Fenchurch Law continues global expansion plans with opening of new Istanbul office
Fenchurch Law, the leading international law firm for insurance policyholders and brokers, has expanded its specialist legal support to the wider Turkic region from its new hub in Istanbul.
Istanbul is an established (re)insurance hub, with particular expertise in Energy and Construction. The new Fenchurch Law office, serving territories across the Turkic and Balkan regions, will provide much needed legal support for policyholders and brokers.
The office is led by renowned Turkish-qualified lawyer, Çağlar Kaçar, who built his expertise during his tenure as an in-house lawyer at Marsh. He brings extensive experience in the insurance and reinsurance sector, having focused on supporting brokers and representing policyholders throughout his career before founding his own practice. His practice is uniquely positioned as a pro-policyholder firm, and his leadership combines sector knowledge, regulatory expertise, and strong broker relationships.
The opening of the Istanbul office comes a year after the launch of Fenchurch Law’s offices in Singapore and Denmark, and five months after forming a partnership with US law firm Saxe Doernberger & Vita, P,C. Fenchurch Law’s Istanbul office marks an important further milestone in the firm’s ongoing global expansion strategy.
Senior Partner at Fenchurch Law, David Pryce, commented: “As one of the major global insurance hubs, Istanbul is a natural new location for Fenchurch Law’s expansion, continuing our growth phase to level the playing field between policyholders and their insurers across the globe. Istanbul’s role in the Energy and Construction fields is especially interesting to us at Fenchurch Law, as we strengthen our established offerings in both sectors from our London, Copenhagen, and Singapore offices, and in the US alongside our colleagues at SDV. We could not think of a better individual than Çağlar Kaçar to lead this new hub, with his extensive sector knowledge and excellent reputation within the insurance ecosystem in the Turkic region.”
Çağlar Kaçar, new Regional Managing Partner commented: “Working and being associated with Fenchurch Law represents a natural continuation of my professional focus. Their work to support the policyholder in complex claims and high-value coverage disputes is something that I have focused on throughout my career, and I am pleased to be joining a team that prioritises the same mindset. Having worked in this region for many years, building strong broker relationships, and leading my own practice, I look forward to contributing to the development of this work here in such a dynamic and powerful insurance hub.”
The underinsurance crisis: legal repercussions, broker responsibilities, and growing solutions
Underinsurance is still a major, pressing issue in the UK insurance market, with recent figures revealing that a huge 76% of commercial buildings are currently underinsured. While this is an improvement from 81% in 2023 and 83% at its peak, the statistics reveal a systemic issue which affects businesses, policyholders, and every facet of the insurance ecosystem.
In a recent webinar on Underinsurance and the Insurance Act 2015, Alex Rosenfield, Partner at Fenchurch Law, delved into the world of underinsurance, why it’s become such a huge problem for our industry, the remedies that insurers may apply under the Insurance Act 2015, the legal and financial consequences for policyholders and brokers, and finally, some suggested strategies to mitigate the risks of underinsurance.
What is underinsurance?
Taking it back to basics, underinsurance arises when the total sum insured cannot cover the full cost of rebuilding or repairing a property. The gap between the true value, and the insured value can be created for many reasons.
- Failure to factor in full rebuild costs: Including demolition, debris removal, professional fees (e.g. architects and builders).
- Inflation: Rising costs of labour, materials, and equipment may not be reflected in outdated valuations.
- Forgetting VAT: This can be especially problematic for businesses that cannot reclaim VAT.
- Intentional underinsurance: The deliberate choice to disclose lower values to reduce premiums, a risky choice which can have detrimental implications on the policy holder.
Even financially educated clients and policyholders can end up underinsured, and one of the biggest reasons is a lack of diligence.
The implications of being underinsured can be very serious. Insurers tend to apply an average clause, and the policyholder may find themselves in financial crisis, needing to fund the difference between the sums insured, and the true asset value.
Alex stressed, “Underinsurance can be disastrous with large claims, but even partial losses can still leave policyholders under-compensated.”
As an alternative (and potentially in addition) to applying average, the insurer can apply a remedy for a breach of the duty of fair presentation under the Insurance Act 2015 (“the IA 2015”), which will depend on whether the breach was deliberate or reckless, or merely carless. If it was deliberate or reckless, the insurer can refuse to pay the claim, or void the policy altogether.
If this happens, the policyholder would most likely have to share this information with a future insurer, and they may be marked as a ‘moral hazard’, reducing their perceived capacity to suffer a loss of a particular kind.
It could also frustrate business continuity in some cases, as the insured may need to wait for financial stability, and in another commercial sense, beyond the financial hit, the act of underinsuring may put directors in breach of their statutory duties.
Insurer remedies for underinsurance
Alex explained that insurers most commonly utilise one of two remedies:
The Average Clause is the most common contractual remedy, proportionally reducing the claim to discourage underinsurance and reinforce the importance of accurate valuations.
There is also the possibility of the insurer applying a remedy for a breach of the duty of presentation under the IA 2015. If the breach was deliberate or reckless, the insurer can avoid the policy and refuse all claims, and keep the premium. If it was careless or negligent, the insurer’s remedy will be proportionate, and turn on what the underwriter would have done differently had the true insured sums been disclosed.
Can insurers apply both remedies?
Alex addressed a nuanced and (currently) legally untested question: Can an insurer apply both average and a proportionate remedy under the Insurance Act to the same failure?
While technically possible, Alex argued this would likely be seen as commercially unfair and commercially unattractive, creating a double punishment. A more reasonable response, he argues, is a single repercussion based on the circumstances and severity of the breach.
“To my mind, applying both remedies cumulatively doesn't sound very attractive, because policyholders effectively be punished twice for the same failure. I think a better analysis, which I think sounds a lot more commercial, is that the insurer picks one or the other, which may just depend on how this has all happened.”
Declaration-linked and waiver of average cover
Declaration-Linked Cover (a premium based on estimated gross profit), avoids average application, unless dishonesty is involved, and is especially useful for those businesses with changeable values and success. Traditional Sum Insured with Waiver of Average promises full claim payouts without average deductions, which is also ideal for businesses that struggle with accurate valuations. However, with a waiver of average, not disclosing ‘material’ changes, such as business value growth, may still be considered a breach of the duty of fair presentation.
“Average and the remedies that insurers have under the Insurance Act can be targeted for very different things. Where an average deals with inactive, inadequate cover that the insured chooses, which is a contractual term, the values of the Insurance Act address inadequate disclosure, which affect the risk so they do address different things.”
Having covered the insurer’s and policyholder’s responsibilities at length, where does the broker stand, what are their responsibilities?
The broker’s role
Alex went on to highlight the role of the broker in helping clients to mitigate the risk of underinsurance. The Infinity Reliance v Heath Crawford case serves as a significant warning to brokers about the importance of comprehensive client advice and clear communication about insurance terms.
Infinity Reliance, an online retailer, experienced a devastating warehouse fire, but after realising that the business was underinsured, the covered value was only 26% of the actual rebuild cost (which was around £33m). The insurer, Aviva, decided to apply average, leaving the business £3 million out of pocket.
But how was the broker implicated? Infinity alliance sued their broker, Heath Crawford, claiming that he had shared misleading documentation, failed to provide proper advice on the insurance calculation, and that he had not considered the alternative premises and additional costs in his advice.
The court agreed with the policyholder, finding the broker had breached his duty. How?
- Not explaining the potential downsides of the chosen insurance type
- Failing to clarify the implications of average and coverage limits
- Not ensuring that the client’s insurance choice was informed and genuine.
Indeed, while Infinity Reliance expressed that they didn’t want to suffer a premium change, the broker was ultimately in breach of duty, as a reasonable broker would recommend a declaration of cover.
“The broker must ensure the client understands any disadvantageous consequences, such as the risk that underinsurance would lead to any claim being reduced by average... even when a preference isn't expressed, the reasonable broker should check that it remains a genuine and informed choice,” Alex clarified.
Today’s legal landscape and practical solutions
While the Insurance Act 2015 introduced clearer frameworks, case law is still limited, leaving policyholders and insurers uncertain, especially on the potential for “double dipping” and the full implications of negligent misrepresentations.
So, what does Alex suggest to help combat the major issue?
- Address the root cause: diligence
There are many reasons for underinsurance, but there is one key theme amongst all reasons: a lack of diligence. It is of the highest importance to express the need for regular evaluations make sure that the policy covers all the necessary rebuild elements, and also to take account of inflation. It is also imperative that the policy holder reviews these figures annually.
"Never assume that the figures and costs that were adequate yesterday will be relevant today."
- Clarify remedy application
Insurers can, theoretically, apply cumulative remedies to the same ‘failure’, even if it feels “very draconian”. A practical solution is to actually discuss the remedy that might apply with insurers, and in what circumstances. That therefore creates certainty for all parties involved.
- Educate clients thoroughly
Brokers must explain the consequences to the policyholder of not insuring adequately; “It does go about saying that policyholders do need to be aware that other insurance can lead to serious shortfalls, even for partial losses.”
“Concepts such as average or declaration linked cover won't be obvious to everybody, so it is important to make sure that your policyholder clients know precisely what those terms mean.”
Underinsurance is not just a hidden gap in coverage, but a systemic vulnerability that has the capacity to shake business stability. With 76% of buildings underinsured, this is a problem that demands urgent attention from the entire insurance ecosystem: from insurers to policyholders to brokers.
The combined force of regulatory obligations, court decisions like Infinity Alliance, makes it clear: accurate valuation, diligent disclosure, and client education are necessities to combating this widespread issue in the current risk market.
Alex Rosenfield is a Partner at Fenchurch Law
Win-Win, and Win again: Delos Shipholding v Allianz in the Court of Appeal
Introduction
In October 2024, our colleagues Toby Nabarro and Eugene Lee wrote here about the policyholders’ first instance success in the case of Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors [2024]. The Court of Appeal has recently upheld those findings in a judgment which will be essential reading for those involved in coverage disputes, especially concerning the duty of fair presentation under the Insurance Act 2015 (the Act).
Background
The case originated from an incident in February 2019 when the "WIN WIN", a bulk carrier vessel, was detained by Indonesian authorities for anchoring inside Indonesian territorial waters without permission. The vessel was detained for over a year, leading to its classification as a constructive total loss under the terms of the war risks insurance policy issued by the appellant insurers.
Key Issues on Appeal
The insurers were granted permission to appeal on two primary issues:
1. Exclusion Clause Interpretation:
The first issue concerned the interpretation of Exclusion (e) of the American Institute Hull War Risks and Strikes Clauses (1977), which excludes loss caused by, resulting from, or incurred as a consequence of "Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments not arising from actual or impending hostilities". The insurers argued that the detention of the vessel fell under this exclusion.
2. Duty of Fair Presentation:
The second issue was whether the policyholders had breached the duty of fair presentation under the Act by failing to disclose that the sole director of the registered owner of the vessel was the subject of criminal charges in Greece.
Court of Appeal's Decision
The Court of Appeal unanimously dismissed the insurers' appeal and upheld the policyholders’ claim for an indemnity.
1. The Exclusion:
The Court of Appeal interpreted the exclusion as applying to detentions under two different kinds of regulation, i.e. customs or quarantine regulations, and extending to other regulations with a similar purpose. The reason for the detainment here was because the vessel did not have the correct licence and it was common ground that it had not been detained under any customs or quarantine regulations.
The insurers’ case was that there had been a detention which was “similar” to a detention under customs or quarantine regulations, in part because customs and quarantine regulations are concerned with the exercise of state sovereignty and security, or clearances, and that the regulations under which the arrest was made were “similar”.
The Court found that the exclusion was concerned with:
“Arrest, restraint or detainment under customs or quarantine regulations and similar arrests, restraints or detainments …’ As a matter of strict language it might be said that it is the arrest, restraint or detainment which has to be similar to an arrest, restraint or detainment under customs or quarantine regulations, but as all arrests are similar in that they place a vessel under the control of the arresting state, it is clear that the similarity with which the clause is concerned is whether the regulation under which the arrest is effected is similar to, or has a similar purpose to, a customs or quarantine regulation”
As the detention of the vessel was completely unconnected – on the facts - to customs or quarantine regulations, the Court found that it therefore did not fall under the exclusion.
2. Duty of Fair Presentation:
On the issue of fair presentation, the issue was whether the insureds ought to have disclosed criminal charges which had been brought against its sole nominee director prior to inception of the policy.
The principal insured was Delos Shipholding S.A. (Delos), which was the registered owner of the vessel. Its sole nominee director was a Mr Bairactaris, a Greek maritime lawyer. Delos was part of the NGM Group, a well-known Greek shipping group run by the Moundreas family. Mr Bairactaris was the only person who was aware of the charges which had been brought against him. Mr Bairactaris was limited in his role as nominee director to taking instructions from the Moundreas family, he exercised no independent judgment and made no decisions.
Actual knowledge
As a corporate insured, pursuant to s.4 of the Act, Delos was obliged to disclose material information within the actual knowledge of its “senior management” (or information which Delos “ought to know”, as discussed further below). The first issue was whether Mr Bairactaris fell within the definition of “senior management”, being “those individuals who play significant roles in the making of decisions about how the insured’s activities are to be managed or organised”.
Both Courts found that Delos’ activities consisted of owning and operating the vessel for profit, which included acquiring contractual rights and obligations. Mr Bairactaris played no part in these activities and had no decision-making role; he simply did what he was told by the Moundreas family.
Therefore, the Court of Appeal upheld the first instance finding that Delos was not aware of the criminal allegations that had been brought against Mr Bairactatris. Whilst the sole director of a corporate insured will normally be part of the insured’s senior management, this will not always be the case. Further, it did not follow from this finding that Delos had no senior management for the purposes of the Act; rather, the senior management comprised those members of the Moundreas family who took the decisions on behalf of Delos.
Ought to know
The Court of Appeal also upheld the first instance finding that the criminal allegations did not amount to information which Delos ought to have known pursuant to s3(4)(a). In short, the obligation to make reasonable enquires pursuant to s4(6) did not extend to asking Mr Bairactaris about whether he knew of any material information, essentially because he knew nothing about the vessel to be insured and thus Delos would reasonably have considered it futile to make enquiries of him .
Inducement and remedy
Pursuant to s5, Schedule 1 of the Act, if the insurer would have entered into the contract, but on different terms, the contract is to be treated as if it had been entered into on those terms. The trial judge had found that, upon full presentation of the criminal charges, insurers would have imposed a condition that Mr Bairactaris should resign as a director and that the insured would have complied with that condition because Mr Bairactaris would have resigned (i.e. that the non-disclosure had not, therefore, induced insurers to enter into the policy).
Insurers argued that it was impermissible to consider what the insured would have done in response to any hypothetical additional terms imposed by insurers as this was not provided for in the Act itself; an argument which was supported by the Law Commission Report on the draft Act (para 11.82), which had stated:
”… it should not be open to an insured to say that it would have complied with any term which the insurer would have imposed (for example, an exclusion or warranty) and so the loss should be covered…”
Given the finding that the insureds had not breached the duty of fair presentation, the Court of Appeal stated that it was unnecessary to determine whether the trial judge was wrong in her findings on inducement, although the Court of Appeal said they found insurers’ submissions persuasive. The Court also noted that it had not received any submissions on whether it was legitimate to use the Law Commission Report or Explanatory Notes to the Act as aids to interpretation and made no findings in this regard.
This important issue of inducement will therefore be left to be decided in another case.
Implications of the Decision
The Act is one of, if not the, most important pieces of legislation for policyholders and coverage lawyers. Therefore, any judgment from an appellate Court discussing the Act is essential reading, especially when the policyholders prevailed. The Court of Appeal's decision should be kept in mind, especially in relation to the duty of fair presentation, when considering:
- The circumstances when an individual may or may not form part of the insured’s senior management. Senior management may include individuals who are not on the board, not employees and who have no contract with the insured;
- The extent to which reasonable enquires have to be made of someone within the organisation seeking insurance; and
- Inducement, and the extent to which it may be legitimate to consider steps which the insured would have taken in response to an additional term which the insurer hypothetically would have imposed following fuller disclosure. The Court of Appeal strongly indicated that such an approach was wrong, whilst not making any findings on this point meaning that, technically, this is still an open issue for another day.
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Fenchurch Law Strengthens Asia-Pacific Presence with New Partner Appointments
Fenchurch Law, the leading international law firm for insurance policyholders and brokers, has appointed two new Partners to its Singapore hub, demonstrating its commitment to the Asia-Pacific region.
Julian Teoh, a twenty-plus year veteran of insurance and reinsurance law has joined the firm as Partner, and Toby Nabarro, a long-time member of the firm, has been promoted from Director to Partner.
Julian brings a wealth of experience to Fenchurch Law, having acted in property, construction and business interruption claims across the region over the last two decades. Before joining Fenchurch Law, he was a partner at an insurer-facing international law firm, and has also spent time on secondment at the Sydney headquarters of Australia’s largest general insurer. His expertise has been recognised in a number of legal directories, including the Gracechurch Asia-Pacific Insurance Law Report and Euromoney’s Expert Guide to Insurance and Reinsurance in Singapore.
Toby Nabarro was a Director and founding member of the Singapore office, having joined the firm in 2020. Toby specialises in Construction, Engineering and Marine insurance coverage disputes.
Since opening in 2024, Fenchurch Law’s Singapore hub has provided first-class support on high-value, complex, commercial insurance disputes to policyholders in Singapore and the wider Asia-Pacific region. These two new appointments highlight the firm’s growing commitment to serving its broker partners and their policyholders in the region.
Toby Nabarro, Partner: “Julian is set to be an instrumental member of our Singapore operation as our client-driven expansion in the Asia-Pacific region continues. We are delighted to have Julian joining the team; his work in the market is widely respected, and his Asian experience will be a real asset as we establish ourselves as the law firm of choice for our broker partners and their policyholder customers in the region. I look forward to working with him closely as I also commit to the new role of Partner.”
Julian Teoh, Partner: “There is a clear lack of insurance law expertise that policyholders in the region can access in disputes with their insurers. Fenchurch Law has an excellent reputation within the legal insurance market, and I am excited to join such a dynamic and growing team and help to level that playing field."
Timing is everything Part II – Archer v Riverstone and (a reminder of) the cost of not complying with a condition precedent
In our article on Makin v QBE last month, we highlighted the importance of complying with conditions precedent, and noted that claimants pursuing claims under the Third Parties (Rights Against Insurers) Act 2010 (“the 2010 Act”) inherit both the rights and obligations of the insured. This case serves as yet another clear reminder of that principle, underlining the risks claimants face when policy conditions are not strictly observed.
Background
The Claimant, Hannah Archer, issued proceedings against R’N’F Catering Limited (“R’N’F”) on 5 July 2022, seeking damages for personal injury following a meal at R’N’F’s restaurant (“the Proceedings”).
R’N’F filed a defence in December 2020 and then entered into a members’ voluntary liquidation in February 2023 (“the Insolvency”). It played no active role in the Proceedings thereafter.
By a consent order dated 9 July 2024, Riverstone Insurance (Malta) SE (“Riverstone”), the successor to ArgoGlobal SE, which insured R’N’F under a restaurant insurance policy from 18/09/18 – 17/09/19 (“the Policy”), was added to the Proceedings.
The Proceedings
Miss Archer claimed that she was entitled an indemnity from Riverstone by virtue of the 2010 Act. Specifically, she said that:
- The Insolvency meant that R’N’F’s rights under the Policy had automatically transferred to her; and
- By reason of s.9(2) of the 2010 Act – which stated that anything done by a third party which, if done by the insured, would amount to fulfilment of the condition as if done by the insured – she complied with the Policy.
The question of Riverstone’s liability to Miss Archer was disposed of at a preliminary issues trial. There were two issues to be determined:
- Could Riverstone prove that R’N’F was not entitled to an indemnity under the Policy (“Issue 1”)?
- Could s.9(2) of the 2010 Act assist Miss Archer to render Riverstone liable on proof of R’N’Fs liability (“Issue 2”)?
Issue 1
The breaches of condition precedent
Riverstone asserted the following breaches of condition precedent by R’N’F:
- A failure to “On the happening of any event which could give rise to a claim … as soon as reasonably possible give notice to the insurer” (“the First Breach”)
- A failure to “supply full details of the claim in writing together with any evidence and information that may be reasonably required by the Insurer for the purpose of investigating or verifying the claim … within … 30 days of the event or circumstances …” (“the Second Breach”).
- A failure to “take all reasonable precautions to prevent or diminish loss destruction damage or injury” (“the Third Breach”).
- A failure to “provide all help and assistance and cooperation required by the Insurer in connection with any claim” (“the Fourth Breach”).
(Collectively, “the Breaches”).
The Breaches were all largely based on the same facts.
In a nutshell, Miss Archer first contacted R’N’F on 29 November 2019 to advise that she had become seriously unwell following a meal at its restaurant. Her solicitors then wrote to R’N’F on a several occasions, which included their sending a Claim Notification Form (“CNF”) and a letter on 10 January 2020 which requested R’N’F’s insurance details. R’N’F did not respond.
Miss Archer’s solicitors then sent a letter of claim to R’N’F on 30 October 2020. That prompted R’N’F belatedly to notify Riverstone on 17 November 2020.
Sedgwick, Riverstone’s claims handlers, thereafter emailed R’N’F asking for information about the claim. That included, notably, a chaser email on 20 July 2021 which stated: “failure to assist us with this matter is a breach of policy terms so if we fail to receive your response your insurer may take the decision to decline indemnity”. Indeed, it was not until October 2022 that R’N’F’s Director, Mr Ali, engaged with Sedgwick, at which point he blamed the delay on the fact that emails had gone into a spam folder.
The parties’ positions
Riverstone said there was no case for R’N’F to answer in respect of the Breaches. It described R’N’F as “burying its head in the sand for months and indeed years, before coming up with a ‘dog ate my homework’ series of excuses’.
Miss Archer, perhaps unsurprisingly, did not advance a positive case as to R’N’F’s actions. She simply said that Sedgwick took only limited steps to contact R’N’F for information, and that “alarm bells should have rung” when R’N’F did not respond.
The decision
The court had no difficulty in finding that Riverstone was right.
As to the First Breach, it said that any and all of the initial communications from Miss Archer and/or her solicitors to R’N’F were “circumstances” which should have prompted R’N’F to notify Riverstone, and that R’N’F was “thoroughly disengaged with the threatened claim, maybe hoping that by ignoring it, it will go away”. So, because R’N’F did not notify Riverstone of the “circumstance” until 17 November 2020, the First Breach was made out.
As to the Second Breach, the court agreed with Riverstone that R’N’F repeatedly ignored Sedgwick, and had no good reason for doing so. Further, the timing of its belated engagement was redolent of a policyholder that “panicked that its prior tactic of ignoring the threatened claim had failed”. The court also rejected Mr Ali’s “spam folder” explanation; that lacked any sort of cogency, and even if it did, the court found that R’N’F ought to have had proper procedures in place for checking important emails.
Based on the same factual matrix, the court found that the Third and Fourth Breaches were also made out.
As R’N’F was in breach of conditions precedent to liability, Riverstone was entitled to refuse to indemnify it.
Issue 2
Miss Archer asserted that even if R’N’F was in breach of condition precedent, she was nonetheless entitled to an indemnity. The gist of her argument was that R’N’F only became a ‘relevant person’ within the meaning of the 2010 Act at the point of the Insolvency. Thereafter, she “stood ready” to comply with the Policy, as shown by the fact that notifying and corresponding with Sedgwick and Riverstone’s solicitors. So, her position was that anything done by her was to be treated as done by R’N’F, thus entitling her to an indemnity.
She also argued that it was impossible for her to comply with the conditions precedent in the Policy before the Insolvency, as her rights only arose at that stage. That was also consistent, she said, with the 2010 Act’s policy of protecting third parties in circumstances where an insured becomes insolvent.
Riverstone disagreed. It said that any actions taken by her after the Insolvency, however reasonable, were too late, and were incapable of leading to a conclusion that she complied with the Policy.
Although the court had considerable sympathy with Miss Archer, it found that she was nevertheless wrong. In short, it was not possible to “resurrect” her right to an indemnity in circumstances where that same right had already been invalidated by R’N’F. If it was, that would effectively mean that the conditions precedent to which was subjected were entirely different from those to which R’N’F were subjected. The court found no authority for such a proposition.
The court was also unpersuaded by Miss Archer’s impossibility argument. It noted that over three years passed between the first circumstance in November 2019 and the Insolvency, and no impossibility prevented R’N’F complying with its obligations in that time. So, as R’N’F had already lost its rights under the Policy when it was not faced with an impossibility, Miss Archer could not take the benefit of them now.
Summary
The decision in Archer is another important illustration that where an insured has already lost its rights under a policy, a claimant pursuing a 2010 Act claim stands in no better a position. Even if the failure was not of the claimant’s making, that is of no consequence – the claimant does not get a second chance.
Finally, although the judgment does not explore the point in detail, it reinforces the principle that conditions precedent, and particularly notification requirements, must be complied with strictly.
The full judgment can be found here:
https://www.bailii.org/ew/cases/EWHC/KB/2025/1342.html
Author:
Timing is everything – Makin v QBE and the cost of not complying with a condition precedent
This recent decision from the High Court provides a powerful reminder of the consequences of not complying with a condition precedent to liability, and that a claimant pursuing a claim under the Third Parties (Rights Against Insurers) Act 2010 inherits both the rights – and the pitfalls – of the insured’s policy.
Background
The Claimant, Daniel Makin, attended a Bar and Restaurant on 6 August 2017. At around 08:30pm he threw a glass on the floor while apparently in “high spirits”, and was then forcibly ejected by two door supervisors (“the Incident”).
Although Mr Makin was seemingly unaffected by the Incident (he walked away and took a taxi home), he later suffered a stroke rendering him unable to work and requiring long-term care.
The Proceedings
Acting by his mother and litigation friend, Mr Makin issued proceedings against (1) the Restaurant Muse Limited (“the Restaurant”); (2) Protec Security Group Limited (“Protec”), the employer of the two doormen; and (3) QBE Insurance (Europe) Limited (“QBE”), who insured Protec under a “Security and Fire Protection” insurance policy (“the Policy”). QBE was joined to the proceedings under the Third Parties (Rights Against Insurers) Act 2010 (“the 2010 Act”).
At a preliminary issues hearing (which Protec did not attend, having entered into administration on the preceding day), the Judge, HHJ Sephton KC, gave judgment that Protec were liable to Mr Makin for assault and his consequent injury (“the Judgment”).
At trial, the parties agreed that pursuant to the 2010 Act: (1) Mr Makin was entitled to claim against QBE directly; and (2) Mr Makin’s rights were no better than those of Protec ie., if QBE had a good defence to a claim for indemnity by Protec, it would also have a good defence to Mr Makin’s claim.
QBE asserted that it had no liability to Mr Makin because Protec breached the claims condition in the Policy – a condition precedent – which required it to notify, “… as soon as practical but in any event within thirty (30) days in the case of other damage, bodily injury, incident accident or occurrence, that may give rise to a claim under your policy …” (“the Condition”).
Mr Makin disagreed. He contended that even if there was a breach of the Condition, it was not a condition precedent which entitled QBE to automatically refuse cover. Rather, it only gave QBE only the discretion to decline the claim, which it could not exercise “arbitrarily, irrationally or capriciously”.
Finally, an issue arose as to whether the Judgment was binding in these proceedings.
The issues to be decided, therefore, were:
- Did Protec breach the Condition? (“Issue 1”)
- If so, was QBE entitled to refuse cover for a breach of a condition precedent, or did it merely have a discretion to decline the claim? (“Issue 2”)
- If QBE was not automatically entitled to refuse cover, was it nevertheless entitled to do so on the facts? (“Issue 3”)
- Was the Judgment binding on QBE? (“Issue 4”).
Issue 1
Following the incident in 2017, neither the correspondence passing between the Restaurant and Protec, the Police’s investigations, nor the Letter of Claim sent in 2020 were disclosed to QBE contemporaneously. In fact, there was no suggestion that QBE were aware of the Incident at all before July 2020. Against that background, QBE said that Protec breached the Condition.
Mr Makin argued that a reasonable person would not have thought that the Incident, on its own, might give rise to a claim. He also argued that any suggestion that Protec may have come under an obligation at a later point to notify the Incident was contrary to the proper meaning and effect of the Condition. He relied in that regard on Zurich v Maccaferri [2016], in which the Court held that the likelihood of a claim eventuating is assessed at the time the event occurs.
QBE, by contrast, held that it would have been apparent to a reasonable person in Mr Lucas’ position that a claim might be made against Protec arising out of the Incident. It also distinguished the present case from Zurich v Maccaferri, because the requirement in that case was to notify a circumstance that was “likely” to give rise to a claim, whereas the Condition required Protec to notify a circumstance “might” give rise to a claim, which was a much lower threshold.
Although the Court accepted that the Incident, in isolation, would not have led a reasonable insured to form the view that there might be claim, there was nevertheless “a clear point in time” when the matters known to Mr Lucas, which included the police investigation, and that Protec were potentially open to criticism for injuring a customer, gave rise to an obligation to notify. Having not done so, Protec was in breach of the Condition.
Issue 2
On Mr Makin’s case, the Condition was not a condition precedent. That is because, he said, it was not expressed in that way (by contrast, there were other terms in the Policy that were so expressed), and if there was any doubt as to the correct interpretation, the Condition should be construed contra proferentem in his favour.
QBE disagreed. It said the Condition did not need to be labelled as a condition precedent in order to have that effect. It also referred to the introductory section of the Condition, which stated: “The following conditions 1-10 must be complied with after an incident that may give rise to a claim under your policy. Breach of these conditions will entitle us to refuse to deal with the relevant claim”. So, QBE said, the Condition made clear at the outset that its obligation to meet a claim was conditional upon Protec’s compliance. Further, and importantly, QBE contended that the use of the word “will” was consistent with an absolute right, not a contractual discretion.
As with Issue 1, the Court agreed with QBE. The true meaning of the Condition was clear, even without the label of “condition precedent”. The Court also agreed with QBE’s analysis that the word “will”, in the introductory section of the Condition, did not merely import a discretion to decline indemnity. To hold otherwise, in the Court’s view, would do an injustice to the language used. There was also good commercial sense in that conclusion: an early notification enables an insurer to investigate claims at a time when witnesses will be easier to contact and memories are likely to be better, as well as to consider the early settlement of the claim, minimising any delays.
So, on the basis that the Condition was indeed a condition precedent to QBE’s liability, and in circumstances where that condition was breached, QBE was entitled to refuse indemnity under the Policy.
Issue 3
Given the Court’s earlier findings, this point was academic: QBE had already prevailed in light of the Protec’s breach of a condition precedent to liability. However, had the Court found that the Condition did not have that status, then, applying the well-established Braganza principles – namely, that a decision must be lawful, rational and made in good faith – it would have found that QBE was not entitled to refuse cover. The breaches in this case were trivial and of no meaningful consequence for QBE’s ability to deal with the claim.
Issue 4
The final issue was whether the Judgment establishing Protec’s liability was binding on QBE in circumstances where it was given (a) at a hearing which Protec did not attend; and (b) before QBE were a party to the proceedings.
Mr Makin contended that the Judgment was binding on QBE as establishing Protec’s liability. He relied in particular on Scotland Gas Networks plc v QBE UK Ltd, in which the Court of Session held that where a policyholder’s liability was established by way of a judgment of the court in previous proceedings, “it is not open to the [insurer] to require either the existence or the amount of that liability to be proved in the present action”.
QBE argued the contrary. It referred to AstraZeneca Insurance Co Ltd v XL Insurance (Bermuda) Ltd and Omega Proteins Ltd v Aspen Insurance UK Ltd, both of which established that neither a judgment nor an agreement are determinative of whether a loss is covered by a policy – it is open to an insurer to dispute that the insured was in fact liable.
The Court agreed with Mr Makin. The present case was distinct from Omega Proteins and AstraZeneca v XL Insurance, because those cases did not involve the 2010 Act, which was focussed on placing a claimant in the same position as the insolvent insured. It would therefore be incongruous with that objective if an insured’s liability could be determined definitively, only for the insurer to later challenge it.
Summary
There are a number of salutary lessons from Makin:
Firstly, the decision provides a convenient reminder of the distinction between “likely to” and “may / might” wordings in the context of notification conditions. Whereas the former requires an insured to notify circumstances which are at least 50% likely to lead to a claim, the latter requires only a real, as opposed to fanciful, risk of a claim eventuating. Policyholders would be well advised to check which wording appears in their policies, and to ensure that the requirements are met.
Secondly, the decision reinforces that a condition precedent need not be labelled as such in order to have that effect. Where the consequences of breaching a condition are clearly spelt out, namely, that an insurer will not be liable for a claim, the courts will likely treat the condition as a condition precedent to liability. It should never be assumed, therefore, that a condition precedent does not have that status simply because the words “condition precedent” are not included.
Thirdly, and finally, although the Court’s application of the 2010 Act did not assist Mr Makin on the facts, it is likely to be helpful for policyholders generally: where an insured’s lability is definitively determined in earlier proceedings, then, applying Makin, it will not be open to an Insurer to unravel that Judgment later down the line.
Author:
Commercial Court grounds War Risks insurers in landmark Russian aircraft judgment
Please find a link to the judgment here - Russian Aircraft Lessor Policy Claims [2025] EWHC 1430 (Comm)
Introduction
On 11 June 2025, judgment was handed down following the long-awaited Russian aviation “mega trial” heard in the Commercial Court between October 2024 and January 2025.
The judgment is substantial for a number of reasons, not least because it runs to 230 pages, but also because the £809 million awarded is the largest amount ever awarded by the UK courts.
Of particular significance to policyholders however, is Mr Justice Butcher’s detailed application of causation principles, and his commentary on “the grip of the peril” which he first considered in Stonegate Pub Company Ltd v MS Amlin Corporate Member Ltd & Ors [2022] EWHC 2548 (Comm) and which was recently affirmed in Sky UK Ltd & Anor v Riverstone Managing Agency Ltd & Ors [2023] EWHC 1207 (Comm).
Background
On 10 March 2022, shortly after Russia’s invasion of Ukraine, the Russian Government issued an order which banned the export of aircraft and aircraft engines, initially for a period up until 31 December 2022 (“Order 311”). As a result, an estimated £7-10 billion of aircraft were retained by Russian lessees, and coverage proceedings were brought by affected lessors across a range of jurisdictions. Last winter, six sets of those proceedings were heard together by the Commercial Court, with AerCap acting as lead claimant on behalf of DAE, Falcon, KDAC, Merx and Genesis (together, “the Lessors”).
Each of the Lessors insured aircraft under policies which included two relevant sections, namely All Risks and War Risks cover. Whilst the All Risks cover insured against loss arising from property damage subject to certain exclusions, the War Risks cover protected against loss caused by war, which is typically excluded from standard All Risks cover.
Within those sections, there were two principal types of cover: Contingent Cover and Possessed Cover. The Contingent Cover was designed to respond when the aircraft were not in the physical possession of the Lessors, but were instead being operated by the Russian lessees, and was triggered in circumstances where the Lessors could not recover under the operator’s own insurance policies. In contrast, the Possessed Cover was designed to respond when the aircraft were in the actual possession of the Lessors, including during the course of any repossession.
Given that its War Risks cover was subject to an aggregate limit of $1.2 billion (around £892 million), AerCap’s primary claim was for All Risks cover for the full value of the aircraft at $3.5 billion (around £2.57 billion).
We set out the various points considered by the Court, and the key takeaways for policyholders, below.
Insurers’ position
Both All Risks and War Risks insurers denied liability for the Lessors’ claims on the basis that (inter alia):
a) the Lessors had not been permanently deprived of the aircraft;
b) in any event, both Political and Government Perils were excluded under the All Risks cover;
c) the loss was not covered under the War Risks cover; and
d) the effect of US and EU sanctions was that insurers were prohibited from paying the Lessors’ claims.
Contingent Cover or Possessed Cover?
AerCap advanced that it was the Contingent Cover which responded to the claim, given that the assets were stranded in Russia and were not therefore in the care, custody or control of the Lessors.
It was a requirement of the Contingent Cover that the Lessors were “not indemnified” under the lessee’s own insurance policy. The relevant leases obliged the lessees to take out their own insurance for the aircraft during the period of the lease, with the Lessors added as an additional insured. Those policies were referred to by the Court as the Operator Policies. It was an important factor that Lessors had also sought an indemnity under the Operator Policies, which is listed for trial in the Commercial Court in October 2026.
Despite each of the other Lessors seeking cover under the Possessed Cover, Mr Justice Butcher agreed with AerCap and held that each of the Lessors were entitled to claim under the Contingent Cover, given that the various requirements of the Contingent Cover were, prima facie, met.
Whilst the insurers argued that the Contingent Cover only responded in circumstances where the Lessors were “not indemnified” under the Operator Policies, and there was in fact a chance, pending the trial listed for October 2026, that they would be, the Court held that “not indemnified” actually meant “had not been paid”. On that basis, the Lessors’ outstanding claims under the Operator Policies were no bar to cover, as they had not been paid in respect of them.
In reaching that view, Mr Justice Butcher adopted guidance from the Australian case of LCA Marrickville Pty Limited v Swiss Re International SE [2022] FCAFC 17, which held that:
“The ease with which an insured may establish matters relevant to its claim for indemnity may influence questions of construction … a construction which advances the purpose of the cover is to be preferred to one that hinders it as a factor in construing the policies.”
In that vein, the Possessed Cover was not engaged because it was triggered where the aircraft were in the possession of, or alternatively were “in the course of repossession” by, the Lessors. The Court held that the latter required an overt act to physically repossess the aircraft, rather than simply an intention or a plan to do so. Therefore, as the Lessors had not taken steps to repossess the aircraft, the Possessed Cover could not be engaged.
Could the Lessors demonstrate permanent deprivation of the aircraft and, if so, when?
The relevant insuring clauses were triggered by “physical loss or damage” sustained to the aircraft during the period of insurance.
Each of the Lessors advanced a similar argument, which was that it was sufficient for them to show, on the balance of probabilities, that recovery of the aircraft was a “mere chance”.
In contrast, War Risks insurers argued that the appropriate test was whether there was no realistic prospect of recovery at any time within the commercial lifetime of the aircraft, a bar which they said had not been met. All Risks insurers accepted that there had been a loss of the aircraft, but argued that the loss was the result of a War Risks peril.
In holding that each of the Lessors had suffered permanent loss of possession of the aircraft upon the implementation of Order 331 on 10 March 2022, the Court held that the Lessors only needed to establish that deprivation of possession was, on the balance of probabilities, permanent which, in line with the judgment of the Supreme Court of New South Wales in Mobis Parts Australia Pty Ltd v XL Insurance Co SE [2019] Lloyd’s Law Rep IR 162, could be interpreted as being “more probable than not”. That case, whilst not binding in the UK, considered the notion of permanence and held that it should be assessed against the standard of “more probably than not”.
What was the proximate cause of the loss?
Having established a loss, the central issue was whether that loss was covered under the All Risks or the War Risks cover.
In relation to the All Risks cover, the Court had to consider whether the claims fell within either of two excluded perils, being:
a) Political Peril, defined as “any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional”; or
b) a Government Peril, defined as “confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government”.
If the claims did fall within either of those perils, the War Risks cover would be engaged.
Despite War Risks insurers’ attempts to argue a restrictive interpretation of the exclusions, Mr Justice Butcher found that the action taken by the Russian government on 10 March 2022 (Order 311) amounted to a “restraint” or “detention” that fell squarely within the definition of a Government Peril.
As a result, the claims were excluded by the All Risks cover and fell to the War Risks insurers.
Causation – Wayne Tank & Pump Cp. Ltd v Employers Liability Incorporation Ltd
Central to the arguments on causation was whether the Wayne Tank principle applied to independent concurrent causes (i.e. two causes each of which is sufficient to cause the loss on its own), or if Wayne Tank applied only to interdependent concurrent causes (i.e. where two causes, neither of which is sufficient on its own, act together to cause the loss).
In broad terms, the Wayne Tank principle dictates that, where there are two proximate causes of a loss, and one is covered and the other excluded, the exclusion will prevail, and the insurer will not be liable.
In seeking to limit the potential application of the Government Peril and Political Peril exclusions if it was found that the loss was also caused by a peril within the All Risks cover, War Risks insurers argued that the Wayne Tank principle did not apply to independent concurrent causes. In essence, the War Risks insurers were seeking to argue that, in addition to Order 311, the lessees of the planes had independently decided that it was in their interest to retain the aircraft and engines, which was a proximate cause which would be covered under the All Risks cover, and was completely independent from Order 311 such that the Wayne Tank principle did not apply.
Ultimately, Mr Justice Butcher found that Order 311 was the sole proximate cause. However, obiter, he commented that, even if there was an independent concurrent cause that fell within the scope of the All Risks cover (such as the lessees deciding themselves to retain the aircraft), the Wayne Tank principle would apply and the fact that Order 311 triggered the Government Peril exclusion would exclude cover in any event.
This part of the judgment is notable for policyholders as, while it is settled law that the Wayne Tank principle applies to interdependent concurrent causes (causes which act together to cause the loss), Mr Justice Butcher has now indicated, albeit obiter, that the same principle applies to independent concurrent causes (causes which would have been sufficient to cause the loss on their own).
As a result, each of the Lessors’ claims were found to be excluded under the All Risks cover and it was held that the claims fell to the War Risks insurers. Unfortunately, in Aercap’s case, this meant that it was entitled only to the lower limit of indemnity of $1.2 billion.
Do sanctions prevent payment to lessors?
Each of the policies contained an endorsement providing that insurers would not be liable where “providing coverage to the Insured is or would be unlawful because it breaches an embargo or sanction".
On that basis, insurers argued that they were prohibited from making payment under the War Risks section on account of sanctions introduced by the EU and US.
The Court considered the relevant sanctions and rejected insurers’ arguments on the basis of the specific wordings.
The grip of the peril – Stonegate v MS Amlin and Sky v Riverstone applied
Finally, in light of Mr Justice Butcher’s finding that the loss occurred on 10 March 2022, a separate issue arose in relation to the claims advanced by the Lessors whose War Risks policies contained provisions to review the geographical limits of the policies, pursuant to which insurers had terminated cover in Russia prior to 10 March 2022.
DAE, Falcon, Merx and Genesis advanced the “death blow” or “grip of the peril” concepts considered by Mr Justice Butcher in Stonegate v MS Amlin and again by the Court of Appeal in Sky v Riverstone. The lessors argued that the loss flowed from a peril that was operative within the policy period, and so, notwithstanding that the total loss occurred outside of it, they were entitled to cover.
In considering the authorities, Mr Justice Butcher clarified that:
“if an insured is, within the policy period, deprived of possession of the relevant property by the operation of a peril insured against and, in circumstances which the insured cannot reasonably prevent, that deprivation of possession develops after the end of the policy period into a permanent deprivation by way of a sequence of events following in the ordinary course from the peril insured against which has operated during the policy period, then the insured is entitled to an indemnity under the policy.”
Concluding that there were indeed restraints and detentions that took place prior to the implementation of Order 311, and that the loss of the aircraft on 10 March 2022 arose in a sequence of events that followed in the ordinary course of those restraints and detentions, it was held that the aircraft were in the grip of the peril by the time the relevant policies were terminated, and the relevant Lessors were therefore entitled to cover. In other words, whilst the aircraft were lost on 10 March 2022, they were in “the grip of the peril” from 5 March 2022 onwards.
In making this decision, the Court made several important findings, including:
a) relying on the explanation of the doctrine by the Court of Appeal in Sky v Riverstone, that a policy covering “loss occurring during” does not overcome the application of the “grip of the peril” principle;
b) there is no difference between (i) a loss where physical damage during the period of insurance later develops into a total loss after expiry and (ii) a loss where a deprivation during the period later becomes permanent after expiry, as a matter of construction; and
c) the “grip of the peril” principle naturally applies to deprivation of possession scenarios.
Lessons for policyholders
During a time of increased geopolitical tension, this decision is an important one given its key findings of fact and analysis of legal principles, which are likely to be applicable to all manner of coverage disputes arising out of Russia’s invasion of the Ukraine.
In particular, Mr Justice Butcher’s consideration of loss by way of deprivation in non-marine insurance policies is likely to be relevant to a range of insurance policies and policyholders that have been affected by the fallout from the Ukraine conflict and other ongoing geopolitical events.
Mr Justice Butcher’s consideration of the Wayne Tank principle is also of particular importance to policyholders given the apparent expansion of its previously accepted application to interdependent concurrent causes. It now seems that the principle will also apply to causes either of which is sufficient to cause the loss on its own, but which act in parallel.
Authors:
Joanna Grant, Managing Partner
Anthony McGeough, Senior Associate
AI is mainstream. Reimagining conventional risk management and insurance practice
As generative AI continues to revolutionise how businesses operate, the insurance industry is navigating a fast-changing landscape. AI’s potential to increase efficiency is undeniable, but it’s also raising serious questions about risk, responsibility, and the very nature of professional value.
In a recent panel discussion, at the Airmic Annual Conference in Liverpool, David Pryce, Senior Partner at Fenchurch Law, Jonathan Nichols, Head of RMIS Operations at Archer, and Vincent Plantard, Head Strategy & Analytics Claims, Director at Swiss Re Corporate Solutions, shared how their businesses are adapting to AI, the challenges they’re facing, and what responsible use looks like in high-stakes, regulated sectors.
From “let’s wait” to full-scale adoption
“A year ago, if you’d asked me about AI, I would’ve said, ‘We’re a small firm, we’ll wait and see what the bigger players do.’ But within about eight months, that completely changed.”- David Pryce
What drove the shift?
The realisation that clients are unlikely to continue paying for tasks that AI can perform quickly, cheaply, or even for free.
David and his team began a firm-wide review of every task they perform, categorising each into five types of data interaction:
- Capturing
- Retrieving
- Processing
- Analysing
- Creating
The focus is on using AI to free up more time for meaningful, high-value client engagement. The view is that if a task isn’t central to what clients truly value, it should be automated wherever possible. For the work that is core, AI should be used to enhance the way you operate, not to replace it. The ultimate aim is to spend more time applying the judgment, creativity, and specialist knowledge that only humans can offer.
Process to process improvement
Jonathan opened with a stark reality. At a recent industry event, a student asked him, “Where should my career be in five years?” The honest answer: many current jobs will no longer exist as AI rapidly replaces routine processes.
AI is not just advancing, it’s accelerating. Current systems already exceed average human IQ, and in a few years, they are projected to surpass Einstein-level intelligence. AI will solve complex problems at a scale and speed humans can’t match. However, AI cannot decide what problems to solve. That remains the essential human role.
The real value in future careers won’t come from doing the process but from improving it. To stay relevant, professionals must actively learn AI, work closely with IT teams and vendors, and develop strong data strategies, as AI can only deliver results with the right information. Companies that don’t embrace this shift will quickly be left behind.
Becoming data-led professionals
The shift isn’t just about technology, it’s about mindset. Swiss Re’s Vincent shared that one of the biggest challenges is helping professionals evolve from intuition-based decision-making to data-informed thinking.
“We’re asking people who’ve built their careers on experience to now use data and AI insights as a critical part of their decision-making. It’s a cultural change.”
The focus is on automating low-value, repetitive work, like routine marketing tasks and claims processing, so that teams can focus on what matters most: serving clients, making strategic decisions, and adding value.
“AI isn’t about cutting heads. It’s about giving people the space to focus on higher-order work.”
David echoed this theme, emphasising that the profession has already moved beyond the question of whether AI will have an impact; it is. The real focus now is on how to integrate AI into processes in ways that strengthen service and build even deeper trust with clients.
Risk and responsibility
David highlighted that while AI is a powerful tool, it does not remove professional responsibility.
“When you delegate a task to a junior colleague, you don’t sign it off without reviewing it. It’s the same with AI. You must check the output; you’re still accountable.”
In most cases, existing insurance policies will respond to AI-related errors if the professional has taken reasonable care. But there’s a fine line.
“Sending AI-generated work to a client without checking it would likely be seen as negligent, or even reckless. And if you act recklessly, you could find yourself uninsured.”
David also raised an important emerging issue: whether insurance policies are fully equipped to address the rapidly evolving AI landscape. He noted that some cyber exclusions may unintentionally restrict legitimate AI use, while insurers are beginning to consider AI-specific risks, such as hallucination errors. However, the fundamental principle remains that insurance is there to protect those who act responsibly.
Crucially, that responsibility doesn’t rest solely with individuals; it is an organisational duty. Firms must ensure their teams are properly trained to use AI safely and effectively. Simply blaming the tool for mistakes will not suffice; courts, regulators, and insurers will still hold businesses accountable.
David shared a cautionary story: a lawyer who submitted AI-generated court documents containing fake legal citations. The lawyer now faces professional sanctions and possible prosecution.
Responsible AI use is not just about risk management; it’s about maintaining trust with clients, regulators, and insurers. By using AI to enhance, rather than shortcut, professional work, firms can better serve their clients while staying firmly within regulatory and ethical boundaries.
Integrating AI seamlessly
Many professionals still think of AI as something they actively prompt, typing questions into tools like ChatGPT. But as Vincent pointed out, AI is increasingly embedded into everyday systems.
“When you get personalised dashboards, search suggestions, or email summaries, AI is working behind the scenes. You’re probably using it already.”
Jonathan emphasised the importance of taking a proactive, hands-on approach to learning AI. He recommended a three-pronged strategy: first, get familiar with AI personally by using tools like ChatGPT, Copilot, or any accessible AI platform. By experimenting with these tools, professionals can better understand their capabilities and limitations. He noted that the number of people using AI regularly has grown significantly over the past six months, signalling how quickly adoption is accelerating.
Second, Jonathan encouraged working closely with internal IT teams, who often already have access to advanced AI tools. Understanding what is available within the organisation is key to unlocking potential solutions.
Third, he advised engaging directly with technology vendors. By learning what providers can offer and asking how AI might help solve specific problems, professionals can better integrate AI into their workflows. His core message was clear: don’t shy away from AI. Much like past technological shifts, such as the move from fax machines to email, embracing AI will be essential to staying effective and competitive in the evolving workplace.
Getting started
For professionals wondering where to begin, David offers this:
“Don’t try to build your own AI. Start with an off-the-shelf solution from a reputable, secure provider.”
He also recommends integrating AI into workflows in a deliberate and balanced way. Use AI to automate routine, repetitive tasks to free up time, but caution against letting automation distract from the core value clients seek.
Evolving, not replacing
The takeaway from all three speakers is clear: AI isn’t about replacing professionals. It’s about elevating them.
“We’re not preparing for some distant AI future. The tools we have now are already changing how we work. It’s not about whether we use AI, it’s about using it well.”
The key risks? Not using AI at all, or using it irresponsibly.
AI is here to stay. The professionals who thrive will be those who embrace it, understand its limits, and use it to strengthen, not erode, the trust their clients place in them.
David Pryce is a Senior Partner at Fenchurch Law.
Fenchurch Law Appoints Matthew King as Associate Solicitor, Singapore.
Matthew King joins Fenchurch Law’s Singapore office as an Associate, specialising in coverage disputes. He previously worked for Michelmores where he specialised in Commercial and Regulatory disputes, advising on intellectual property, contractual, shareholder, banking and insolvency and insurance-related disputes.
Fenchurch Law announced the opening of its first international hub in Singapore in 2024, with a mission to offer policyholders and brokers from across Singapore and the wider Asia-Pacific region first-class support on high value, complex, commercial insurance coverage disputes.
Toby Nabarro, Director at Fenchurch Law Singapore: “It’s been a busy first year for our team in Singapore. Over the past twelve months, we’ve begun to establish ourselves in the APAC insurance markets by representing and advising policyholders in high-value and complex coverage disputes with their insurers. It’s an exciting time for Matt to join the team, as we continue to grow and establish our presence in the APAC market.”
Matthew King: “I was attracted to Fenchurch Law due to its entrepreneurial spirit and its inclusive values. Having a single purpose mission statement, to put policyholders on an equal footing with insurers in coverage disputes, is a unique attribute in a competitive legal market, and one that sets Fenchurch Law out from the crowd.”
Click here to find out more about Matthew
URS v BDW: a milestone decision from the Supreme Court – but does it break new ground?
The Supreme Court has handed down its long-awaited judgment in URS v BDW. The judgment considers a number of important issues for construction professionals including limitation, liability in tort, and the interplay between the Defective Premises Act 1972 (“the DPA”) and the Building Safety Act 2022 (“the BSA”).
Background
BDW, a well-known developer (whose brand names include Barratt Homes and David Wilson Homes) engaged URS, a designer, to carry out design work on two apartment blocks called Capital East and Freemans Meadow (“the Blocks”). Practical completion of the Blocks took place in 2012, and the apartments were then sold to individual purchasers.
Following the tragic Grenfell Tower fire in 2017, BDW undertook a wholesale review of its developments and discovered that the Blocks’ design was seriously defective, and that they were at risk of structural failure.
It is relevant to note that, at the time the defects were discovered:
a) There was no damage or cracking at the Blocks, even though it was accepted that that they were dangerous.
b) BDW had sold all the flats in the Blocks (thus retaining no interest in them).
c) BDW’s contractual limitation period for defective design had expired, and the then applicable six-year limitation period to bring a claim under the DPA had also expired.
Despite not owing the Blocks, nor facing claims from their owners or occupiers, BDW felt that it could not ignore the problems once they came to light, and incurred costs running to “many millions” to carry out investigations, temporary works, evacuation and a permanent remedial solution. Accordingly, in 2020, BDW issued proceedings against URS to recover the cost of the remedial works, which at the time was confined to a claim in negligence.
At a preliminary issues hearing, Fraser J held that BDW’s alleged losses were recoverable in principle, and agreed with BDW that its cause of action accrued on practical completion, not, as URS contended, when the defects were discovered.
In 2022, following the advent of the BSA, s135 of which extended the limitation period to claim under section 1 of the DPA from 6 to 30 years, BDW was permitted to add new claims under (1) Section 1 of the DPA; and (2) the Civil Liability (Contribution) Act 1978 (the “CL(C)A”).
URS appealed both decisions unsuccessfully, and was then granted permission to appeal to the Supreme Court on the basis of certain “assumed facts”.
The Grounds of Appeal
URS’ grounds of appeal were as follows:
(1) As to BDW’s claim in negligence, had BDW suffered actionable damage, or was the damage too remote because it was voluntarily incurred? If the damage was too remote, did BDW already have an accrued cause of action in tort at the time it sold the Developments? (“Ground 1”)
(2) Did s135 of the BSA apply here, and if so, what was its effect? (“Ground 2”)
(3) Did URS owe a duty to BDW under s1 of the DPA, and if so, are BDW’s alleged losses of a type which are recoverable? (“Ground 3”)
(4) Was BDW entitled to bring a claim against URS under s1 of the CL(C)A, notwithstanding that there had been no judgment or settlement between BDW and any third party? (“Ground 4”).
The appeal was heard by seven Justices, who unanimously dismissed it.
Ground 1
As a preliminary point, the Supreme Court explained that BDW’s claim against URS was for pure economic loss ie., compensation for financial loss (because the Blocks has a lower value and required repair), not physical damage. Nevertheless, it was accepted that there was an “assumption of responsibility” by URS to BDW, such that, if URS was in breach of its duty by its negligent design, BDW’s losses would be recoverable.
The issue to be decided here, however, was whether BDW’s losses could be recovered in circumstances where BDW had “voluntarily” repaired the Blocks, it being noted that any claims by the Blocks’ owners would, by that time, have been time-barred.
The Court rejected a principle of voluntariness which established a “bright line” rule of law which would render BDW’s losses too remote. In any event, there were powerful features of the case to suggest that BDW’s actions were not ‘voluntary’ in the true sense of the word. Those included that: (1) if BDW had not repaired the Blocks, there was a risk that they would cause personal injury (or at worst death) to the owners; (2) even though any claims by the owners would have been time barred, that would only provide BDW with a limitation defence, which it was not obliged to take – it did not extinguish the owners’ rights altogether; and (3) BDW would be exposed to reputational damage if it ignored the problems, including the danger to homeowners, once they had been discovered.
On the basis that there was no automatic “voluntariness principle”, the Court declined to consider when the tortious cause of action accrued. As such, the much-maligned decision in Pirelli - in which it was held that limitation in negligence against a designer runs from the date of the damage, not when it was discovered - remains, for now at least, good law.
Ground 2
The question here was whether s135 of the BSA could apply to claims which, although not claims under the DPA, were dependent on the time limits under the DPA e.g., claims by homeowners against a developer, designer or contractor.
In grappling with that question, the Court firstly set out that a key objective of the BSA was “to identify and remediate historic building safety defects as quickly as possible, to protect leaseholders from physical and financial risk and to ensure that those responsible are held to account.” S135 of the BSA, which created a “backward-looking” 30-year limitation period for claims under s1 of the DPA, was written with that objective in mind.
Against that background, the Court found that s135 applied to cases such as the present one. A finding to the contrary would seriously undermine the scheme of s135 of the BSA, and effectively create two contradictory “parallel universes” – one for claims by homeowners against developers, and another for onward claims by developers against the designers or contractors responsible for the defects, each of which would bear different limitation periods. Plainly, the Supreme Court found, that would be an incoherent outcome.
Ground 3
S1 of the DPA imposes a duty on those who “take on work” for in connection with the provision of a dwelling to ensure that the work is done in a professional manner, and that the dwelling is fit for habitation when completed. The duty is owed to the person who commissioned the dwelling, ie., “to the order of any person”, and any person who acquires a legal or equitable interest in the dwelling.
It was common ground that BDW owed the s1 duty on the basis that it took on work. The question raised by Ground 3 was whether BDW could also be owed the s1 duty, because URS took on work to BDW’s order.
Unsurprisingly, the Court held that BDW was owed the s1 duty. As a matter of normal meaning, the words “to the order of any person” did not confine the recipients of the duty to lay purchasers, but were capable of embracing the “first owners” who order work ie., developers. Accordingly, the Court found, “there is no good reason why a person, for example, a developer, cannot be both a provider and person to whom the duty is owed …”.
Ground 4
S1 of the CL(C)A 1978 establishes a right of a person who is liable for damage to seek a contribution from others who are also liable for the same damage. There is a two-year limitation period that applies to such claims, running from the date that the right accrues.
URS asserted that BDW was not entitled to bring a claim for a contribution. That was because, it said, there had been no judgment against BDW, a settlement, or an admission of liability on BDW’s part. BDW, by contrast, contended that the right to claim a contribution under the CL(C)A arose as soon as the damage was suffered.
The correct answer, the Court found, was somewhere in between: when (1) there is damage suffered for which two defendants are each liable; and (2) the first of the defendants “has paid or been ordered or agreed to pay compensation in respect of the damage”. It was at that point, and not before, that the first defendant would be entitled to recover a contribution.
Accordingly, BDW was not prevented from bringing a contribution simply because there was no judgment against it, nor a settlement with any third-party claimants.
Conclusion
Although the Supreme Court stopped short of breaking new ground in some respects (Pirelli, notably, being left for another day), the decision in BDW v URS brings welcome clarification on a number of important issues. Those include, in particular, that claims under s1 of the DPA are not confined to lay purchasers: developers and other construction professionals may be owed precisely the same duties by professionals responsible for design and construction. That the Supreme Court came to that conclusion is unsurprising, and is on all fours with the BSA’s central purpose of holding those responsible for building safety defects accountable.
The corollary is that liabilities under the DPA will be considerably broader in scope. That will inevitably open the floodgates for more claims against construction professionals.
How the insurance market will respond remains to be seen. Watch this space.
Alex Rosenfield is a Partner at Fenchurch Law.