Alfred McAlpine Plc v BAI (Run-Off) Ltd [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Colman J. |
| Judgment Date | 05 May 1998 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 05 May 1998 |
Colman J.
Queen's Bench Division (Commercial Court).
Insurance — Whether notice of claim or occurrence clause condition precedent to insurer's liability — Whether insurer could repudiate liability by proving prejudice from non-compliance with notice clause — Whether non-compliance with notice clause repudiatory breach.
This was a claim against insurers under the Third Parties (Rights against Insurers) Act 1930 who denied liability under an insurance policy on the ground that a so-called claim condition was not complied with.
In 1991 O was seriously injured when he fell off scaffolding. O was employed by M who did concreting work under a subcontract with “RCCL” which was a subcontractor to McAlpine (the plaintiff) working on the cementing of a new bridge over the A3 Brighton bypass. The scaffolding was erected by McAlpine and appeared to be unsafe. O sued M and McAlpine and McAlpine joined RCCL as third party. The action was settled. O accepted a sum paid into court by McAlpine and M made a payment to McAlpine. McAlpine obtained judgment against RCCL which had gone into liquidation. McAlpine sought to recover from RCCL's insurers, “BAI” (the defendant). BAI denied liability on the basis that RCCL had failed to comply with cl. 1(a) of the policy (under the heading “claims conditions”) which required it to give notice of any claim as soon as possible in writing with full details. BAI contended that compliance with that clause was a condition precedent to its liability. Alternatively failure to comply prejudiced BAI and operated as a defence, or constituted a repudiatory breach.
Held giving judgment for McAlpine:
1. RCCL failed at all times to satisfy the requirements of cl. 1(a). They did not give notice “as soon as possible” following their acquiring knowledge of the accident and they did not at any time provide full details of the occurrence when they could easily have assembled that information.
2. Compliance with cl. 1(a) was not to be construed as a condition precedent. The courts would not usually construe notice of claim or occurrence clauses as conditions precedent unless either the clause itself was expressed to be a condition precedent (which it was not) or the policy contained a general provision to that effect which it did not. On the contrary another clause expressly stated that it was a condition precedent, a strong indication that cl. 1(a) was not. (Farrell v Federated Employers Insurance Association LtdWLR[1970] 1 WLR 1400 considered; Taylor v Builders Accident Insurance LtdUNK[1997] PIQR 247 followed.)
3. An assured who advanced a claim for indemnity without complying with cl. 1(a) committed a breach of contract. If the insurers could show quantifiable loss from that breach, they would be entitled to damages which they could set off against their liability under the policy. But proof of some prejudice would not normally operate as a complete defence, unless insurers could show that if the assured had complied with the clause, insurers would have been able to take steps to avoid making any payment by way of indemnity, or where the non-compliance amounted to breach of the assured's duty of utmost good faith.
4. Non-compliance by RCCL with cl. 1(a) made it more difficult for BAI to obtain access to witnesses and information than if cl. 1(a) had been complied with, but BAI was not thereby irremediably prejudiced. BAI's own decision to repudiate liability was a significant reason why it did not acquire further relevant information and evidence. Although BAI had repudiated liability for non-compliance by RCCL with cl. 1(a), McAlpine could not be said to have acted in breach of the duty of utmost good faith by pursuing its claim against BAI once it obtained judgment against RCCL and became statutory assignee of RCCL's rights under the policy. The omission to comply with cl. 1(a) could not be treated as a repudiatory breach. The consequence of the breach was not such as to deprive BAI of the whole benefit of the contract. It was not RCCL's non-compliance with cl. 1(a) which caused BAI to be without evidence but BAI's belief that it was entitled to repudiate liability.
The following cases were referred to in the judgment:
Allen v RoblesWLR [1969] 1 WLR 1193.
Barrett Bros (Taxis) Ltd v DaviesWLR [1966] 1 WLR 1334.
Cehave NV v Bremer Handelsgesellschaft mbH (“The Hansa Nord”)ELR [1976] QB 44.
Cox v Bankside Members Agency Ltd [1995] CLC 180.
Farrell v Federated Employers Insurance Association LtdWLR [1970] 1 WLR 1400.
Farrell, ReUNK [1970] 1 All ER 360; [1970] 1 WLR 498.
Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha LtdELR [1962] 2 QB 26.
Hood's Trustees v Southern Union General Insurance Co of Australasia LtdELR [1928] Ch 793.
Pioneer Concrete v National Employers Mutual Insurance GAI LtdUNK [1985] 1 Ll Rep 274.
Reid & Co v Employers' Accidents Insurance CoSC (1899) 1 F 1031.
Stoneham v Ocean, Railway, & General Accident Insurance CoELR (1887) 19 QBD 237.
Taylor v Builders Accident Insurance LtdUNK [1997] PIQR 247.
Vainqueur Jose, TheUNK [1979] 1 Ll Rep 557.
Williams and Lancashire & Yorkshire Accident Insurance Co's Arbitration, Re [1903] WR 222
Jonathan Woods (instructed by Cameron McKenna) for the plaintiffs.
Ronald Walker QC (instructed by Mackrell Turner Garrett) for the defendants.
Colman J:
This is a claim under the Third Parties (Rights Against Insurers) Act 1930. It arises out of an accident which occurred on 1 May 1991 when a workman called O'Malley, who was one of a gang working on the cementing of a new bridge over the A3 Brighton By-Pass, fell over shuttering and beneath a scaffold guard rail and dropped some 13 metres to the ground. He sustained serious injuries. The features of the scaffold appear to have been unsafe: the guard rail was so high that there ought to have been a board between the shutter and guard rail to stop workmen falling through the space. Without the board there was a breach of the Construction (Working Places) Regulations 1966. It was also suggested that O'Malley fell by reason of his having lost consciousness due to an epileptic condition.
O'Malley was employed by one Harry Moss who was responsible for the concreting work under a sub-contract with RC Construction Ltd (“RCCL”). The latter contracted for the concrete works with McAlpine. It was McAlpine who erected the scaffold. Consequently McAlpine and Moss were exposed to liability for breach of statutory duty and negligence.
The injured workman, O'Malley, sued Moss and McAlpine as co-defendants. McAlpine joined RCCL as third party claiming against them an indemnity under an express indemnity clause in their sub-contract, as well as damages for breach of a duty of care at common law or under the Occupiers' Liability Act 1957 or breach of statutory duty under the 1966 regulations and contribution under the Civil Liability (Contribution) Act. The action was eventually settled in February 1996. O'Malley accepted £254,363.39 paid into court by McAlpine. Moss paid £27,000 to McAlpine. RCCL had gone into liquidation and been wound up on 11 March 1992, before the commencement of proceedings, and in May 1996 McAlpine obtained judgment against RCCL without a contested trial for £243,000, together with £86,000 in respect of costs for which McAlpine were liable to O'Malley and £113,241.83 together with statutory interest.
RCCL was insured under a contractors' policy with The Builders' Accident Insurers Ltd (“BAI”). By that policy BAI agreed to indemnify RCCL against
“all sums which the Insured shall become legally liable to pay as compensation arising from…
(a) accidental Bodily injury to any person not being an Employee of the Insured…occurring during the Period of Indemnity…”
By an express exception to that section of the policy BAI was not to be liable to indemnify the insured “in respect of liability assumed by the insured by contract or agreement and which would not have attached in the absence of such agreement”. Under the heading “Claims Conditions” cl. 1(a) provided as follows:
“In the event of any occurrence which may give rise to a claim under this Policy, the insured shall, as soon as possible, give notice thereof to the Company, in writing, with full details and as far as practicable there shall not be any alteration or repair until the Company have had an opportunity of inspecting.”
Having obtained judgment against RCCL, which had been wound up, McAlpine now claims as statutory assignee of RCCL'S rights to recover in respect of its liability against BAI under the terms of the policy. BAI denies that it is liable. It contends that compliance with cl. 1(a) is a condition precedent to its liability under the policy and that either notice under that clause was never given or it was given no earlier than 4 June 1992 which was not “as soon as possible”. BAI contends, in the alternative, that failure to comply with the terms of cl. 1(a) was a repudiatory breach of contract or a breach of the insured's duty of the utmost good faith and that BAI accepted its conduct as a repudiation. Finally it is argued that the failure of RCCL to comply with the requirement for notice prejudiced BAI and accordingly the non-compliance operates as a defence to the claim under the policy.
The contractors' policy was renewed with effect from 1 September 1990 through Frizzell Contractors Insurance Brokers of Poole, Dorset. It was expressly provided on the face of the policy that all communications and notices regarding that policy should quote the policy number and be addressed to that firm. Clearly therefore Frizzell were the agents of BAI to receive notice of occurrences under cl. 1(a). In about September 1991 RCCL's renewal for 1991-1992 was handled by the brokers Gibbs Hartley Cooper Ltd and not by Frizzell. In a letter from RCCL dated 4 February 1992 it is stated simply...
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