Published in HFW's Insurance/Reinsurance Bulletin April, 2010.
(1) Loyaltrend Limited (2) Sye Razvi v (1) Creechurch Dedicated Limited (2) Brit UW Limited (3) Catlin (Five) Limited [2010] EWHC 425 (Comm)
The recent case of Loyaltrend v Brit UW Limited & Others, relating to damages under a property policy for business interruption arising out of a subsidence claim, further considered and applied the principles set down by the Court in the recent spate of decisions on notification in liability policies, specifically the cases of Kidsons1, Laker Vent2 and Aspen3. It was held that the test for whether a claim "may be made" was an objective one and further that the failure to "immediately" notify the potential claim to insurers was sufficient to invalidate the claim.
The General Conditions provided that, "compliance with the Policy is a condition precedent to liability" and also that "the insured shall give immediate notice ...on the happening of any injury or damage in consequence of which a claim is or may be made under this Policy...".
The insured first noticed cracking in late Summer 2003 but argued that the obligation to notify only arose in August 2004 when subsidence damage first became serious and it became apparent that a claim under the Policy may result.
The insured's argument was rejected by the Judge who held that, "strict compliance [with the condition] is required. Notification must be 'immediate' and 'in consequence of which a claim may be made'. The test is an objective one and what [the insured] knew or did not know is irrelevant. ...[the] 'serious problems;' at the end of 2003 required notice to be given at that point." The Policy would not respond as the Claimant had failed to comply with the condition precedent as to notice.
This is a commonsense Judgment, noting that in the circumstances of the particular case, the giving of immediate notice (as provided for in the Policy) would have allowed insurers to gather reliable evidence of the claim, while also confirming that, as in Laker Vent, the test for whether a claim 'may be made' is an objective one.
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