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DMC/INS/10/01
HIH Casualty & General Insurance Ltd. V (1) Axa Corporate
Solutions (Formerly Axa Reassurance SA) (2) New Hampshire Insurance Co
English High Court: Jules Sher QC: Unreported: 21 December
2001
Julian Flaux QC and Simon Picken for HIH.
Nicholas Hamblen QC for Axa.
COMMERCIAL: REINSURANCE: ESTOPPEL: PROMISSORY ESTOPPEL: CLEAR
AND UNEQUIVOCAL REPRESENTATION REQUIRED: FOREGO RIGHTS: RELIANCE ON
REPRESENTATION
Summary
When proving waiver by estoppel in the
insurance context, it had to be shown that, from the conduct of the person
making the representation (the ‘representor’), it would have appeared to a
reasonable person in the position of the person to whom the representation was
made, that the representor was aware of his rights and was willing to forego
them.
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Facts
This case concerned an application by the defendant reinsurer
('Axa') for summary dismissal of the claims against it in two actions by
insurers under a film finance insurance contract ('HIH') on the ground that the claim had no realistic prospect
of success.
Preliminary issues had been decided by the Court of Appeal in
HIH Casualty & General Insurance Ltd. v New Hampshire Insurance Co & Ors
(2001) 2 Lloyd's Rep 161. In particular the Court of Appeal held that both the
insurance and reinsurance contracts contained a warranty that had been broken,
the effect of which was to discharge both the original insurers and the
reinsurers from liability under their respective policies. HIH alleged, however,
that Axa had waived the breach of warranty. The case for waiver was put forward
on the basis that it was only necessary to show that the reinsurer was aware of
the facts which constituted the breach of warranty and not to go on to show that
the reinsurer knew that, as a matter of law, the facts constituted a breach of
warranty.
Judgment
(1) HIH's claim had no real prospect of success. Axa’s
application was accordingly granted.
(2) Since this was an insurance case, the waiver alleged was a
waiver by estoppel, or promissory estoppel. This required
a) a clear and unequivocal representation that the reinsurer
(in this case) would not stand on its rights to treat the cover as having been discharged
b) that the insurer (in this case) had relied on this
representation
c) in circumstances in which it would be inequitable to allow
the reinsurer to resile from its representation.
(3) The representation had to relate to the willingness of the
reinsurer to forgo its rights. Axa’s conduct must have been such as to convey
to a reasonable person that Axa was aware of its rights and was prepared to
forgo them. It was not sufficient to establish the necessary estoppel that Axa’s
conduct had conveyed only that it believed the cover continued in place, without
giving the slightest indication that it was aware that it could take the point
that cover had been discharged but had decided not to do so.
(4) It was difficult to see how HIH could, on the evidence,
establish such an unequivocal representation. Further, there was no evidence
that HIH had relied upon a representation by Axa that it would not enforce its
right to treat the cover as discharged.
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