Milton Furniture Ltd v Brit Insurance Ltd

Insurance conditions precedent must be construed as commercial terms, read together where necessary to identify their purpose. A general protection condition may be qualified by a more specific warranty so that the insured’s obligations are not more onerous in a non-theft claim than they would have been under the specific theft warranty.

Whether premises are left unattended is a question of fact, degree and circumstance. A condition requiring protections to remain in place may impose a separate and cumulative obligation from a condition governing their use. Breach of such a condition may defeat the claim without proof that the breach caused the loss.

The claimant sought an indemnity under a commercial combined insurance policy after fire destroyed almost all of its furniture stock. The insurer relied on two protection provisions: PW1, a burglar-alarm warranty applying to theft or attempted theft, and GC7, a general condition requiring protections to be used and not withdrawn or varied to the insurer’s detriment.

The principal issues were whether PW1 displaced or qualified GC7, whether the premises were unattended when the fire occurred, whether the claimant breached GC7 by allowing burglar-alarm monitoring to cease, whether any breach was causative, and the amount of any recoverable loss.

1. Construction of PW1 and GC7. PW1 did not displace GC7. The provisions had distinct commercial purposes and had to be read harmoniously. GC7 was, however, to be read down so that the claimant’s obligations concerning use and monitoring of the burglar alarm were no more onerous than under PW1. The alarm had to be set when the premises were left unattended, and the monitoring obligation was the same under both provisions.
2. First limb of GC7. Whether premises were “left unattended” depended on fact, degree and circumstance. In the context of a large and complex building, premises occupied by sleeping persons could be treated as unattended. Nevertheless, on the proper construction of GC7, the claimant was not required to activate the alarm while the premises remained occupied. There was no breach of the first limb.
3. Second limb of GC7. The obligation not to withdraw or vary protections was separate and cumulative. Knowledge was required, but breach occurred where the insured acted or failed to act so that there was a real risk that the protection would cease. The claimant knew that monitoring charges were overdue, failed to resolve the dispute, and was reckless as to the escalating risk of termination. It therefore breached GC7 and GC8.
4. Causation and consequence. Because GC7 was a condition precedent, the breach defeated liability without proof of causation. In any event, on the alternative hypothesis that the first limb had been breached, an activated alarm would probably have detected the intruder or fire in time to prevent or limit the loss.
5. The stock was valued at £147,600, lost revenue at £560,000 and the rate of gross profit at 10 per cent. The total calculated loss was £194,982. Judgment was entered for the defendant.