Insurance Law Monthly

It is common for insurers on property risks to seek information about the financial probity of the directors of the assured company, and in particular whether the directors have ever been insolvent. R&R Developments Ltd v. Axa Insurance UK Plc [2009] EWHC 2429 (Ch), discussed by Mark Cannon QC of 4 New Square, shows that clear questions are required if insurers are concerned not just with the position of the directors but also with the position of other companies with which the directors have been involved.

An insurance warranty is widely regarded as a draconian provision. It imposes obligations on the assured which must be complied with strictly according to the terms of the warranty, and in the event of breach the insurers are automatically discharged from liability as of the date of the breach even if the matters in question are beyond the control of the assured. Unsurprisingly, the courts have adopted a series of devices to overcome the harsh consequences of a breach, ranging from refusing to treat the clause as a warranty at all to adopting a narrow approach to construction. The decision of HHJ David Mackie QC in A C Ward & Sons Ltd v Catlin (Five) Ltd [2008] EWHC 3585 (Comm), upheld by the Court of Appeal [2009] EWCA Civ 1098 is illustrative of the approach taken by the English courts. The insurers in this case sought summary judgment, it was necessary to decide only if the assured had a case worthy of going to trial. However HHJ Mackie QC chose to express his views in the interests of promoting a settlement between the parties, and the Court of Appeal undertook a similar exercise. Subsequently, in a full trial of the issues in this case, Flaux J decided that there had not been any breach of the warranties by the assured, but the insurers succeeded on a non-disclosure issue. Flaux J’s ruling will be discussed in a forthcoming issue of I nsurance Law Monthly.

Dornoch Ltd v Westminster International BV (No 2) [2009] EWHC 1782 Admlty concerned a blatant attempt by the insured to use an intra-group transaction to keep its vessel out of the hands of its insurers who had made payments for a constructive total loss. In this ‘Phase 2 judgment’ of Mr Justice Tomlinson, the insurers successfully invoked the jurisdiction under s423 of the Insolvency Act 1986 to frustrate the attempt. The case is discussed by Roger Stewart QC and Jonathan Hough of 4 New Square.

The Court of Appeal in Sienkeiewicz v Greif (UK) Ltd [2009] EWCA Civ 1159 has decided that the ordinary rules of causation in tort which apply where there are two or more possible causes of injury are to be relaxed where the injury sustained is mesothelioma resulting at least in part from exposure to asbestos. In mesothelioma cases the test is simply whether tortious exposure had made a material contribution to the risk.