MacCaferri Ltd v Zurich Insurance Plc

Where an insurance policy requires notice after an event likely to give rise to a claim, the event must carry at least a 50 per cent chance that a claim will eventuate. The obligation arises after the insured knows that the event has occurred and requires prompt notice. It does not impose a continuing or rolling assessment of claim likelihood, nor a general duty of inquiry, unless the policy says so. A serious accident and the possibility of a claim are insufficient where the evidence does not show that a claim against the insured was more likely than not.

Maccaferri sought an indemnity from Zurich under a public and product liability policy after a serious eye injury involving a hired Spenax gun. Zurich declined indemnity, asserting that Maccaferri had breached a condition precedent requiring prompt written notice of an event likely to give rise to a claim.

The central issues were the construction of the notification clause and whether the accident, viewed in the circumstances known to Maccaferri, was likely to result in a claim against it before notification was given.

1. Construction of the notification clause. The first sentence of clause 2 required: an event to have occurred; that event to be likely to give rise to a claim; written notice to be given as soon as possible after the event; and full particulars to be provided. The phrase “as soon as possible” concerned the promptness of notification after the relevant event. It did not postpone the obligation until the insured could, with reasonable diligence, discover that the event was likely to give rise to a claim.
2. The phrase “likely to give rise to a claim” required an event carrying at least a 50 per cent chance that a claim against the insured would eventuate. A possibility of a claim was insufficient. There was no continuing or rolling assessment obligation where the policy contained no such requirement. The second sentence of clause 2 separately required immediate notification on receipt of verbal or written notice of a claim.
3. Application to the evidence. When the accident occurred, there was no at least 50 per cent chance of a claim against Maccaferri. A fault in the gun was only one of several possibilities, and no blame was directed towards Maccaferri. The seriousness of the injury, possible Health and Safety Executive involvement, forensic testing and criticisms of Maccaferri’s maintenance system did not alter that conclusion.
4. The authorities, including Layher Ltd v Lowe [2000] Lloyd’s IR 510 and Jacobs v Coster (t/a Newington Commercials Service Station) and Avon Insurance (Third Party) [2000] Lloyd’s Rep IR 506, supported the distinction between a mere possibility and the required likelihood. Verelst’s Administratrix v Motor Cross Union Insurance Company Limited [1925] 2 KB 137 concerned a different issue and did not assist on the nature of the event triggering notification.
5. There was no breach of the condition precedent. Zurich was obliged to indemnify Maccaferri under the policy, and an appropriately worded declaration would be made.

First instance decision. No prior or appellate decision is stated in the judgment.