A C WARD & SON LTD V CATLIN (FIVE) LTD

[2009] EWHC 3122 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Flaux, 3 December 2009

Insurance (theft) - Goods stolen from warehouse - Policy containing Protection Maintenance and Burglar Alarm Maintenance Warranties - Equipment not functioning - Whether warranties were absolute or required the assured to correct known defects - Utmost good faith - Non-disclosure of failure to comply with security recommendations -Materiality - Inducement - Variation of policy

The assured's goods were insured under a theft policy which contained two security warranties. The first, the Protection Maintenance Warranty, stated that: "It is warranted that ... the whole of the protections provided for the safety of the insured property shall be maintained in good order throughout the currency of this insurance and that they shall be in full and effective operation at all times ... All defects occurring in any protections must be promptly remedied". The second, the Burglar Alarm Maintenance Warranty, stated that: "It is warranted that - ... the burglar alarm system shall have been put into full and effective operation at all times when the Insured's premises are closed for business, and at all other appropriate times, including when the said premises are left unattended". The policy also stated: "Make and type of Burglar Alarm System: Not provided", and contained cigarettes, tobacco, wine and spirits endorsement to the effect that: "It is hereby noted and agreed that Theft cover in respect of Stock of Cigarettes & Tobacco ... at Victor House ... is not operative outside of Business Hours unless the Stock is kept within the special secure store on the ground floor". The endorsement was subsequently lifted after the inception of the policy. The assured suffered a theft of stock, and the insurers denied liability in reliance on these warranties and also on the ground that the assured had falsely stated when applying for the policy that survey recommendations had been complied with, in that there was a metal cage in place, that additional sensors had been installed in accordance with those recommendations and that the guardwire extended round the walls of the cage.