In Zurich Insurance PLC v Maccaferri Ltd [2016] EWCA Civ 1302 the Court of Appeal considered the notification provisions of a policy, held by the respondent (Maccaferri), which covered accidental death and personal injury (“the policy”). The policy contained a condition precedent which required Maccaferri to give the appellant insurer (Zurich) notice in writing “as soon as possible after the occurrence of any event likely to give rise to a claim”. Maccaferri was also required to give “immediate notice” to Zurich on receiving verbal or written notice of any claim.
Maccaferri had supplied Spenax guns, used for construction, to a builders’ merchant which had in turn leased the equipment to a building company. In September 2011 an employee of the building company was injured when the Spenax gun accidentally discharged, hitting him in the face. In September 2011 Maccaferri was notified that an accident had occurred and that the gun should be recalled and kept for investigation. In January 2012 Maccaferri discovered that someone was injured. No allegation had been made that the gun was faulty or that a claim was being made against Maccaferri. In July 2012 the injured employee issued proceedings against the building company, and Maccaferri was notified on 22 July 2013 that it had been joined as a Part 20 defendant, notifying Zurich of the claim on the same day.
Zurich refused to indemnify Maccaferri in relation to its subsequent claim on the policy on the ground that it had failed to comply with the condition precedent concerning notification of possible claims. Zurich submitted that the condition precedent meant that Maccaferri should have given Zurich notice of the event, prior to Maccaferri’s actual 22 July 2013 notification, as soon as Maccaferri became aware (or ought to have become aware) of an event that was likely to give rise to a claim.
Black LJ and Christopher Clarke LJ, upholding the decision of the Queen’s Bench Division (see our previous blog, here), dismissed Zurich’s appeal and held:
1) That if the insurer wished to exclude liability, it was for the insurer to ensure that clear wording was used to secure that result.
2) That the condition precedent which had been introduced by the insurer into its policy was ambiguous and that, given the nature of the clause, this ambiguity had to be resolved in favour of the insured.
3) That the question was therefore whether, when the event occurred, it was likely to give rise to a claim against Maccaferri. This depended on whether, in light of the insured’s actual knowledge at the time, a reasonable person would have thought it at least 50% likely that a claim would be made. On the facts known to the insured, it was not at least 50% likely that there would be a claim. The circumstances of the incident were unclear and it had not been made clear to the insured that someone had been seriously injured. That the gun was at fault was no more than a possibility amongst many possibilities.
4) That, consequently, the insurer was not entitled to rely upon the condition as a ground for denying liability.
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