Shinedean Ltd v Alldown Demolition (London) Ltd & Anor

Where an insurance policy makes delivery of relevant proof and information a condition precedent, it must be delivered within a reasonable time. Reasonableness depends on all the circumstances. The insurer’s eventual prejudice may be relevant, but its absence is not determinative and cannot excuse plainly late disclosure of material information that was available earlier. The insurer is entitled to timely information to assess liability and decide what action to take, including whether to control the defence. Disclosure more than two years after the insured event, and only during litigation, was unreasonably late. The condition precedent was therefore breached.

Shinedean employed Alldown Demolition (London) Limited to carry out demolition and excavation works. Following negligent excavation and damage to adjoining property, Shinedean settled the adjoining owners’ claim and sought indemnity under its insurance arrangements. AXA, Alldown’s insurer, was joined to the proceedings under the Third Party’s Rights Against Insurers Act 1930.

The policy required immediate notification and the provision of information and assistance as conditions precedent to liability. HHJ Havery QC held that the information had been provided late but that AXA had suffered no material prejudice, and therefore found no breach: [2005] EWHC 2319 (TCC). AXA appealed, arguing that eventual prejudice was immaterial. The central issue was whether the absence of resulting prejudice could prevent a finding that information had not been supplied within a reasonable time.

1. Appeal allowed unanimously. Lord Justice May gave the leading judgment. Lord Justice Gage and the Master of the Rolls agreed.
2. It was common ground that, where the insurer reasonably requires relevant proof and information, the insured must provide it within a reasonable time, and that this obligation is a condition precedent to the insurer’s liability.
3. Whether information has been provided within a reasonable time is essentially a question of fact depending on all the circumstances. Eventual prejudice to the insurer may be a relevant circumstance, but there is no determinative principle that the obligation is not breached merely because the insurer ultimately suffers no prejudice.
4. The purpose of timely co-operation is to enable the insurer to assess potential liability and take appropriate action. That may include investigating while evidence remains available, assessing cover and loss, and deciding whether to control the defence. The insurer must be able to identify that information is overdue without waiting for hindsight to establish whether its absence caused prejudice.
5. Much of the relevant documentation existed and could have been supplied substantially earlier. Its provision more than two years after the insured event, and only in litigation to which AXA was about to become a party, was plainly unreasonably late. The lower court had therefore applied the wrong principle. The fact that AXA accepted the settlement satisfied the bona fides test in section 1.4 of the Civil Liability Contribution Act 1978 did not answer the question of compliance with the condition precedent.
6. Alldown had breached the reasonable-time obligation. AXA was entitled to decline indemnity on that ground. Order: appeal allowed.

1. Court of Appeal (Civil Division) allowed AXA’s appeal and held that the information had not been supplied within a reasonable time.
2. Technology and Construction Court, Queen’s Bench Division (HHJ Havery QC) held that the information was supplied within a reasonable time because AXA had suffered no material prejudice: [2005] EWHC 2319 (TCC).