Ristorante Ltd T/A Bar Massimo v Zurich Insurance Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 21 September 2021 |
| Neutral Citation | [2021] EWHC 2538 (Ch) |
| Docket Number | Case No: BL-2020-MAN-000035 |
| Court | Chancery Division |
[2021] EWHC 2538 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
CIRCUIT COMMERCIAL COURT (QBD)
Civil Justice Centre,
Bridge Street West,
Manchester,
M60 9DJ
Mr Justice Snowden
(Vice-Chancellor of the County Palatine of Lancaster)
Case No: BL-2020-MAN-000035
Roddy Dunlop QC (Scot) and Jonathan Schaffer-Goddard (instructed by Markel Law LLP) for the Claimant
Graham Eklund QC (instructed by Clyde & Co LLP) for the Defendant
Hearing date: 19 May 2021
Approved Judgment
This is the trial of three preliminary issues, ordered by HHJ Halliwell on 9 September 2020. The one-day hearing took place before me in person.
The underlying claim was brought by the Claimant on 24 March 2020, alleging breach of contract by the Defendant insurer in respect of what the Claimant says was the wrongful avoidance of an insurance policy and the refusal to meet a claim under it. In the underlying claim, the Claimant seeks, inter alia, a declaration that the Defendant was not entitled to avoid, and has not avoided, the policy of insurance, together with the payment of a sum under the policy of some £633,000, damages, and various other heads of relief.
The preliminary issue is all about the meaning of words: namely, the meaning of a particular question that the Defendant asked the Claimant policyholder prior to inception and renewal of the policy, and the legal effect of that meaning.
Following the occurrence of an insured peril, the Defendant purported to avoid the Claimant's policy ab initio on the basis that the meaning of the question was such that the Claimant's answer was a material misrepresentation or unfair presentation of risk. The Claimant contends that, on the contrary, the meaning of the question was such that the answer it gave was true, that there was no misrepresentation and, by asking the question with the meaning that it had, the Defendant waived its right to certain other information, meaning that there had been no unfair presentation of risk. The Claimant submits that if it is right about these matters, then there was no basis on which to avoid the policy ab initio.
Background
The factual background to the claim is straightforward and is not in dispute between the parties.
The parties
The Claimant is a company which was at all material times the leasehold owner of a property situated at 3/5 Kirk Road, Bearsden, Glasgow (the “Property”). The Claimant has been carrying on business as a bar and restaurant from the Property since the early 2000s. The Defendant is an insurance company.
At all material times, the directors and shareholders of the Claimant were Mr Massimo Lilli, Mr Dino Dalsasso and Mr Stefano (also known as Stephen) Dalsasso. Mr Lilli, Mr D Dalsasso and Mr S Dalsasso had formerly been directors of certain other companies:
i) Mr Lilli was a director of each of Massimo Leisure Ltd (“Leisure”), Massimo Edinburgh Ltd (“Edinburgh”) and Collecastello Ltd (“Collecastello”);
ii) Mr D Dalsasso was a director of each of Leisure and Edinburgh, and a company secretary of Collecastello;
iii) Mr S Dalsasso was a director of Leisure.
Each of the three companies referred to above had entered liquidation at various times and had subsequently been dissolved: Leisure went into (voluntary) liquidation in September 2009 and was dissolved on 30 March 2011; Edinburgh went into (compulsory) liquidation and was dissolved on 11 April 2012; and Collecastello went into (compulsory) liquidation on 24 June 2014 and was dissolved on 25 June 2015. I refer to these events collectively as the “Other Insolvency Events”.
The Policy and the Representation
On or about 12 October 2015, the Defendant incepted an insurance policy numbered PR/DLJX 8464 (the “Policy”) in respect of the Property for the benefit of the Claimant.
The Claimant instructed an insurance broker, Munro and Sons Limited (the “Broker”), in connection with the insurance cover. In written evidence, Mr Gunning, a senior underwriter at the Defendant, explained the process by which the Policy was originally incepted. He explained that the risks to be insured under the policy were presented to the Defendant by the Broker via “Z-Trade”, the Defendant's automated computer underwriting system. One of the key functions of Z-Trade was to enable the processing of straightforward applications for insurance. Applications were submitted and evaluated on Z-Trade by an algorithm, without any involvement from an individual underwriter.
Mr Gunning explained that the restaurant sector in which the Claimant operates is a “flat trade”, meaning it is a low-risk environment subject to strict rules, and which generally carries with it less scope for discretion in the underwriting process. Accordingly, in most cases, restaurants such as the business of the Claimant would be evaluated exclusively on and by the Z-Trade system.
The specific risks insured under the Policy were set out in a schedule to it. The schedule provided that the following risks were insured: (i) business interruption and book debts; (ii) money; (iii) employers' liability; (iv) public and products liability; (v) frozen food; (vi) goods in transit; (vii) legal expenses; and (viii) loss of licence.
There were a number of other specific risks set out in the schedule which were expressly listed as being uninsured. These were: (i) specified and unspecified items ‘all risk’; (ii) employee dishonesty; (iii) personal accident; (iv) business travel; (v) terrorism; and (vi) household contents. Although not identified specifically in the schedule to the Policy, it is clear that the insolvency of the Claimant (or indeed any other person) was not among the insured risks under the Policy.
The Policy was renewed with effect from 12 October 2016, and again with effect from 12 October 2017. Upon the inception of the Policy, and at each subsequent renewal, the Defendant's Z-Trade system required the Claimant to indicate its response to various statements of fact as follows:
“No owner, director, business partner or family member involved with the business:
[(i)] has ever had a proposal or renewal for insurance declined or cancelled; a policy voided, withdrawn or suspended, or special terms imposed by any insurer.
[(ii)] has ever been convicted of, or charged (but not yet tried) with any criminal offence, other than motoring offences or offences that are spent under the Rehabilitation of Offenders Act 1974.
[(iii)] has ever been the subject of a winding-up order or company/individual voluntary arrangement with creditors, or been placed into administration, administrative receivership or liquidation.
[(iv)] is currently insured with Zurich Insurance plc. for the covers being requested.”
The numbering in the extract quoted above has been inserted by me for convenience.
It will be apparent from the structure of the question that the introductory wording (“ No owner, director, business partner or family member involved with the business:”) applies equally to each of the numbered statements (i) – (iv). The Z-Trade platform on which the form was completed provided a drop-down menu in respect of each numbered statement. The only options in the drop-down menu were “Agree” or “Disagree”. Accordingly, when completing the form, the Claimant (via the Broker) had to consider, in turn, whether it agreed or disagreed with each of the statements in respect of the persons identified in the introductory wording.
The critical statement of fact, and the statement at issue in the present case, appears under item (iii). It will be seen that it is a statement about various types of insolvency procedure. I refer to that statement as the “Insolvency Question”. In response to the Insolvency Question, on each occasion at inception and at each renewal date, the answer given by the Claimant was “ Agree”. I refer to the question and the answer together as the “Representation”.
The Defendant also relied on certain other statements contained in the Policy or ancillary documents.
First, at inception in 2015, the statement of facts which formed part of the Policy stated as follows:
“IMPORTANT – Please read the following information carefully
[…]
This statement of fact forms part of your insurance policy.
May we remind you that you have a duty to disclose all material facts: that is, those facts that would influence an insurer in the acceptance or assessment of a risk. If you are in any doubt about whether a fact is material, you should disclose it. Failure to do so may invalidate your cover and could mean that part or all of a claim may not be paid. Your duty to disclose is ongoing and does not apply solely at inception or renewal therefore if any information on which this insurance is based changes, please notify us immediately.
This statement of facts, the policy, any schedule, endorsements and certificate should be read as if they are one document.
If you are satisfied that this is a true statement of facts you need to take no further action and should retain this statement with your policy. If any of the details are incorrect please contact us immediately, as failure to do so could invalidate your policy. You will be advised of any resultant changes in acceptance, premium or cover and issued with a replacement statement of facts.”
Second, on renewal of the Policy in 2016 and 2017, the statement of facts stated as follows:
“IMPORTANT – Please read the following information carefully
This statement of facts,...
To continue reading
Request your trial