Construction—property insurance—fire—cover expressed to cease on material alteration to the premises or material change in the facts proposed

The claimant, a freeholder of business premises, had property insurance with the defendant. To the knowledge of the insurer the premises were occupied by the claimant’s tenant. Following the destruction of the premises by fire, the insurer declined indemnity on two grounds: misrepresentation of facts, in that the insured had falsely represented that the premises were protected by a fire sprinkler system; and breach of condition of the policy, in that there had been a material change in use of the premises prior to the fire from wholesale kitchenware to scooters and mini motor-bikes, and/or a material change in facts as proposed in that the sprinkler system had been disconnected. The insured relied on an extension clause to protect the interest of the freeholder, who was expressed not to be prejudiced by an increase in risk without his authority or knowledge. The evidence at first instance was that the water supply to the fire sprinkler system had been cut off prior to the fire and that an isolation valve had been closed and covered by a filing cabinet, thus preventing access to a control handle.