Fisk v Brian Thornhill & Son (A Firm)

An insurance broker who places cover owes an independent duty of care to ensure that the proposed policy terms and warranties match the information available. A previous quotation assuming standard construction does not justify giving a construction warranty without further inquiry or authority. It is a breach to place cover without obtaining a proposal form where later corrections may entitle the insurer to avoid the policy. Such breaches may be causative where competent handling would have revealed the inability of the proposed insurer to provide cover and allowed alternative cover to be obtained. Responsibility for the resulting loss may be apportioned between brokers according to their respective responsibility.

Daryl Fisk, a retail insurance broker, settled the insureds’ main claim against him after their insurer avoided cover following serious flood damage to their public house. Fisk brought a Part 20 claim against Brian Thornhill, the wholesale placing broker, alleging breach of contract, negligence and a contribution under the Civil Liability (Contribution) Act 1978. The Colchester County Court found that Thornhill had failed to disclose that a new insurer and different terms were proposed, but held that the breach had not caused loss and dismissed the claim. The issues on appeal were whether Thornhill committed further breaches, whether those breaches caused loss, and what proportion of the loss should be attributed to him.

Sir Peter Gibson gave the judgment of the court. Lady Justice Hallett and Lord Justice Dyson agreed. The appeal was allowed, and Thornhill was ordered to contribute 25% of the sum Fisk had agreed to pay the insureds, including the costs of the main action.

1. Duty to inquire. Thornhill owed a duty of care to Fisk as well as to the insureds. The information supplied for the earlier policy did not establish that the property was of BSST construction. The prior quotation’s assumption of BSST construction did not entitle Thornhill to ignore the unanswered question about the roof or the qualifications in the proposal form. Further inquiry was required.
2. Unauthorised warranties. Thornhill gave warranties about the property’s construction without specific authority. This was a breach of duty. A warranty placed the insurer in a stronger position and deprived Fisk and the insureds of the opportunity to refuse authorisation where the warranties could not be complied with.
3. New terms and proposal form. Thornhill breached his duty by failing to make clear that a new policy with a different insurer and different terms was being proposed. The new construction clause was more onerous. In the circumstances, failing to obtain the proposal form before placing cover was also a breach, particularly because the insurer could refuse liability for discrepancies between the quotation request and the later proposal.
4. Causation and procedure. The judge had rejected Fisk’s evidence that alternative cover could have been obtained at short notice without providing a valid reason. Thornhill’s inability, as a wholesale broker, to place cover for a non-standard property did not establish that Fisk, as a retail broker, could not have found alternative cover. If the proposal form had been obtained earlier, the problem would have been identified in time to seek alternative insurance. The causation issue had also emerged only at trial and should have been pleaded before trial.
5. Apportionment. Fisk bore the major share of responsibility, but Thornhill’s breaches had contributed to the loss and to the damages paid by Fisk. Thornhill was therefore responsible for 25%.

• Court of Appeal (Civil Division): In [2007] EWCA Civ 152, the appeal was allowed and Thornhill was ordered to contribute 25% of Fisk’s settlement payment and the insureds’ costs.
• Colchester County Court: HH Judge Yelton dismissed the Part 20 claim on 27 January 2006 and refused permission to appeal.