Non-compliance with condition precedent in insurance policy resulted in refusal of cover

Facts
In Kelly Builders (Rosemount) Ltd v HCC Underwriting Agency Ltd [2016] IEHC 72, Murphy J, 1 February, 2016, the plaintiff sought an order for specific performance of an insurance contract together with a declaration that it was entitled to an indemnity in respect of its liability for loss and damage sustained following a fire at NUI, Maynooth.  The fire broke out on the campus when a sub-contractor of the plaintiff, Mr Feeney, was carrying out repairs to a flat roof which involved the use of burning, welding and cutting materials.

The policy at issue contained a number of conditions precedent in particular a condition which stated that "suitable and fully charged fire extinguishers must be kept available for immediate use near the scene of operations". The defendant’s case was that it was entitled to decline cover on the grounds that the Plaintiff failed to comply with this condition.

Decision
The Court was satisfied that Mr Feeney had received an ABC powder extinguisher from the plaintiffs prior to commencing work. He checked that the pin and nozzle were in order but did not check the gauge or service label.  While working on the roof Mr Feeney noticed the fires (a small and larger fire) and he attempted, unsuccessfully, to activate the extinguisher. The parties agreed that by the time Mr. Feeney noticed the fires they were incapable of being controlled by fire extinguishers.

The Plaintiff argued that the presence, condition and suitability of fire extinguishers was irrelevant as a fire extinguisher would not have been of assistance to Mr Feeney and it was unreasonable for the Defendant to refuse cover on this basis.

The Defendant argued that the decision in Cornhill Insurance plc v DE Stamp Felt Roofing Contractors Ltd [2002] EWCA Civ 395 was authority for the proposition that non-compliance with a condition precedent on the part of the insured absolves the insurer of liability even if the non-compliance does not in any way cause the loss.

The Court accepted the Defendant's argument and held that a condition precedent is one which must be complied with before the contractual obligation to indemnify takes effect, irrespective of whether compliance or non-compliance affects the loss.

The Court then considered the requirement for “suitable and fully charged fire extinguishers” and whether this requirement could be met by a single extinguisher. The Plaintiff pointed to many examples of where a plural word may contemplate a singular. The Defendant argued that as the policy referred to 'fire extinguishers' it was evident that more than one was required. However, the Court was satisfied that the plural encompassed the singular such that the requirement for “suitable and fully charged fire extinguishers” could be met, in this particular case, by the presence of one suitable and fully charged ABC extinguisher.

Then the Court examined whether it could be said that the ABC powder extinguisher provided was “suitable, fully charged and available for immediate use”. The Court noted that it was not contested that the extinguisher was “available for immediate use near the scene of operations”. In addition the defendant did not contest that the dry powder fire extinguisher was a suitable extinguisher if it was fully charged and otherwise fit for service. The Court was satisfied that the extinguisher was a “suitable” type of extinguisher which, on the evidence of Mr Feeney, had its pin in place and its nozzle clipped on, and was therefore apparently suitable for use.

The final question for the Court to determine was whether that extinguisher was fully charged. It was accepted by the experts on both sides that “fully charged” meant that the extinguisher had a full complement of (a) extinguishing agent, and (b) expellant gas. The Court accepted the evidence of Mr Feeney that when he attempted to discharge the extinguisher it did not work and it also accepted expert evidence, that the most likely cause for its failure was a loss of pressure. Accordingly, the Court held that the Defendant had prima facie established that the extinguisher was not fully charged and it noted that it had no evidence before it which would rebut or displace that finding. In particular, there was no evidence of the history of this particular fire extinguisher, its service and maintenance history, nor whether it had been checked prior to its supply to Mr. Feeney.

Therefore, the Court was satisfied that the Plaintiff had not complied with the condition precedent by having available “suitable and fully charged fire extinguishers”.

For that reason, notwithstanding the fact that the presence of a fully charged fire extinguisher would have made no difference to the outcome of the fire which actually occurred, the Court dismissed the Plaintiffs' claim.

For further information please contact Paula Mullooly.

Date published: 3 May 2016