Jacobs v Coster, Avon Insurance

Whether an insured event was likely to give rise to a claim under a notification condition must be assessed objectively, by reference to what the insured knew at the time. The seriousness of an injury is relevant, but the court must also consider the insured’s immediate investigation and what that investigation revealed. A condition precedent may permit repudiation without proof of prejudice, subject to the proper construction of the policy. Where the lower court fails to consider material evidence bearing on that issue, permission to appeal should be granted.

Mrs Jacobs suffered a serious leg injury after slipping at a service station operated by Mr and Mrs Coster. The underlying personal injury proceedings were compromised. Mrs Coster then sought an indemnity from Avon Insurance under the policy.

The insurer relied on a condition requiring immediate notification of any event likely to give rise to a claim. The county court held that the condition had been breached because the accident was sufficiently serious, and found for the insurer. The application concerned permission to appeal against that decision, particularly whether the judge had considered Mrs Coster’s immediate inspection of the forecourt and her finding of no apparent cause for the accident.

1. The Court of Appeal granted permission to appeal. The application was allowed, with notice of appeal to be filed within 21 days. The costs of the application were made costs in the appeal.

2. The policy condition was a condition precedent to the insurer’s liability. On the authorities, including Layher Ltd v Lowe, The Times, 8th January 1997, the court proceeded on the assumption that a breach could entitle the insurer to repudiate liability even without prejudice.

3. The question whether an event was likely to give rise to a claim required an objective assessment. It had to be judged by reference to what the insured knew at the time, rather than by attributing constructive knowledge without justification.

4. The county court had concentrated on the seriousness of Mrs Jacobs’s injury. It had not, on the face of its judgment, considered the results of Mrs Coster’s immediate investigation, including the absence of any apparent slipperiness or petrol spillage. That evidence was capable of affecting whether she should objectively have regarded a claim as likely.

5. That unresolved issue justified permission to appeal. The Court of Appeal expressed no final view on the merits.

• Court of Appeal (Civil Division) — Permission to appeal granted against the judgment of His Honour Judge Hargrove QC in the Medway County Court on 27 August 1998. Notice of appeal was to be filed within 21 days.