Milton Furniture Ltd (Appellant / Claimant) v Brit Insurance Ltd (Respondent / Defendant)
| Jurisdiction | England & Wales |
| Judge | Lady Justice Gloster,Lord Justice Kitchin,Lady Justice Rafferty |
| Judgment Date | 07 July 2015 |
| Neutral Citation | [2015] EWCA Civ 671 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2014/1273 |
| Date | 07 July 2015 |
[2015] EWCA Civ 671
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
MR JUSTICE JAY
HQ13X00738
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Rafferty
Lord Justice Kitchin
and
Lady Justice Gloster
Case No: A2/2014/1273
Mr Graham Eklund QC and Ms Amanda Savage (instructed by Browne Jacobson LLP) for the Appellant/Claimant
Mr Christopher Butcher QC and Ms Rachel Ansell QC (instructed by Reynolds Porter Chamberlain LLP) for the Respondent/Defendant
Hearing dates: Monday 30 th March 2015
Tuesday 31 st March 2015
Introduction
This is an appeal by the claimant, Milton Furniture Limited ("Milton"), from the judgment of Mr Justice Jay dated 1 April 2014 whereby he dismissed Milton's claim against the defendant, Brit Insurance Limited ("Brit"), for an indemnity under a Commercial Combined Insurance policy ("the policy"), following a fire at premises from which Milton traded, known as Tournament Building, Smisby Road, Ashby de la Zouch, LE65 2UR ("Tournament Building"). The issue in the appeal is the construction of a general condition in the policy, namely General Condition 7 ("GC7").
Mr Graham Eklund QC and Ms Amanda Savage appeared on behalf of Milton. Mr Christopher Butcher QC and Ms Rachel Ansell QC appeared on behalf of Brit.
Factual background
Milton is a company which was incorporated in 2004. It carries on the business of hiring out furniture for use at exhibitions. The policy incepted on 17 July 2003 when the sole insured was another group company, GPE Exhibitions Ltd ("GPE"). The cover was renewed on 17 July 2004 and Milton was added to the policy on 2 December, as a result of which Brit agreed to provide Milton with cover for the period 2 December 2004 to 16 July 2005. A third group company, "thefurniturehirepeople. com" ("TFHP"), was also an insured under the terms of the policy. Fire was a specified risk, and the policy covered loss or damage to stock in trade, loss of gross profit and increased cost of working, the indemnity period being 12 months.
Tournament Building consisted of a large warehouse ("the Warehouse"), a two-storey office block ("the Office"), a reception area, a workshop ("the Workshop") and a dwelling house ("the House"), which was attached to the Warehouse and Office by a link building ("the Link"). Tournament Building was leased and the landlord insured the buildings. Milton insured its stock, trade fixtures and fittings, tenant's improvements and loss of gross profit under the policy. Tournament Building was one of two sets of premises named in the schedule to the policy ("the schedule"). The other set of premises specified in the schedule were in Oakenshaw, West Yorkshire ("the Oakenshaw premises")
Tournament Building was fitted with a Fire Alarm ("FAS") and an Intruder Alarm (referred to variously as "the IAS" or the "burglar alarm"). Both systems were monitored, or supposed to be monitored, by SECOM Plc ("SECOM"), but under separate maintenance contracts. The burglar alarm was split into three zones – "warehouse", "offices" and "house" – which could be set by separate codes or by a single master code. It was not possible to set the offices and house zones when either the Link or the House was occupied, but the judge rejected Milton's assertion that it was impractical to set the warehouse alone if the rest of the building was occupied. 1
The claim for an indemnity under the policy arose out of a fire which was started deliberately by a person or persons unknown late in the evening of 8 April or early in the morning of 9 April 2005. There was no suggestion that any director, agent or servant of Milton was responsible for starting the fire. The judge held that the fire had been started by someone, with a degree of insider knowledge, hiding within Tournament Building prior to it being secured or was started by someone with legitimate access to the building (on the basis that there was no evidence of forced entry).
On the evening of Friday, 8 April 2005, Mr Michael Hyams (Milton's general manager, and together with his wife, the beneficial owner and/or controller of the group) and Mr Derren Furley (a subcontractor who worked regularly for Milton) were both present at Tournament Building. They had been working at the premises during the day and they had work to do on the following day (a Saturday). When their work was completed, Tournament Building was locked and secured. They both remained on the premises and slept there, Mr Hyams in the House and Mr Furley in the Link. On the night of the fire the burglar alarm was not set, although the FAS was turned on. Brit contends that no, or no satisfactory, explanation was given in evidence at trial as to why the burglar alarm had not been set. Milton contends that the reason was because Mr Hyams and Mr Furley were both on the premises.
The judge found that the burglar alarm could have been set in the Warehouse alone, as evidenced by the fact that it was set on 259 nights out of 288 nights between 1 May 2004 and 12 February 2005, even when employees of Milton were sleeping in the Link and the House. In addition, as the judge held, SECOM had stopped monitoring the burglar alarm in February 2005 because of persistent non-payment by Milton (or another group company) of its invoices.
Mr Furley was woken by the fire alarm. In turn he woke Mr Hyams. Three minutes after the FAS activation, SECOM telephoned Mr Hyams to inform him of the fire alarm activation.
Brit refused Milton's claim to an indemnity on the basis that Milton had failed to comply with what Brit asserted were two conditions precedent set out in GC7, viz.:
i) that the burglar alarm had to be set "out of business hours" or when the premises were "left unattended";
ii) that the "protections" required by the policy (i.e. the burglar alarm and the FAS) were not to be "withdrawn or varied to the detriment of the interests of Underwriters without their prior consent".
Brit contended that, because the burglar alarm had not been set on the night of the fire and the burglar alarm was not being monitored, Milton was in breach of these conditions and, accordingly, Brit was entitled to decline to pay under the policy.
The relevant provisions of the policy
The policy provided, so far as is material, as follows:
"This Policy, the Proposal, the Schedule (including any Schedule issued in addition or substitution) and any Endorsements or Memoranda shall be considered one document and any word or expression to which a specific meaning has been attached shall bear such meaning wherever it appears.
The Insured named in the Schedule having made to Insurers a Proposal which is hereby agreed to be the basis of this Insurance are to be considered incorporated herein and having paid or agreed to pay the premium.
Section A Protection Warranties
Only acceptable if indicated on the Schedule
PW1 Intruder Alarm Warranty
It is a condition precedent to the liability of the Underwriters in respect of loss or damage caused by Theft and/or attempted Theft, that the Burglar Alarm shall have been put into full and proper operation whenever the premises referred to in this Schedule are left unattended and that such alarm system shall have been maintained in good order throughout the currency of this insurance under a maintenance contract with a member of NACOSS.
PW3 Protections Warranty (No 2)
It is warranted that all doors, windows and openings are protected by a NACOSS approved Direct Line, RedCARE or Dualcom alarm system.
Section B Loss of Profits
Definitions
Gross Profit The sum produced by adding to the Net Profit the amount of the Insured Standing Charges …
Net Profit The net trading profit (exclusive of all capital receipts and accretions and all outlay properly chargeable to capital) resulting from the business of the Insured at the premises after due provision has been made for all Standing and other Charges including depreciation, but before the deduction of any taxation chargeable on profits…
Rate of Gross Profit ["ROGP"]The rate of gross profit earned on the turnover during the financial year immediately before the date of the damage to which such adjustments shall be made as necessary to provide for the trend of the business and for variations in or special circumstances affecting the business either before or after the damage or which would have affected the business had the damage not occurred, so that the figures thus adjusted shall represent as nearly as may be reasonably practicable the results which but for the damage would have been obtained during the relative period after the damage.
General Conditions of this policy
7 The whole of the protections including any Burglar Alarm provided for the safety of the premises shall be in use at all times out of business hours or when the Insured's premises are left unattended and such protections shall not be withdrawn or varied to the detriment of the interests of Underwriters without their prior consent. [I shall refer to this provision as GC 7.]
8 The Insured shall at all times use due diligence and do and concur in doing all things reasonably practicable to avoid or diminish any loss, damage or liability under this policy… [I shall refer to this provision as GC 8.]
17 Provided always that the due observance and fulfilment of all conditions, provisions and endorsements of this policy shall be a condition precedent to any liability on the limb of the Underwriters under this policy… [I shall refer to this...
To continue reading
Request your trial
-
Court Of Appeal Considers Two Conditions Precedent And The Meaning Of 'Left Unattended'/Non-Withdrawal Of Protections
...be able to rely on the breach of a clause like GC7 as a defence to the insured's claim. Milton Furniture Ltd v Brit Insurance Ltd [2015] EWCA Civ 671 Court Of Appeal Considers Two Conditions Precedent And The Meaning Of "Left Unattended"/Non-Withdrawal Of The content of this article is inte......