George on High Ltd v Alan Boswell Insurance Brokers Ltd
| Jurisdiction | England & Wales |
| Judge | Simon Tinkler |
| Judgment Date | 27 July 2023 |
| Neutral Citation | [2023] EWHC 1963 (Comm) |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: LM 2022 000064 |
[2023] EWHC 1963 (Comm)
Simon Tinkler
Sitting as a Deputy High Court Judge
Case No: LM 2022 000064
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Royal Courts of Justice, Rolls Build
Fetter Lane, London, EC4A 1NL
Ben Elkington KC (instructed by Edwin Coe LLP) for the Claimants
Roger Stewart KC (instructed by DWF LLP) for the First Defendant
Neil Hext KC (instructed by Keoghs LLP) for the Second Defendant
Hearing dates: 19, 20, 26 and 27 June 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Thursday 27 July 2023 at 10:30AM.
Simon Tinkler sitting as a Deputy Judge of the High Court:
This case relates to a 16 th century hotel called The George. It is in Rye in Sussex. The freehold to the hotel is owned by the First Claimant (“ GOH”). The business of the hotel and restaurant is operated by the Second Claimant (“ GOR”). Both companies are under the common ownership of another company which itself is under the common ownership of Mr and Mrs Clarke. In 2004 GOR acquired the freehold to the hotel and the business operated at the hotel. In 2009 GOR transferred the freehold of the building to GOH (a newly incorporated company) but continued to operate the business and employ all the staff associated with it. GOH never operated any part of the hotel or restaurant business. GOR paid rent to GOH for use of the premises for the hotel and restaurant business.
The First Defendant (the “ Broker”) is an insurance broker who has for many years arranged insurance cover for the Claimants. The Second Defendant (“ NIAC”) was from 2013 onwards the underwriter of the insurance arranged by the Broker. The relevant policy in this case was entered into for the period 18 November 2018 to 17 November 2019 (the “ Policy” or the “ Contract”). It named the “Insured” as “The George on High Ltd t/a The George in Rye”.
The hotel was largely destroyed by fire on 20 July 2019. The Claimants sought indemnification from NIAC for losses caused by the fire. Those included losses of GOH for damage to the building and losses to GOR caused by loss of business whilst the hotel was closed for reconstruction as well as for loss of stock and contents. NIAC accepted liability in relation to damage to the hotel owned by GOH and made payment. NIAC declined to make any payment to GOR for business interruption and other items. It said that GOR was not insured under the Policy because the words “George on High Ltd t/a The George in Rye” did not cover GOR.
GOR claimed against the Broker for losses caused by the non-payment by NIAC because the Broker had therefore negligently failed to organise insurance for GOR (the “ Insurance Claims”). The Broker, on the other hand, claimed that NIAC should in fact have made payment for the Insurance Claims and that therefore the Broker was not liable to the Claimants. NIAC was thus joined as a Second Defendant.
GOH and GOR also both claimed against the Broker for other losses they said were caused by the Broker having arranged insurance that was inadequate in other respects such as under-insuring the value of the buildings (the “ Broker Claims”). The Broker Claims were settled immediately before the trial, leaving the Insurance Claims to be decided by this court.
The Broker accepted that it was liable to the Claimants for the Insurance Claims to the extent NIAC was not liable. In other words, the Claimant was going to be entirely successful in obtaining judgment for the Insurance Claims against one or both Defendants. The dispute was solely between the Broker and NIAC as to who was liable to the Claimants for the Insurance Claims.
The Broker says that there are multiple bases on which NIAC should be liable to make payment under the Policy to GOR. These are:
i) On the correct construction of the meaning of Policy NIAC is liable to indemnify GOR (the “ Construction Argument”);
ii) Alternatively, the Policy should be rectified such that NIAC should indemnify GOR under the Policy (the “ Rectification Argument”);
iii) Alternatively, GOH was acting as agent for GOR in relation to the Policy and therefore NIAC should indemnify GOR under the Policy (the “ Agency Argument”); or
iv) Alternatively, NIAC should, under the doctrine of estoppel by convention, be prevented from denying liability to GOR under the Policy (the “ Estoppel Argument”).
The factual background
The claim is made up of four financial elements.
i) A claim for losses caused to GOR for business interruption in an amount agreed at £892,520;
ii) A claim for stock belonging to GOR that was destroyed in the fire in an amount agreed at £23,833;
iii) A claim for contents belonging to GOR that were destroyed in the fire in an amount agreed at £574,805; and
iv) A claim for rent in the period that that hotel was closed that GOR was liable to pay GOH in an amount agreed at £776,000.
In addition to the significant quantity of documentation provided at the trial there was evidence in person from four witnesses. Alexander Clarke gave evidence as director and owner of both GOH and GOR. Crawford Allen, Andy Bilner, and Karen Howell gave evidence on behalf of NIAC. There was agreed witness evidence from Christopher Gibbs on behalf of the Broker.
In general, the evidence from the witnesses was straightforward and enabled me to form a clear view of the relevant facts. There was criticism of certain witnesses because they strayed into submissions or failed to set out the documents they had reviewed. Those matters had no material impact (either way) on my assessment of their evidence and were in general not particularly relevant to the underlying evidence. By the conclusion of the witness evidence there was little that remained disputed as to matters of fact, though the legal consequences of those facts remained the subject of significant dispute.
There were also two witnesses who did not give evidence. I was invited to draw some inferences from that lack of evidence following the authority of Wisniewski 1. Jon Preston was one of the main employees of the Broker who was involved in placing the insurance with NIAC. NIAC invited me to infer from the fact that Mr Preston was not called as a witness that the Broker's intention was that any business operated by GOR was not to be insured. The documentary evidence and other witness evidence, however,
indicated an intention from GOR and the Broker to insure the business. NIAC did not provide any evidence that Mr Preston intended not to insure the business of GOR. I did not draw that adverse inference from his lack of evidence. I note for completeness that I disregarded the evidence in Mr Preston's witness statement which had been provided prior to the trial. NIAC also did not call Mr Raj who, it was said, declined the claim and had some knowledge of why the claim was declined. I did not need to determine NIAC's motivation for non-payment under the Policy. I therefore did not draw any adverse inferences from the lack of witness evidence from Mr RajNIAC first underwrote insurance in relation to the hotel in 2013. The Broker had approached NIAC to seek that insurance because NIAC already insured another hotel owned by Mr Clarke. The proposal form was signed by Mr Clarke. It described the business as “hotel and restaurant” and included details of turnover, staff numbers and value of contents owned. The name of the proposer was “George on High Limited” with a trading name of “The George in Rye”. The form did not mention GOR.
That description was repeated in the insurance policy schedule in 2013 which referred to the Insured as being “George on High Limited t/a The George in Rye” and the “Business” as being “Hotel & Restaurant”.
The insurance continued on the same basis until the policy year 2018–19 with some minor amendments during those years, such as to the breadth of matters insured and the monetary limits on certain categories of insured risks.
It was common ground that GOH never traded as The George in Rye. The only legal entity which ever traded at the hotel was GOR. It was also common ground that in 2013 NIAC did not know that GOR ran the business of the hotel and employed the staff who worked in the business. The Broker and Claimants say, however, that the state of knowledge of NIAC changed before November 2018 when the Policy was issued. In particular, they say that NIAC and/or its agents became aware that (i) GOR existed and that (ii) GOR operated the business of the hotel and employed the staff. This arose largely through claims made against GOH or GOR and which were notified to NIAC (“ Historic Claims”).
The first occasion when NIAC is said to have become aware of GOR is in 2014. On 17 September 2014 a letter of claim was sent to GOR by solicitors acting for a guest at the hotel, Mr Arkley, who had fallen down the front steps and sustained injuries. The PL1 Claim Notification Form (“ CNF”) identified the defendant as “The George in Rye”. Mr Clarke sent the letter and CNF by email to the Broker on 22 September 2014. Anthony Lehman, an employee of the Broker, emailed the letter and CNF to Garwyn on 23 September 2014. Garwyn were NIAC's claims' handlers. On 24 September Sarah Johns at Garwyn acknowledged receipt and confirmed that they were investigating it. The emails between Sarah Johns and Anthony Lehman were headed “NEW...
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