Kosmar Villa Holidays Plc v Trustees of Syndicate 1243

JurisdictionEngland & Wales
JudgeLord Justice Rix,Lord Justice Jacob,Mr Justice Forbes
Judgment Date29 February 2008
Neutral Citation[2008] EWCA Civ 147
Docket NumberCase No: A3/2007/0888
CourtCourt of Appeal (Civil Division)
Date29 February 2008

[2008] EWCA Civ 147

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM COMMERCIAL COURT

THE HON MR JUSTICE GROSS

2006-281

Royal Courts of Justice

Strand, London, WC2A 2LL

Before :

Lord Justice Rix

Lord Justice Jacob and

Mr Justice Forbes

Case No: A3/2007/0888

Between:
KOSMAR VILLA HOLIDAYS plc
Respondent/Claimant
and
TRUSTEES OF SYNDICATE 1243
Appellants/Defendants
and

Graham Eklund QC (instructed by Kennedys) for the Respondent/Claimant

Richard Slade (instructed by Hextalls) for the Appellants/Defendants

Hearing dates : 23 January 2007

Lord Justice Rix
1

The primary issue argued on this appeal concerns the difference between waiver by electionwaiver by estoppel. Can breach of a condition precedent in a claims notification clause in an insurance policy be waived as a matter of irrevocable election, or is it only susceptible to waiver in face of an estoppel caused by reliance on a representation? As will appear below, there are important differences between the two types of waiver. However, common to both is the need for communication to the other party of an unequivocal representation. Therefore, also in issue in this appeal is whether the communication was unequivocal.

The parties, the policy,the claim

2

The claimant,in this court the respondent, is Kosmar Villa Holidays plc (“Kosmar”), a specialist tour operator with a particular focus on destinations in Greece. At the time relevant to these proceedings, Kosmar held public liability insurance cover from Euclidian Direct Limited, of whom the defendants, in this court the appellants, the Trustees of Syndicate 1243, are the successors. Like the judge, I will continue to call the insurers “Euclidian”. The policy in question is a Combined Liability Policy which incepted on 10 December 2001 (the “policy”).

3

On 22 August 2002, during the period of the policy, James Evans, then aged 17, who had booked a holiday with Kosmar at the Marina Beach Apartments, Kavos, in Corfu, dived at 0400 into the shallow end of a swimming pool and, tragically, fractured his spine resulting in incomplete tetraplegia. Kosmar had exclusive use of those apartments but did not own them.

4

It was not until 4 September 2003, over a year after Mr Evans' misfortune, that Kosmar first gave notice to Euclidian of the occurrence. It is this failure to give immediate notification, as required by the policy, that has led to this litigation.

5

Kosmar's notice followed its receipt from Mr Evans' solicitors, Messrs Hugh James, of a claim letter dated 14 August 2003. Despite its date, it was received by Ms Flora Souidhou, Kosmar's customer relationslegal manager, on 4 September 2003. That was the first that she knew of the incident. She immediately telephoned Mr Gary Armstrong, an underwriter with Euclidian, to tell him about the claim,she sent a copy of the claim letter on to him that same day. She regarded Mr Armstrong as the right person to contact at Euclidian, although in fact he was not in its claims department.

6

The policy provided that “Insurers will indemnify the Insured against all sums which the Insured shall become legally liable to pay as damages consequent upon accidental injury to any person…occurring during the Period of Insurance, in connection with the Business…”. It is General Condition 7 with which this appeal is concerned,that provided as follows (I have added the sub-clause numbering):

“7. It is a condition precedent to insurers' liability under this insurance that:

(1) The Insured shall immediately after the occurrence of any Injury or Damage give notice in writing with full particulars thereof to insurers. Every letter, claim, writ, summons or process shall be notified or forwarded to insurers immediately on receipt. Notice shall also be given in writing to insurers immediately the Insured shall have knowledge of any impending prosecution or inquest in connection with any accident for which there may be liability under this insurance. So far as is reasonably practicable no alteration or repair shall without the consent of the insurers be made to any works, machinery, plant, commodities or goods which are directly or indirectly connected with the occurrence until insurers shall have had the opportunity of examining the same.

(2) Upon receipt by or on behalf of the Insured of notice…of an intention by any person or body to make a claim against the Insured or of any allegation of negligence which might give rise to such a claim or on the discovery of any such act of negligence, the Insured shall notify insurers as soon as practicableshall provide full information respecting it so far as such information is in the Insured's possession…”

7

It was common ground at the trial below that compliance with General Condition 7 (“GC7”) constituted a condition precedent to Euclidian's liability under the policy;that Kosmar had failed to comply with limb (1) of the clause in that notification of Mr Evans' grave injuries (the “occurrence”) was not given to Euclidian “immediately” following 22 August 2002 as required,was not given until over a year later on 4 September 2003. Euclidian therefore denied liability in respect of Kosmar's claim in these proceedings. However, no complaint is made by Euclidian regarding limb (2) of GC7, concerning notification of claims, for it is accepted that Kosmar gave prompt notice in that regard.

8

The waiver issue arises predominately out of the circumstances which followed Ms Souidhou's notification of the Evans claim to Mr Armstrong on 4 September 2003. The judge observed:

“28…There was some debate as to what was said in the conversation between Ms SouidhouMr Armstrong; I doubt that it matters. It is likely that Mr Armstrong, who was not surprised at having been Kosmar's port of call, asked why it had taken so long to notify himlikely that Ms Souidhou answered because she (herself or personally) had only just received the claim. It was at once apparent to Mr Armstrong that this was a serious incident; it had happened in August 2002; it had first been notified to Euclidian in September 2003. On any view, enough was said in that conversation for Mr Armstrong to realise immediately that there had been a breach of limb [1] of the clause.”

9

The documents show what then happened. On 5 September Kosmar sent to Euclidian copies of various reports completed by its local representatives, on the day of the accident, together with other contemporaneous documentation. On 17 September Ms Souidhou e-mailed Mr Armstrong, providing further information about the swimming-poolthe (assumed) state of Mr Evans' knowledge of its depth. She also pointed out that alterations had been made to the swimming-pool “due to the owners wanting it bigger”.

10

Also on 17 September 2003, Mr Armstrong e-mailed Ms Souidhou as follows:

“I have read through the filehave asked Kerry [Kerry Rogers, a member of Euclidian's claims department who received the e-mail in copy] to write to you with my commentsrequests for information. We have taken the view, given the possible size of this claim, not to deny liability yetwill await your reply to our various requests.

I am of the opinion that whilst we should probably win this case I think that the claimant may want his day in court. There does not appear to be a CFA in place at presenttherefore as a tactic once we have gathered our evidence if we disclose this should paint such a picture that he has no hope of winninghe should then be unable to obtain insurance to cover his CFAthen he would be forced to withdraw his action.

Thus is a very simple viewthere are other aspects to consider but for now I hope this assists.”

11

The judge commented:

“31…In his evidence, Mr Armstrong agreed that there had been no reservation of rights in this e-mail (a topic to which I return); he accepted too that the e-mail gave the appearance that Euclidian was dealing with the claim. I am satisfied, insofar as there was any doubt about it, that the reference to “we”denying liability, was a reference to the combined position of EuclidianKosmar vis-à-vis Mr Evans, rather than to the position as between EuclidianKosmar.”

12

On 19 September 2003 Ms Rogers of Euclidian wrote directly to Mr Evans' solicitors as follows:

“We are the liability insurers of the above named tour operatorswe have been passed your letter dated 14 th August 03 for attention. We were sorry to learn of the circumstances of this accident. Please note our interestensure that all future correspondence is sent direct to us…

Please note that we are presently making enquiries with our insured in respect of the matterwe shall revert to you as soon as possible, however, given the fact that we are concerned with an accident outside the UK, enquiries may take some time. Accordingly we have 6 months to investigateprovide our views on liability…

…What is Mr Evans' current position? Please provide details of any special damages claim. Are you able to provide witness statements?

We note that you [intend] to instruct a consultant to examine your clientprepare a reportwe require a copy of the expert's CV. Please also confirm your client's DOBNI number, in order that we may notify CRU of his claim for injury, as is our statutory duty.”

13

On the same day Ms Rogers wrote also to Ms Souidhou, to say that Mr Armstrong had asked her to write to request answers to 25 questions which she set out in her letter. She added that she had written to Mr Evans' solicitors noting Euclidian's interest.

14

The judge observed that Mr Armstrong accepted that Ms Rogers' letters would have given the impression that Euclidian was dealing with the claim.

15

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  • Reservations of Rights Around the World
    • United States
    • JD Supra United States
    • 21 April 2016
    ...668, 696 (S.D. Tex. 2002). [9] See N.H. Code Admin. R. Ins. § 1002.05. [10] See Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147. [11] Vitol SA v Esso Australia Ltd [1989] 2 Lloyd's Rep. [12] Mexican Insurance Contract Act, Article 19. [13] Mexican Insurance Contra......

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