Hussain v Brown

JurisdictionEngland & Wales
JudgeLORD JUSTICE SAVILLE,LORD JUSTICE ROSE,LORD JUSTICE LEGGATT
Judgment Date28 June 1995
Judgment citation (vLex)[1995] EWCA Civ J0628-6
CourtCourt of Appeal (Civil Division)
Docket NumberQBCMI 94/1045/B
Date28 June 1995

[1995] EWCA Civ J0628-6

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(His Honour Judge Kershaw)

Before: Lord Justice Leggatt Lord Justice Rose Lord Justice Saville

QBCMI 94/1045/B

Azmat Hussain
Plaintiff/Respondent
and
Reginald Ewart Brown (Nominated Representative Underwriter)
Defendant/Appellant

MR S BRODIE QC with MR R MILLETT (Instructed by Messrs Squire & Co, London EC1V 4JL) appeared on behalf of the Appellant

MR S STEWART (Instructed by Messrs Betesh Partnership, Manchester M3 2LY) appeared on behalf of the Respondent

1

Wednesday, 28 June 1995

LORD JUSTICE SAVILLE
2

In this case the Plaintiff claims under a Lloyd's fire policy in respect of a fire at his commercial premises in Bury, Lancashire on 24 November 1992. Two questions arise from the Notice of Appeal and these are whether the underwriters are discharged from liability by reason of breach of warranty on the part of the insured, or by reason of breach of one of the conditions of the cover. In circumstances that I shall explain in due course, the second of these questions is now not pursued before us.

3

The two questions in turn arose in the context of an application by underwriters under Ord.14A for declarations in their favour. The Judge (His Honour Judge Kershaw QC) declined to grant any such relief, and from that ruling underwriters (with the leave of the Judge) now appeal.

4

The warranty question arises out of a proposal form completed by the Plaintiff and signed on 9 June 1992. Question 9 of this form was as follows:

5

"Are the premises fitted with any system of intruder alarm?

6

If YES, give name of installing company.

7

(Please provide a copy alarm specification if applicable)"

8

The Plaintiff answered this question "Yes" and "See specification". Accompanying the proposal form when it was offered to underwriters' agents was a specification for a proposed security alarm dated 2 February 1990 and a survey report dated 11 April 1990. By the date of the report, the security alarm had been fitted and the report recorded that certain modifications were to be made to the system. Underwriters' agents were informed when the risk was presented that these modifications had in fact been carried out. Underwriters accepted the proposal and the insurance incepted on 14 July 1992.

9

The proposal form contained the following declaration:

10

"I/We the Proposer warrant that the above statements are true and that they shall be the basis of the contract between me/us and the Underwriters and will be incorporated into such contract."

11

The insurance itself, which was in the form of a Lloyd's certificate dated 18 December 1992, also provided that the proposal and the declaration I have just quoted were to be the basis of and form part of the certificate.

12

The Plaintiff has made a formal admission in these terms:

13

"The Plaintiff admits that since August 1992 the alarm was on 'suspended service' due to a failure to pay Ambassador [the suppliers of the alarm] for their services over the previous months, a writ had been issued and Judgment obtained. Since August the alarm company were providing no central station service and since at least October and probably earlier that the Plaintiff had not utilised the alarm protection."

14

The underwriters' submission is that the answer given to question 9 in the proposal form, amounted to a continuing warranty that the premises were fitted with an intruder alarm, that the alarm was operational and/or would be habitually set by the Plaintiff when the premises were unattended. Assuming for the moment that this is the true meaning and effect of the answer, there is no dispute that on ordinary principles of insurance law, the admissions made by the Plaintiff would mean that the Underwriters were discharged from liability from the date of the breach, which in this case (on the assumption made) was before the date of the fire, and that it was immaterial whether or not the breach had anything to do with the fire. The question, therefore, is simply whether the answer to question 9 amounts to a continuing warranty of the kind suggested by the underwriters.

15

His Honour Judge Kershaw concluded that this was not so. In his view the answer to question 9 and the warranty as to its truthfulness simply related to the state of affairs when the proposal form was signed, and did not import any warranty as to the future.

16

Mr Brodie QC, for the appellant underwriters, submitted that this conclusion was contrary to authority. In particular he relied upon the case of Hales v. Reliance Fire and Accident Insurance Co [1960] 2 Lloyd's Rep 391. In that case, the insurers had asked the question in the proposal form for a fire policy whether any inflammable oils or goods were used or kept on the premises. The assured answered "lighter fuel". McNair J held that this was a warranty which continued "during the currency of the risk". In doing so, the Judge approved a statement which was to be found in the then current edition of Macgillivray on Insurance Law (but which is not to be found in the current edition), namely:

17

"Doubts frequently arise as to whether a warranty applies only to the present or to the future as well as the present. It may be clear that the warranty applies only to the commencement of the risk, as in all warranties as to health in life insurance. Any warranty as to the insured's habits, such as a warranty that he is sober and temperate, would prima facie apply to the past and present, and not to the future. But, in fire and burglary insurance, warranties as to the nature of the premises and precautions taken against loss will prima facie be read as applicable to the whole duration of the policy. It would obviously be of little value to have a warranty that a building contained no artificial heating apparatus, or that a night watchman was kept on the premises, unless the warranty was effective to ensure the subsistence of those conditions throughout the duration of the risk…"

18

Mr Brodie also relied upon the case of Sillem v. Thornton (1854) 3 El & Bl 868.

19

In my judgment, despite these authorities and the passage from Macgillivray approved by McNair J, there is no special principle of insurance law requiring answers in proposal forms to be read, prima facie or otherwise, as importing promises as to the future. Whether or not they do depends upon ordinary rules of construction, namely consideration of the words the parties have used in the light of the context in which they have used them and (where the words admit of more than one meaning) selection of that meaning which seems most closely to correspond with the presumed intentions of the parties.

20

As Judge Kershaw observed in his judgment, it appears that the cases of Weber & Berger v. Employers' Liability Assurance Corporation (1926) 24 Lloyd's Rep 321 and Woolfall & Rimmer Ltd v. Moyle [1942] 1 KB 66 were not cited to McNair J. In both those cases the Court construed questions in proposal forms using the present tense as only referring to the present state of affairs, and as not importing any warranty as to the future. In Woolfall (a decision of this Court) there was an employers' liability policy. In the proposal form the question was "Are your machinery, plant and ways properly fenced and guarded and otherwise in good order and condition?" The answer was "Yes". Lord Greene MR said at page 70, in a passage quoted by Judge Kershaw:

21

"In my opinion, there is not a particle of justification for reading into that perfectly simple question any element of futurity whatsoever. The argument that the court should read into it such an element was based, as I understood it, on the suggestion that the answer would be valueless from the underwriters' point of view...

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