Micro Design Group Ltd & Anor v Norwich Union Insurance Ltd

Where an insurance policy names a non-existent insured, the claimant must prove, by construction of the policy and admissible evidence, that it was nevertheless a contracting party. A court cannot rewrite a materially different collection of companies into the named insured merely because the surrounding commercial circumstances suggest that insurance was intended. Subsequent conduct and interpretations cannot assist construction where the contractual language is clear and the parties accept the restriction on subsequent events stated in [1974] AC 235. Failure to establish contractual entitlement defeats the claim for indemnity and any associated claim for breach. A policy may also be treated as factually cancelled for the purpose of assessing non-disclosure, even if the insurer lacked a contractual right to cancel in the manner adopted.

The claimants sought indemnity under two insurance policies issued by Norwich Union after a burglary at premises in Leamington Spa. The policies named non-existent entities, described as Micro Design Group (Ince House Ltd) and Micro Design Group (Ince) House Ltd. The claimants contended that the policies should be construed as covering them and other companies in the group. Alternatively, they relied on an alleged notification to Norwich Union correcting the identity of the insured and on estoppel.

The defendant denied contractual liability and also relied on material non-disclosure and fraud. The trial concerned liability only, including whether the claimants were insured, whether a previous policy had been cancelled for non-payment of premium, whether that fact would have induced Norwich Union to decline the risk, and whether the claimants incurred liability for alleged drawing-reconfiguration work.

1. Identity of the insured. The claimants failed to prove that either had entered into either policy. The names used in the policies could not, on their true construction, mean the several companies, pension scheme and other entities for which cover was claimed. This was not a minor mistake in a name but an attempt to attribute a materially different group of contracting parties to the written policies.
2. The court considered the surrounding indications of identity discussed in Fung Ping Shun v Tong Shan [1918] AC 403 and F Goldsmith (Sicklesmere) Ltd v Baxter [1968] 1 Ch 85, but they did not establish the claimants’ contractual status. Following Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235, subsequent conduct and Norwich Union’s later interpretation could not assist construction.
3. The alleged telephone notification correcting the insured’s identity was rejected on the evidence. The claimants therefore also failed to establish the alleged estoppel. Their claims for indemnity and breach of contract consequently failed.
4. Alternative grounds. The St Paul policy had in fact been cancelled for non-payment of premium. Whether St Paul had complied with its contractual cancellation clause was irrelevant to the factual question whether cancellation occurred. The court accepted that Norwich Union would probably have declined the risk had the cancellation been disclosed.
5. The claimants were not shown, on the balance of probabilities, to have incurred liability to ACS Wade Ltd for reconfiguring architectural drawings. The claims therefore failed in any event. The court invited submissions on the form of order and costs.