Where circumstances dictate, the court will entertain claims in construction, rectification and estoppel by convention to do justice between the parties.
In George on High Ltd and another v Alan Boswell Insurance Brokers Ltd and another [2023] EWHC 1963 (Comm), the court ordered insurers to settle business interruption and associated claims arising from a fire.
The George, a 16th century hotel in Rye, East Sussex, was largely destroyed by fire in July 2019. The first claimant, GOH, owned the freehold interest and the second claimant, George on Rye Ltd, operated the hotel and restaurant business. GOR paid rent to GOH for the use of the premises. Alex and Katie Clarke were sole directors and shareholders of both companies.
The first defendant was the insurance broker that arranged cover for the claimants over many years. The second defendant, New India Assurance company Ltd, was the underwriter of the insurance arranged by the broker from 2013 onwards. The 2018 policy named the insured as “The George on High Ltd t/a The George in Rye”.
NIAC accepted liability to GOH for damage to the hotel but refused to cover claims by GOR for business interruption, stock and contents, arguing that GOR was not insured under the policy. GOH and GOR brought claims against both NIAC and the broker.
It was common ground that GOH never traded as The George in Rye, that GOR was the only entity which ever traded at the hotel and that NIAC did not know this in 2013. However, the claimants and the broker argued that NIAC became aware through the conduct of four historical personal injury claims directed at GOR that it existed and operated the business of the hotel before the 2018 policy was issued. The claims were not denied.
The court decided that the knowledge of the claims handlers – the only people NIAC put forward to interact with an insured in relation to a claim under a policy – was knowledge which NIAC was deemed to know under agency principles. The wording used to describe the insured was imprecise. It had been copied over from a 2013 policy and the parties were lax about the accuracy of the terms used. A reasonable person, knowing all the background, would look at the wording naming the insured and conclude that its meaning was “The George on High Ltd and the business operated by GOR t/a The George in Rye”.
Consequently, GOR was insured, but if the court was wrong on that then it would have ordered rectification of the policy in those terms. All the elements required to establish estoppel by convention were also made out.
Louise Clark is a property law consultant and mediator
