The parties entered into an underwriting agency agreement (a “binder”), under which Temple was to write certain business on behalf of QBE and issue insurance certificates to policyholders. The binder provided that on termination “unless otherwise agreed by QBE, Temple shall remain liable to perform its obligations in accordance with the terms and conditions of [the binder] in respect of all insurances bound to termination until every such insurance has expired or has otherwise been terminated”. In arbitration proceedings following termination of the binder, it was argued by Temple that according to the wording of the binder and related contracts, it had a right to manage the run-off. Temple argued that it was a party to the insurance certificates and that there was an implied undertaking in the certificates that QBE would not revoke Temple’s authority to manage insurance on its behalf.
The Court of Appeal upheld the decision of the court below. The Court held that Temple was not a party to any contract of insurance: the binder did not envisage Temple being a party and it was clear from the certificate that the insurer was QBE. The binder provided that Temple’s obligations continued after termination unless QBE chose not to require it to perform them, so that Temple had no right to manage the run-off if QBE did not want it to. The Court held that it would be unusual and uncommercial “for any principal who had employed an agent to manage some aspect of his business to be obliged to allow that agent to continue to act on his behalf once the necessary degree of trust and confidence had been lost”. At the very least, clear language would be required to bring about such a result, which was not present in this case.