Comlex Limited (in Liquidation) Against Allianz Insurance Plc
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2016] CSOH 87 |
| Court | Court of Session |
| Published date | 28 June 2016 |
| Year | 2016 |
| Date | 28 June 2016 |
| Docket Number | CA195/15 |
OUTER HOUSE, COURT OF SESSION
[2016] CSOH 87
CA195/15
OPINION OF LORD DOHERTY
In the cause
COMLEX LIMITED (IN LIQUIDATION)
Pursuers;
against
ALLIANZ INSURANCE PLC
Defenders:
Pursuers: McBrearty QC; BBM Solicitors
Defenders: Ellis QC; BLM Solicitors
28 June 2016
Introduction
[1] In this commercial action the pursuers are assignees of Laura Ann Britton’s rights, benefits, interests, titles, claims and demands arising from a policy of insurance with the defenders. The pursuers claim indemnity under the Buildings Section (Section 7) of that policy following the destruction by fire of a public house at 50 Causeyside Street, Paisley (“the public house”). The defenders have declined to indemnify the pursuers. They maintain that Ms Britton had no insurable interest in the property destroyed. They also say that the claim she had was not covered by Section 7 of the policy.
Background
[2] Comlex Limited (“Comlex”) owned and operated the public house. Comlex was controlled by Ms Britton’s parents. Ms Britton had been named as the Premises Manager since 1 September 2009. In about March 2011 Comlex ceased trading due to financial difficulties. Ms Britton proposed to raise finance to purchase the public house with a view to a new public house business being operated from it. LCSC Enterprises Limited (“LCSC”) was formed to be the trading entity for the new business. Some refurbishment was carried out. Ms Britton planned to purchase the public house using finance to be provided to her by the Lancashire Mortgage Company, and to grant a lease or a licence to LCSC. At the Lancashire’s insistence Ms Britton obtained buildings insurance for the public house. She took out a Complete Retailer Policy with the defenders which commenced on 5 April 2011. She was the Insured. The cover provided was described in Sections 1 to 9 of the policy. Section 7 set out the cover for Buildings. One of the perils insured against was fire. The risk address was the public house. Section 6 set out cover for Liabilities, including Public Liability. No indication was given to the defenders that the policy was being taken out for the benefit of anyone other than Ms Britton or that any other party had an interest in the policy.
[3] On 16 May 2011 Derek Simpson was appointed as interim liquidator of Comlex. Mr Simpson met with Ms Britton on 23 May 2011. The precise terms of the discussions and any agreement between the parties are contentious: but there was some discussion of Ms Britton insuring the property; of Ms Britton purchasing the property; and that meantime trading would continue.
[4] On 18 May 2011 Mr Simpson arranged insurance cover for the property. On 8 June 2011 he instructed that that cover be cancelled on the basis that Ms Britton had insured the property.
[5] The liquor licence was held by Comlex from 1 September 2011until 6 June 2011. Mr Simpson was the licence holder from 6 June 2011 until 28 June 2011. LCSC was the licence holder from 28 June 2011 until the public house was destroyed by fire on the night of 23 and 24 February 2013. LCSC traded from and had physical occupation of the premises from April 2011 until the fire.
[6] On 5 April 2012 Ms Britton renewed the contract of insurance with the defenders. No change of circumstance was brought to the defenders’ attention.
[7] For a variety of reasons, principally difficulty on Ms Britton’s part in obtaining loan funding, missives for the sale to her of the public house had not been concluded before the fire.
The policy
[8] On renewal on 5 April 2012 the policy was in the following terms:
“Introduction
Your Complete Retailer Policy is made up of several parts which together form your contract of insurance … The parts of the Policy are:
- The Statement of Facts …
- This Introduction; the Insuring Clause, the Policy Conditions and Policy Exclusions, which apply to all Sections of the Policy
- The Sections of cover provided including the Conditions and Exclusions
- The Schedule …
…
Any word or expression in the Policy which is given a specific meaning under the Section Definitions has the same meaning wherever it appears in the Policy
…
Insuring Clause
The Statement of Fact … together with any information supplied by or on behalf of the Insured forms the basis of the contract of insurance between the Insured and the Insurer.
In consideration of payment of the premium the Insurer will indemnify or otherwise compensate the Insured against loss, destruction, damage, injury, or liability (as described in and subject to the conditions and exclusions of this Policy or any Section of it) occurring or arising in connection with the Business during the period of Insurance or any subsequent period for which the Insurer agrees to accept a renewal premium.
…
Policy Definitions
…
Insured
The Insured named and shown in the Schedule
…
Business
The business description stated in the Schedule
…
Property/Property Insured
Buildings, contents, stock and other items shown and/or described in the Schedule
…
Damage/Damaged
Loss or destruction of or damage
Premises
Address as stated in the Schedule
Building/Buildings
The buildings at the Premises …
…
Section 1 – Trade Contents
…
Events
1. Fire …
…
Section 6 - Liabilities
Definitions
…
Business
The business specified in the Schedule … which includes
a the ownership, maintenance and repair of Premises used for the business
…
Cover
Event 1 – Employers Liability
…
Event 2 – Public and Products Liability
Allianz will indemnify the Insured against legal liability to pay compensation and claimants costs and expenses in respect of accidental
…
b loss of or Damage to material property
…
Occurring … in connection with the Business
…
Exclusions
…
In respect of Event 2 – Public and Products Liability …
This Section does not cover
…
2. liability in respect of Damage to any property belonging to or in the charge of or the control of the Insured
…
Section 7 – Buildings
Definitions
Property Insured
The Building and outbuildings situate at the Premises …
All Risks Cover
Events 1-10 described under Section 1 Trade Contents of this Policy, incorporating the relevant exclusions and in addition the following Event 11
Event 11
Accidental Damage of a sudden and unforeseen nature excluding Damage to the Property Insured caused by collapse, cracking, frost, landslip, subsidence, ground heave or settlement and the first £250 of each claim
Cover
Allianz will indemnify the Insured in respect of Damage of or to the Property insured occurring … by any of the Events shown.
The amount payable in the event of Damage of or to the Property Insured subject to the terms of this Section and the Policy Exclusions and Policy Conditions shall be the cost of repair or replacement of the Damaged property without deduction for wear and tear.
…
Complete Retailer Renewal Schedule
…
The Insured Miss Laura Britton t/a Webster’s Pub
…
Business Description Public House
The Premises Address Premises 1: 50 Causeyside Street Paisley …
….
Section 7 Buildings
Property at Premises 1: 50 Causeyside Street Paisley …
The Buildings at the above Premises £472,500
Subsidence Cover Yes
…”
The proof
[9] The case came before me for proof. The only witnesses were Mr Simpson and Ms Britton. Witness statements and affidavits from each of them were lodged and adopted as their evidence‑in‑chief and that evidence was supplemented by oral evidence. A joint minute (27 of process) set out several agreed matters, much of which (together with other matters which it is clear were not contentious) has been incorporated in the background set out above.
[10] Mr Simpson was 52 years of age at the proof. He is a licensed insolvency practitioner. He became interim liquidator of Comlex on 16 May 2011and was appointed as liquidator on 27 June 2011. He remained in office until 12 May 2015. He met Ms Britton on 23 May 2011. She was proposing to buy Comlex’s assets (principally the public house). Mr Simpson and the creditors were content with that proposal. He had agreed with her that she could occupy the public house pending completion of the sale on condition that all trading expenditure was to be her responsibility and that she insure the property on his behalf. He granted her a licence to occupy the property on condition that she accepted responsibility in relation to buildings insurance and trade expenditure. She was obliged to insure the premises. Ms Britton had agreed to proceed on that basis and she had confirmed that the premises were sufficiently insured. Mr Simpson was aware that “Ms Britton’s company” LCSC was trading from the premises but the licence to occupy was granted to her personally and the agreement was with her personally. How she chose to trade from the premises was not his concern. The proposed purchase was to be by her personally. He could not recall if there was any more detailed discussion about the insurer or the cover. He had some recollection of having a telephone call with Ms Britton not long after the meeting and that after that call he had instructed his colleague that the insurance cover he had put in place on appointment was no longer required. He had not taken any steps to record in writing the terms of the licence or the discussion. It was possible that that had been because of pressure of other work at the time, or because there was no money in the liquidation. The only asset was the public house.
[11] Ms Britton (also known as Mrs Crolla) was aged 43 at the proof. She qualified as an accountant in 2001 and has worked in that profession since qualification. The controlling shareholders in Comlex had been her parents. When the business had encountered financial difficulties she had decided to purchase the assets. She had proposed that the public house be held in her name but that the trading vehicle should be LCSC. The plan had been...
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