Economides v Commercial Assurance Company Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SIMON BROWN,LORD JUSTICE PETER GIBSON,SIR IAIN GLIDEWELL |
| Judgment Date | 22 May 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0522-6 |
| Docket Number | CCRTF 96/0589/C |
| Court | Court of Appeal (Civil Division) |
| Date | 22 May 1997 |
[1997] EWCA Civ J0522-6
Lord Justice Simon Brown
Lord Justice Peter Gibson
Sir Iain Glidewell
CCRTF 96/0589/C
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(MR RECORDER STEPHEN HOCKMAN QC)
Royal Courts of Justice
Strand
London WC2
MR R BARTLETT (instructed by Messrs Protopapas, London W1P 9LE) appeared on behalf of the Appellant/Plaintiff.
MS M L KINSLER (instructed by Messrs Kennedys, London EC1Y 4TY) appeared on behalf of the Respondent/Defendant.
On 22nd October 1991 the appellant's flat was burgled and property worth some £31,000 was stolen. The bulk of the items stolen were valuables—jewellery, silverware and the like—and most of it belonged to his mother and father. The appellant had at the time a household contents policy with the respondent insurers, the total sum insured being £16,000 and the maximum recoverable for valuables (as defined in the policy) being one-third of that amount. Following the loss the appellant claimed under the policy. The respondents repudiated liability, alleging both misrepresentation and non-disclosure of material facts. It was their case that the appellant had represented that to the best of his knowledge and belief (i) the full cost of replacing all the contents of his flat as new was £16,000 whereas at the time of the burglary it was some £40,000, and (ii) that the total value of the valuables did not exceed one-third of £16,000 (£5,333) whereas by a very considerable margin it did—nearly £30,000 of the £40,000 total being represented by valuables. Further or alternatively, the respondents contended, the appellant was in breach of a duty to disclose as material facts (i) that the full cost of replacing the contents was substantially more than £16,000, and (ii) that the valuables were worth very substantially more than £5,333 (or, indeed, than one-third of the actual total value).
All those contentions succeeded below: on 2nd April 1996 Mr Recorder Hockman QC at the Central London County Court dismissed the appellant's claim. It had been agreed that, were his policy effective, the sum recoverable under it would be £7,815.38 exclusive of interest. The appellant now appeals to this court. The appeal raises questions of some importance, both for insurers and for those with home contents policies.
With that short introduction let me return in a little more detail to the facts. Cover under this policy began in January 1988. The appellant was at the time aged 18. Some 2 1/2 years previously he had come to England from Cyprus to study. Whilst here he became the leasehold owner and occupier of a flat in north London. His parents, then still living in Cyprus, visited him from time to time.
On 7th January 1988 the appellant completed and signed a proposal form entitled 'Priority Application Form' which reads in part as follows:
"Yes I wish to insure the contents of my home and I understand that I will be covered on acceptance of my application and payment of my first premium.
Please send my personal policy documents to study at home without obligation for a full 15 days.
Please read carefully before completing this form.
The questions on this application form generally provide sufficient information for the insurers to assess the risk. However there may be some special feature concerning you or your family or your property, its location or use that is not covered by the questions but which might nevertheless affect their judgement. If you can think of anything which might influence the likelihood or severity of a loss, please give full details. If you are in any doubt whether a fact may affect their judgement, you should give details as failure to do so could invalidate the insurance …
Home Contents …
Sum to be insured £12,000 (including property of members of your family permanently residing with you. The figure must represent the full cost of replacing all your contents as new…)
Contents questions
4. Does the total value of precious metals or stones, jewellery, furs, curios, works of art, watches, exceed one third of the sum insured? …
[To the latter question the Plaintiff answered "No".]
Declaration:
I/We declare that the statements and particulars given above and overleaf are to the best of my/our knowledge and belief, true and complete, that the sums insured under this Plan will be maintained on an up-to-date basis and that this proposal shall form the basis of the contract between me/us and the insurers."
That proposal was accepted by the respondents and a copy of their policy wording was sent to the appellant. The only parts I need read are these:
"Sum Insured
The amount shown in your current schedule or latest renewal invitation, being the maximum amount Insurers will normally pay in respect of a claim.
Contents
…
Valuables up to 33_% of Sum Insured …
…
all owned by or the responsibility of you or members of your Household … while contained within your Home."
[I need not set out the definition of Valuables.]
"Insurers will pay the cost of … replacement as new following total loss …
If at the time of any loss or damage the cost of replacing all the Contents as new is greater than the Sum Insured then any payment under the Home Contents section will be made after a deduction for any wear or depreciation."
The sum insured, initially £12,000, was index-linked. By the time for renewal in 1991 it had thereby increased to £12,800. No one suggests that in those initial years it failed to represent the full replacement value of the contents or that the valuables were worth more than one-third of it.
In 1990 the appellant's parents came to live permanently in England and took up residence at his flat, first his mother, then his father. They brought with them from Cyprus a considerable quantity of chattels which they kept in a wardrobe or suitcase in their double bedroom here. Mother told the appellant that she had brought both jewellery and silverware, much of which it was proposed to pass on to him when he got married. He saw some of the jewellery as and when his mother wore it; he showed, said mother, no interest in the silverware. He was but 21 at the time. Father had been a police divisional commander in Cyprus. He it was who suggested that the appellant should increase his contents insurance by some £3,000-£4,000 to take account of the value of these further chattels and that is precisely what the appellant did.
It would seem that towards the end of 1990 the appellant must have telephoned the respondents and told them to increase the sum insured to £16,000. The single document evidencing the January 1991 renewal is a Renewal Notice dated 6th December 1990 referring to the sum insured as £16,000 and reminding the appellant that his policy was renewable on 14th January 1991. The Notice contains a paragraph headed 'Important News' reading:
"It is important to remember that when you proposed for this insurance you gave information which enabled the insurer to assess the risk and arrive at the premium terms and conditions of your present insurance. You should advise us of any facts not already passed on to us, and of any circumstances which may have changed since the proposal was made, so that the insurer can reassess the risk if necessary. FAILURE TO DO SO MAY MEAN THAT THE POLICY MAY NOT OPERATE FULLY OR EVEN AT ALL".
As stated, the loss occurred on 22nd October 1991 and it was only then—when the appellant and others (in particular his sister) obtained from his mother a description of the items stolen, researched their appropriate retail prices, and thereby calculated their replacement cost—that the total value of the loss was established, fairly and in good faith as the judge below accepted, at £30,970 (the total value of the contents being found to be some £40,000).
It follows from all this that whereas the sum insured was in fact increased in January 1991 by £3,200, the value of the contents had actually increased by some £27,000—and the value of the valuables now greatly exceeded one-third of the total.
The claim on the policy was made on 10th November 1991. On 22nd June 1992 the respondents (or rather a panel of insurers of whom the respondents were the lead company) asserted an entitlement to avoid liability on grounds of misrepresentation and non-disclosure. On 8th December 1993 the particulars of claim were issued.
So much for the facts. I shall now consider each defence in turn.
Misrepresentation
The appellant has conceded throughout that at the time of the 1991 renewal he represented that to the best of his knowledge and belief (hereafter 'he believed that') the full cost of replacing all the contents of his flat as new (hereafter 'the full contents value') was £16,000. He does not, however, concede, although the judge below understood otherwise, that at the time of renewal, as opposed to the date of inception, he represented that the valuables did not account for more than one-third of that sum. Although at first I had some difficulty in understanding how these two matters could be distinguished, it now seems to me arguably possible, on this basis: whereas the statements in the original proposal form—"the [sum to be insured] must represent the full cost of replacing all your contents as new" and "the sums insured under this Plan will be maintained on an up-to-date basis" —
carry over and impliedly attach also to valuations on renewal (assuming the appellant's concession is rightly made), the assured, when answering at inception that the value of the valuables did not exceed one-third of the total,...
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