Insured losing stock to burglars – Whether theft within terms of policy – Preliminary issues of whether entry via gates or forcing open of internal doors involved “entry to or exit from premises” – High Court answering issues in favour of insurer – Court of Appeal allowing appeal
The plaintiff carried on a business from Nigel Fredericks House, Carlise Road, London NW9. It sought recovery from the defendant insurers in respect of loss suffered occasioned by the alleged burglary. It was claimed that intruders gained entry into the plaintiff’s yard by forcing open two sets of double gates and, either by picking the lock or by the use of a duplicate key, entering the building via an external staff door and forcing open five internal doors. Clause (a) of section C of the policy read: “the Premises (which shall not include any garden, yard or outbuilding) . . . shall be lost or damaged due to: (i) theft . . . involving entry to or exit from the Premises by forcible or violent means . . . and the [insurer] will . . . indemnify the insured against such loss or damage”.
A preliminary issue arose as to the meaning of the term “the Premises”. The insurers claimed that the staff door had not been opened by forcible or violent means and therefore the plaintiff was not covered by the policy because “the Premises” excluded a garden, yard or outbuilding. Accordingly, “the Premises” meant the building itself and thus any use of forcible and violent means on the double gates or the internal doors did not involve entry or exit from “the Premises” within the policy. The plaintiff contended that the exclusion to the word “the Premises” defined in clause (a) did not apply to subsequent references to “the Premises” such as in subclause (i), clause (b) and the protections warranty. The High Court answered the issue in favour of the insurers. The plaintiff appealed.
Held The appeal was allowed.
1. As a matter of construction, it would have been surprising if the protections warranty had been limited to the protection of the building, because the insured would not have been bound to keep the main gates secured. That suggested that the references to “the Premises” subsequent to clause (a) were not intended to be subject to the defined exclusion and, had they been so, it would have been appropriate to have included an express opening definition in the policy to that effect.
2. The commercial purpose of section C was to provide cover against theft from outside, as distinct from theft by employees without the use of force and violence. Thus, the policy required the perimeter to be breached and there was good commercial sense in defining the property as the building in clause (a) for that purpose, but not thereafter. In any event, the uncertainty had to be decided in favour of the plaintiff when the contra proferentem rule was applied. Therefore clause a(i) included forcible entry to and from the yard by the gates.
3. Entry and exit from “the Premises” meant entry and exit from “the premises or any part thereof”. That was part of the statutory definition of burglary: see section 9(1) of the Theft Act 1968. Therefore the forcible and violent entry of the internal doors was within the scope of the policy: Re Calf & Sun Insurance Office [1920] 2 KB 366 applied.
Simon Croall (instructed by Seddons) appeared for the plaintiff; Derek Holwill (instructed by Davies Arnold Cooper) appeared for the defendant.
