Genesis Housing Association Ltd v Liberty Syndicate Management Ltd

The Facts and the Documents

“Genesis Housing Association" is named as the Housing Association.

The Quotation is to go to Graham Gamby.

The "Reconstruction Cost" is identified as £4.6m; the “Contract Cost” was filled out (correctly) as £4.6m in handwriting but that was scored out and £3.7m substituted. It is unclear when the scoring out took place and it is wholly unclear where the figure of £3.7 million came from. It has no obvious resonance for instance in the Contract Sum Analysis.

The name of the “Builder” was identified as "Time and Tide Construction Ltd” ("TT Construction") and a contact name was “Perry Gamby”.

Under the heading "Additional Cover", the box against "Insolvency of Builder during construction" has been ticked.

The following words appear, typed as part of the form, under the heading "Declaration by the Insured":

“I/we declare that to the best of my/our knowledge and belief, the information I/we have given is correct and complete in every detail and I/we have not withheld any material fact.

I/we understanding [sic] that the signing of this form does not bind us to effecting insurance under the Premier Guarantee for Social Housing Scheme but agree that should a contract be completed for a New Development or Housing Unit that [sic] this proposal and the statements made therein shall form the basis of the contract between me/us and the Insurer."

The form was signed by Mr Graham Gamby apparently on 2 April 2007 for and on behalf of “Time and Tide (Bedford) Ltd and Genesis Housing Association."

Apart from Mr Gamby’s signature, the whole of the form had been filled in by Mr Johnson. It is unlikely that this document was ever shown to Paddington or to Mr Galliers at the time; indeed, it only emerged so far as the Claimant was concerned after a claim was notified some 2 to 3 years later.

Full rights of recourse being retained against all parties other than the Policyholder;

All other terms and conditions as per the policy wording."

Under the heading "Your responsibilities" the following was stated:

“You are responsible for providing the complete and accurate information, which the Underwriter requires in connection with any proposal for insurance cover. This is particularly important before taking out a policy but it also applies throughout the life of a policy. If you fail to disclose any material fact or other information material to the insurance this could invalidate the policy and mean that claims may not be paid. You should check all details on any proposal form or statement of facts and pay particular attention to any declaration you may be asked to sign."

The Issues

The Policy

Clause 5 identified exclusions which the Policy did not cover:

“2.

BUILDER’S RESPONSIBILITIES

Loss or damage which appears within a defects liability or maintenance period and which is the responsibility of the Builder under the terms of any agreement or Building Contract to erect the Housing Unit, unless such loss or damage is covered by this Policy…”

Clause 6 contained the Conditions on which two are relevant:

“4.

FRAUD

If any claim under this Policy shall be in any respect fraudulent, or if any fraudulent means or devices are used by the Policyholder, or anyone acting on its behalf, to obtain benefit under this insurance, all benefit hereunder shall be forfeited…

7.

MISREPRESENTATION

This Policy will be voidable in the event of misrepresentation, misdescription, error, omission or non-disclosure by the Policyholder with intention to defraud.”

Clause 8 contains the endorsement as to cover for the "Insolvency of Builder during Building Period":

“In consideration of the payment of the additional premium the Underwriter will indemnify the Policyholder during the currency of the Building Period against:

a)

the additional cost required to complete the New Development;

and/or

b)

the cost of reasonable precautions to secure the New Development.

Provided that the total loss or cost under this Endorsement does not exceed 10% of the agreed contract price for the New Development… and arises out of the failure of the Builder to complete the construction of the New Development due to insolvency or fraud

Note For the purposes of this Endorsement Builder shall not be deemed to include any sub-contractor or sub-consultant.

Subject otherwise to the Terms Definitions, Exclusions and Conditions of this Policy."

Although most of the issues on analysis are a matter of construction of the insurance contract, a substantial amount of authority was deployed by both Counsel and certainly some of those authorities help inform the debate as to what the contract actually means. Lord Hoffman said in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28:

“…But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken this branch of the law, particularly as a result of the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1384-1386 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows:

(1)

Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2)

The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3)

The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.

(4)

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see Mannai Investments Co. Ltd. v. Eagle Star Life Assurance Co. Ltd.http://www.bailii.org/uk/cases/UKHL/1997/19.html[1997] 2 WLR 945

(5)

The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. Lord Diplock made this point more vigorously when he said in The Antaios Compania Neviera S.A. v. Salen Rederierna A.B. 19851 A.C. 191, 201:

 "…if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."”

There is long standing authority, much of it fairly old, which addresses the impact of "basis" clauses and the warranties to which they give rise. Sometimes, the "basis" is in a proposal form or in the insurance contract. The House of Lords in Dawsons Ltd v Bonnin [1922] 2 AC 413, in a Scottish appeal, considered a case involving an inadvertently inaccurate statement by the insured in the proposal form which was expressly incorporated in the policy, as was a clause which expressly rendered the policy void for material misstatement. The inaccuracy was found to be immaterial but a majority of the House decided that there could be no claim under the insurance. Lord Haldane said at pages 424 and 425:

“It is clear that the answer was textually inaccurate. I think that the words employed in the body of the policy can only be properly construed as having made its accuracy a condition. The result may be technical and harsh, but if the parties have so stipulated, we have no alternative, sitting as a Court of justice, but to give effect to the words agreed on. Hard cases must not be allowed to make bad law…It was a specific insurance, based on a statement which is made of foundational if the parties have chosen, however carelessly, to stipulate that it should be so. Both on principle and in the light of authorities such as those I have already cited, it appears to me that when the answers, including that in question, are declared to be the basis of the contract this can only mean that their truth is made a condition exact fulfilment of which is rendered by stipulation foundational to its enforceability."

In Condogianis v Guardian Assurance Company Ltd [1921] 2 AC 125 the Privy Council addressed an Australian case in which the insured had filled out a proposal form for fire insurance incorrectly in that he failed to mention in answer to a relevant question about a second of two fires for which he had previously claimed. The proposal form contained a declaration stating that the proposal was the "basis of the contract [and] is to be taken as part of the policy and…the particulars to be deemed express and continuing warranties furnished by" the insured; there was also an express clause about material misdescription and misrepresentation. Lord Shaw said at page 129:

“The case accordingly is one of express warranty. If in point of fact the answer is untrue, the warranty still holds, notwithstanding that the untruths might have arisen inadvertently and without any kind of fraud. Secondly, the materiality of the untruth is not an issue; the parties having settled themselves-by making the fact the basis of the contract, and giving a warranty-that as between them their agreement on that subject precluded all enquiry into the issue of materiality. In the language of Lord Eldon in Newcastle Fire Insurance Co v Macmorran (1815) 3 Dow 255,262: “It is a first principle in the law of insurance, on all occasions, that where a representation is material it must be complied with-if immaterial, that immateriality may be inquired into and shown; but that if there is a warranty it is part of the contract that the matter is such as it is represented to be. Therefore the materiality or immateriality signifies nothing."

This rule has been repeated over and over again and is too well-settled to be questioned…”

A first instance case a few years later, Holmes v Scottish Legal Life Assurance Society (1932) TLR 306, was concerned with an honest misstatement made by a son about his father’s health in a proposal form for a life insurance. The proposal form was made "the basis of the contract" and there was a further provision in the policy that it could be avoided if the insured had made any "fraudulent or untrue" statement. In the summarised judgement, Mr Justice Swift said:

“The claimant had stated in the proposal form that his father’s health was good, and had agreed that the truth of this statement should be the basis of the contract. The misstatement, therefore, though innocent, was a warranty. And in the body of the policy the claimant further agreed that the policy should be avoided if he had made any untrue statement on matters material to the insurance, and this clearly included innocent misstatements as well as fraudulent statements. The rules [of the defendant society] did not affect the matter and were not inconsistent with the other provisions of the contract. It was unfortunate for the claimant, but, if a person warranted that the statement was true when he had in fact no means of knowing whether it was true of all is, and if ultimately he had to admit that it was false, his insurance was gone."

The Court of Appeal in Rozanes v Bowen (1928) 32 Ll.L.Rep.98 considered a proposal form for a jewellers block policy as filled in by the insured or his agent which incorrectly identified only one previous loss although there were several previous losses. The form stated that “It is understood that this proposal will serve as the basis of the contract if a policy is issued". Lord Justice Scrutton said at page 103:

“The second point [taken by the insured’s Counsel]…was that the answers were not in any way incorporated with the policy so that the correct answering was a condition precedent. The answer to that appears to be at the bottom of the form: "This proposal is to serve as the basis of the contract”; and, if so, the truth of the statements in it is equally the basis of the contract."

There has not been much by way of reported authority (at least put before the Court in this case) over the last 50 years. In a decision of the Inner House in Scotland, Unipac (Scotland) Ltd v Aegon Insurance Co (UK) Ltd 1996 SLT 1197, similar principles were applied in circumstances where information set out in a proposal form was incorrect and the declaration made by the insured was not dissimilar to the one in the current case.

In Kumar v AGF Insurance Ltd [1999] 1 WLR 1747, Mr Justice Thomas (as he then was) was concerned with solicitors’ professional liability top up insurance. Clause 5 of the policy contained an undertaking by the insurer "not to avoid repudiate or rescind this insurance upon any ground whatsoever including in particular non-disclosure or misrepresentation" and a statement that "where before the inception or renewal of this insurance a principal has fraudulently failed to disclose and/or fraudulently misrepresented circumstances which might give rise to a claim or claims, the insurer shall be entitled to seek reimbursement from that principal". There were errors or omissions in the information provided in the insurance proposal form and the insured certified on the form that they were satisfied that the details were correct "to the best of our knowledge and belief". The judge was prepared to assume that this conduct was fraudulent. He considered the construction exercise against the regulatory background of the Solicitors Indemnity Fund, in particular rules 29 and 30 and the fact that the insurance scheme was intended to provide an indemnity to clients when they had been caused loss by a solicitor (page 1754D-G). This is clear when one comes to seeing the construction which the learned judge found at pages 1755G- 1756D. He referred then to the insurers’ argument that the warranty on the proposal form was extremely important. He then went on to say that "it is not uncommon to find surplusage in a policy of insurance [and that] in no way detracts from the meaning which I have found the parties intended and in which in my judgement is plainly expressed in the language used in the policy as a whole”.

The reliance by insurers on "basis" clauses has attracted academic criticism. In McGillivray on Insurance Law(12th Edition 2012), the editors at Paragraph10-023 say that the "juristic basis for this practice is unclear", referring in effect to how the declaration can become an effective term of the “contract of insurance even if not expressly mentioned in the policy”; they suggest that one explanation "is that the policy evidences the main contract between the parties but the promises in the proposal form are collateral warranties given prior to the conclusion of the contract". Another approach is that adopted by Lord Goff in the Good Luck [1992] 1 AC 233 at 262-3 that "fulfilment of the warranty is a condition precedent to the liability of the insurer". They go on to say:

“Whatever is the reasoning behind this practice, it is in our submission an objectionable one in so far as it makes the extent of the assured’s obligations extremely unclear to him, particularly where continuing warranties have been made."

Reliance was placed by Mr Leabeater on authorities which deal with what declarations as to the best of knowledge and belief mean. In Economides v Commercial Assurance Co Plc [1998] QB 587, the Court of Appeal addressed a case in which a son declared on a proposal form that to the “best of his knowledge and belief” the value of various valuable items such as jewellery was £16,000 (mostly belonging to the parents), when the value was in fact some £31,000. This had been based on what he had been told by his father. Simon Brown LJ said:

“Mr Bartlett relies in particular upon sub-section (5) notwithstanding what Steyn J said about it in the passage cited above from Highlands. He accepts, as inevitably he must, that the appellant had to have some basis for his statement of belief in this valuation; he could not simply make a blind guess: one cannot believe to be true that which one has not the least idea about. But, he submits, and this is the heart of the argument, the basis of belief does not have to be an objectively reasonable one. What the appellant's father told him here was a sufficient basis for his representation: he was under a duty of honesty, not a duty of care.

In my judgment these submissions are well-founded. This case seems to me very different from those relied upon by the respondents. (Page 598 C-E)

I would hold, therefore, that the sole obligation upon the appellant when he represented to the respondents on renewal that he believed the full contents value to be £16,000 was that of honesty. That obligation the judge apparently found him to have satisfied. Certainly, given that the appellant was at the time aged 21, given that the figure for the increase in cover was put forward by his father, and given that father was a retired senior police officer, inevitably better able than the appellant himself to put a valuation on the additional contents, there would seem to me every reason to accept the appellant's honesty”. (Page 600A-B)

In Zeller v British Cayman Insurance Co Ltd [2008] Lloyd’s Rep IR 545, a Privy Council decision on a health insurance policy, Lord Bingham considered a statement which was said to be "complete and correct to the best of my knowledge and belief". At Paragraph 18, Lord Bingham stated:

“It is unnecessary to rehearse these authorities in detail, since it is clear in the Board's opinion that the basis of this contract, as it affected Mr Zeller, was that the statements made by Mr Zeller in the application form were true to the best of his knowledge and belief. This was expressly stated three times in the form, and the incompleteness of the statement at the very end of the form seems likely, having regard also to the absence of punctuation, to be attributable to a typographical error. It was not stated in the form, as is often done, that the applicant's warranty that his answers were true to the best of his knowledge and belief was to be the basis of the contract, but that was plainly to be understood. Ms Corbett drew attention to the parenthesis in condition (b) at the end of the form (see para 7 above: "if such statements are fraudulent or material to the acceptance of this application"), but this immediately follows a warranty of correctness to the best of the applicant's knowledge and belief. It cannot, consistently with the rest of the form, be read as entitling the insurer to cancel the policy if a material fact is not disclosed despite the applicant answering the insurer's questions fully to the best of his knowledge and belief. Thus the judge was right to regard the real question as being whether Mr Zeller, if he honestly believed he was answering the questions truthfully, was guilty of non-disclosure, and Ms Corbett was correct to tie her submissions, as she expressly did, to the questions Mr Zeller answered. This approach is entirely consistent with that of the Court of Appeal of England and Wales in Economides v Commercial Assurance Co Plc [1998] QB 587, 598, 599, where the duty of the applicant was held to be one of honesty.”

I draw from the above authorities following propositions:

It is rightly common ground that in effect TT Bedford acted as an express or implied agent for Paddington in securing the Premier Guarantee cover. It matters not therefore (although it is certainly unfortunate) that Paddington or the Claimant did not see, correct and sign the Proposal form itself at the time. There are clearly errors on the face of the Proposal form, namely that the Builder was to be TT Construction, that the "Contract Cost" for the conversion and refurbishment works was £3.7m. In the latter context, I simply do not understand as a matter of fact how anyone for Paddington or the TT companies could have thought that the contract cost would be £3.7m. There is nothing in the Contract Sum Analysis from which one could infer or guess how a figure of £3.7m could be extracted. It was and must have been painfully obvious at the time of the Proposal to both of those parties that the contract sum would be £4.6m for the building contract; this was expressly referred to in the letter dated 28 March 2007 (see above) and in an e-mail from Mr Galliers of 28 March 2007. The insurance quotation and the Initial Certificate to the insurance identified the sum insured as £4.6m as did the building contract of 7 April 2007. I therefore infer that the Proposal form as signed by Mr Gamby referred to £4.6m as the "Contract Cost" and that it was someone within MD who later (for one misguided reason or another) scrubbed out the original entry of £4.6m and inserted in hand writing £3.7m. No-one within MD or the Defendant believed that the Contract cost was anything other than £4.6m.

However, there is no getting away from the clear error in the identification of the Builder as TT Construction. Although Mr Gamby signed the form on behalf of TT Bedford and Genesis, both he and Paddington (principally through Mr Galliers) would, if they had thought about it at the time, have realised that TT Bedford, and not TT Construction, was to be the Builder. There is absolutely no reliable evidence to suggest that as at 2 April 2007 when the Proposal was signed TT Construction was to be the Builder. The letter and e-mail of 28 March 2007 referred to above, only five days before, make it clear that Paddington was to engage TT Bedford as the Contractor under the proposed JCT contract, which when signed a few days later confirmed that. I can only conclude that Mr Gamby was at worst confused or more likely simply did not properly read the form (which had clearly been filled out by Mr Johnson of MD). I can and do accept that it was an entirely innocent error in that context and there is no hint or suggestion that there was some deliberate or conscious misrepresentation that the Builder was to be TT Construction. The error was openly and obviously repeated in the Quotation with TT Construction identified as the Builder and it is clear that both Mr Gamby and Mr Galliers received and saw the Quotation and did not either pick up the error or at least appreciate that there was an error.

In so far as it is necessary to determine the materiality of this error, this was material because TT Construction had a reasonable credit rating and had been in business for a number of year whilst TT Bedford was a new single vehicle company with no or no established credit rating. There was therefore at least potentially a lesser risk that TT Construction would become insolvent than TT Bedford, who should have been named as the Builder. This difference could well have impacted on the level of premium.

Mr Leabeater for the Claimant argues that the declaration on the Proposal is essentially only an honesty declaration and that the reference in the second part of the declaration to the "proposal and the statements made" is simply a reference to the first half of the declaration. I do not accept this argument. The first part of the declaration simply means what it says, namely that the insured is saying in context: "so far as I know, the name of the Builder set out in the Proposal is correct". Whilst I do not consider that there was any dishonesty here (in the sense that when Mr Gamby signed the Proposal he was deliberately and consciously lying), certainly on the part of the Insured and most probably on the part of Mr Gamby, it is not as such a declaration of honesty; it does not say: "I declare that in filling out and signing this form I have [only] acted honestly” but it is saying: "so far as I know and believe, the Builder is or is to be TT Construction". If Mr Gamby or Mr Galliers had actually seen and thought about this reference, TT Bedford would have been named as the Builder. Put another way, they both knew at the date of the signing of the Proposal that the Builder was not to be TT Construction and therefore Mr Gamby for himself and the Claimant through Mr Gamby were saying something which was not true to the best of their knowledge and belief. The second part and sentence of the Declaration is essentially and simply saying that the statement (amongst others set out in the Proposal) that the Builder is or is to be TT Construction is to be treated as forming the basis of the insurance contract. This case is factually different from the Economides and Zeller cases which were concerned with honest individuals’ assessments of the value of property and health; that is an essentially different scenario from the statement that TT Construction was to be the Builder when the agent signing the Proposal and the principal knew and must have known that the Builder was to be TT Bedford.

It is argued by Mr Sage for the Defendant that there was another error on the Proposal which was the name of the Housing Association, "Genesis Housing Association". I do not consider that this was as such an error. This appellation was simply and in effect a shorthand reference to the group which included Paddington. There was no legal entity, as such, called Genesis Housing Association. The reference to it was not wrong and did not amount to some sort of warranty that there was some entity called Genesis Housing Association. Paddington was effectively within the appellation.

There is nothing of particular or additional relevance in the Quotation to the interpretation of the contract of insurance albeit that, because the quotation was accepted for and on behalf of Paddington, it was or became part of the contract. It repeated the name of the Builder as TT Construction and the Policyholder was named as the "Housing Association and/or part or future owners of each Housing Unit to be insured acquiring a freehold or leasehold interest or their successors in title, or any mortgagee or lessor for (other than the Builder)". This emphasised the mutually accepted basis of who the contract was to be with but also that the Defendant, so to speak, did not mind whether the contract was to be with "Genesis Housing Association" or whoever the "Housing Association" which required the freehold or the leasehold interest turned out to be. In any event, Paddington was the Housing Association which acquired the leasehold interest in the relevant property.

Turning to the Policy itself, the Claimant amongst others (the future owners of the flats) is specifically told to read the Policy and the Certificates as being "important documents". The Certificates include the Initial Certificate issued by the Defendant and that contained in substance the same information as that referred to in the Quotation. The Policy itself spelt out that it consisted of the eight clauses set out in the following pages of the Policy. There is no hint or suggestion as such that the Proposal was to be considered as incorporated in or within the Policy but that does not particularly matter because the insurance contract as between the Claimant and the Defendant was evidenced additionally by the Quotation and the Certificate, together with the Proposal itself (unless the Proposal was to be treated as a separate stand-alone warranty by the Claimant).

It is true to say that Clause 1 states that the insurance cover "is subject to a number of definitions, conditions exclusions and financial limits as detailed in the Policy". In the context of the dispute between the parties, the only relevant definition is that of "Builder" which is defined in the policy as the "person or company with whom the Policyholder has contracted to erect or refurbish the New Development". This definition does not have such say that one should disregard the other contractual documentation. Mr Leabeater argues that this definition, so to speak, "trumps" or overrides the identification of TT Construction in the Quotation, the Certificate and the Proposal form. I disagree because looking at the overall documentation there can be no doubt that, as between the Claimant and the Defendant, the Builder was to be treated, and was being warranted by the Claimant, as being TT Construction. Indeed that is by far the most sensible, commercial construction to be put on the documentation overall because, if the Claimant was right, it could retain any builder, no matter how small, incompetent or impecunious that builder was, in circumstances in which the insurer was giving cover against not only insolvency (in Clause 8) but also major damage caused by a defect in the design, workmanship, materials or components provided by that very builder. One also has to bear in mind that the Policy was to bind not only the Claimant and the Defendant but also the part and future owners of the flats, who were also to be considered within the definition of Policyholder; the definition of “Builder" within the Policy can be explained as a simple explanation to such future owners of who the Builder is to be considered to be.

The next series of arguments relate to the contractual impact of Condition 7 within Clause 6 of the Policy. Mr Leabeater argues that Condition 7 should be construed as in effect modifying or nullifying the "basis of contract" warranty so that only warranted errors which were made with “intention to defraud” can be deployed to render the insurance contract unenforceable. As Mr Justice Thomas suggested in the Kumar case, surplusage or repetition of clauses does not necessarily detract or mean that one clause is intended to replace or supersede the other. I disagree with the argument deployed on behalf of the Claimant for the following reasons:

On the assumption that the above is all correct, it is clear that the insolvency endorsement, which expressly relates to the Builder, relates in this case to the entity which the parties must be taken as having mutually intended it to be, namely TT Construction. Therefore, either (and primarily) the insurance contract was void from the start because the information in the Proposal form about who the Builder was or was to be was simply wrong (as Paddington and its agent for these purposes Mr Gamby would have known if they had thought about it) and the Claimant was in breach of the warranty which it gave about that in the first place or, even if the insurance in some way subsists, it only relates to TT Construction and not to TT Bedford. The whole case has been predicated and pleaded upon the basis of the Builder being TT Bedford; there is no alternative case relying upon the insolvency of TT Construction. On either basis the claim must fail. An alternative argument was put, namely that the definition of Builder could relate to any subsequent builder appointed by the Claimant even after the named and defined Builder had become insolvent or otherwise ceased to perform. Again, I do not consider that this argument holds water because the definition of Builder in the Policy and indeed in the other contractual documentation is to a specific named builder and it is predicated upon the basis that effectively only one company has entered into a building contract for the requisite work. There is nothing in the policy which suggests that the Policyholder can repeatedly appoint builders who each consecutively becomes insolvent and for whose insolvencies the insurer must indemnify for up to 10% of the £4.6m; such an interpretation would be simply un-commercial.

It follows from the above that the Claimant had no right of claim under the insurance because it was, albeit innocently, in breach of warranty in that the statement made by it in the Proposal form to the effect that the Builder was or was to be TT Construction was within its knowledge and belief incorrect and because such warranty was not displaced or modified materially or at all by any other terms of the insurance contract.

50.. There are some residual issues which it is strictly speaking not necessary to decide. However, I will briefly indicate my findings on these other matters:

It follows from the above that there will be judgment for the Defendant. So far as is material, the answers to the issues posed earlier in this judgment are: (1) Yes, (2) Yes, (3) The facts disclosed on the Proposal form were warranted as to their truth to the best of the Claimant’s knowledge and belief, (4) Yes, (5) No, (6) Yes, (7) Yes to both questions, (8) No, (9) Yes, subject to the other answers the amount otherwise claimable would have been £460,000, (10) Yes, (11) Yes, (12) No, (13) No.