Bennett (T/a Soho Pizzeria) v AXA Insurance Plc

An insurance warranty requiring trade waste to be swept up, bagged and removed daily must be construed in light of its purpose. In a material-damage policy, that purpose included reducing the risk of fire while insured premises were unoccupied.

“Trade waste” includes waste generated in the ordinary course of the business, including discarded food, napkins, newspapers and tissues used by staff or customers. The obligation required removal before the premises were vacated where necessary to achieve that purpose. Under a warranty clause making non-compliance a bar to claims insofar as it increased the risk, a breach is effective where it materially increases the relevant risk. No separate de minimis exception is required.

The claimant operated a pizza restaurant insured by the defendant under an all-risks policy covering material damage and business interruption. A fire started in a waste bin after the restaurant had closed, preventing trading for several months.

The claimant sought agreed indemnities totalling £289,400.21. The defendant relied on a waste warranty requiring greasy cloths to be placed in lidded metal bins and trade waste to be swept up, bagged and removed to a secure disposal area or designated storage building. The central issues were the meaning and timing of that obligation, whether the waste left in the bin was trade waste, and whether any breach increased the risk of the fire so as to bar the claim.

1. Construction and purpose. The waste warranty was directed principally to protecting the insurers against fire occurring while the premises were unoccupied. Its wording had to be given a sensible meaning, with ambiguity construed against the insurers.
2. Meaning of trade waste. Trade waste meant waste generated in the ordinary course of trading from the premises. It included customer and employee waste, such as food, napkins, newspapers and tissues. There was no workable distinction between generic waste and trade waste in this context.
3. Daily obligation. The requirement to sweep up, bag and remove waste daily was not merely a periodic obligation capable of performance at any time between trading periods. In context, it required removal immediately after trading or before, or shortly after, the end of trading, so that the waste did not remain on the premises overnight.
4. Secure disposal area. The bin and the cupboard beneath the work surface were not a secure waste disposal area or designated storage building. Removal of bags to the street would not itself have been relevant non-compliance, since the waste would no longer have presented a significant risk to the insured premises.
5. Increase in risk. General Condition 13 required the insurer to establish that non-compliance increased the risk of the loss or damage. The failure to remove combustible trade waste left a risk of fire in the unoccupied premises which compliance would have eliminated. A separate de minimis qualification was unnecessary because insignificant waste would not increase the risk and would therefore be irrelevant under the condition.
6. The fire originated in the bin and involved combustible waste and a likely discarded cigarette end. The waste warranty was breached, the breach increased the risk of fire, and General Condition 13 barred recovery. Because business-interruption liability depended on liability under the material-damage section, both claims failed. The claim was dismissed.