Widefree Ltd (t/a Abrahams & Ballard) v Brit Insurance Ltd

An unexplained-loss exclusion referring to property missing at “stocktaking” applies to a structured and organised stock inventory undertaken at regular intervals. It does not apply whenever an insured searches for an item. A policy condition requiring information and evidence reasonably required by insurers does not require an insured to anticipate an unexpressed request, particularly where responsible third parties have advised that other material is irrelevant. The obligation is assessed by reference to what the insured could provide when the information or evidence was requested. An insured who reasonably follows such advice does not necessarily fail to co-operate by failing to preserve additional material.

Widefree claimed an indemnity under a jewellers’ block insurance policy after a valuable diamond ring was stolen from its premises. Brit Insurance denied liability under an unexplained-loss exclusion and a general condition requiring information and evidence about the loss. The insurers alleged that Widefree had failed to prove the date and circumstances of the loss and had failed to preserve CCTV footage from all cameras. The claim was tried in the High Court on liability and quantum.

1. Claim allowed. The court found, on the balance of probabilities, that the ring had been stolen from the shop on 9 October 2008. Widefree was entitled to an indemnity of £120,940.
2. The unexplained-loss exclusion did not apply. Widefree had proved the date and circumstances of the loss. In any event, “stocktaking” in the policy meant a structured, organised process undertaken at regular intervals. It did not include an urgent or unstructured search for missing items. The ordinary meaning of the term and commercial common sense supported that construction.
3. The court rejected the insurers’ submission that every assessment of available stock constituted stocktaking. The policy contained no definition of the term and imposed no obligation to conduct stocktaking at specified times. The exclusion was not ambiguous, so the contra proferentem rule did not arise.
4. The general condition was a co-operation provision and a condition precedent to liability. The insurers bore the burden of proving non-compliance, and any doubt or ambiguity was construed against them. The condition required the insured to provide information and evidence reasonably required by the insurers and within the insured’s power when the request was made.
5. Widefree was not required to guess what evidence the insurers might later wish to see. It had retained the CCTV footage which the police identified as relevant and had told the insurers’ loss adjuster what had been done. By the time a request for further footage might have been made, the additional recordings had probably been automatically erased. It was not reasonable to require their production, and the material was probably no longer within Widefree’s power.
6. The insurers’ defences therefore failed. Judgment was entered for Widefree for £120,940, comprising the claimant’s liability for the stolen diamond and the policy valuation of the supporting diamonds.