The Court of Appeal considered a notification condition precedent in a combined public and products liability policy. The condition precedent required the insured to give notice “as soon as possible after the occurrence of any event likely to give rise to a claim”.
Maccaferri, the insured, supplied a Spenax gun to a builders’ merchant, who hired it out to a construction company. On 22 September 2011 there was an incident involving the gun which resulted in one of the construction company’s employees losing the sight in one eye.
Maccaferri were made aware of that there was an incident involving the Spenax gun on 28 September 2011, although the evidence before the court was that no details of the accident were provided and Maccaferri was not told that there had been a serious personal injury. By 12 January 2012 Maccaferri was aware that there was an injury, but not of any allegations that the gun was faulty and on 12 July 2013 Maccaferri was joined as a Part 20 defendant in an action brought by the building contractor against the builders’ merchant. Maccaferri notified its insurer of the claim that day.
The insurer refused to indemnify Maccaferri on the basis that it was in breach of the notification condition precedent. Its position was that the insured must give notice of an event likely to give rise to a claim “when he becomes aware of the event, and that it was likely to give rise to a claim, or when he ought to have become so aware”.
The court considered that the critical question is whether the event, when it occurred, was likely to give rise to a claim, for that is the notification trigger. The court confirmed that “an event likely to give rise to a claim” required that a reasonable person in the position of the insured would have thought it was at least 50% likely that a claim would be made. Here, this was not the case, as there were other possible causes of the accident and a faulty gun was no more than a possibility. The insurer argued that when it occurred, the event was not likely to give rise to a claim, the insured’s obligation was to notify at the point when he knew or should have known that a claim was likely, but the court disagreed. The insured’s obligation to assess the likelihood of a claim arose at the time the event occurred, or when the insured became aware of it. On the wording of the policy, there was no ongoing obligation to perform a “rolling assessment” as to whether a past event was likely to give rise to a claim. If the insurer wanted to exclude liability, it had to ensure that the wording was clear.
The claim was therefore valid and the case is a reminder for both insurers and insureds of the importance of agreeing clear and precise policy wordings. The case also reaffirms the position that an event is “likely to give rise to a claim” when the likelihood of a claim is higher than 50%.