[2008] EWHC 83 (TCC)

Where an investigation into notified circumstances revealed other defects which had no relationship to the notified circumstances, any claim relating to them did not arise out of the notified circumstances.

Relying on the guidance given recently in HLB Kidsons v Lloyds Underwriters concerning notification under “claims made” policies which also provide cover for circumstances notified during the period of insurance, the judge applied a rigorous approach to notification under the claimant builder’s professional indemnity policy. The claimant had notified the defendant insurer in February 2001 that accommodation pods in a five storey pod and flat pack constructed block of flats were moving excessively causing adjoining walkways, roofing and balconies to distort. An investigation into the problem was referred to in the notification and this subsequently determined that the problem was anticipated and had stabilised.

Following the expiry of cover in May 2002, further problems were discovered, some in the area of the previously notified problems. The claimant relied upon its 2001 notification in respect of these subsequent problems. The court held that the notification only covered the defects which caused the symptoms of, or the consequences of, the circumstances notified in 2001.

Comment: the Kidsons case illustrated the problems caused by the wording of a notification – even to the extent that, following judgment, the parties could not agree on what Gloster J had decided was the scope of the notification and asked her to clarify her judgment (see Insurance Update December 2007). In the present case, the judge was at pains to avoid such uncertainty. He spelt out that even had the investigation referred to in the notification revealed damages, defects and deficiencies which were not related to the notified circumstances within the insurance period, the original notification would not be wide enough to cover such laterally or coincidentally discovered matters. The investigation referred to in the notification was not a separate notified circumstance in itself. It could, and in fact did, only relate to the notified circumstances. The fact that later investigations, even if into the notified circumstances, happened to reveal other defects did not bring them within the scope of the notification unless they were attributable or gave rise to the notified circumstances.

An insured must make further notifications as it becomes aware of further circumstances which might give rise to a claim.