The Claimant in Kosmar Villa Holidays plc v Trustees of Syndicate 1243  EWCA Civ 147 was a tour operator who had a public liability policy with the Defendant's predecessor, Euclidian Direct Limited (Euclidian). The policy stated that "7. It is a condition precedent to insurers' liability under this insurance that: (1) The insured shall immediately after the occurrence of any Injury or Damage give notice in writing with full particulars thereof to insurers." On 22 August 2002 one of Kosmar's customers dived into the shallow end of a swimming pool sustaining injuries that resulted in incomplete tetraplegia. Kosmar did not give notice of this occurrence until almost a year later on 4 September 2003. An exchange of correspondence between Kosmar, its insurer and solicitors for the injured third party followed (the September Communications) but it was not until almost a month later, on 30 September 2003, that Euclidian reserved its position on the ground of late notification. On 21 October the insurer's solicitors repudiated liability for Kosmar's claim. At first instance the judge found that Kosmar was entitled to an indemnity on the basis that Euclidian had elected to waive compliance with the notice provision and, by corresponding with the insured and the third party's solicitors about the injured customer's claim, had unequivocally communicated its election to Kosmar. Click here to view further details of the first instance decision.
The Court of Appeal considered the doctrines of waiver by election and waiver by estoppel. The former involves the exercise of a right to choose between inconsistent remedies and requires unequivocal conduct. Waiver by estoppel occurs where an insurer unequivocally represents that it accepts liability or will not rely on breach of a condition precedent and the insured has detrimentally relied on the representation such that it would be inequitable for the insurer to resile from his representation. The Court said that although an insurer could not equivocate for a long time whilst giving the insured the impression that it was treating the claim as covered by its policy, Euclidian was entitled to a reasonable amount of time to consider the situation including awaiting answers from Kosmar as to why there was such a delay in giving notice. The Court of Appeal disagreed with the first instance judge, stating that when considering breach of a procedural condition precedent such as the notice clause, the relevant doctrine was not election but estoppel. The Court found that there was no evidence that the insurer had decided to waive the need for Kosmar to comply with the notice provision and the September Communications were not unequivocal declarations of Euclidian's position. The fact that there was no unequivocal communication by the insurer meant that a claim based on waiver by estoppel also failed. Kosmar was therefore not entitled to an indemnity from its insurer.
Although on reading the facts of this case, one might understand why Kosmar believed its insurer to have agreed to ignore the breach of the notice provision, the Court of Appeal's decision makes clear that unless an insurer has clearly stated its willingness to deal with the claim an insured will not be excused from the consequences of its breach of procedural condition precedent.