COURT OF APPEAL CONFIRMS INDEMNITY TO BE AWARDED ON A REINSTATEMENT BASIS FOR DAMAGED PROPERTY WHICH HAD NOT BEEN REINSTATED

Endurance Corporate Capital Limited v Sartex Quilts & Textiles Limited [2020] EWCA Civ 308

The Court of Appeal recently dismissed the insurer’s appeal in Endurance Corporate Capital Ltd v Sartex Quilts and Textiles Ltd (click here for the full judgment). Upholding the first instance decision of David Railton QC sitting as a deputy High Court judge in the Commercial Court, the Court of Appeal’s decision confirmed that the reinstatement basis was the appropriate measure of indemnity for property severely damaged by fire which had not been reinstated. The Court of Appeal held that it was not necessary for an insured to show that it had a genuine, fixed and settled intention to reinstate in order to recover for damaged property on a reinstatement basis of indemnity. The relevant questions were simply what was the insured’s loss and what measure of indemnity fully and fairly indemnifies the insured for that loss?

Background

Sartex Quilts & Textiles Limited (Sartex) occupied premises at Crossfield Works where it had manufactured bed linen and quilts. Sartex subsequently moved production to larger premises at Castle Mill in Rochdale and looked to convert its former premises at Crossfield Works for use as a manufacturing plant for ‘shoddy hard pads’ used in mattresses and insulation. Sartex took out a Property Loss or Damage Policy (the Policy) for the Crossfield Works site which provided cover for the buildings, plant and machinery, as well as business interruption cover. The insurer was Endurance Corporate Capital (Endurance).

On 25 May 2011, a fire at Crossfield Works severely damaged the buildings. The plant and machinery were a total loss. In November 2013 Endurance paid Sartex £2,141,527 based on their assessment of the market value of the buildings, plant and machinery. Following the fire, Sartex considered a number of options for the site and its business including: (i) reinstating the facility at Crossfield Works; (ii) re-siting the facility to Castle Mill; (iii) moving the manufacturing operation to Pakistan; and (iv) re-developing Crossfield Works as a banqueting/wedding venue. At the time of the trial, Sartex’s prevailing intention was to reinstate the facility for manufacturing shoddy hard pads and it had taken steps to secure planning permission and listed building consent to do so.

The Policy

The terms of the Policy were in a standard form used by the underwriting agent and divided into sections. Section A covered material damage to property with the Insuring Clause providing:

Subject to the general conditions and exclusions of this Policy, and the conditions and exclusions contained in this Section, we, the Underwriters, agree to the extent and in the manner provided herein to indemnify the Insured against loss or destruction of or damage to Property caused by or arising from the Perils shown as operative in the Schedule, occurring during the period of this Policy.” (emphasis added)

Condition 7 of Section A, headed ‘Reinstatement Basis’, provided:

In the event of loss or damage to or destruction of Buildings, Machinery and Plant or All Other Contents, the basis upon which the amount payable hereunder is to be calculated will be the Reinstatement of the Property lost, destroyed or damaged.

Special Conditions

  1. Underwriters’ liability for the repair or restoration of property damaged in part only, will not exceed the amount which would have been payable had such property been wholly destroyed.
  2. No payment beyond the amount which would have been payable in the absence of this condition will be made:
      1. unless Reinstatement commences and proceeds without unreasonable delay;
      2. until the cost of Reinstatement has actually been incurred;
      3. if the Property at the time of its loss, destruction or damage is insured by any other insurance effected by the Insured, or on its behalf, which is not upon the same basis of Reinstatement.”

As Sartex had not incurred reinstatement costs, it was common ground that Special Condition 2(b) was not satisfied and Condition 7 of Section A of the Policy did not apply. The amount payable was therefore as provided for under the Insuring Clause on an indemnity basis.

The issue in dispute was whether Sartex was in fact entitled to be indemnified on a reinstatement basis. The Judge at first instance found in favour of Sartex and awarded damages based on the cost of reinstating the buildings and to replace the plant and machinery that was destroyed. He considered that the relevant question of law was “what had the insured lost as a result of the insured peril?” In making this determination, he saw the primary focus as being on Sartex’s intentions in relation to the property immediately before and at the time of the fire but he also thought it relevant to consider subsequent events, including the intentions of Sartex after the loss, in order to decide what measure of indemnity would fairly and fully compensate Sartex for its loss (see our article on the first instance decision here).

Endurance appealed on the basis that the sum awarded should have been limited to the (much lower) market value of the buildings, plant and machinery. Endurance argued that the Judge was wrong in law to assess the indemnity payable under the Policy as the cost of reinstatement where the insured did not have a genuine, fixed and settled intention to reinstate the property.

Decision

The questions raised on appeal concerned the correct legal test for assessing the sum payable under a property damage policy when the policy does not contain a term which fixes the measure of loss. The main issue was whether, in order to recover the cost of reinstating damaged property under such a policy when this cost has not actually been incurred, the insured needs to show a genuine, fixed and settled intention to reinstate the property

Leggatt LJ gave the leading judgment with which McCombe and Dingemans LLJ concurred.

The Court of Appeal considered that, as a matter of general principle, where an insurer has agreed to indemnify the insured against loss or damage caused by an insured peril, the nature of the insurer’s promise is that the insured will not suffer the loss or damage. The general object of an award of damages is to put the claimant in the same position (so far as money can do) as if the breach had not occurred. There are two distinct ways to give effect to this principle: one is to award the cost of replacing or repairing the property; the other is to award the market value of the property in its condition immediately before the damage occurred (less any residual value). What measure is appropriate in the circumstances depends on the use to which the claimant was intending to put the property. Where the property is a building insured against damage or destruction which the owner was intending to use, or continue to use, as premises in which to live or from which to carry on business, the appropriate measure of damages will generally be the cost of repair, if the building is damaged, or the cost of reinstatement, if the building is destroyed. On the other hand, if at the time when the damage occurred the insured was intending to sell the building (and land on which it was built), the measure of loss is the amount by which the market value of the property has been reduced as a result of the damage.

In the present case, it was not in dispute that before the fire Sartex intended to use the buildings (and the plant and equipment) at the Crossfield Works site as a facility for manufacturing shoddy hard pads. Prima facie, therefore, the appropriate measure of the insured’s loss was the cost of repairing the buildings and buying replacement plant and machinery.

Endurance argued, however, that in circumstances where the insured had not at the time of trial actually incurred the cost of reinstating the property at the Crossfield Works site and had not, in the period following the fire, demonstrated a genuine, fixed and settled intention to do so, this was not the appropriate measure of loss. Endurance relied on the Court of Appeal judgment in Great Lakes Reinsurance (UK) SE v Western Trading Ltd in which Christopher Clarke LJ said (at para 72) that:

“I doubt whether a claimant who has no intention of using the insurance money to reinstate, and whose property has increased in value on account of the fire, is entitled to claim the cost of reinstatement as the measure of indemnity unless the policy so provides. The true measure of indemnity is ‘a matter of fact and degree to be decided on the circumstances of each case’ per Forbes J in Reynolds v Phoenix; and is materially affected by the insured’s intentions in relation to the property.”

Leggatt LJ reasoned that the statement of Christopher Clarke relied upon by Endurance in the Great Lakes case was expressly limited to instances where the property damage had in fact increased the property value. Moreover, he considered that Christopher Clarke LJ’s observations were in any case made obiter dicta as the insured’s intention to reinstate was not an issue in dispute or on which the Court heard argument in the Great Lakes case.

In the absence of binding authority, therefore, it was necessary to consider the position in principle. The Court of Appeal considered that the relevance of intention only arises where, at the time when damages are assessed, the claimant has not taken any action to remedy or mitigate the effect of the defendant’s breach of contract. In the present case, it was found as a fact that the insured was intending to use the Crossfield Works site as a facility for manufacturing shoddy hard pads. Thus to put Sartex in a position materially equivalent to the position it would have been in had the fire not occurred, it was necessary to award the cost of re-establishing such a facility. It was not suggested by Endurance that any of the other options considered by Sartex after the fire (such as re-siting the plant at Castle Mill or moving production to Pakistan) were options which Sartex ought reasonably to have adopted instead to mitigate its loss. As such, the question of whether Sartex actually intended to reinstate the buildings was of no relevance to the measure of indemnity.

Leggatt LJ also noted that in circumstances where Sartex was not intending to sell the property (and had no right to do so as it was only a licensee) the reduction in market value of the property could not be the proper basis of assessment.

Betterment  

Endurance had an alternative ground of appeal, namely that the Judge was wrong to decline to make a deduction from the cost of reinstatement for betterment.

At first instance the Judge saw considerable force in the insured’s argument that, where an insured is claiming the cost of the most reasonable and least expensive option, any benefit derived from getting something new for old is an unavoidable consequence of the loss and so to make a deduction for betterment is to deprive the insured of part of the indemnity to which he is entitled. However, he did not consider that it was open to him to depart from the well-established principle of betterment in the law of insurance. That said, he did not consider that he had a sufficient evidential basis to make a deduction for betterment.

Endurance submitted on appeal that the Judge was wrong to regard the evidence as insufficient to make a deduction from the cost of reinstatement to allow for betterment and that he should have made an assessment taking a broad brush approach by reference to the material available to him.

On the relevant principles in considering whether a deduction should be made for ‘betterment’, the Court of Appeal rejected the insurer’s submission that a broader approach to betterment was justified in insurance cases than where damages are awarded for breach of contract. In particular, it is no more just where the defendant is an insurer than it is in any other breach of contract case to force the claimant to pay for a benefit which it did not choose to receive (as an incidental consequence of adopting a reasonable reinstatement scheme) and which does not save the claimant any money.

Moreover, in the present case, the insurer who had the burden of proving that damages should be reduced on the basis that the insured will save money as a result of reinstatement, had made no attempt to quantify the items of betterment for which an allowance should properly be made. In these circumstances, the Court of Appeal held that the Judge was justified in declining to make any deduction for betterment.

Accordingly, Endurance’s appeal failed on both counts.

Comment

This is the latest decision in a line of cases in which the English courts have grappled with the measure of indemnity in property damage cases where there is no term in the policy which fixes the measure of loss and no reinstatement has been carried out at the time when damages are assessed and thus no reinstatement costs incurred.

The Court of Appeal judgment which is based on general principles brings welcome clarification of the position confirming that an award based on the cost of replacing or repairing the damaged property can still be made even where reinstatement works have not been carried out. The relevant questions are simply what is the insured’s loss and what measure of indemnity fully and fairly indemnifies the insured for that loss? Both the reinstatement basis of indemnity and the reduction in market value of the property may fairly compensate the insured depending on the insured’s intention with regard to the property. However, where the property is a building which the insured was intending to use, or continue to use, as premises in which to live or from which to carry on business, the intention of the insured is only relevant where there is dispute about what action it would be reasonable for the insured to take to remedy or mitigate its loss. How the insured subsequently chooses to spend the damages and whether it actually attempts to reinstate the damaged property is irrelevant to the measure of indemnity.

Additional References

Sartex Quilts & Textiles Ltd v Endurance Corporate Capital Ltd [2019] EWHC 1103 (Comm)

Great Lakes Reinsurance (UK) SE v Western Trading Ltd [2016] EWCA Civ 1003

Castellain v Preston (1883) 11 QBD 380

Reynolds v Phoenix Assurance Co Ltd [1978] 2 Lloyd’s Rep 440

Anthony Dempster
Anthony Dempster
Partner, London
+44 20 7466 2340
Alison Morris
Alison Morris
Associate, London
+44 20 7466 2336

High Court awards indemnity on a reinstatement basis for damaged property which had not been reinstated

In Sartex Quilts & Textiles Limited v Endurance Corporate Capital Limited [2019] EWHC 1103 (Comm), David Railton QC sitting as a Deputy High Court Judge in the Commercial Court decided that the reinstatement basis was the appropriate measure of indemnity for a property severely damaged by fire which had not been reinstated. The Judge found that the question of whether an insured was entitled to be indemnified on the reinstatement basis required consideration of all the circumstances, including the position before the loss and up to and including trial; and that the insured’s intentions regarding reinstatement were relevant on a continuing basis.

Background

Sartex Quilts & Textiles Limited (Sartex) occupied premises at Crossfield Works and manufactured home textiles, bed linen and quilts. In 1995, Sartex signed an agreement allowing it to use Crossfield Works rent-free, as long as it insured the buildings and contents and ensured that the premises were kept in a good state of repair (the 1995 Agreement). By 1999, the business was so profitable that Sartex moved its production line to larger premises at Castle Mill in Rochdale, and Crossfield Works were used to store and re-pack imported linens.

By late-2010, Sartex was converting Crossfield Works for use as a manufacturing plant for ‘shoddy hard pads’, used in mattresses and insulation. At this point, Sartex took out a Property Loss or Damage Policy (the Policy), which provided cover for the buildings, plant and machinery, as well as business interruption. The buildings were insured for £2,020,000 and the plant and machinery for £2,500,000. The insurer, Endurance Corporate Capital (Endurance), was the sole member of the Lloyd’s syndicate with which the insurance was placed. The Policy incepted on 11 November 2010.

On 25 May 2011, a serious fire at Crossfield Works severely damaged the buildings. The plant and machinery were a total loss. Sartex and Endurance settled the business interruption claim in May 2013, and in November 2013 Endurance paid Sartex £2,141,527 based on their assessment of the market value of the buildings, plant and machinery. Endurance refused to indemnify Sartex on the reinstatement basis.

This case followed the recent decision of the Court of Appeal in Great Lakes Reinsurance (UK) SE v Western Trading Limited [2016] EWCA Civ 1003 in which a property severely damaged by fire increased in value, as it was de-listed and became suitable for development. The property had not been reinstated. The Court of Appeal held that it had been open to the judge at first instance to award a declaration that, if Western Trading reinstated the property, it was entitled to be indemnified by the insurer on the reinstatement basis. In obiter comments, Christopher Clarke LJ said that it seemed to him that the insured’s intention needed to be “not only genuine, but fixed and settled,” and there had to be at least a reasonable prospect of the insured bringing about what he intended. Where there was a real risk that reinstatement would not take place, it was open to the Court to decline a monetary award and to give declaratory relief.

The Policy

The Policy in the present case was preceded by an insurance proposal sent to Sartex in October 2010. This proposal expressly noted that the basis of cover for the buildings, plant and machinery was ‘reinstatement’ and that the proposal was to be the basis of the Policy and incorporated into it.

The Insuring Clause provided:

Subject to the general conditions and exclusions of this Policy, and the conditions and exclusions contained in this Section, we, the Underwriters, agree to the extent and in the manner provided herein to indemnify the Insured against loss or destruction of or damage to Property caused by or arising from the Perils shown as operative in the Schedule, occurring during the period of this Policy.

Underwriters shall not be liable for more than the Sum Insured stated in the Schedule or in the Policy in respect of each loss or series of losses arising out of one event at each location as stated in the Schedule.”

Condition 7 of Section A, headed ‘Reinstatement Basis’, provided:

In the event of loss or damage to or destruction of Buildings, Machinery and Plant or All Other Contents, the basis upon which the amount payable hereunder is to be calculated will be the Reinstatement of the Property lost, destroyed or damaged.

Special Conditions

    1. Underwriters’ liability for the repair or restoration of property damaged in part only, will not exceed the amount which would have been payable had such property been wholly destroyed.
    2.  No payment beyond the amount which would have been payable in the absence of this condition will be made:

a) unless Reinstatement commences and proceeds without unreasonable delay;

b) until the cost of Reinstatement has actually been incurred;

c) if the Property at the time of its loss, destruction or damage is insured by any other insurance effected by the Insured, or on its behalf, which is not upon the same basis of Reinsurance.

The basis of the assessment of the indemnity

As Sartex had not incurred reinstatement costs, it was common ground that special condition 2(b) was not satisfied and Condition 7 of Section A of the Policy did not apply. The amount payable was therefore as provided for under the Insuring Clause: insurers agreed to indemnify Sartex “against loss or destruction of or damage to Property caused by or arising from” the fire. Both parties accepted that this provision permitted an indemnity on either the market value basis or the reinstatement basis. The parties disagreed on the applicable basis and on the criteria for determining the basis.

Sartex

Sartex’s primary position was that it was entitled to be indemnified on the reinstatement basis. This reflected the value of the buildings, plant and machinery to it at the time of the loss and reflected the terms of the 1995 Agreement.

Sartex accepted that the intentions of an insured at the time of the loss were relevant in determining the correct measure of indemnity but only in so far as these revealed what the insured intended to do with the property, assuming the loss had never happened. The insured’s intentions after the loss were only relevant in exceptional cases, which this was not.

The manufacture of the shoddy hard pads was a “valuable opportunity, which [Sartex] was about to exploit.” The loss, Sartex submitted, was the sum that enabled it to reinstate the buildings, plant and machinery at the date of the fire, although it was not bound to use the proceeds for reinstatement. Sartex submitted it was entitled to use the proceeds as it chose, provided any material changes or improvements made to Crossfield Works did not increase Endurance’s liability.

In the alternative, if events after the fire were relevant to determining the measure of indemnity (which Sartex denied) and if there were doubts as to Sartex’s intention to reinstate the buildings, plant and machinery, Sartex submitted that the correct course would be a declaration from the court that if it carried out the reinstatement, it was entitled to be paid the reinstatement costs.

Endurance

Endurance’s position was that it was necessary to look at all the circumstances to determine the insured’s actual loss and the reinstatement basis only applied if Sartex intended to reinstate at Crossfield Works. Sartex had to show a genuine, fixed and settled intention to reinstate.

It was submitted that Sartex’s intentions regarding reinstatement at the time of the fire were relevant, and so were its intentions on a continuing basis. Endurance pointed to several factors to show that there was certainly no fixed or settled intention to reinstate:

  • no reinstatement works had taken place in the 8 years since the fire;
  • Sartex had explored plans to buy other premises, to buy a fibre processing business in Pakistan, and to use Crossfield Works for other purposes, including a function venue or supermarket;
  • Sartex had approached Rochdale Council with a redevelopment plan but failed to follow up with the additional procedural steps and documents required for the planning application, showing there was no genuine intention to reinstate; and
  • the costs of reinstatement were likely to exceed the final value of the property, such that from a commercial standpoint, “no-one in their right mind would reinstate.”

Decision

The Judge concluded that Sartex was entitled to indemnification on the reinstatement basis.

He began by reviewing the authorities on the relevant criteria in assessing the basis of indemnity in the context of property damage. The underlying principle that an insured is entitled to recover his actual loss but no more, as outlined in Castellain v Preston (1883) 11 QBD 380, required an examination of what the insured had lost and the value of the property to the insured. Events before and after the loss could be relevant in establishing the proper measure of indemnity but this was a “matter of fact and degree to be decided on the circumstances of each case,” as stated by Forbes J in Reynolds v Phoenix Assurance Co Ltd [1978] 2 LLR 440.

He did not read Christopher Clarke LJ’s comments in Great Lakes as suggesting there could be no indemnity on the reinstatement basis if remedial works were not carried out. Instead, Great Lakes was authority for the proposition that all circumstances had to be considered when determining the measure of indemnity, which could include the position up to the date of trial.

Sartex’s intentions regarding Crossfield Works, both immediately before, at the time of the fire and afterwards, were therefore relevant. The Judge accordingly rejected Sartex’s submission that an insured’s intentions after and as a result of the loss were only relevant in exceptional cases (including the case in Great Lakes where the property had increased in value as a result of the fire). The Judge also rejected Endurance’s submission that Sartex was required to demonstrate a genuine, fixed and settled intention to reinstate, although he found that Sartex had at all times since the fire genuinely intended to reinstate the plant and machinery at an appropriate site. Indemnification on the reinstatement basis would therefore most fully indemnify Sartex for its loss:

  • the terms of the 1995 Agreement required Sartex to keep Crossfield Works in a state of good repair;
  • immediately before the fire, Sartex had clearly intended to use Crossfield Works to manufacture shoddy hard pads and so the value of the buildings, plant and machinery was that they provided the location and means of carrying out this profitable new venture;
  • although Sartex had looked elsewhere for premises and seriously considered reinstating in Pakistan, going as far as to sign an agreement to purchase a fibre manufacturing business there, by 2017 it was considering its options with Crossfield Works. These included rebuilding it as a manufacturing site and Sartex had employed surveyors to make the necessary planning application; and
  • Sartex’s key director submitted that his intention at all times since the fire had been to reinstate the destroyed plant and machinery at an appropriate site.
  • If, as Endurance submitted, Sartex was required to demonstrate a genuine, fixed and settled intention to reinstate, the Judge was prepared to find that it had done so. Sartex’s argument in the alternative, that it was entitled to a declaration if not to indemnification, was irrelevant given the Judge’s findings, but he held that if he were wrong as to the indemnity, he would have awarded a declaration akin to Great Lakes, given the risk that reinstatement would not happen.

Betterment

There was a subsidiary argument on betterment if the reinstatement basis applied under the Insuring Clause (cf. the specific reinstatement provisions in Condition 7 of Section A of the Policy which addressed betterment by providing for Reinstatement on a “new for old basis”).

Endurance argued that there should be a deduction from the agreed reinstatement costs on account of betterment, to which Sartex objected on a number of grounds. The Judge did not consider that it was open to him to depart from the well-established principles of betterment which apply in this area of insurance law. In particular, he did not accept that betterment should be approached in the same way as it is in the assessment of damages in other areas of the law.

However, he did not consider that he had a sufficient evidential basis on which to make any reduction for betterment in this case. Accordingly, he did not consider the notional reduction proposed by Endurance of a third or a quarter was appropriate or warranted.

Comment

This is the latest in a line of cases in which the English Courts have had to consider the basis of assessment of the indemnity under a property damage insurance policy in circumstances in which no reinstatement had actually begun and no costs of reinstatement had been incurred.

The judgment provides further guidance on the relevant criteria following the recent decision of the Court of Appeal in Great Lakes. An indemnity on the reinstatement basis can still be given even if the reinstatement works have not been carried out. The relevant question is what has the insured lost as a result of the insured peril. This requires consideration of the value of the property to the insured at the date of the damage. The insured’s intentions in relation to the property immediately before and at the time of the loss are important factors in determining the value to the insured at that date but the insured’s intentions after the loss, and as a result of it, may also be relevant.

Anthony Dempster
Anthony Dempster
Partner, London
+44 20 7466 2340
Fiona Treanor
Fiona Treanor
Senior Associate, London
+44 20 7466 2307

Brokers’ negligence – guidance on the scope of the duty and causation

In Dalamd Limited v Butterworth Spengler Commercial Limited [2018] EWHC 2558 (Comm), Mr Justice Butcher considered a negligence claim against the Defendant insurance broker arising out of a fire at a waste recycling facility. The insured’s claim succeeded in part.

In his decision, the Judge provided a useful recap on brokers’ duties, in particular their duty to advise clients on their pre-inception duties of disclosure. Of particular note, he also considered how causation should be analysed in brokers’ negligence cases where the insured has not pursued the claim against its insurer to settlement, judgment or award. His conclusion – which will be well received by brokers – was that whether a good defence to the policy claim was available to an insurer will be assessed on the balance of probabilities (i.e. a yes/no basis), and not a loss of a chance basis. Whether there was another defence available to the insurer, for which the broker was not responsible, will likewise be assessed on the balance of probabilities, although the issue of whether the insurer would have pursued that point is to be assessed based on loss of chance.

Continue reading

Reminder to brokers of the need to advise insureds on policy terms

In RR Securities Ltd v Towergate Underwriting Group Ltd [2016] the Court held a broker liable for failing to advise its insured client that certain safety precautions were required by insurers as a condition precedent to cover under a property policy.  The case serves as a reminder to brokers of the importance of advising clients on the terms of the policies they place, particularly onerous terms such as conditions precedent.

Continue reading

Court of Appeal confirms insured’s entitlement to a declaration of indemnity for cost of reinstatement of property damaged by fire

In Great Lakes Reinsurance (UK) SE v Western Trading Limited [2016] EWCA Civ 1003 the Court of Appeal confirmed that the court may make a declaration that an insured under a property insurance policy is entitled to be indemnified for the cost of reinstating property damaged by an insured peril, particularly in circumstances where it is unclear whether the insured intends or is able to reinstate the property. The case also provides helpful guidance on the insured's right to be indemnified on a reinstatement basis under a property insurance policy.

Continue reading

Supreme Court rules that a “collateral lie” is immaterial to the insurance claim

In Versloot Dredging BV and another v HDI Gerling Industrie Versicherung AG and Others [2016] UKSC 45, the Supreme Court held that policyholders who advance otherwise valid insurance claims by lies which are irrelevant to their rights to recover do not forfeit their claims under the policy: "the lie is dishonest but the claim is not". In doing so, the Supreme Court overruled the decision of the Court of Appeal ([2015] QB 608), and rejected the analysis of the law by Mance LJ (as he then was) in Agapitos v Agnew (The Aegeon) [2003] QB 556 ("The Aegeon") (on which the Court of Appeal decision had been based) that an insured who supports a valid claim with a lie forfeits his claim.

Continue reading

Insurer’s subrogation rights in relation to leasehold premises revisited

In Elizabeth Frasca-Judd v Galina Golovina [2016] EWHC 497 (QB), the High Court has held, applying Mark Rowlands v Berni Inns Limited [1986] QB 211, that where a landlord insured property for the benefit of herself and her tenant, the insurer could not bring a subrogated claim against the tenant for damage caused by breach of contract and/or negligence.

Continue reading

A “blot on English insurance law”

Insurers successfully avoided a policy on the grounds of inadvertent non-disclosure. The High Court commented on the different outcome that would have been available under the Insurance Act 2015 which comes in to force in August 2016, remarking that the stringent remedy of avoidance under the present law remains a "blot on English insurance law". 

Continue reading