Ricci Burns Ltd v Toole
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RALPH GIBSON,LORD JUSTICE BUTLER-SLOSS |
| Judgment Date | 30 September 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0930-4 |
| Docket Number | 88/0766 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 September 1988 |
[1988] EWCA Civ J0930-4
Lord Justice Ralph Gibson
and
Lord Justice Butler-Sloss
88/0766
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN ORDER OF SIR NEIL LAWSON
Royal Courts of Justice
MR R.S. TOLSON, instructed by Messrs Clarke Willmott & Clarke, appeared for the Appellants (Second Defendants).
MR J.N. GRUDER, instructed by Messrs Taylor Tyrrell Silas & Craig, appeared for the Respondents (Plaintiffs).
This is an interlocutory appeal by Covey & Somerset (London) Ltd, insurance brokers, who are the second defendants in an action brought by Ricci Burns Ltd, the plaintiffs. The first defendant, Mr Patrick Toole, is sued as representing underwriters at Lloyd's. The second defendants were ordered on 4th May 1988 by Deputy Master Rose to pay to the plaintiffs by way of interim payment under Order 29, rule 11, the sum of £50,000. On 25th May 1988 Sir Neil Lawson, sitting as a Deputy High Court Judge, dismissed the appeal of the second defendants. That order, if it is upheld, decides nothing finally in the proceedings and the action must proceed to trial if the parties are unable to settle it. On 30th June 1988 O'Connor L.J. adjourned the application for leave to appeal to the full court. This court gave leave to appeal in the course of the hearing. For the reasons which follow, I have reached the conclusion that this appeal should be allowed, and I would set aside the order for the interim payment.
The facts of the case, to the extent that they are not in issue, are as follows. The plaintiffs sold ladies' clothing at a shop at 55 George Street, W.2. They had for some time relied upon the services of their former brokers for the placing of insurance cover upon the stock held by them at the shop. In November 1985 they appointed the second defendants to act as their brokers. The plaintiffs had a traders insurance for the shop which came up for renewal at 30th March 1986. On 16th March 1986 there was a meeting between Mr Monks and Mr Hulin of the second defendants and Mrs Osgood for the plaintiffs. No forms or documents were produced. Questions were put to Mrs Osgood as to the record of previous claims made by the plaintiffs and to a previous refusal to renew cover by other insurers by reason of water damage claims and problems resulting from them. Answers given by Mrs Osgood were recorded and set out in a proposal form. Two verbal quotations were made to Mrs Osgood for cover: one at £15,000 to include water damage and the other at £7,350 to cover loss not including water damage. Mrs Osgood considered the cheaper policy to be the better. She was told by Mr Hulin that it would be necessary to install some additional physical protection to the shop in the form of additional bolts etc., and to update the existing alarm system. Mr Hulin was to make all the necessary arrangements with the firm of Securicor Granley for the additional work to be done. At the same meeting it was agreed that the premium would be paid by monthly instalments by the plaintiffs to the second defendants by standing order and that cover would be provided from 30th March 1986. As is apparent from paragraph 3 of the plaintiffs' statement of claim it is contended for the plaintiffs that Mrs Osgood at that meeting orally instructed Mr Hulin to procure from the first defendants a Lloyd's Practical Traders policy of insurance.
By letter to the plaintiffs of 15th April 1986 the second defendants acknowledged that at the meeting "…you agreed that we should proceed with the new Lloyds Policy at a first premium of £7,350…" and continued: "…I will need to trouble you for a proposal form in respect of the Traders Combined policy (that is a reference to the new Lloyd's policy) and this is attached from which you will see I have answered all the questions on your behalf so can you please arrange for this to be checked, signed and returned to me. In the meantime I attach our invoice confirming the premiums due and confirm that we will accept payment of these premiums by Bankers Order…(to) commence this month…The new Lloyds policy is subject to the rear basement doors being fitted with barrel bolts and clost shackle padlock and locking bar and for an additional movement detector to be installed in the basement area…I have asked (the alarm company) to deal with the locks and bolts (and with the alarm)…" The invoice which was enclosed was dated 1st April 1986 and was for £7,350 as first premium under the new Lloyd's policy effective from 30th March 1986 for 12 months.
The proposal form, which was enclosed with the letter of 15th April 1986, was signed by Mr Burns for the plaintiffs and returned to the second defendants dated 30th March 1986. That form indicated "…those sections of the policy (as outlined in the prospectus) (required by the plaintiffs.") Questions as to the means of protection for doors and windows and as to the burglar alarm, and questions as to prior losses and claims were answered. The declaration signed by Mr Burns on behalf of the plaintiffs in that form was in the usual terms as to the truth of the answers contained, and that no material fact had been withheld, and continued: "We agree that this Proposal and declaration shall be the basis of the Contract between…us and the Underwriters, and shall be deemed to be incorporated in such Contract and…we further agree to accept the ordinary form of Policy issued by the Underwriters for this class of Insurance…" Immediately below Mr Burns' signature was the statement: "The Underwriters reserve the right to decline any proposal."
The works required with reference to the alarm system and physical security were put in hand. The quotations were dated 14th May 1986 and invoices were sent for the alarm system in June 1986 and for the physical protection in September 1986.
The plaintiffs, before that work was completed, paid two instalments by one payment on 23rd May 1986, i.e. for April and May, and thereafter made monthly payments to the account of the second defendants.
On 16th November 1986 the plaintiffs' shop was burgled. The front door was forced. The alarm was thereby set off; that notified the police; but the burglars removed a large part of the shop's stock.
On 17th November 1986 the second defendants prepared a certificate of insurance in respect of the cover on the plaintiffs' shop. That document certified that, in accordance with the authorisation granted under contract to the second defendants by certain underwriters at Lloyd's, "…the said Underwriters are hereby bound,…to insure in accordance with the terms and conditions contained herein or endorsed hereon." The schedules stated that the "Clauses applicable to this Certificate (were):—PTC 1 as printed on the reverse of this Schedule." PTC 1 appeared under the heading "Standard Clauses" and read: "PTC 1. ALARM MAINTENANCE CLAUSE…Whereas the herein mentioned premises are protected by an N.S.C.I.A. approved installation company Burglar Alarm it is hereby warranted that such alarm shall be maintained under contract by the installing company and shall be in full and effective operation whenever the premises are left unattended."
The Standard Clauses listed in the printed schedule to the certificate contained two other clauses relevant to this case: PTC 3 which provided: "It is warranted that all doors, windows, and openings, all walls and ceilings, are protected by an N.S.C.I.A. approved Central Station Alarm System"; and PTC 4 which provided: "This Policy does not cover loss or damage to the Insured property by Theft following the use of the keys of the Insured premises or the keys of the Burglar Alarm or Safe or any duplicates thereof belonging to the Assured, unless such keys have been obtained by threat or violence." Neither clause PTC 3 nor PTC 4 was stated as applicable to the certificate.
After the burglary the plaintiffs claimed the invoice value of the stock lost at £74,808. Copy invoices were sent to the second defendants by 23rd November 1986.
By letter of 22nd January 1987 solicitors for Lloyd's underwriters (the first defendants) informed the plaintiffs that the first defendants had granted to the second defendants authority to bind on behalf of the first defendants certain classes of insurance risks; that it was an express limitation of that authority that clothing risks with stock above £10,000 could only be accepted if warranties PTC 1, PTC 3 and PTC 4 were applied; and since those warranties had not been applied by the second defendants they had acted outside their authority and the purported insurance was invalid.
The authority under which the second defendants claimed to be acting included the following provisions:
"1. Power to bind and issue Certificates
The Underwriters…authorise the Coverholder to bind Insurances for their account in accordance with the terms and conditions contained herein…and to issue Certificates of Insurance and Endorsements in respect thereof,…"
"4. No insurance shall be bound for a greater period than one year plus odd time (Limit 18 months in all)."
"8. Proposal Forms shall be obtained for all Practical Traders; and other risks where applicable."
"9. All Insurances shall be accepted on the basis of the Certificate wordings supplied with such additions or deletions as shall be authorised only by the persons named in the schedule.
…the General Conditions for the…Practical Traders Certificates…shall always remain unaltered.
A Certificate shall be issued in respect of every risk accepted.…
A copy of each Certificate Schedule and…any Endorsements issued shall be sent to the Lloyd's Brokers…within...
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