Milton Furniture Ltd v Brit Insurance Ltd

An insurance policy may impose overlapping conditions precedent. A specific alarm warranty does not displace a general protection condition unless the provisions conflict. Where protections must operate outside business hours or when premises are unattended, those are alternative requirements. The obligation applies to relevant parts of the premises where full activation is impracticable because of legitimate occupation. Whether premises are left unattended is fact-sensitive and ordinarily requires actual attention, not merely sleeping occupants. A separate prohibition on withdrawal or variation of protections may operate independently and need not require proof that the withdrawal caused the loss.

Milton sought an indemnity under a commercial combined insurance policy after a deliberate fire at its trading premises. The burglar alarm was not set after business hours, and its monitoring service had ceased following non-payment of charges to the service provider. Brit declined cover, relying on General Condition 7, which required the protections to be used and not withdrawn or varied to the detriment of the underwriters.

Mr Justice Jay dismissed the claim. He held that General Condition 7 was a condition precedent, but read it down by reference to PW1 so that the alarm need only be set when the premises were unattended. He found no breach of that limb but found a breach concerning withdrawal of monitoring. The appeal concerned the construction and application of General Condition 7.

Gloster LJ delivered the leading judgment. Kitchin LJ and Rafferty LJ agreed. The appeal was dismissed.

1. Interaction between GC7 and PW1. General Condition 7 was a condition precedent applying to the burglar alarm and other protections. PW1 did not take priority merely because it was a specific alarm warranty. Both provisions formed part of the selected standard terms, and there was no inconsistency requiring one to displace the other. General Condition 17 reinforced that conclusion by making observance of all policy conditions a condition precedent.
2. First limb of GC7. The requirement that protections operate outside business hours or when the premises were left unattended was disjunctive. The alarm therefore had to be activated in relevant parts of the premises outside business hours, so far as practicable, even if other parts were occupied. A commercial construction permitted the reference to the premises to include the relevant part of the premises. The alarm could have been set in the Warehouse, despite lawful occupation of the House and Link, and was not set after business ended at 8.30 pm.
3. The expression left unattended had no precise definition. It required application of its ordinary meaning to the facts. Attendance connoted actual presence and attention, with an ability to observe and respond to interference. Persons asleep in two small parts of a large building did not attend the building. This provided an additional basis for finding breach.
4. Second limb of GC7. Although it was unnecessary to decide the issue after the first-limb finding, the court held that the second limb separately concerned retention and maintenance of the protections, regardless of whether they were required to be operating on the particular occasion. A withdrawal seriously impairing the security arrangements was to the detriment of the underwriters, and proof that it caused the loss was unnecessary. The court further held that the obligation was strict: withdrawal by a third-party alarm company could constitute breach without fault or knowledge by the insured. If a mental element were required, knowledge or what reasonable or common care should have revealed would suffice; recklessness was unnecessary. The evidence satisfied any applicable formulation.
5. There was no need to consider the proposed appeal concerning quantum. The claim remained dismissed.

• Court of Appeal (Civil Division): In [2015] EWCA Civ 671, the court dismissed Milton’s appeal.
• High Court, Queen’s Bench Division: Mr Justice Jay, by judgment dated 1 April 2014, dismissed Milton’s claim and ordered it to pay 66% of Brit’s costs.