Insurer resisting claim by restaurateur under fire insurance policy — Fire caused by cigarette end in almost empty bin — Insurer relying upon clause warranting removal of trade waste — No allegation that restaurateur’s practice otherwise unsafe — Claim dismissed
The claimant’s pizza restaurant was insured under a combined all-risks policy issued by the defendant insurer. The policy contained a waste clause, warranting that all trade waste would be bagged by the end of each day’s trading and removed to a secure waste-disposal area or designated storage building pending removal from the premises. Condition 13 recited that non-compliance with any warranty would be a bar to any claim “in so far as it increase[d] the risk” of the loss, destruction, or damage giving rise to the claim. The restaurant was closed from April to October 2001 after being damaged by a fire that broke out after the last of the claimant’s employees had departed. The claimant sought to recover £94,336 under the material damage section of the policy, and £195,640 under the business interruption section of the policy. The insurer resisted both claims on the ground of failure to comply with the waste clause. The claimant contended that the clause did not apply, and that, in any event, his non-compliance had not increased the risk of fire.
The judge found as a fact that the fire had started in a plastic bin located beneath a steel surface in the food-preparation area. The bin was used for the disposal of, among other items, used napkins from the restaurant tables and, very occasionally, cigarette ends. The normal practice was to deposit the contents of ash trays into another bin that was used for the disposal of wet rubbish. Once they were full, the bags were taken from the bin to the street outside. The judge found that the “overwhelming likelihood” was that there were one or more paper napkins and at least one, discarded, unextinguished, cigarette end in the bin before the fire broke out.
Held: The claim was dismissed.
Although ambiguity had to be construed against the insurer, the expression “trade waste” sensibly had to mean waste generated in the ordinary course of trading. The individual detritus generated by those carrying on the trade, for example napkins or newspapers discarded by customers, must realistically be regarded as trade waste. Since the only sensible purpose of removal to a safe area was to reduce the risk of fire while the premises were unattended, compliance could not be achieved by removal of the waste immediately prior to the next day’s trading. Neither the bin nor the space that it occupied could be described as a secure waste-disposal area. Had the waste clause been complied with, the relevant waste would have been removed to the street before the premises were vacated. It was inescapable that the breach of warranty had increased the risk of fire.
Warranties in an insurance policy were draconian in their effect. It was significant that the insurer had not suggested that the claimant had failed to take reasonable precautions to prevent the loss and damage. By including the waste clause in its policy, it had made it clear that meeting a claim in the present circumstances was not what it had intended.
Christopher Heather (instructed by Edwin Coe) appeared for the claimant; Nicholas Vineall (instructed by Davies Arnold Cooper) appeared for the defendant.
Alan Cooklin, barrister
