FM Conway Limited v The Rugby Football Union & Ors.
[2023] EWCA Civ 418
Scotbeef Limited v D&S Storage Limited & Anor
20 February 2024
[2024] EWHC 341 (TCC)
High Court
A company's meat spoiled while in storage. The storage company's insurer said they weren't liable because the storage company didn't use the correct contract terms. The judge ruled that the insurance contract itself wasn't clear enough for the insurer to deny the claim, meaning the insurer has to pay for the spoiled meat.
Key Facts
- •Scotbeef Ltd (Claimant) sued D&S Storage Ltd (in liquidation) (First Defendant) and Lonham Group Ltd (Second Defendant) for loss of meat.
- •The First Defendant's insurance policy with the Second Defendant (Policy No: 117040 DB) was central to the dispute.
- •The preliminary issue was whether the First Defendant had a right of indemnity against the Second Defendant, enforceable by the Claimant under the Third Parties (Rights against Insurers) Act 2010.
- •The First Defendant did not participate in the proceedings.
- •The policy referenced FSDF terms and conditions and included a 'Duty of Assured Clause' requiring the First Defendant to take reasonable steps to incorporate its trading conditions into all contracts.
- •The 2022 judgment found the FSDF terms were not incorporated into the contract between the Claimant and the First Defendant.
- •The Second Defendant argued the First Defendant breached the 'Duty of Assured Clause', thus negating indemnity.
Legal Principles
Insurance policy provisions are construed like other contracts, seeking the parties' intention and avoiding absurd results. Ambiguity is construed contra proferentem.
Law of Insurance Contracts, Service Issue No 56 (July 23)
The Insurance Act 2015 (2015 Act) ameliorated the uberrima fides duty in insurance contracts. Section 9 prevents converting representations into warranties.
Insurance Act 2015, sections 9, 14, and Schedule 1; Chitty on Contracts (34th edition)
A breach of a condition precedent prevents a claim under an insurance policy unless the breach is remedied.
Case law (implicitly)
The 2015 Act's transparency requirements (sections 16 and 17) must be met for contracting out of the Act's provisions.
Insurance Act 2015, sections 16 and 17
Outcomes
The Second Defendant is required to indemnify the First Defendant (and thus the Claimant).
The court interpreted the 'Duty of Assured Clause' as requiring the First Defendant to take reasonable steps to incorporate the FSDF terms into existing contracts and found this did not satisfy the transparency requirements of the 2015 Act. The Second Defendant failed to prove it would not have entered the contract with the First Defendant on any terms had the misrepresentation not occurred. Sub-clauses (i), (ii), and (iii) should be read together, and the misrepresentation relating to sub-clause (i) is not sufficient to deny the claim.
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