An accident for the purposes of an insurance policy is an act, intentional or otherwise, which has unintended consequences. If the consequences were intended by the assured or were inevitable so that the assured acted with reckless disregard for them, there is no accident.
The High Court has dismissed an appeal against refusal of an indemnity for nuisance or trespass under a contract of insurance in Thomas Fitzhardinge Gueterbock and another v Alexander Dugald Gregory MacPhail and others [2023] EWHC 1035 (Ch).
The claimants owned a late Victorian/early Edwardian property, 28 Henderson Road, London, SW18, without a basement. Adjacent to number 28 was a 1950s block of flats, Henderson Court, which was demolished in order to recreate three houses in keeping with the other houses in the road, numbers 30, 32 and 34 Henderson Road. The defendants owned number 30.
A gap of 90cm was proposed between numbers 28 and 30 with a shared side path. However, as developed, the basement of number 30 extended below the 90cm pathway to the line of the flank wall of number 28. The developer was insured against legal liability to pay compensation and costs in respect of accidental nuisance or trespass.
The defendants settled proceedings by the claimants for nuisance and trespass and sought to recover their losses from the developer and its insurer. They succeeded against the developer for failing to build number 30 with reasonable care and skill but not against the insurer. The judge decided that the extension to the flank wall must have been intentional and the trespass on the claimants’ property was not accidental. Consequently, the insurer was not liable to indemnify either the developer or the defendants.
The defendants appealed. The question for the appeal court was what level of risk, accepted by the developer, that the intentional act in extending the basement to the flank wall of number 28 was a trespass or nuisance, rendered the claimants’ successful claim non-accidental.
The judge had found the developer believed that the boundary of number 30 extended to the flank wall of number 28, but knowing the claimants would have objected, it took steps to hide them from the extent of the building, until the works were complete, and they could be presented with a fait accompli. The judge was entitled to conclude there was a high level of recklessness on the part of the developer and that the claim under the policy was not accidental.
Louise Clark is a property law consultant and mediator
