Milton Furniture Ltd v Brit Insurance Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jay,MR JUSTICE JAY |
| Judgment Date | 01 April 2014 |
| Neutral Citation | [2014] EWHC 965 (QB) |
| Docket Number | Case No: HQ 13X00738 |
| Court | Queen's Bench Division |
| Date | 01 April 2014 |
[2014] EWHC 965 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jay
Case No: HQ 13X00738
Graham Eklund QC and Amanda Savage (instructed by Browne Jacobson) for the Claimant
Rachel Ansell (instructed by Reynolds Porter Chamberlain) for the Defendant
Hearing dates: 10 th– 13 th March 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Shortly before 01:00 on Saturday 9 th April 2005 a catastrophic fire occurred at premises occupied by the Claimant known as Tournament Building, Smisby Road, Ashby De La Zouch, LE65 2UR ("the premises"). The Claimant's core business is and has been at all material times the hiring out of furniture for exhibitions, and the vast majority of its stock was destroyed in the fire.
Pursuant to the terms of a Commercial Combined Insurance Policy ("the policy"), the Defendant agreed to provide the Claimant with insurance cover for the period 2 nd December 2004 to 16 th July 2005. 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. No issue arises as to the limits of cover. The Claimant's claim for an indemnity under the policy has been repudiated by the Defendant, and after a lengthy delay legal proceedings were commenced. I understand the reasons for the delay, and I have not drawn any inferences from it which are adverse to the Claimant.
In essence, the Defendant has resisted the claim for an indemnity on the principal grounds that the Claimant is in breach of two conditions precedent to its liability. The amount of the claim is also in dispute.
The hearing of this action occupied 3 1/2 days of Court time. During the course of the hearing some of the issues narrowed in scope even if, on my reckoning, only one issue disappeared. I understand the importance of this case to both parties, and I am particularly grateful to Counsel for the skill and economy of their submissions. Thanks to them, all of the issues acquired the requisite focus.
The Terms of the Contract of Insurance
I will be explaining the insurance history and referring to the quotation documents and proposal forms at a later stage of this Judgment. These are relevant to the contractual construction issues. At this juncture, I limit myself to setting out the material terms of the key documentation.
On 2 nd December 2004 there was a mid-term adjustment to the existing policy constituted by a new commercial schedule [E/5]. The insured was described as "GPE Exhibitions Ltd & thefurniturehirepeople. com & Milton Furniture Ltd". These are three separate corporate entities and I am only concerned with a claim brought by Milton Furniture Ltd.
Insofar as is material, the commercial schedule [E/5/3] provided:
"Endorsements, warranties and special conditions applicable to this Certificate: No's
… PW1; PW3
Stock sum insured of £800,000 includes £80,000 of stock which is kept outside in steel shipping containers.
… Increased stock sum insured relates to stock owned by Milton Furniture Ltd. Cover for up to £250,000 of stock applies whilst at both insured's addresses and whilst in transit."
According to the first page of the commercial schedule [E/5/1], the limit of cover for stock in trade was £1,050,000. I interpret that as applying to the aggregate stock of all three companies described as 'the Insured', although thefurniturehirepeople. com did not own any stock. The specific wording set out above appears to limit the Claimant's cover to £250,000, and the reference to 'stock sum insured of £800,000' must be to GPE's stock. Ultimately, nothing turns on this because the claim in respect of loss or damage to stock does not exceed even the lower threshold.
The limit of cover for loss of gross profit was £750,000. Again, this would appear to relate to all the companies viewed collectively, although in this regard the commercial schedule fails to single out this Claimant. Ms Ansell did not suggest, in my view rightly, that the limit for this aspect of the cover was other than £750,000.
The Commercial Combined Insurance policy document [E/2] provided, insofar as is material (omitting terms on which nothing turns), 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. [E/2/2]
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. [E/2/2]
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. [E/2/18]
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. [E/2/18]
Section B Loss of Profits
Definitions [E/2/20]
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 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.
[This will be referred to hereinafter as "ROGP"]
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. [E/2/29]
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. [E/2/29]
…
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 part of the Underwriters under this Policy. [E/2/30]
[These General Conditions will be referred to hereinafter as GC7, GC8 and GC17 respectively]"
The Principal Issues in the Case
The main issues in the case as they remained by the end of the trial are as follows:
(i) is GC7 subordinate to PW1 so that, as regards the obligations therein specified, compliance with GC7 is not a condition precedent to the Defendant's liability?
(ii) does PW1 qualify GC7 — as regards the obligation to ensure that the burglar alarm was in use – such that the Claimant's duties in that regard were the same under both provisions, and no more onerous than those set out in PW1?
(iii) was the Claimant in breach of its obligations under the first part of GC7 ( "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") by not ensuring that the burglar alarm was in use at the material time?
(iv) was the Claimant in breach of the second part of GC7, in particular by causing or permitting the withdrawal of the monitoring of the burglar alarm?
(v) if GC7 is not a condition precedent to the Defendant's liability, was any breach by the Claimant of its obligations under GC7 causative of the loss sustained?
(vi) in the event that the Defendant is found liable to indemnify the Claimant:
(a) what was the value of the stock at the time of the fire?
(b) what would the Claimant's turnover have been?
(c) what ROGP should be applied?
My Assessment of the Witnesses
Before setting out a detailed factual chronology based on the evidence I heard, I propose to give my assessment of the witnesses who testified before me. Issues of credibility and reliability arise on the case as advanced by the Defendant; and, in any event, I must not lose sight of the fact that the Claimant bears the burden of proof in relation to the quantum of its claim, and the absence of some key pieces of documentary evidence requires me to consider carefully what weight and credence I should be giving to the evidence of the Claimant's two main...
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