Shinedean Ltd. v Alldown Demolition (London) Ltd & Anor

Insurance claims co-operation clauses may operate as conditions precedent, but their wording must be sufficiently clear. Where no express time limit is stated, the policy ordinarily contains an implied requirement that notification and co-operation occur within a reasonable time. Reasonableness is assessed generously in favour of the insured. The court may consider the insurer’s ability to investigate, assess liability, negotiate and close its books, together with the surrounding circumstances. The requirement is not punitive. A delay does not necessarily amount to breach where the required information is ultimately supplied within a reasonable time and the insurer suffers no material prejudice.

Shinedean sought damages and contribution from Alldown after the collapse of a neighbouring property during demolition works. Alldown’s insurer, Axa, was joined and relied on policy provisions requiring information and assistance as conditions precedent to indemnity. The court had to determine whether Alldown had breached those claims co-operation provisions, whether they were conditions precedent, and whether Axa could decline indemnity as a result.

1. Conditions precedent. The policy provisions requiring delivery of proofs and information, and the provision of information and assistance to enable the insurer to deal with claims, were conditions precedent to Axa’s liability to indemnify. The wording was sufficiently clear for that purpose, notwithstanding some ambiguity about the method of delivery and the breadth of the conditions.
2. Construction. Conditions precedent in an insurance policy must be construed in accordance with the contra proferentem principle. The court applied the approach in Re Bradley and Essex and Suffolk Accident Indemnity Society [1912] 1 K.B. 415, including the need for insurers to make such conditions clear. The present provisions were distinguishable because they related specifically to the subject matter of the claim, rather than to the insured’s general conduct.
3. Reasonable time. Although the clauses contained no express time limit, a term requiring compliance within a reasonable time was implied to give the policy business efficacy. The assessment had to be generous to the insured. Relevant considerations included the insurer’s requests, the reasons for delay, the liquidation of the insured, and the prejudice or practical disadvantage caused to the insurer. The clause was not intended to operate punitively.
4. Application. Alldown failed to provide requested documents promptly, and its directors’ powers ceased on liquidation under section 103 of the Insolvency Act 1986. Nevertheless, the information ultimately became available within a reasonable time. Any prejudice beyond the minor disadvantage inherent in uncertainty about closing the claim was minimal. No breach of the claims co-operation conditions was established.
5. The preliminary issues were answered: the conditions were conditions precedent; Alldown was not in breach; and Axa was not entitled to decline indemnity on that basis.