Warranties: construction of “basis” clauses

The decision of the Court of Appeal in Genesis Housing Association Ltd v Liberty Syndicate Management Ltd [2013] EWCA Civ 1173, upholding the first instance ruling of Akenhead J, is a sharp reminder of two points. First, warranties in the form of basis clauses remain powerful weapons and remove the need of an insurer to rely upon misrepresentation where a false statement has been made by the assured.

Secondly, it is not always appropriate to attempt to give effect to every provision in a policy. If there are clearly contradictory provisions, one of them must be regarded as superfluous. The ruling in Genesis is nevertheless somewhat surprising, in that the Court of Appeal was prepared to give the basis clause a generous interpretation (contrary to the approach in other recent decisions seeking to confine the operation of warranties) and in that the insurers were given the benefit of their own ambiguity.