Non-disclosure and breach of warranty

Burton J in Sugar Hut Group Ltd v Great Lakes Reinsurance (UK) plc [2010] EWHC 2636 (Comm) discussed a series of defences raised by insurers under a property policy following damage to the insured subject matter by fire. Much of the ruling is factual, although there are interesting statements of principle relating to the construction of policy terms.

Sugar Hut: the facts

The Sugar Hut Group (SHG) was run by two individuals, N and G, and from 2007 held interests in three nightclubs through companies which were not SHG subsidiaries. In November 2008 four new companies were interposed as subsidiaries of SHG to take over the business of the old companies, and the old companies went into administration in February 2009 by reason of their financial difficulties. This was partly the result of an allegation by SHG against G that he had been guilty of fraudulently siphoning off SHG funds, although the dispute was resolved by a compromise agreement.