Zurich Insurance PLC v Maccaferri Ltd [2016] EWCA Civ 1302

Introduction

The Court of Appeal has dismissed an appeal by an insurer who sought to establish that the insured had breached a condition precedent of their policy, and so would not be indemnified. The insurer ("Zurich") argued that the insured ("Maccaferri") should have reported to them sooner, and that the delay meant Maccaferri were not protected for their liability in a matter involving personal injury.

The court was not swayed by Zurich's submissions, and in the judgment of Clarke LJ, Zurich was attempting to stretch the ambit of the condition so as to exclude an otherwise valid claim.

The wording of the provision

The relevant provision in Maccaferri's policy was as follows:

The Insured shall give notice in writing to the Insurer as soon as possible after the occurrence of any event likely to give rise to a claim with full particulars thereof.

In the case at hand, the event was an incident in September 2011 involving an item of equipment owned by Maccaferri whereby a construction worker sustained an injury. The item had been hired out from Maccaferri to a third party merchant, and then from there hired out again to the worker's employer. Maccafferri notified Zurich of a claim in July 2013 when they received a letter from the merchant's solicitors, but Maccaferri's first knowledge of an incident involving injury was at least January 2012.

It was common ground between the parties that an event qualifies as being "likely to give rise to a claim" where there is at least a 50% chance that a claim would arise as a result of the event. Zurich's argument rested on Maccaferri failing to notify sooner, whereas Maccaferri's position was that they were not aware of any blame being directed at them at the time of the incident, nor were they made aware from the occasional updates they received in subsequent months. To their knowledge at the point of becoming aware of the event, the event did not qualify as likely to give rise to a claim – therefore no notice was given.

The extent of the duty to notify

At the Court of Appeal, Zurich sought to demonstrate that the presence of the wording "as soon as possible" in the policy created an obligation to notify when Maccaferri's knowledge was such that it was, or should have been, possible for them to notify. Part of this argument relied on the reference to providing full particulars, which Zurich said was consistent with a duty to be proactive in making inquiries. Therefore, Zurich submitted, the condition required Maccaferri to give notice not only when Maccaferri became aware of a qualifying event, but also when they ought to have become so aware.

Maccafferri countered by accusing Zurich of an attempt to make the words "as soon as possible" do double duty – to require that notice to Zurich be prompt once Maccaferri was actually aware of a qualifying event, and simultaneously to require that notice be given as soon as it was possible and reasonably practicable for notice to be given, in light of sufficient information about the likelihood of a claim now being available.

Clarke LJ sided with Maccaferri on this point. Although he granted that it was possible to read from the wording an obligation to notify when one ought to have known of a qualifying event, his view that such an interpretation was "strained and erroneous".

Applying contra proferentem

Clarke LJ also pointed to the long-standing contra proferentem doctrine, which holds that where there is an ambiguity in the wording of a contract, the court should construe that ambiguity to the detriment of the party that drafted the wording. Zurich could have been explicit in the wording of the policy, and created a clear duty on Maccaferri to assess the following continually:

  1. whether any event has happened; and
  2. whether any events which have happened are likely to give rise to a claim.

Unfortunately for Zurich, as Clarke LJ said (at paragraph 33):

"There are clauses which have that effect... but they are not in this form. If that was what was intended, the insurers could be expected to have spelt it out."

Clarke LJ noted that in light of existing caselaw, there is a prima facie position that one assesses whether one must notify an event immediately after said event. Therefore if Zurich's aim was to depart from that established approach to notification and require ongoing assessments, they would need clear wording to demonstrate this, and their wording was not clear enough to establish such a departure.

Conclusion

This case demonstrates a party suffering after a failure to make explicit any duty to inquire. Interpretation of notice provisions will always depend on the surrounding wording, but the decision illustrates the danger of extrapolating too much from a requirement to act in a given way "as soon as possible". If the intent is not only to report existing knowledge but also to report other information as soon as it may be possible to know it, then the courts are likely to search for clear signs in the contract that inquiries are expected.