Project Angel Bidco Limited (In Administration) v Axis Managing Agency Limited & Ors
[2023] EWHC 2649 (Comm)
Project Angel Bidco Limited v Axis Managing Agency Limited & Ors
2 May 2024
[2024] EWCA Civ 446
Court of Appeal
A company bought another and got insurance to cover problems. The insurance policy seemed to both cover and exclude problems with bribery and corruption. The court said the insurance company's interpretation of the policy was reasonable, even though confusing. The company that bought the other business didn't win.
Key Facts
- •Project Angel Bidco Ltd (PABL), now in administration, acquired Knowsley Contractors Ltd (King) and took out a Buyer Side Warranty & Indemnity Insurance Policy.
- •The policy included warranties covering various aspects of King's business, including those related to bribery and corruption (warranty 13.5).
- •The policy also contained an exclusion for 'ABC Liability,' defined as any liability or alleged non-compliance with anti-bribery laws.
- •PABL claimed under the policy alleging breaches of several warranties, including those in warranty 13.5.
- •The dispute centered on the interaction between the 'covered' warranties and the ABC Liability exclusion.
- •PABL argued that a contradiction existed between the policy's insuring clauses and exclusions, suggesting a drafting error that should be corrected.
- •The lower court found no contradiction.
Legal Principles
General principles of contractual interpretation.
HHJ Pelling KC [2023] EWHC 2649 (Comm)
The words used as labels in a contract are seldom arbitrary and may help elucidate ambiguities.
Chartbrook Ltd v Persimmon Homes [2009] AC 1101
Insurance policy exclusions must be read in the context of the contract as a whole, consistently with the purpose of the insurance contract. The contra proferentem principle may be excluded by contract.
Impact Funding Solutions Ltd v Barrington Support Services Ltd [2016] UKSC 57
A literal meaning of a contract provision can be corrected if a mistake is clear, and the intended wording is clear. There is a high hurdle to overcome, requiring an obvious nonsense.
Chartbrook Ltd v Persimmon Homes [2009] AC 1101; MonSolar IQ Ltd v Woden Park Ltd [2021] EWCA Civ 961; Trillium (Prime) Property GP Ltd v Elmfield Road Ltd [2018] EWCA Civ 1556
The clarity of both the mistake and its correction is crucial for rectification.
Arnold v Britton [2015] UKSC 36
Inconsistent contractual clauses must contradict each other, making it impossible to give effect to both.
Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565
A contract may itself provide an order of precedence for resolving inconsistencies between clauses.
Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565
The assumption that parties intended all clauses to have effect is not reasonable in complex documents that contemplate inconsistency.
FCA v Arch Insurance (UK) Ltd [2021] UKSC 1
Outcomes
Appeal dismissed.
The court found no obvious error in the policy's drafting requiring correction. While an apparent inconsistency existed, the policy itself did not indicate which conflicting clause should prevail. The court found the underwriters' interpretation coherent and rational, and the proposed correction, while seemingly minor, had a significant effect with unclear justification.
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