Manor Park Homebuilders Ltd v AIG Europe (Ireland) Ltd

JurisdictionIreland
JudgeMr. Justice Bryan McMahon
Judgment Date13 June 2008
Neutral Citation[2008] IEHC 174
CourtHigh Court
Docket NumberNo. 1119 P/2004
Date13 June 2008
Manor Park Homebuilders Ltd v AIG Europe (Ireland) Ltd

BETWEEN

MANOR PARK HOMEBUILDERS LIMITED
PLAINTIFFS

AND

AIG EUROPE (IRELAND) LIMITED
DEFENDANT

[2008] IEHC 174

No. 1119 P/2004

THE HIGH COURT

INSURANCE

Contract

Repudiation - Insurance of unoccupied protected structure - Fire cover - Implementation of loss prevention programme of alternative insurer - Inadvertent disconnecting of alarm system - Whether alarm operational when contract concluded - Statements regarding shuttering and alarm - Warranties - Whether continuing warranties - Whether terms of contract - Whether statements material to risk - Whether failure to disclose blocking up of windows and doors material non-disclosure - Reinstatement - Uberrimae fidei - Onus of disclosure - Reciprocal duty to make reasonable inquiries - Fiduciary duties of broker - Departure from good business practices - Superwood Holdings v Sun Alliance & London Insurance Plc [1995] 3 IR 303, Ballasty v Army Navy and General Insurance Association Ltd (1916) 50 ILTR 114, Furey v Eagle Star and British Dominions Insurance Co Ltd (1922) 56 ILTR 23, Coen v Employer's Liability Assurance Corporation Ltd [1962] IR 314, Keating v New Ireland Insurance Company [1990] 2 IR 383, Thomson v Weems (1884) 9 App Cas 671, Zurich General Insurance Co v Morrison [1942] 2 KB 53, Anderson v Fitzgerald (1853) 4 HLC 484, Re Sweeney and Kennedy's Arbitration [1950] IR 85, Hussain v Brown [1996] 1 Lloyd's Rep 627, Krelinger and Fernau Ltd v Irish National Insurance Co Ltd [1956] IR 116 and AMP Financial Planning PTY Ltd v CGU Insurance Ltd [2005] FCAFC 185 considered - Declaration that defendant pay plaintiff on foot of policy (2004/1119P - McMahon J - 13/6/2008) [2008] IEHC 174

Manor Park Homebuilders Ltd v AIB Europe (Ireland) Ltd

Facts: A contract of insurance was entered into between the plaintiff and defendant in respect of a period house on a development that was subsequently no longer used as a site office and was then damaged extensively by fire. The contract of insurance was for Fire Only. The defendant insurer repudiated the contract and the plaintiff instituted proceedings claiming declaratory reliefs and damages for breach of contract. The issue arose as to the contract entered into and any relevant warranties, terms, misrepresentations and whether, if any, they were material and or fraudulent.

Held by McMahon J. in finding for the plaintiff and ordering the defendant to pay to the plaintiff the sum of Eur1,015000 on foot of the policy. The defendant insurer had departed from good business practices and was in breach of uberrimae fides in failing to deal fairly with the insured. There was no continuing warranty of relevance. There was no material non disclosure.

Reporter: E.F.

SUPERWOOD HOLDINGS PLC v SUN ALLIANCE & LONDON INSURANCE PLC 1995 3 IR 303

BALLASTY v ARMY NAVY & GENERAL ASSURANCE ASSOCIATION LTD 1916 50 ILTR 114

FUREY v EAGLE STAR & BRITISH DOMINIONS INSURANCE CO LTD 1922 56 ILTR 23

COEN v EMPLOYERS LIABILITY ASSURANCE CORPORATION LTD 1962 IR 314

MARINE INSURANCE ACT 1906 S33

MARINE INSURANCE ACT 1906 S35

KEATING v NEW IRELAND ASSURANCE CO PLC 1990 2 IR 383

CLARKE THE LAW OF INSURANCE CONTRACTS 5ED 2006 PARA 20-2B

SWEENEY v KENNEDY (ARBITRATION) 1950 IR 85

HUSSAIN v BROWN 1996 1 LLOYDS REP 627

MARINE INSURANCE ACT 1906 S20(5)

EGGERS, PICKEN, FOSS GOOD FAITH & INSURANCE CONTRACTS 2ED 2004 291

KREGLINGER & FERNAU LTD v IRISH NATIONAL INSURANCE CO LTD 1956 IR 116

AMP FINANCIAL PLANNING PTY LTD v CGU INSURANCE LTD 2005 FCAFC 185

INSURANCE CONTRACTS ACT 1984 S13 (AUSTRALIA)

Mr. Justice Bryan McMahon
1

Ongar Stud Farm, Clonee, County Dublin was purchased by the plaintiff company for the purposes of development. There were some hundred and sixty-five acres in the farm and it was proposed to build several hundred houses of varying sizes on the land. Ongar House (hereinafter "the House"), was a period house, located in the centre of the farm and was a listed building and a protected structure under the Planning Acts. As such, any changes to its structure or use were subject to strict restrictions. The developer's plan was that Ongar House would be the focal point of this new "village", and that it might eventually be run as a restaurant or public house.

2

When the plaintiff company took over the property in 2000, the former owners still resided in the house, but when they eventually moved out, the plaintiff set up the site office for the development in the House. The plaintiff caused a burglar alarm to be installed in the House in August, 2000. In April 2001, the plaintiffs ceased to use the House as their site office and relocated these offices in porta-cabins near the work in progress. This meant that Ongar House was vacant from that time on. To secure the property and to discourage intruders, the plaintiff, with the consent of Fingal County Council, the planning authority, contracted to have steel shutters placed on all the outside doors and windows of the House. This work was done by Sitetex Security Services Ltd. in around March, 2001. Some time later, one of these shutters was interfered with in an attempt to force an entry and it was decided at that time, again with the consent of the planning authority, that to make the House more secure, all the ground floor shutters would be replaced and these openings would be "bricked up" with concrete blocks from the outside. This work was completed on the 9th of November, 2001.

3

Until the 30th of April, 2002, the House was insured under an "All Risks" policy with the Royal and SunAlliance but as the property was vacant from 2001, the insurers showed some reluctance in renewing the policy and the plaintiff's brokers, Coyle Hamilton, sought other quotes in the market. Because the house was unoccupied, getting appropriate insurance became somewhat more difficult. Eventually, a contract for "Fire Only" cover was signed with AIG, the defendant, on the 3rd of May, 2002.

4

The House was extensively damaged by fire on the night of the 14th/15th of September, 2002. The insurer repudiated the contract on the 28th of November 2002, and the plaintiff issued these proceedings claiming various declaratory reliefs as well as damages for breach of contract.

5

It is common case that a contract of insurance was entered into between the plaintiff and the defendant insurer on the 3rd of May, 2002. To establish what the terms of the contract were, however, it is necessary to outline the history of the negotiations that took place from about the middle of April 2002, to the date when agreement was finally reached on the 3rd of May, 2002.

6

As already mentioned, the existing insurer was Royal and SunAlliance and Paul Colgan, broker, from Coyle Hamilton, acting for the plaintiff, contacted them, as the existing insurer, in the middle of April 2002, regarding renewal. Because the House was now vacant, Royal and SunAlliance suspended renewal terms and carried out a survey of the property on the 25th of April, 2002, and wrote to Mr. Colgan enclosing part of the survey. Copies of these documents are reproduced here:-

Insured: Manor Park Home Builders
7

Location: Ongar House, Ongar Stud, Clonsilla, Co. Dublin.

Policy No: SA13549675
Date of Visit: 25 April 2002
8

The Loss Prevention Programme is a component of the Royal & SunAlliance survey service which is provided free of charge to policyholders. You are invited to make use of the service to minimise potential losses.

9

The purpose of this Loss Prevention Programme is to assist in minimising the possibility of loss from the risks referred to herein and it does not imply that no other hazardous conditions exist. The implementation of any measures is the responsibility of the Proposer or Insured and Royal & SunAlliance accepts no liability howsoever arising out of the Programme.

10

The liability of Royal & SunAlliance is limited to the cover it provides under the policies effected on the property or risk concerned.

11

Please contact us if further information is required or if you feel we help in any way.

Requirements
12

These requirements are fundamental to the cover under the policy and failure to comply with these may affect the policy cover, terms and conditions.

02.01Security
13

The building is well secured with the exception of the 'garage/boiler room'. To prevent access to these areas it is a requirement that;

14

(a) the garage door be replaced/repaired as necessary.

15

(b) the light timber door leading to the boiler room be replaced with steel door/surround or alternatively the gap to be bricked up.

16

(c) double leaf timber gates (to rear leading into yard area) be secured using good quality bolt/close shackle padlock.

17

In addition the combustible material in the 'garage' must be removed.

Action by; 4 weeks
Clive Groarke
Underwriter Surveyor"
18

Royal and SunAlliance also communicated its new terms to Mr. Colgan by e-mail on the 30th April, 2002. It is necessary also to produce this e-mail in full:-

"From: adrienne.o'carroll@notes.royalsun.com"

Sent: 30 April 2002 17:32
Subject: Manor Park Home Builders - SA13549675
Paul,
Cover confirmed as follows at premium €10,660 plus levy;
19

Fire only cover on building declared value sum insured €1,015,000 and contents declared value sum insured €20,000.

Unoccupancy Warranties as follows to apply;
20

It is warranted in the unoccupied building insured by this policy;

21

(1) All gas, water, and electricity mains supplies are to be kept disconnected until the buildings are once again occupied.

22

(2) All outside doors are to be securely locked to prevent unauthorised entry.

23

(3) All windows are to be firmly secured at all times.

24

(4) Regular visits shall be carried out by the Insured to physically check the premises and to...

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