Rebel Lloyd's Names vow to fight on despite losing appeal

A group of rebel Lloyd's Names vowed to fight on yesterday after the Court of Appeal ruled that authorities at the insurance market had not committed fraud by concealing the extent of liabilities they faced for asbestos-related claims.

The 215 members who brought the appeal face bankruptcy if Lloyd's succeeds in collecting the £50m it claims it is owed. A Lloyd's spokesman David Peel, said: "They now have no legal excuse not to pay and it's about time they did."

However, the United Names Organisation that represents the rebel members said it was pleased at the Appeal Court verdict, adding that it paved the way for them to bring a case for negligent misrepresentation this autumn.

Catherine Mackenzie Smith, joint chairman of the group, said: "In view of the suffering our members have already had to endure, we hope Lloyd's will not insist on litigating the liability for negligent misrepresentation. But if we have to fight to get full recovery for our members we are prepared for that possibility."

She said that although the Appeal Court ruled there was insufficient evidence to prove fraud, Lord Justice Waller had agreed that Lloyd's had "misrepresented" its position to investors.

The case began in 1996 when Lloyd's tried to collect money owed by the Names to cover very heavy losses incurred on asbestosis-related claims, mainly between 1988 and 1992, of about £4bn.

About 95 per cent of Names either paid up or agreed to a scheme to reinsure their debts. But 1,200 refused to pay and of those a group of 200 or so responded by launching a £100m counter-claim for compensation.

The claim alleged that Lloyd's had defrauded them by failing to disclose the risks of investing in the market in its promotional brochures and annual accounts.

Lloyd's won the case in November 2000 and the Names were given leave to appeal a year later. Three plaintiffs gave evidence in court including Sir William Jaffray, an hereditary baronet who was forced to sell his country house in Hampshire and now lives in what were described as "reduced circumstances".

Mrs Mackenzie Smith said: "There is no way that Lloyd's will ever collect this money. Many of the Names involved have already lost their homes and they have no means of paying."

Legal bills alone for fighting the appeal case have reached an estimated £1.5m – paid for through a levy on the members of the United Names Organisation.