Paine v Catlins & Ors

Insurance conditions must be construed commercially and in the context of the insured premises. A cleaning obligation does not require impossible or impracticable work in inaccessible areas unless the policy clearly says so. Where a policy provides different cleaning periods for extraction ducting and canopies, an enclosed air passage forming part of the ventilation system is extraction ducting, even if it is situated within a canopy.

The mere presence of grease residue does not establish breach. The insurer must prove that the insured failed to carry out the cleaning reasonably possible in the circumstances. A property-insurance maintenance condition is not breached by ordinary negligence alone where the authorities require recklessness, and maintenance is not automatically synonymous with cleaning.

The claimant owned a hotel insured against fire damage. A fire began in the kitchen and spread through grease deposits in the canopy plenum and extract duct.

The policy required flues, exhausts and extraction ducting to be cleaned at least annually. It required grease traps, extraction hoods, canopies, sumps and filters to be inspected regularly and cleaned as necessary at least monthly. The insurers declined indemnity, alleging breach of the monthly cleaning obligation and of a general maintenance condition.

The central issues were the proper classification of the canopy plenum, the meaning of the cleaning and maintenance conditions, and whether the insurers had proved breach.

1. Construction of the cleaning condition. The canopy plenum was an enclosed air passage forming part of the extraction system. Its horizontal orientation did not prevent it being extraction ducting. It therefore fell within the annual, not the monthly, cleaning obligation. The insurers’ pleaded case on breach of the monthly obligation consequently failed.
2. Alternative construction. Even if the plenum fell within the monthly obligation, “cleaned as necessary” had to be construed commercially. It required reasonable cleaning having regard to the physical configuration and accessibility of the area. The evidence established that ordinary hand cleaning was impossible beyond the fixed baffle plates. Jet-washing through the narrow gaps was the only reasonably possible method and, if properly carried out, satisfied the condition.
3. The presence of grease residue was insufficient by itself to prove breach. The insurers had no reliable evidence showing that the quantity of residue exceeded what was inevitable during the cleaning cycle or that the jet-washing regime was inadequate. The absence of samples, after the canopy was destroyed with the insurers’ expert’s authority, prevented reliable extrapolation from post-fire photographs.
4. Condition 3. The maintenance wording was an adjunct to the reasonable-precautions obligation and operated as a condition precedent. It applied only to the claimant because the policy did not extend to his employees. In this property policy, breach required recklessness rather than mere negligence. “Maintenance” could include cleaning only where cleaning was necessary to keep the relevant property in working order. The grease did not affect the operation of the extraction system, and no breach was proved even on the insurers’ alternative assumptions.
5. The insurers therefore failed to establish breach of either condition. The court declared that they were liable to indemnify the claimant under the policy. Consequential wording of the order and costs were reserved.

First-instance decision. No prior appellate decision was stated in the judgment.