An interesting judgement in relation to the scope of notification came out of the English High Court earlier this year in the case of Euro Pools Plc v Royal and Sun Alliance Insurance Plc [2018] EWHR 46 (Comm).

This case concerned three notifications by Euro Pools to RSA, over the June 2006- June 2007 and June 2007- June 2008 Professional Indemnity Policy years, the first notification being made in the 2006-2007 Policy year, and the second and third being made in the 2007-2008 Policy year. A dispute arose as to whether the later notifications attached back to the original notification made in the 2006-2007 Policy year.

The background in brief was that Euro Pools specialised in the design and installation of swimming pools. They offered a swimming pool design which had a moveable floor, which allowed the pool depth to be increased and decreased. They also offered a design which included vertical walls which could be raised and lowered via a booms system, allowing the pool to be reconfigured into separate sections.

The First Notification - Booms System & Moveable Floors (2007 Policy year)

In February 2007, Euro Pools discovered a fault with the booms system. The system worked by filling a steel tank with air, however the bottom of the tank was discovered not to be airtight, meaning that the vertical floors would not rise as intended. Euro Pools notified this to their Insurers, RSA, but advised that they felt this fault could be remedied by the use of airbags, and as such the cost of remediation should not fall outside the excess amount.

They also notified a “major design fault” with the moveable floors rope and winch system, requiring a change to hydraulics and steel ropes that involved a claim to the Policy.

The Second Notification – Booms System (2008 Policy year)

In May 2008 the Insured then advised RSA that there was a problem with airbags system they had implemented to “fix” the booms system. They advised that they needed to change over to a hydraulic system, which cost would exceed the Policy excess.

The Third Notification – Moveable Floors (2008 Policy year)

In November 2007 the Insured notified a problem with a diving pool they had installed in Leeds. The moveable floor jammed and this was therefore notified as a circumstance to RSA.

The Case - Booms System

Euro Pools submitted that, in relation to the Booms Claim, it was the 2008 notification, and not the earlier 2007 notification that triggered policy cover. They submitted that the failure of the airbags “fix” was not causally connected to the original tank fault. They relied on the earlier Kajima decision in support of this position, which states, “It is only a circumstance of which the Insured is actually aware which can be the subject matter of a notification.”

RSA argued that this was too narrow an interpretation of Kajima, and argued that both the tank and airbag failures were symptomatic of a broader design flaw. That is, that the booms system was defectively designed, and therefore the fact that the first “fix” did not take and a second “fix” was required was irrelevant, it was the flawed booms system which was notified.

The Court agreed with Euro Pools and held, “I find that on the evidence the claimant was not aware in February 2007 of problems with the air drive system such that it could not notify the circumstances which led to a claim for the expenses of the move to a hydraulic system.”

The Case – Moveable Floors

Similarly, Euro Pools claimed that the specific “Leeds Pool” circumstance notified in November 2007 was separate and independent to the February 2007 notification in relation to the moveable floors. Crucially, they argued that the Leeds Pool claim arose due to a failure of the steel rope and hydraulic system, not the original rope and winch system notified in February 2007.

RSA argued that the Leeds Pool claim arose due to a failure on the part of the Insured to develop a working moveable design. The fact that the fault notified in 2007 related to rope and winch, and the fault which led to the Leeds Pool claim related to the steel rope and hydraulics system was too narrow a view.

Again, the Court sided with Euro Pools, deciding that the design defect in the Leeds Pool was not known to the Insured in 2007, and therefore there was no causal link between the 2007 Notification and the later Euro Pools claim.

Conclusion

The Court’s findings constitute a fairly restrictive interpretation of the principles set out in Kajima, and a fairly narrow view overall as to the scope of such notifications.

This case is a reminder of the difficulties which can arise when an emerging problem is notified before the full scope of the problem is understood, and a reminder of how fact-sensitive the issue of notification can be.

It is not clear whether an Irish Court would follow the findings of the English High Court in this claim, however, given the dearth of Irish case law in relation to notification it is something practitioners should take heed of.