Margate Theatre Royal Trust Ltd v White (t/a AI Moleing Services) & Anor

In a commercial insurance policy, a brief description of the insured business may operate as an umbrella description rather than an exhaustive list of every task performed. Cover for work carried out in connection with that business may extend to work necessary or incidental to it. Whether particular work is necessary or incidental is a matter for evidence, including appropriate evidence of trade practice. An element of work may remain within the business description even when performed in isolation, if it can properly be described as part of or incidental to the insured business. The court should reject a construction producing inconsistent cover for identical work merely because of the circumstances in which it is performed.

The claimant brought proceedings against Patrick White arising from a flood allegedly caused by defective work at a theatre. White brought Part 20 proceedings against AXA Insurance UK plc, seeking indemnity under a public liability policy.

The policy described White’s business as ground work and pipe moleing. AXA declined cover on the basis that the relevant work was specialist plumbing outside that description. The Part 20 claim was directed to whether replacement of a termination valve and related connection work fell within the insured business, and whether White was precluded from relying on the description by non-disclosure or estoppel.

1. The Part 20 claim succeeded. The work at the theatre was covered by the insurance policy. AXA was wrong to decline the claim on the stated grounds.
2. The work was specialist plumbing, but it was also equivalent to termination or connection work which a pipe moler might perform after laying pipes. The ordinary meaning of ground work and pipe moleing covered the core activities of work in or on the ground and boring and laying pipes.
3. The policy description was a brief commercial shorthand or umbrella title. It covered work necessary for and incidental to the insured business, not merely the core operations. That construction was supported by the general principles identified in ICS v West Bromwich Building Society [1998] 1 WLR 896.
4. The phrase in connection with was of wide import. It extended to loss or damage connected with work incidental to the insured business, consistently with the approach in Ashville Investments v Elmer Contractors Ltd [1988] 3 WLR 867.
5. The insurer was presumed to know the practice of the trade insured, following the principle in Noble v Kennaway (1780) 2 Doug 511. Expert evidence was therefore relevant to whether the connection work was necessary or incidental. The evidence, including AXA’s expert evidence, established that such work could be described as pipe moleing and was incidental to it.
6. The alleged telephone conversation relied on to establish a different meaning or estoppel was not proved. Estoppel therefore failed. The work remained covered even though it was performed without preceding boring or pipe laying; otherwise identical work could be covered in one setting but excluded in another, producing an absurd result.
7. White had not failed to disclose relevant information and was not in breach of the policy.

Not stated in the judgment.