Knapp and Another v Ecclesiastical Insurance Group Plc and Another

JurisdictionEngland & Wales
Judgment Date30 October 1997
Date30 October 1997
CourtCourt of Appeal (Civil Division)

Court of Appeal

Before Lord Justice Butler-Sloss, Lord Justice Hobhouse and Lord Justice Buxton

Knapp and Another
and
Ecclesiastical Insurance Group plc and Another

Negligence - insurance broker - effective date of cause of action

Effective date of cause of action against insurance broker

A cause of action against an insurance broker who negligently advised a client to take out an insurance policy which was voidable and which the insurer avoided when the client tried to claim under it arose when the policy premium was paid and not when the insurer avoided the policy.

The Court of Appeal so held in allowing an appeal by the second defendant, David Smith, trading as David Smith Insurance Brokers, against a decision of Sir Peter Webster sitting as a judge of the Queen's Bench Division refusing to strike out an action brought by the plaintiffs, William and Denise Knapp, on the ground that it was time barred.

Mr Robert Walker, QC and Mr Adam Tolley for the second defendant; Mr Rupert Jackson, QC and Mr Malcolm Stitcher for the plaintiffs.

LORD JUSTICE HOBHOUSE said that for the purposes of the application to strike out the plaintiffs' claim on the ground that it was time barred the allegations made against the second defendant, although disputed by him, had to be assumed to be correct.

The critical question was when the plaintiffs' cause of action first accrued, that was to say when they first suffered damage as a result of the second defendant's alleged breach of duty so as to make that breach actionable.

The second defendant submitted that that was on April 12, 1990 when the renewal cover attached. The plaintiffs said that it was not until April 4, 1991 when the insurer elected to avoid the policy or alternatively on October 16, 1990 when the fire which lead to the claim occurred.

His Lordship considered the authorities including Pirelli General Cable Works Ltd v Oscar Faber & PartnersELR ([1983] 2 AC 1), Forster v Outred & CoWLR([1982] 1 WLR 86) and D W Moore & Co Ltd v FerrierWLR ([1988] 1 WLR 267) and concluded that it could be seen that the cause of action could accrue and the plaintiff had suffered damage once he had acted upon the relevant advice to his detriment and failed to get that to which he was entitled. He was less well off than he would have been if the defendant had not been negligent.

Applying that to the instance case the plaintiffs paid their renewal premium without getting in return a binding contract of indemnity from...

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