Duty of care

In Jones v Environcom Ltd and Anr [2011] EWCA Civ 1152, the Court of Appeal had to consider an appeal by an insured who sought to argue that, but for an insurance broker’s negligence in arranging cover, a fire which had caused significant loss to the insured would not have happened, and that, therefore, the insured was entitled to damages from the broker. The case is considered by Tom Asquith of 4 New Square.

The facts

Environcom (any distinction between the two defendant entities being immaterial for the purposes of the litigation) were in the business of waste management. As part of this business, a plasma gun would be employed to remove bolts securing fridge compressors. On 16 September 2007 a fire took place at the premises of Environcom causing Environcom substantial losses. Their insurer (‘Woodbrook’) sought a declaration of non-liability. Woodbrook rejected liability on the basis that the source of the ignition was probably a plasma gun and there had been no disclosure of previous fires or the use of plasma guns. Their involvement in the matter was settled on 6 November 2009 (by payment to Environcom the sum of £950,000). The remaining dispute was between Environcom and the third party, Miles Smith Insurance Brokers (‘MS’).