R & R DEVELOPMENTS LTD V AXA INSURANCE LTD

Chancery Division, Nicholas Strauss QC, 28 September 2009

Insurance (property) - Utmost good faith - Alleged misrepresentation - Proper construction of question - Waiver

The claimant assured took out a Commercial Combined and Contract Works policy in respect of a small development. The proposal form asked the question: "Have you or any Partners or Directors either personally or in connection with the business in which they have been involved ... ever been declared bankrupt or are the subject of any bankruptcy proceedings or any voluntary or mandatory insolvency". The assured answered this question in the negative. One of assured's directors was a director of a company in administration at the date the proposal form was completed. The insurers purported to avoid the policy on the grounds of misrepresentation. The court held that there was no misrepresentation. (1) Where there was an ambiguity in the question, the contra proferentem principle was to be applied to it. The meaning was to be assessed on an objective rather than subjective basis. (2) There was no ambiguity here. The question by its terms did not ask about the insolvency of companies with which directors had been involved, but only about the insolvency of the directors themselves. Had the word "involved" extended to companies, it would have been very wide and uncertain in meaning. Further, in asking about past losses, the proposal was concerned only with claims by individuals. (3) Had the question been ambiguous, the same result would have been reached by the application of the contra proferentem principle. (4) In any event, the fact that a limited question relating to individual insolvency had been asked meant that disclosure of information as to corporate insolvency had been waived.