A C WARD & SONS LTD V CATLIN (FIVE) LTD

[2009] EWCA Civ 1098, Lord Justice Wilson, Lord Justice Etherton and Lord Justice Sullivan, 10 September 2009

Insurance (property) - Policy containing security warranties - Burglar alarms defective unknown to assured - Whether warranties to be construed as excluding liability where assured unaware of defects

The assured's theft policy contained two relevant provisions, described as warranties, which were related to security. The first clause stated that: "It is warranted that ... the whole of the protections provided for the safety of the insured property shall be maintained in good order throughout the currency of this insurance and that they shall be in full and effective operation at all times ... All defects occurring in any protections must be promptly remedied". The second clause stated that: "It is warranted that ... the burglar alarm system shall have been put into full and effective operation at all times when the Insured's premises are closed for business, and at all other appropriate times, including when the said premises are left unattended". At the time of the loss neither of these provisions was being complied with. At first instance HHJ Mackie QC held that the insurers were not entitled to summary judgment based on breach of these terms. (1) The terms were warranties and not, as the insurers had argued, merely suspensory conditions. That meant that the terms were to be given the narrow construction appropriate to draconian clauses such as warranties. (2) The terms were not to be construed as unconditional statements that there was no recovery if security protection or burglar alarms were not working. Instead they were to be construed as meaning that the assured was under a duty to remedy defects promptly, so that there was no recovery only if the defects were or ought to have been known to the assured and had not been remedied. The Court of Appeal upheld this ruling without further elaboration.