George Hunt Cranes
Clauses requiring notice of a claim inhabit a grey area because is not always easy to decide whether they are conditions precedent to insurers' liability to pay the claim, or merely policy terms which only enable insurers to claim damages for breach if they can show a loss. This, however, was a rare instance when the Court had no hesitation in finding the words used abundantly clear; the clause was a condition precedent, with which the insured had not complied. The claim against insurers therefore failed.
DMC’s Category Rating: Confirmed
This case note is based on an Article in the January 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers,DLA. DLA is an International Contributor to this website.
George Hunt promptly wrote a letter to Fast Track, setting out their claim, but Fast Track failed to notify their insurers, who only learned about the claim when George Hunt wrote directly to them the following January, whereupon insurers denied liability. Fast Track went into voluntary receivership in March 1998.
Under the Third Parties (Rights against Insurers) Act 1930, all Fast Track's rights as an insured against its own insurers automatically transferred to George Hunt on the liquidation, but, nevertheless, insurers could only be pursued after judgment against Fast Track had been obtained. George Hunt duly issued proceedings and obtained judgment in default.
The defence to the claim was that Fast Track was in breach of a notification provision, which, insurers argued, was a condition precedent to their liability under the policy.
The clause in question provided that the insured had to give immediate notice in writing of any loss or damage which might give rise to a claim and "the Insured shall within thirty days after such loss, destruction or damage, accident or injury…deliver to the Company a claim in writing containing as particular an account as may be reasonably practicable of the accident, injury or any portions of the Plant lost, destroyed or damaged and of the amount of damage…No claim under this policy shall be payable unless the terms of this condition have been complied with".
The fact that the clause did not use the term "condition precedent" was neither here nor there as the Court will always look behind such labels (or lack of them) and consider the clause in the context of the policy as a whole.
Another point worth noting is that, if the Law Commission's proposals for a new Third Parties (Rights against Insurers) Act are adopted, a third party in George Hunt's position would be able to pursue insurers after a triggering event (such as the insured's liquidation) without first having to issue proceedings against the insured.
In the present case, this would have saved some time and expense, but the proposed new Act would probably have had little effect on the outcome, as insurers would still be able to rely on the same defences they could have raised against the insured. Where, however, insurers have a notification defence of a purely technical nature (such as a failure to notify in circumstances where the only reason the insured could not do so was because it had already gone into liquidation) the new proposals would allow the third party to give insurers valid notice of a claim once the insured's rights against insurers have transferred.
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