This case concerned a property that was destroyed by fire. Insurers declined cover under a property owner’s policy on the grounds that they had validly avoided it for misrepresentation and non-disclosure and, alternatively, because the insured had breached warranties relating to the state of the property when unoccupied.
The judge, Mr. Richard Salter QC, held that insurers had been induced to accept the risk by the insured’s misrepresentations that the property (i) was in a “good” state of repair; (ii) had no flat roof; and (iii) had not been subject to malicious acts or vandalism; and because Dalecroft had failed to disclose that an Environmental Protection Order had been made in relation to the Property. He also held that underwriters would not have been liable anyway because the insured had, among other things, failed properly to secure unoccupied parts of the property, in breach of warranty.
Whilst this case is in many ways a typical avoidance/breach of warranty case, it is unusual in some interesting respects:
Dalecroft argued that the misrepresentations and non-disclosure complained of related to the residential parts of the property and that insurers could not therefore validly avoid cover for the commercial parts. However, the judge rejected this argument because Dalecroft’s answers regarding the state of the property pertained to both residential and commercial parts and, as such, the risks covered by the policy were not clearly separable. Moreover, the policy was a single insurance for which a single overall premium was paid.
Dalecroft also contended that the relevant period in respect of which the truth of the alleged misrepresentations and non-disclosure fell to be decided was when the insurer issued a certificate by which the identity of the insured under the policy was changed. However, the judge found that the effect of the issuance of further certificates was to amend the policy rather than to replace it with new policies, notwithstanding that they had new policy numbers. What was cancelled and replaced was the documentation embodying the contract of insurance, not the contract of insurance itself.
Although the judge applied the law as it stood before the 2015 Insurance Act, the relevant events having occurred before 12 August 2016, he commented that although the pre-2015 Act law may sometimes operate harshly to the detriment of the insured, he was satisfied that it does no injustice to Dalecroft in this case because Dalecroft made no real effort to make a fair presentation of the risk or to comply with the Commercial Unoccupancy conditions of the insurance.
It is also instructive to note that the judge, faced with contradictory evidence from factual witnesses, was able to rely more readily on the evidence of those who had maintained contemporaneous notes than of those who did not.