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

In an insurance claim, the insured bears the burden of proving on the balance of probabilities that loss was caused by an insured peril. Difficulties of proof do not justify lowering that standard, although the court may use indirect evidence and appropriate inferences.

Once an actionable loss is established, its amount may be assessed on a broad basis where precise calculation is impossible. The burden remains on the insured to show that the loss exceeds an applicable excess. A claims-co-operation clause must be construed in its contractual context. Information is not necessarily reasonably required where insurers wrongly refuse to accept that the alleged peril is covered, but plainly relevant accounts may still be required. The claim failed because the insured did not prove compliance with the policy requirements for the 2004 claim and did not establish losses exceeding the excess.

The claimants sought business interruption indemnities under successive commercial insurance policies for losses allegedly caused by the theft of stock from their distribution centre by an employee. A previous judgment had held that the policies covered employee theft: [2012] EWHC 1406 (Comm). Permission for a late appeal was refused: [2014] EWCA 134.

The present trial concerned claims-co-operation conditions, proof and quantification of the alleged losses, the operation of a £5,000 excess for each loss, and a contingent claim for repayment of premium rebates. The central issues were whether the claimants had supplied the particulars and information required by the policies, whether the alleged thefts and resulting business interruption losses had been proved, and whether the losses exceeded the excess.

1. Claims particulars. The insurers’ conduct after notification of the thefts allowed further time for delivery of particulars under the business interruption claims condition. The email of 17 February 2009 constituted particulars of claim for the years identified. It did not, however, include the 2004 claim. Because compliance was a condition precedent, the 2004 claim was precluded.
2. Information and documents. Most of the information requested was reasonably required in the abstract. In the circumstances, however, information requiring substantial time and expense was not reasonably required while the insurers wrongly refused to confirm that employee theft was an insured peril. The claimants nevertheless failed to provide the profit and loss and management accounts requested in category 7. That failure was fatal to the claim. A limited agreement or estoppel postponed only the additional work involving accountants; it did not extend to category 7.
3. Proof of insured loss. The burden remained on the claimants to prove on the balance of probabilities that the losses resulted from an insured peril. Indirect evidence, statistical analysis and inference could be used, but they could not dilute that burden. The court was satisfied that the stock losses were caused by the employee’s thefts.
4. Excess and quantum. The £5,000 each-and-every-loss provision defined the scope of cover rather than operating as an exclusion. The burden therefore remained on the claimants to show that their losses exceeded the excess. Their assumptions about the number of theft incidents and the quantity stolen on each occasion were too speculative. The claim consequently failed independently on the excess issue. The proposed blended-margin model for loss of gross profit was also insufficiently reliable, although the court did not need to determine every issue of quantum.
5. Disposition. The claim was rejected in its entirety. The contingent counterclaim for premium rebates fell away. The parties were invited to agree an order, including consequential matters and costs.

The judgment records an earlier determination of preliminary liability issues in favour of the claimants: [2012] EWHC 1406 (Comm). A late application for permission to appeal was refused by the Court of Appeal: [2014] EWCA 134. The present judgment determined the remaining claims and rejected them.