NOTIFICATION CLAUSE HELD TO BE AN INNOMINATE TERM

Alfred McAlpine plc v BAI (Run-Off) Ltd ([2000] 1 Lloyd’s Rep 437)

The Court of Appeal in Alfred McAlpine plc v BAI (Run-Off) Ltd [2000] 1 Lloyd’s Rep 437 dismissed an appeal from the decision of Mr Justice Colman (on which see our March 1999 issue, pp 1–4) but the reasoning which led it to dismiss the appeal differed in significant respects from the analysis of Mr Justice Colman. The Court of Appeal concluded that the clause requiring the assured to notify the insurer ‘as soon as possible’ of any occurrence giving rise to a claim under the policy was an innominate term and that a breach of the term which was sufficiently serious would entitle the insurer to reject the claim (but not to avoid the policy as a whole). On the facts of the case it was held that the failure to comply with the notification procedure was not sufficiently serious to entitle the insurer to reject the claim so that the insurer’s only remedy lay in damages for the loss suffered as a result of the failure to notify (although, on the facts, the insurers had abandoned any claim in damages).