Property – Insurance – Plaintiffs owning large portfolio of residential properties – Whether defendant insurers entitled to avoid claim on ground of non-disclosure – Whether presence of squatters a material consideration – Whether service of Housing Act notices a material consideration – Whether level of unoccupied areas in properties a material consideration – Claim by plaintiffs dismissed
The plaintiffs’ insurance portfolio consisted of a number of associated companies concerned in the owning, letting and refurbishment of various properties.The insurance value of the portfolio was £27,842,000. In October 1987 a lady fell and was severely injured in one of the plaintiffs’ properties at 37 Belgrave Gardens, London. She claimed against the plaintiffs who paid an agreed total sum to include damages and costs of £305,599 and then claimed an indemnity under their insurance policy with the defendant for this sum.
The defendant claimed to be entitled to avoid the claim on the ground that the plaintiffs had not disclosed material facts, namely the existence of squatters living in a number of the premises contained in the portfolio, the service of Housing Act 1985 notices in respect of 37 Belgrave Gardens and other properties, and the high level of unoccupied areas in properties.The defendant further contended that at the relevant date, June 16 1987, the date on which the insurance slip was signed, the plaintiffs’ failure to disclose amounted to an inducement to the defendant to insure.
Held The plaintiffs’ claim was dismissed.
1. Since a contract of insurance was a contract uberrima fides and the insured was under a duty to disclose any material consideration which might affect the mind of the insurer,the presence of squatters in properties to be insured was a material circumstance to be disclosed.
2. The plaintiffs’ policy that refurbishment was best achieved by treating whole buildings inevitably resulted in a single unit remaining empty, perhaps indefinitely, while awaiting the availability of the whole. Works which were required to be done had not been done and although receipt of a Housing Act notice was not a material consideration in itself, the increased risk arose with the decision not to carry out the works. This policy meant further deterioration and made the circumstances which surrounded the Housing Act notice a material consideration which the plaintiffs should have disclosed.
3.The level of unoccupied areas, which had been disclosed to the plaintiffs’ insurers in 1983, had not been disclosed at the 1987 renewal when it was significantly higher. This level produced a greater risk of squatters and therefore a greater risk of internal and external damage.The detail of unoccupied areas was material and should have been disclosed .
4. It could not be said that disclosure of the presence of squatters, the Housing Act notices and the number of unoccupied areas were considerations which would not have affected the mind of a prudent underwriter. The duty to disclose was the insured’s and the response if any of the insurer to such disclosure was a matter for his professional judgment.
Andrew Prynne QC and Benjamin Battcock (instructed by Church Adams Tatham, of Reigate) appeared for the plaintiffs; Graham Eklund (instructed by Cameron Markby Hewitt) appeared for the defendants.
