R & R Developments Ltd v AXA Insurance UK Plc
| Jurisdiction | England & Wales |
| Judge | Nicholas Strauss Q.C. |
| Judgment Date | 28 September 2009 |
| Neutral Citation | [2009] EWHC 2424 (Ch) |
| Docket Number | Claim No. HC O7 CO2603 |
| Court | Chancery Division |
| Date | 28 September 2009 |
[2009] EWHC 2424 (Ch)
In the High Court of Justice
Chancery Division
Before Mr. Nicholas Strauss Q.C. (sitting as a deputy judge)
Claim No. HC O7 CO2603
Appeal Court ref: CH/2009/PTA/00125
Mr. Howard Smith, instructed by Messrs Trethowans, appeared for the claimant/appellant.
Mr. Michael Taylor, instructed by Messrs Keoghs LLP, appeared for the defendant/respondent.
This is an appeal from the judgment of Deputy Master Hoffmann, given on 22 nd December 2008, and supplemented by a note dated 22 nd December 2008 and by a further judgment dated 4 th February 2009, the effect of which was that he declined to grant declarations for which the claimant sought summary judgment, and ordered the claimant to pay the defendant's costs of the application.
The claim relates to a Commercial Combined and Contract Works insurance policy taken out by the claimant to insure itself against theft and damage to the contract works at a small development of two houses on a site near Milton Keynes. Issues have arisen between the parties as to the accuracy of answers given by the claimant to the defendant on a questionnaire which was part of the proposal for the insurance and as to whether the claimant disclosed all material facts.
There have been some minor procedural complexities, but it is unnecessary to go into them. The present position is that both parties wish me to decide certain questions of law and construction, in effect as preliminary issues. There is no procedural reason why I should not do so. They are raised in the notice of appeal and the respondent's notice, and in any event CPR 1.4(1)(c) requires the court to decide issues summarily where possible.
The Policy was entered into on 2 nd June 2006 and covered the period to 1 st June 2007. It was arranged by the claimant's brokers, a firm called Towergate Risk Solutions. The Proposal was incorporated in, and formed the basis of, the Policy. General Condition 1 provided that the Policy was to be voidable in the event of misrepresentation, misdescription or non-disclosure in any material particular. The Proposal form was headed “Commercial Combined Statement of Fact” and there was a warning in the following terms:—
“ About Your Statement of Fact
This document is a Statement of Fact showing the information provided to (the defendant) on 10/06/2006 and should be read together with the Policy and Schedule as one contract. By signing this Statement of Fact you are confirming that all relevant information has been disclosed and that full and true answers have been given to all questions. If you have not given full and true answers to all questions … your insurance may not protect you in the event of a claim.”
There then followed a document headed “Acceptance Criteria”, which I set out in full in the form in which it was completed by the claimant save that I have added the numbers (1) to (8):—
“ Acceptance Criteria
Our acceptance of this cover is subject to the following statements being true.
General Details
Yes No
Have you or any Partners or Directors either personally or in connection with any business in which they have been involved:
(1) Ever been declared bankrupt or are the subject of any bankruptcy proceedings or any voluntary or mandatory insolvency? v
(2) Even been convicted of or charged with (but not yet tried) a criminal offence other than a motoring offence? v
(3) Ever been declined or refused insurance cover or had cover cancelled? v
(4) Ever had any renewal refused? v
(5) Ever had any special terms or conditions imposed? v
(6) Ever been the subject of a recovery action by Customs & Excise or the Inland Revenue? v
(7) Had within the last five years any losses whether insurance or not or had any claims made against you (in this or any existing or previous business)? v
(8) Ever been prosecuted or served prohibition or improvement order under Health and Safety Legislation? v
| Business Details | ||
|
| Yes | No |
| Is any effluent fumes or anything of a noxious nature discharge by the business? |
| v |
| Are you, or the Partners or Directors involved in the business aware of the requirements of the Health and Safety at Work Act? | v |
|
| Have you completed a workplace Health and Safety Risk Assessment? | v |
|
| Have workplace risk assessments been carried out as required by the Management of Health and Safety at Work Regulations 1992 or other Legislation eg Control of Substances Hazardous to Health Regulations (COSHH) Noise etc and where appropriate relevant actions taken? | v |
|
| Has the business any assets or representation or any associated or subsidiary operations outside the UK? |
| v |
| Does the Proposer enter into any 'Design & Build” contracts or other contracts imposing professional duty upon your firm or others whom you may appoint on a sub-contract basis in connection with the contract. |
| v |
At the end there was a Declaration signed on behalf of the claimant which included the following passages:—
“I/we have read the Statement of Fact and the Policy Schedule supplied.
I/we understand that any material fact, which is information that may influence the Company and the acceptance and terms provided, has been disclosed and recorded.
I/we understand that if true answers have not been given this insurance may not protect me/us in the event of a claim (sic).
I/we declare that to my/our knowledge and belief the answers and particulars given on this Statement of Fact … are true and complete, and that I/we have not withheld any material information. Failure to disclose such information may result in claims not being met.”
The following facts or alleged facts were not disclosed to the defendant:—
(1) Mr. Molton, a director of the claimant, had been a director of a company called Robinson & White Limited, which had been placed by its bankers in administrative receivership and remained in administrative receivership in June 2006. There is an issue as to whether Mr. Molton was still a director of this company at the time of the proposal in June 2006.
(2) Mr. Molton had also been a director of the Galliers group of companies, consisting of five companies, of which three were placed in creditors voluntary liquidation on 20 th April 2001, one went into member voluntary liquidation in May 2001 and one was placed in compulsory liquidation, also in May 2001. All these companies had been dissolved by June 2006.
(3) There may have been (but there is an issue about this) an unsatisfied judgment for £4,601 against one of the Galliers companies dated September 2002.
(4) There is evidence that the Galliers companies made or may have made two insurance claims before they were placed in liquidation.
The Defendant contends that the answer to the first question under the heading 'General Details' was a misrepresentation, because Mr. Molton had been involved, as a director, in Robinson & White Limited, which was still in administration in June 2006. This raises two issues. First, does the question relate only to the insolvency on the insured or any of its partners or directors, or does it extend to the insolvency of any company or other separate legal entity in the business in which they have been involved? Secondly, is administrative receivership a form of “mandatory or voluntary insolvency?”
The defendant does not contend that there was any misrepresentation resulting from Mr. Molton's involvement with the Galliers companies because they had all been dissolved by June 2006, so that on any view it could by then no longer have been said that they “are” the subject of any bankruptcy proceedings or involuntary or mandatory insolvency.
The parties approach to the above two issues differs. Mr. Howard Smith on behalf of the claimant submits that, where a question put to the insured is ambiguous, the court does not have to decide on one true construction; there is no misrepresentation if the answer is true on a reasonable interpretation of the question.
In support of this submission, he relied on the decision of MacKinnon J. in Revell v. London General Insurance Company Limited [1934] 50 Lloyd's List L.R. 114, in which the insured had answered the question “have you or any of your drivers every been convicted of any offence in connection with the driving of any motor vehicle?” in the negative, when one of her drivers had been convicted of driving without a suitable reflecting mirror and of driving while uninsured. The judge expressed the principle in the following way:—
“I think Mr. Samuels is right when he says – indeed, it is elementary – that if there is an ambiguity in this question so that upon one view of the reasonable meaning which is conveyed to the reasonable reader of it the answer was not false, the company cannot say that on the other meaning of the words the answer was untrue so as to invalidate the policy.”
He then went on to say that a reasonable person reading the question might reasonably regard it as limited to questions relating to the standard of care and skill of the drivers, and not to offences which have nothing to do with this. Therefore, he held, the insurers could not rely on the negative answer to the question as a breach of the condition of the policy that all the statements made in the proposal form were true in every respect.
The actual decision is perhaps surprising, in that one might have thought that driving without a proper mirror did reflect on the relevant standard of care and skill. Possibly, the judge was influenced by the position of the victims of the accident as it would have been in the pre-Motor Insurers Bureau era. However, his statement of the principle is quite clear, and it has been applied on several occasions: see Colinvaux & Merkin Insurance Contract Law at A-0665. Questions in a proposal form which are to...
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