Ted Baker Plc & Anor v Axa Insurance UK Plc & Ors

In an application to rely on late-disclosed evidence and extend time for an appeal, the evidence must bear materially on the proposed grounds and be capable of having an important influence on the result. Evidence about a party’s subjective belief does not establish estoppel by convention unless words or conduct objectively communicated a shared assumption between the parties. A challenge that could have been advanced earlier cannot be revived merely because later disclosure provides an opportunity to reconsider it. A misrepresentation defence also requires materiality and reliance. Where the policy, properly construed, provides the cover described, a broker’s subjective misunderstanding does not make the description a misrepresentation. Permission and an extension may therefore be refused where the proposed appeal has no real prospect of success.

The appellant insurers sought permission to appeal preliminary issue rulings by Eder J in the Commercial Court, arising from a claim by Ted Baker plc and No Ordinary Designer Label Ltd for business interruption losses following clandestine employee theft from a warehouse. Eder J held that the policy covered direct theft losses and consequential business interruption losses, rejected estoppel by convention and rectification, and dismissed Fusion’s and Tokio Marine’s misrepresentation and non-disclosure defences in [2012] EWHC 1406 (Comm).

The construction finding and the original estoppel and rectification conclusions were not challenged in the initial grounds. After late disclosure of documents from the brokers’ files, the insurers sought an extension of time, permission to rely on fresh evidence and permission to appeal. The central issue was whether the documents justified the proposed belated challenges and whether those challenges had a real prospect of success.

The Court of Appeal refused permission to rely on the fresh evidence, refused the extension of time for filing an Appellants’ Notice and, insofar as necessary, refused permission to appeal.

1. The court assumed that the late documents might have undermined findings about the contemporary beliefs of the broker, Mr Burbedge, and, to a lesser extent, the insured’s representative, Mr Page. That did not establish a viable estoppel appeal. Estoppel by convention requires an indication by each party to the other of a shared assumption. The relevant question is the objective impression reasonably conveyed by words or conduct crossing the line, not the parties’ subjective beliefs or internal documents.
2. The proposed grounds had either been available earlier or did not depend on the fresh evidence. The late documents did not address what impression the parties’ conduct objectively conveyed. Reliance on the policy wording was ineffective because the judge had held that, on its true construction, the policy afforded the relevant cover. Nor could silence amount to an unequivocal communication of a shared assumption. The proposed appeal on estoppel therefore had no real prospect of success.
3. As to Fusion, the description of the cover as larceny was not a material misrepresentation. The policy, properly construed, covered clandestine employee theft even if Mr Burbedge did not believe that it did. In any event, the underwriter had not relied on the alleged misrepresentation, and any reliance would not have been reasonable. No material non-disclosure was established.
4. The Tokio Marine challenge was weaker still. Mr Burbedge had played no part in presenting that risk, and the fresh documents had no bearing on the findings concerning Mr Read’s presentation, Mr Monahan’s lack of reliable recollection, reliance or non-disclosure. The belated disclosure could not justify reopening those conclusions.

• Court of Appeal (Civil Division): Refused permission to rely on fresh evidence, refused an extension of time for filing the Appellants’ Notice and refused permission to appeal.
• High Court of Justice, Queen’s Bench Division, Commercial Court: Eder J determined the preliminary insurance issues in favour of the insured, including the construction of the policy, estoppel, rectification, misrepresentation and non-disclosure, in [2012] EWHC 1406 (Comm).