Norman Hay PLC (in Members’ Voluntary Liquidation) v Marsh Limited
[2024] EWHC 1039 (Comm)
Hamsard One Thousand and Forty-Three Limited v AE Insurance Brokers Limited
12 February 2024
[2024] EWHC 262 (Comm)
High Court
A company sued its insurance broker for not getting them proper insurance, leading to their policy being cancelled. The judge decided the broker didn't do anything wrong. Even if they had, the company wouldn't have gotten the insurance they wanted anyway, so the broker wasn't to blame for their losses.
Key Facts
- •Hamsard One Thousand and Forty-Three Limited (Hamsard) sued its insurance broker, AE Insurance Brokers Limited (AE), for alleged breaches of duty leading to the avoidance of a property insurance policy.
- •Fusion Insurance Services Limited (Fusion) avoided the policy due to Hamsard's non-disclosure of directors' association with prior failed companies and the administration status of the tenant, Incanite Foundries Limited.
- •Hamsard claimed £2,648,769.99 in damages.
- •AE denied liability, arguing Mr Beresford (Hamsard's principal) had lied, there was no breach of duty, no causation, and no recoverable loss.
- •Incanite, Hamsard's tenant, experienced financial difficulties and entered administration.
- •The policy was cancelled and replaced with a new policy with significantly less cover.
- •The claim was made more than five years after the relevant events.
- •A central dispute involved whether AE had disclosed Incanite's administration status to Fusion.
Legal Principles
Duties of an insurance broker
Standard Life Assurance v Oak Dedicated Ltd [2008] Lloyd’s Rep IR 552, Dunlop Haywards (DHL) Ltd & Others v Barbon Insurance Group Ltd [2009] EWHC 2900 (Comm), Jones v Environcom Ltd (No 1) [2010] PNLR 27
Waiver of disclosure under the Marine Insurance Act 1906
Marine Insurance Act 1906, section 18(3)(c)
Liability for consequential losses in broker's negligence cases
Verderame v Commercial Union Assurance Co Plc [1955-95] PNLR 612; Ramwade Ltd v WJ Emson & Co Ltd [1987] RTR 72 and Sprung v Royal Insurance (UK) Limited [1999] 1 Lloyd’s Rep 111
Outcomes
Hamsard's claims were dismissed.
The court found that AE was not in breach of its duty to act as a competent broker. The court held that Fusion had waived disclosure of Mr Beresford's involvement with prior failed companies. Further, the court found that AE had informed Fusion of Incanite's administration status and that loss of rent cover was not required. The court also found that even if there had been breaches of duty, causation was not established. Specifically, even with full disclosure, alternative insurance would likely not have covered the claimed property damage.
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