mr. Norris and thought it must have been on 22^nd March. No other underwriter’s evidence established that he had asked the question and the letter of 31^st of March from Mr. Norris to Mr. Davies incorporates this question with Mr. Burns request of 30^th March, whilst a fax from Mr. Sinrich to BCCI on 27^th March suggests that he may have had knowledge of underwriter’s question in some form before IMG received Mr. Davies’ letter which put the request in a different way on 5^th April 2000. Mr. Norris’s understanding of the question is clear from his further e-mail to Mr. Davies of 4^th April 2000 which refers expressly to “the point regarding the Indian Government’s authorisation raised previously”, to which I shall refer later in this judgment.

The reason why Mr. Norris was insistent that it was not a lead underwriters question was because he knew that the answers had not been shown to all the following market, but only to the leaders and to each follower who had expressly put a “subject” of one kind or another upon the slip. This is not a satisfactory basis for the conclusion he wanted me to reach and I accept Mr. Knight’s evidence on this point.

It may be significant that this question links with the “subject” of “confirmation from PCB and ICB that both teams are able to participate” in the original quotation sheet, as continued in the quotation sheet of the 20^th March, although not appearing in any of the subjects endorsed on the slip by any underwriter prior to 31^st of March. When contracts were produced to the leading underwriters, which on the evidence of the leaders which I accept, was 22^nd March, Mr Norris appears to have summarised the effect of the BCCI cancellation clause to them and both made a further subject in relation to contract terms, in Mr Knight’s case, by reference to the reduced sum payable under the IMG guarantee, if the Force Majeure clause came into play. It seems highly probable therefore that this question emerged on production of the contracts on 22^nd March, when the subscriptions of the leaders were expressly made subject to further contract information, as would have been plain to the following underwriters who subscribed thereafter.

On Tuesday the 4^th April, Mr. Norris e-mailed Mr. Davies to say that there was no more ink on the slip but that Mr. Burns had agreed to write a line but wanted a quick word with him before deciding on his line size. The Goshawk line was put down that day on a slip with the syndicate number deleted and an express “subject” relating to confirmation that the cricket matches scheduled between India and Pakistan in England in September 2000 were still to take place and subject to signing. The e-mail referred to other possible underwriters who had yet to make a decision. The e-mail concluded:-

Mr Davies was thus informed both by faxed letter of 31^st March 2000 and e-mail of 4^th April 2000 of the underwriters’ requirement for confirmation that the body that forced the change to the tournament the previous year (whose identity they were uncertain about) had given written permission for it to take place in 2000. Mr Norris plainly identified the Indian government as potentially being that body in his email of the 4^th April.

Notwithstanding what had been said by Mr Norris to Mr Davis, on 5^th April, Mr Davies faxed Miss Trott and confirmed that cover was bound 100% as of the 24^th March 2000 in accordance with a cover note which he forwarded with the fax. That cover note was in the terms of the wording agreed with underwriters on 27^th March, including the warranty and the deletion from the coverage provision of the words “or the refusal of necessary permits, licenses or visas”. The fax went on to point out “that underwriter’s agreement to bind cover has generated some further information requirements” and that “underwriters would like to know which governing cricket body forced the change to the tournament last year (i.e. did India or Pakistan pull out?)” and that underwriters required “confirmation that written permission by both governing bodies for this years tournament to go ahead” had been obtained. It will be noted that the terms of Mr Norris’ request of 31^st March, as amplified by his e-mail of 4^th April, had been altered so as to refer to the “governing cricket body” in relation to the request for the entity responsible for forcing the change to the 1999 tournament and the question of permission for 2000.

On the 5^th April 2000, Mr Norris informed Mr Davies that syndicate 994 had agreed to hold IMG covered on the outstanding 11.5% of the placement for a period of 7 days until further underwriters could be found who would be prepared to underwrite the risk. Although the constitution of the 88.5% said to be placed is not ascertainable from the documents it may include 10% from Mr. Burns and a 10% line written by Ace. Mr. Norris said, in terms, however in his e-mail that the placement was still subject to a number of points including:-

On 6^th April 2000, Mr. Filipek of Brockbank subscribed 7.5% with “subjects” and on 7^th April Mr. Gaunt of the Warrington Syndicate subscribed 5% with similar “subjects” on the contracts and budget. The documents show placement (including subjects) of 79.5% at this point.

On the 18^th April, Mr Wildblood sent a memorandum to Miss Trott in response to the questions asked of IMG, which Miss Trott passed on to Mr Davies on 19^th April and Mr Davis then passed on to Mr Norris. Miss Trott’s 19^th April fax was then taken by Mr Norris to underwriters. The fax set out the answers to Mr Davies’ questions in the following way:-

Mr Norris then took this fax and the amended budget, together with the file which included the contracts, to see Mr Knight of Syndicate 994 on the 20^th April. Mr. Knight removed his subject and subscribed an unconditional line on that date. Mr Mercer did likewise for ASU on the 25^th April and Mr Ward of the Leisure Consortium’s line became unconditional on the 26^th April. Mr Burns’ 10% line became unconditional on a date which does not appear, on being satisfied with the answer to his question. It seems that Mr Rice revisited Mr Filipek at Brockbank and Mr Gaunt at the Warrington syndicate 1239 who removed their subjects on the 27^th April and 3^rd May respectively. Mr Filipek, Mr Gaunt and Mr Ward scratched the budget which was presented to them. Mr Rice also saw Mr Clark of Gan Insurance Company Limited and showed him the e-mail of the 14^th March. He subscribed on the 18^th April 2000 with a stamp including the words “all amendments to be agreed notwithstanding any slip conditions.”

The evidence of the leaders and the followers who were shown the 19^th April fax from Miss Trott and, where necessary, the fax of Mr Norris with the questions he put to Mr Davies, was that they read it as saying that BCCI was responsible for the changed arrangements in the 1999 Sahara Cup and that there was no need for any further permissions, since BCCI and PCB had entered into contracts for the national teams to appear in 2000. No question of Government permission therefore arose. This was a natural understanding to draw from the original questions asked by underwriters and the answers which were provided, but which were actually responses formulated to Mr Davies’ different questions, of which underwriters were unaware. The answers therefore misled Underwriters if the position was that the Government of India had refused approval for India to play Pakistan in the 1999 Sahara Cup and if BCCI required the permission of the Government of India to play in the 2000 Cup.

On 9^th May 2000, Adam Brothers issued their cover note to Aon and on 2^nd June 2000, Aon issued an amended cover note to IMG in respect of the altered insured sums.

On 4^th February 2000 Mr Sinrich of IMG wrote to Mr Dalmiya of the ICC. The letter referred to BCCI’s failure to participate in the 1999 event because of events “beyond the control” of BCCI. On 27^th March 2000, after IMG had been told by Aon that cover had been bound, Mr Sinrich wrote to Mr Lele, the honorary secretary of BCCI, stating that India’s participation in the five-year series had been suspended for 1999 and seeking confirmation that BCCI would participate in the Cup in both 2000 and 2001. Additionally, Mr Sinrich stated (although he said in evidence that the statement was untrue) that IMG’s insurer’s were “still requesting a copy of a letter from the Indian government advising you of their desire for BCCI not to participate in the 1999 Sahara Cup.”

The response to this was a letter from Mr Lele to Mr Sinrich dated 25^th April 2000 in which he apologised for the late response but stated that

In documents provided shortly before the trial by BCCI, there was a letter dated 5^th April 2000 by which BCCI applied to the government for permission for the 2000 Sahara Cup. The letter took the following form, so far as relevant:-

It will be noted that the letter of application to the Indian government was sent on 5^th April 2000, at a time when it is common ground that none of the underwriters were bound, save for Mr Anscombe at syndicate 9133 and Mr Howland Jackson at Euclidean. The BCCI letter of 25^th April to IMG which referred to that application as already made, was sent at a time when Mr Knight had removed his “subject”, Mr Mercer had or was about to remove his “subject” and Mr Clark had written his line, but before Mr Rice had seen any of the other following underwriters to remove their subjects.

In June 2000 India played Pakistan in the Asia Cup, a competition which was not limited to those two countries.

By the end of the first week in August, Press reports in India were throwing doubt upon the participation of India in the 2000 Sahara Cup because of a series of massacres carried out in the preceding week by suspected Pakistani based militants. Nearly 100 lives were taken in these massacres and the Indian sports minister was reported as saying that the government was still undecided whether to clear the team’s participation in the Sahara Cup, whilst sources in the BCCI were reported to have told the press that the selection meeting had been put off pending clearance by the government of the tournament. One particular report stated that the BCCI “as it routinely does, applied some time back to the government for clearance of the Toronto trip. It has yet to get the green signal. Sometimes these routine requests are met with instantly but if they are not, then it can be taken that the government is having second thoughts.” The report went on to say that this was borne out by the sports minister’s statement that the government had not yet made a final decision.

In a press report on IMG’s file, dated 10^th August 2000, the Indian Government sports minister was reported as categorically saying that the Sahara Cup series was off but that the BCCI had made it clear that it was in favour of the Indian Cricket team participating and had scheduled the team selection meeting for August 19^th. That same day, 10^th August, Mr Wildblood wrote to Mr Lele stating IMG’s awareness of press reports regarding the Sahara Cup. The letter went on to refer to BCCI’s intention to send its team to Canada, stating “We are also aware that BCCI has submitted the necessary paperwork to the relevant authorities.”

In a letter dated 10^th August 2000, the Government of India Ministry of Youth Affairs and Sport wrote to Mr Lele, the Honorary Secretary of BCCI in the terms set out earlier in this judgment.

The letter was clear in its terms in referring to the application of 5^th April 2000 for the government’s permission and in stating that it would be inappropriate for the Indian team to participate in the Sahara Cup, advising BCCI not to do so and to cancel the program. A copy of this letter was sent to IMG and circulated amongst all those concerned with the Cup.

On the following day, Mr Wildblood wrote to the Chief Executive of the Australian Cricket Board seeking to ascertain if that Board would consider sending the Australian team to play in Canada against both India and Pakistan, in an attempt to arrange a similar reformulation to the 1999 Toronto Cricket Festival, with Australia taking the place of the West Indies. That letter included the following paragraph:-

Similarly, Miss Smith, IMG’s event manager wrote to the ICC stating that the letter was “to confirm that the Indian government have rejected the request from the BCCI to travel to Toronto to play against Pakistan in the Sahara Cup series” pointing out that this was the same situation as was faced the previous year and that, in the same way, they were trying to bring a third team to Toronto to organise two mini-series of three matches each.

Mr Wildblood’s understanding of the position in 1999 and 2000 is revealed by notes of the loss adjusters of a meeting and a telephone call with him in September 2000 and an unknown date thereafter. It is clear from these notes that he understood that an application had to be made by BCCI to the Government for approval to travel which was usually a formality and that IMG knew that Government approval was required. He saw that it only became a problem in 1999 when permission was not granted and that in 2000 he was unaware of the formal process but knew that BCCI wrote off seeking permission and that it was declined. The whole reason he had taken out insurance was to cover precisely this event, in view of what had happened in 1999.

I find that the proximate cause of cancellation of the 2000 Sahara Cup was the Government letter of 10^th August 2000. On the evidence, BCCI was keen for the Indian team to participate and would not have let the events in Kashmir in August 2000 prevent them, if the Government had not written that letter. There had been massacres in Kashmir in the first week of August 2000 and it seems that a hundred lives were lost as a result of the activity of militants in that area who were said to be Pakistani based. That led to the Government’s refusal in its letter of the 10^th August 2000, but the Kashmir events did not themselves cause the cancellation. Nothing other than the Government letter would have prevented the team from going. Therefore the insured event was not cancelled ‘as a result of actual or threatened war… act of foreign enemies, hostilities (whether war be declared or not) civil war, rebellion, revolution or insurrection’.

Without the Government letter, or with a letter written in different terms saying that the Government was content for the team to participate, BCCI would have applied for permission on the prescribed forms in the usual way, would have obtained it and the 2000 Cup would have gone ahead. The hostilities in Kashmir did not themselves cause the cancellation which would not have occurred without the Government’s letter. If therefore, there had been no such letter, the loss would have been within the control of BCCI, one of the participants, and therefore excluded from cover.

The same position obtained in 1999. Even though the letter of 17^th August 1999 was written in a different context, the effect was the same. The fact that the hostilities did not cause the cancellation of the 1999 Sahara Cup is clear from the terms of the Government letter of 17^th August 1999, which permitted triangular contests, but not bilateral encounters. This demonstrates that it was the terms of the Government letter which were causative and decisive.

Whether or not ‘permission’ was required from the Government as a matter of law, it was undoubtedly the Government’s attitude that in practice operated upon BCCI and prevented them from going to Toronto to play Pakistan as they would otherwise have done, in both years.

BCCI did require such permission in practice because they would not have contemplated embarking on a foreign tour or playing in a tournament abroad without it. It was their standard practice as shown by the evidence of the BCCI personnel, the prescribed forms and the fact that they did apply in 1999, 2000 and 2001 and received Government answers.

Whatever the legal basis for such permission to be sought and obtained, in practice BCCI had to seek Government approval and without such permission they could not go. Whilst in most situations seeking permission was a routine matter, it was always open to the Government to refuse. The events of 1999, 2000 and 2001 and the 2001 refusal to countenance the team going to unregulated venues such as Sharjah, Singapore and Toronto for three years indicates this clearly. It is not simply a question of foreign exchange, nor simply a question of foreign relations with Pakistan. There is a general requirement, in practice as the prescribed forms show, and the Government reply to an application had the force of an Executive Order under Art 73 of the Constitution.

The warranty reads ‘It is warranted that the assured shall ensure that all necessary licences, visas and permits are obtained within sufficient time prior to the insured event’. The first issue is whether or not the approval or permission of the Indian Government was “necessary” within the meaning of the warranty. I find that it was. As a matter of practical necessity, BCCI could not take an Indian team to Toronto to play without Government permission to do so.

The second question is whether or not the approval of the Government represents a necessary visa, licence or permit. In my judgment, because, as a matter of practice, BCCI needed Government permission, which was given in the shape of a formal letter, this constitutes a “permit” within the meaning of the warranty.

The warranty has to be seen in the context of the insuring clause in Section 1 which gives cover in respect of “the withdrawal of any previously issued necessary permits, licences or visas.” If permission had been given, IMG would be able to rely on the insurance clause wording and would be right to do so. Having given permission, the Government would then be revoking it, thus causing the cancellation of the Cup. The failure to obtain that permission thus falls within the wording of the warranty.

IMG did not ensure that BCCI got a permit from the Government of India within sufficient time, or at all. They never got permission to go to Toronto in 2000. There was nothing that IMG could do to achieve this result but the word ‘ensure’ means exactly what it says. This was a warranty that had to be strictly complied with and it was not.

The warranty applies to both sections of the policy, both sections 1 and 2. There is only one policy and there is no basis in the terms set out in the slip for distinguishing between one section and another so far as the conditions are concerned, as a matter of grammatical construction, by reference to the layout of the document and when regard is had to the purpose of the provision in the context of the document as described below. All conditions apply to both sections of cover and none are expressed as being referable to one part rather than another.

The history of the development of the wording shows that Mr. Rackliffe amended section 1 of the policy (as it subsequently became) on 22^nd March 2000, before subscribing his line. The war risks/political risks section was originally based upon the exclusions to be found in form GC(J)I(92). The intention was to give coverage where this was excluded by the standard forms. The brokers added the words ‘or the refusal of necessary permits, licences or visas or the withdrawal of any previously issued necessary permits, licences or visas’ to the words of exclusion 5, as the basis of coverage in section 1. Mr. Rackliffe however deleted from this the words ‘or the refusal of necessary permits, licences or visas’.

Without regard to that history, however, the existing words in section 1 which remain as coverage, ‘the refusal of permits to enter or remain within any country or at any place where the insured event is to be held which is the subject of this insurance’ do not apply to the current situation at all, as a matter of construction. In the context of the phrase where those words appear, they are plainly directed to the activities of the Canadian authorities and nothing else. This is plain from the reference to ‘repatriation, internment, imprisonment and deportation’, quite apart from the manner in which the rest of the sentence is phrased.

Because of the words ‘ withdrawal of any previously issued necessary permits, licences or visas’ (emphasis added), this phrase cannot refer only to the activities of the Canadian authorities, but since there never was any permit which was the subject of withdrawal in the present case, the phrase does not help IMG.

It is clear therefore that there is no coverage wording which covers the ‘refusal of necessary permits, licences or visas’ in Section 1 of the policy which was designed to create coverage for any political risks that were to be covered. This ties in with the warranty which required the assured to ‘ensure that all necessary licences, visas and permits are obtained within sufficient time prior to the insured event’.

There is therefore no coverage under Section 1 [the political risks coverage], if the proximate cause of the cancellation of the 2000 Sahara Cup was the refusal of any necessary permit or the failure to grant any necessary permission, or the ban by the Indian authorities of the tour, unless the true cause could be said to be ‘threatened or, hostilities, rebellion, insurrection etc’. There simply is no cover in respect of Indian Government refusal to allow the tour to take place, unless any necessary permission had been obtained and was then revoked. I have already found that the proximate cause of the cancellation was the Government refusal of permission in their letter of 10^th August 2000 and that this was a necessary permit.

There would however be coverage under Section 2 of the wording if the event was cancelled as a result of a cause “beyond the control of the Assured”. To come within this section IMG has to show that Government intervention or war prevented the Indian team participating in the 2000 Sahara Cup. Coverage under this Section would apply in the absence of cover under Section 1. Whereas in the normal form of cancellation cover, there is an exemption for war and political risks, and an additional policy is taken out to cover those risks, or an additional section is added into the policy to achieve the same effect, here the war risks/political risks are covered in Section 1 and Section 2 covers everything else without exception. There would therefore be cover here under Section 2, but for the breach of warranty.

The Warranty applies to both sections of the policy and there is no basis for the contrary argument, as set out earlier in this judgment.

It is trite law that there is no need to make disclosure of facts or circumstances covered by a warranty in the insurance. I have already found that there was a breach of warranty in relation to Government permission, so that no issues of non disclosure arise in relation to that. However regard must be had also to the Condition precedent clauses in the insurance. I deal with the factual issues which concern Government permission as well as those relating to other matters for that reason, and for the sake of completeness.

It is clear that no underwriter was unconditionally bound other than Messrs Anscombe [27^th March], Howland Jackson [27^th March] and Clarke [18^th April] before 20^th April 2000 when Mr. Knight removed the ‘subjects’ on the slip. It was not disputed that the information in the email of 1^st March 2000 from Mr Krishnan to Mr Sinrich and Mr Wildblood was not given to any underwiter. I find that the 14^th March email from Miss Trott to Aon was shown to all the underwriters who subscribed. The evidence of the leading underwriters and most of the followers was clear on this. Although some had no recollection of it, Mr Rice said that he showed it to all those to whom he presented the risk and Mr Norris’ evidence was that he took the file with him on all occasions. The email was the basis on which the business was rebroked after earlier declinature and it is inconceivable that it was not shown to all the underwriters, even if some have no memory of it. I find that the 19^th April fax from Miss Trott to Mr Davies, in answer to underwriters’ questions, was shown to all the underwriters except Messrs Howland Jackson, Anscombe and Clark, who had all subscribed unconditional lines before that.

The Defendant underwriters complain that in breach of the duty of utmost good faith, IMG failed to disclose material circumstances known to them before the contracts of insurance were concluded. They also allege misrepresentations of material circumstances. So far as non-disclosure is concerned, put shortly the allegation is the claimant failed to disclose:-

That the BCCI was, (or was said by it), to have been required to apply to the government of India for permission or approval for the Indian team to participate in the Sahara Cup in 1999 and the Government had declined to give such permission or approval.

The BCCI was ( or was said by it to be) required to apply and/or it had applied or would apply to the Government for permission or approval for the Indian team to participate in the Sahara Cup 2000.

That the Government of India was the body that led the Indian cricket team to withdraw from the Sahara Cup in 1999 and had not agreed to the participation of the team in the Sahara Cup 2000.

That the participation of the Indian National Cricket Team in the triangular tournament in Australia in early 2000 and their proposed participation in the Pepsi Asia Cup in Bangladesh in May or June of 2000 fell into a different category from their prospective participation in the Sahara Cup 2000, so far as concerns Government permission, because the former competitions were triangular or larger whereas the Sahara Cup was a bilateral series of matches between India and Pakistan.

That a number of people including prominent journalists and well connected people with the Board were saying in March 2000 that they felt there was no way that the Indian Government would allow India and Pakistan to play a head to head series such as the Sahara Cup whilst they might be allowed to play in triangular or multilateral tournaments where the other was also involved.

The misrepresentations alleged were based on the e-mail of 14^th March 2000 and the fax from Miss Trott of 19^th April which were shown to some of the underwriters. First it was alleged that, in the 14^th March email, IMG represented that the fact that the Indian team had played against Pakistan in a triangular tournament in Australia and were scheduled to meet them in the Pepsi Asia Cup reflected favourably upon the prospects of the Sahara Cup 2000 taking place. Secondly it was alleged that by the fax of 19^th April, in answer to the underwriters question as to the identity of the body that caused the Indian team to withdraw from the 1999 Sahara Cup and their request for confirmation of its written permission for the team to participate in the 2000 Sahara Cup, IMG represented that it was BCCI who had caused the withdrawal and that, although written permission would not be forthcoming from BCCI and PCB, they were both contracted to attend the tournament and that ought to be sufficient.

Mr. Knight, Mr. Rackliffe and Mr. Mercer who all saw the risk when presented by the brokers, in their capacity as leaders, were clear that it was not the practice of the contingency risk market, which was different from the political risks market, to grant cover against the risk of an insured failing to get the permissions he required for an event to take place. The underwriting philosophy of all the followers was the same, stemming from their approach to writing cancellation risks. The event had to be fixed to take place for the cover to operate. There would usually be a warranty to the effect that all permits, licences and the like are obtained or, if it is plain at the outset that there is a problem over a permission to be obtained, underwriters would highlight this by making the cover expressly subject to the obtaining of such permission, declining to offer cover until it has been granted, or specifically excluding loss caused by the absence of permission, even though a warranty existed upon which they could rely. This approach was uniform amongst the underwriters who gave evidence. They would try not to write a risk blind and rely upon warranties alone. If they know what the problem is, they would seek to address it up front rather than find themselves in the position where they simply refuse to pay a claim, when it arises, on the basis of a breach of warranty.

The circumstances of the 1999 changed arrangements and any part played therein by the Government of India, whether in the shape of a need for Government approval and its refusal in that year or otherwise, were matters which anyone seeking cover in 2000 for the Sahara Cup would recognise as being matters which underwriters would want to know. Moreover, the need for any Government approval in 2000 was equally highly relevant.

In this connection, it avails the claimant nothing to say that, when the political risk of Government intervention is envisaged, the existence or non existence of Government permission may make little or no difference to the prospect of Government intervention if political circumstances appear to make intervention an appropriate action on the part of the sovereign states. This risk was written in the contingency market, not the political risks market and the placing broker was well aware of the practices of the market, since Adam Brothers were specialist contingency brokers and Mr. Norris himself held a binding authority from the two leading underwriters on the slip, enabling risks to be bound without reference to them, up to a limit of £2,000,000. A political risks element sometimes appears in contingency risks which are bound in that market but the evidence was that this occurred in 0.5% to 1% of risks bound by those two leaders. Furthermore, as a number of underwriters pointed out in evidence, there is in fact a difference in the risk assumed when Government permission is granted to the assured and the position where it is not. If permission has been granted, it can be anticipated that some significant event would have to occur to cause revocation of permission or a prohibition to occur. Without permission however, it may be that for very marginal reasons or unknown reasons, a Government might refuse permission or that some event of less significance could result in a refusal. Contingency underwriters are not, as a matter of practice, normally prepared to assume the risk that permission will not be obtained in the first place.

Mr. Norris knew underwriters’ approach. It was to be expected when the IMG risk was brought into the contingency market that underwriters would decline to give cover for a refusal of Government permission and would only agree to cover a withdrawal of existing permission or Government intervention after such permission had been obtained. Not only might there be a warranty or an express exclusion, but underwriters could be expected to ask questions to ascertain the position if there was any uncertainty about it. This Mr. Norris recognised by inserting the “subject” in the quotation sheet he drafted, referring to the need for confirmation from the cricketing boards that both teams were able to participate. The continuing history of the placement and the raising of subjects reinforces the importance of this.

Mr. Norris’s evidence was, as was that of underwriters, that the exact circumstances in which the 1999 Sahara Cup had been reformulated and the circumstances in which India came to pull out of that Cup were unknown, both when the 1999 cover was placed for the Toronto Cricket Festival and when leading underwriters and the market were approached with the 2000 risk. In 1999 the risk which was written followed the reformulation of the competition where there was no or very limited political risk of cancellation, and, more importantly, underwriters were writing an ordinary cancellation risk with no political risk included in the insurance. In fact there was even an express exclusion of political risks to make the point clear. The focus was not therefore on the reasons for the reformulation at all but on the risk of cancellation of the new competition for ordinary reasons.

When the 2000 risk was broked therefore, it was inevitable that underwriters would want to know, and that there would be some questions about, the reasons for the change in the 1999 arrangements, if no or inadequate information was given, since it was cover for the risk of a similar occurrence which was being sought. Mr. Rice had calculated and informed the underwriters he saw that the previous year would have given rise to a loss of about £1,551,000 to the political risk section of the cover, if it had operated that year. The assumption was that a political risk of some kind had operated in that year and in assessing the risk for the year 2000, underwriters could be expected to want to know who made the decisions about cancellation for political reasons and whether, as matters then stood, the event was truly fixed to take place with all the necessary approvals given, from whomever they had to come.

There was little dispute about the applicable law. A contract of insurance is a contract of the utmost good faith and, in compliance with that duty the insured must disclose to the insurer all circumstances known or deemed to be known by the insured which are material to the insurers appraisal of the risk.

In my judgment, and on the basis of the expert evidence, leaving aside the terms of the warranty, and applying the test of influencing a prudent underwriter as set out in the authorities, it was material for the underwriters to know:

That the Indian Government’s approval had been required in relation to the Indian team’s participation in the 1999 Sahara Cup.

That there was a need for BCCI to apply to the Government for Government approval or permission in order for the Indian team to play in the 2000 Sahara Cup.

That the Government of India was the body which caused the change in the 1999 arrangements by its refusal to approve participation by the Indian team and that it had not yet approved participation in the 2000 Sahara Cup.

That the Government had expressed a policy difference in 1999 between triangular /multilateral tournaments in which India and Pakistan were involved and bilateral matches between the two countries, where Government permission was concerned.

That, at the very least, BCCI had said that it had been refused permission by the Government to participate in the 1999 Sahara Cup and that it required Government permission in order to participate in the 2000 Sahara Cup.

That “well connected” people to BCCI took the view in March 2000, in that, where Government permission was concerned, a significant distinction was to be drawn between bilateral matches between India and Pakistan on the one hand and triangular or multilateral tournaments in which both countries participate on the other.

None of these matters was disclosed. To the contrary, the terms of the slip itself with its reference to the sanction of the respective National Cricket Boards to the 2000 Sahara Cup, the terms of the 14^th March e-mail and the 19^th April fax were all designed to allay underwriters fears.

There was argument about the materiality of the information contained in the 1^st March email from Mr Krishnan to IMG London. It referred to communications made to and information received by the Assured. It was argued that what it referred to was “loose rumours”, gossip, speculation or unreasoned fears which were not material to be disclosed . Reliance was placed upon Carter v Boehm (1766) 3Burr 1905 at p 1917, Durrell v Bederley (1816) Holt N.P. 283, The Elena G [2001] 2 Lloyd’s Rep 378 at p 382 and The Grecia Express [2002] Lloyd’s Rep 88 at p 131-132. The information contained in the email was, the email said, no more than the feelings of individuals who had no back up for them and so it was argued that this information fell into the category described in these decisions. In my judgement, however this is not the case.

I was referred by the Insurers to CTI v Oceanus [1984] 1 Lloyd’s Rep 476 at p 506 and to Arnould’s Law of Marine Insurance 16^th Edition para 653 and Morrison v The Universal Marine Insurance Company (1872) LR Ex 40. Even if the assured is satisfied that the report or rumour is incorrect, the information must be disclosed if it would be such as to influence a prudent underwriter. In the email, the reference to “well connected people with the Board ” was, self evidently, a reference to people other than the prominent journalists who were also referred to in the e-mail, notwithstanding Mr Krishnan’s disingenuous evidence that they were one and the same. The email was marked “strictly private and confidential” and was endorsed with the word “agreed” by Mr Sinrich. This was not loose, vague or insubstantial rumour. What it represented was a leak from BCCI which Mr Krishnan, as part of his job of intelligence gathering reported to IMG London and which the personnel there took seriously. He considered that a contingency plan should be drawn up and insurance should be obtained. It motivated IMG to seek insurance with a greater urgency than before, as is plain from the documents. There was no information given as to any contrary views and the distinction drawn was one which had been drawn by the Government in their letter of August 1999, as had been reported in the Indian press and notified to IMG London. Mr Dalmiya, Mr Sinrich’s best contact had also made a distinction between bilateral and triangular/ multilateral tournaments in comments to the Press in August 1999. IMG had good reason to take this information seriously and it was not vague unsubstantiated rumour or speculation, being information, albeit unattributable information, which purported to be from BCCI, which tallied with the Government’s publicised view in the previous year. This was a communication or information which would have influenced a prudent underwriter in his assessment of the risk. It raised not only the issue of bilateral matches as compared with triangular contests, but also the spectre of Government intervention in 1999 and the possible need for some form of permission for 2000.

The 14^th March e-mail was designed to give underwriters assurance that because a triangular tournament had taken place in early 2000 and a further similar tournament was due to take place in May or June, the prospects of a bilateral tournament taking place in September were much improved. Yet at the time of giving this assurance, IMG was well aware, as a result of their knowledge of the basis upon which the Government had given its advice in the 17^th August 1999 letter and of the views of well connected people with the Board in March 2000, that a distinction existed between bilateral and triangular or multilateral tournaments, where Government permission was concerned. That information was highly material to underwriters’ assessment of the risk and showed that the playing of triangular tournaments did not reflect favourably on the risk. Whilst there may not have been a misrepresentation in the 14^th March email it did not represent a fair presentation of the risk.

The 19^th April fax represented a complete distortion of the position which had obtained in 1999 and the issue of approval in 2000. The true position, as IMG well knew, was that it was the Indian Government who had forced the change to the tournament in 1999 and that it had not given written permission for the 2000 Sahara Cup as at 19^th April 2000. They knew too that BCCI had or would be making the usual application for approval or permission. IMG therefore withheld from underwriters the knowledge they had of what had in fact occurred in 1999, namely the refusal of the Indian Government to approve the Indian teams participation in the 1999 Sahara Cup and the need for a BCCI application and Government permission in order for the Indian team to participate in the 2000 Sahara Cup. These matters were highly material to the underwriters’ assessment of the risk.

Even if the position was not one where, either in law, or as a matter of practice, Government approval had to be sought and obtained by BCCI, it was plainly material for underwriters to know that BCCI were telling IMG that this was the case, both in relation to the 1999 Sahara Cup and the 2000 Sahara Cup. This information IMG kept from underwriters.

Moreover, in the circumstances in which the 19^th of April fax was presented to underwriters, in answer to the leader’s questions, the representations made were false in as much as the answers to the questions could only be read as meaning that it was BCCI who forced the change to the 1999 tournament (not the Indian Government) and that no permission was required from the Indian Government of any kind.

Having heard each of the underwriters who gave evidence before me, I am entirely satisfied that each was induced to write the risk in the way he did by the misrepresentations that were made to him or affected by the non-disclosures in assessing it. Each would have taken into account the information, had it been offered and it would have influenced their decision. In relation to the distinction between triangular and bilateral tournaments and the information in the 1^st March and the 14^th March emails, each underwriter would have asked questions which would, if answered correctly, have led to disclosure of the role of the Indian Government and the terms in which the Indian Government had written the letter of 17^th August 1999. This in turn would have raised the question of Government approval for 2000. If any issue of Government approval had been disclosed, whether in answer to questions then or otherwise, the underwriters would either have specifically excluded liability in the event of lack of Government approval or permission, made cover expressly subject to that approval or permission or declined to write the risk at all until evidence of such approval or permission had been obtained, as they would have done if the questions asked in Mr Norris fax of 31^st March 2000 had been accurately answered.

It is clear that this was a risk which was hard to place. The leaders were reluctant to write the risk in the first place, being persuaded to keep it under review when first approached by Mr. Norris. On the second occasion they were approached they declined to offer a quotation at all. It was only when the 14^th March e-mail was produced that any quotation was forthcoming but with subjects. The questions raised by Mr. Knight as to the identity of the body which had forced the change to the tournament in 1999 and whether it had given written permission for 2000 were plainly questions of real significance. The leading underwriters and indeed the followers who placed subjects on their lines were all clearly dubious about writing the risk and I have no difficulty in finding that each was influenced by the nondisclosure and the misrepresentations to accept a risk which they would otherwise have considered in a different light.

Their approach to underwriting, as set out earlier in this judgment when dealing with materiality, shows how they would have been influenced if proper information had been given to them about Government permission in particular. Moreover in the context of assurances given about India and Pakistan playing each other in triangular tournaments, the impact of being told that there was a difference between triangular and bilateral matches would undoubtedly have been influential upon them. When each underwriter who appeared before me told me that he was induced by the representations and nondisclosures in question, I had no difficulty in accepting that evidence.

Mr. Filipek was the underwriter at the Brockbank Syndicate who did not appear to give evidence and from whom no statement was taken. The explanation that I was given for this was that he had left the employment of Brockbank and had refused to co-operate unless he was given access to confidential information to which he was not entitled. Brockbank unsurprisingly was unprepared to provide that information. He could however have been the subject of a subpoena. I was invited by IMG to find against the Brockbank Syndicate on the basis that there was no evidence of inducement of their underwriter but, in all the circumstances of this action, I find that unrealistic. Notwithstanding reference being made to a letter being written by someone else at Brockbank to their re-insurers, to the peril insured being

In my view, in the circumstances of this case, Brockbank are entitled to rely upon a presumption of inducement of the kind referred to in St. Paul Fire and Marine Insurance Co. UK Ltd. v. McConnell Dowell Constructors Ltd [1995] to Lloyds rep 116 page 127 and Marc Rich & Co. v. Portman [1996] 1 Lloyds Reports 430 at pages 441-442 and Aneco Reinsurance Underwriting Ltd. v. Johnson & Higgins Ltd. [1998] 1 Lloyds Reports 565 at page 597.

In addition to the above, I find that, absent successful reliance on the warranty, each of the followers would be entitled to avoid the cover for failure on the part of IMG and its brokers to disclose to them the fact of the unfair presentation which, as I have already found, was made to the two leading underwriters. Whilst each of the following underwriters who gave evidence told me that he made his own underwriting decision, it was plain that they placed considerable reliance upon the leading underwriters on this risk. The brokers’ evidence was that the risk was unplaceable without these two leaders because they would never be able to persuade the following markets to write the risk without such a lead. Moreover their evidence also was that, in the event that either of the market leaders dropped out for any reason, whether because a “subject” failed to be fulfilled, or because of some recognised failure to give them proper information, the brokers would inevitably go back to the following market and ask them what they wanted to do in the circumstances. In the context of a Lloyd’s placement of this kind in a small contingency market, where the risk included a political element, with which the lead underwriters were more familiar than the followers and where one of the lead underwriters had access to greater sources of information, the reliance upon the leaders’ subscription is self evident.

In these circumstances, the misrepresentations and non-disclosures which prevented a fair presentation of the risks to the leaders represented a material circumstance which required to be disclosed to the followers, in order to make a fair presentation to them. The situation here is comparable to that in Aneco v. Johnson & Higgins and in International Lottery Management v. Dumas [2002] LRIR 237 at pages 256-258.

I find that the followers were also induced by such non disclosure to write the risk.

As was pointed out on behalf of the underwriters, the Conditions precedent provision makes full disclosure a precondition to the contract. It was conceded that the effect of default was the same as that of avoidance by underwriters for misrepresentation or nondisclosure of material fact, inasmuch as underwriters had an option whether or not to take advantage of the provision and that restoration of premium would follow from reliance upon the provision (in the absence of fraud). The differences were however twofold, according to the underwriters. First, there was no need for inducement of any underwriter, in order for him to rely on this provision. Secondly the width of information to be given could be said to be wider than that required as part of the insured’s ordinary duty of utmost good faith. In this latter connection reliance was placed upon the words

As I have already found that there has been both misrepresentation and nondisclosure of material circumstances which induced underwriters to write this risk, it does not matter whether or not underwriters are correct in these submissions. Nonetheless, there is no basis in logic for any argument that inducement is required for any underwriter to take advantage of the provision. IMG fairly pointed out that some wording had to be read into condition 2, since on its face it did not make any reference to that which had been disclosed to insurers. In my judgment condition 2 has to be read in the light of condition 1 so that the first condition precedent requires the assured truthfully to declare all material facts, whilst the second condition precedent provides that he must have no knowledge of any other (i.e. undeclared) matter of fact or circumstance, actual or threatened that increases or could increase the possibility of a loss. IMG said that this was merely therefore declaratory of the Common Law position, which it may well be, but, if so, it does make clear that any known circumstance, actual or threatened which could increase the possibility of a loss, must be disclosed. The provision would also be effective notwithstanding the ambit of any warranty. If there was any doubt at all as to whether a matter was truly material, this provision might extend the ambit of what was required to be disclosed. In my judgment there is no doubt that each of the matters which was not disclosed, and which I have already found to be material, would undoubtedly fall within the ambit of this provision also.

In these circumstances there was a breach of warranty which discharges the defendant underwriters from liability under the contract, of which right they have availed themselves. In addition, IMG failed to disclose and misrepresented material facts relating to Government permission which, had they not fallen within the ambit of the warranty, would have been material to underwriters assessment of the risk. Furthermore there was also material nondisclosure and an unfair presentation of the risk in relation to the cause of the changed arrangements in 1999 and the significance of triangular tournaments as opposed to bilateral contests in which India and Pakistan were involved. All of these had an inducing effect upon underwriters which entitled them to avoid the insurances which they duly did. Furthermore, these same failures of nondisclosure also amounted to breaches of condition precedent. For all these reasons, IMG’s claim must fail.