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.
Court pours cold water on insurer’s fraud claims: Malhotra Leisure Ltd v Aviva
Court pours cold water on insurer’s fraud claims: Malhotra Leisure Ltd v Aviva
During the Covid-19 lockdown in July 2020, water escaped from a cold-water storage tank at one of the Claimant’s hotels causing significant damage.
Aviva, the Claimant’s insurer under a property damage and business interruption policy, refused to indemnify the Claimant on the basis that:
1. the escape of water was deliberately and dishonestly induced by the Claimant; and
2. there were associated breaches by the Claimant of a fraud condition in the policy.
The Commercial Court dealt with each of the issues as follows.
Was the escape of water accidental or deliberate?
Aviva bore the burden of proof and had to show that, on a balance of probabilities, the escape of water was the result of an intentional act carried out either by, or at the direction of, the Claimant or its agents.
In considering whether the escape of water was accidental or deliberate, the Deputy Judge, Nigel Cooper KC, held that there was a distinction to be drawn between whether the Claimant’s witnesses were credible, and the question of whether they were sufficiently dishonest that they were prepared to deliberately cause the incident and thereafter lie about their involvement both during the investigation and then throughout the litigation. In reaching that view, he considered the following established principles:
a) if fraud is to be made out, the evidence must exclude any substantial plausible explanation for how the escape of water may have occurred accidentally; and
b) when assessing the evidence, the Court should take into account as probative tools the following factors:
i) whether there is evidence of a plausible financial motive for the Claimant to damage its own property;
ii) the fact that owners of property do not generally destroy their own property and an allegation that they have done so is a serious charge to make;
iii) instances of lesser wrong-doing may not be probative of an allegation that an insured has deliberately destroyed property to defraud insurers; and
iv) in considering where the balance of probabilities lies, it is important to consider the evidence as a whole, putting the available evidence as to the physical cause of the escape of water into the context of the surrounding circumstances and commercial background.
In considering (a) the Judge was satisfied that it was possible, based on the plumbing evidence and the fact that Aviva’s own expert accepted that the escape of water could have been accidental, that the incident was fortuitous.
Evidence of a plausible financial motive
In circumstances where there was no direct evidence as to how the escape of water was caused, the question as to whether there was a financial motive became correspondingly more significant. Aviva submitted that there was a “preponderance of evidence” that the Claimant was struggling financially in the lead up to the incident, and that from March 2020 onwards the Claimant and its wider group had been placed under significant financial pressure as a result of the pandemic. To the contrary, the evidence showed that the Claimant’s group had extensive cash reserves (£7.5 million in cash and £150 million in tangible assets at the time of the incident) with a turnover of £38 million.
The Court held that the cash reserves represented a substantial hurdle to Aviva’s case that the Claimant’s controlling shareholder, Mr Malhotra, had motive to commit fraud to obtain a payment in relation to damage to the hotel. To that end, the Judge pointed out that any payment made would have been diminished in covering the immediate clean-up costs (which had already been incurred by the Claimant) and the costs of repair and refurbishment. There was therefore no evidence of a financial motive sufficient to explain why the Claimant would have caused the incident. In fact, all necessary steps to reinstate the hotel had been taken, without the benefit of an interim payment from Aviva.
The proper approach to the construction of fraud conditions
The Fraud Condition
The policy included a fraud condition, which read:
"If a claim made by You or anyone acting on your behalf is fraudulent or fraudulently exaggerated or supported by a false statement or fraudulent means or fraudulent evidence is provided to support the claim, We may:
(1) refuse to pay the claim”
(the “Fraud Condition”).
In addition to the allegation that the escape of water was deliberately induced by the Claimant, Aviva made various submissions in respect of statements made by the Claimant’s employees and associates to Aviva’s loss adjusters. Those allegations included:
1. That the Claimant’s Estates Manager, Mr. Vadhera, who discovered the escape of water, was not an honest witness and had good reasons to be willing to lie in order to support the Claimant's insurance claim, including that:
a) he had been the Claimant’s Estates Manager since 2019, overseeing 20 members of staff, and was responsible for 20 - 30 properties;
b) there was a close personal relationship between Mr Malhotra and Mr. Vadhera dating back nearly three decades;
c) Mr Vadhera was personally and financially indebted to the Claimant, due to various substantial loans;
d) Mr Vadhera was the sole director of a construction company owned by Mr Malhotra;
e) his testimony was that, upon discovery of the escape of water, he saw the cold water tank overspill, which on Aviva’s case, would not have occurred without the connected tanks also overspilling (when in fact, the Judge found that the tank in question did overspill); and
f) he told loss adjusters that he had apologised to Mr Malhotra for disturbing his birthday on the day of the incident, when in fact it was not Mr Malhotra’s actual birthday (incidentally, it was found that Mr Malhotra was indeed celebrating his 60th birthday on that day).
2. That Atul Malhotra, Mr Malhotra’s son and the sole director of the Claimant, had lied about the whereabouts of the valve that had caused the escape of water (when in fact, he had simply not appreciated what the plumbers had handed him during the cleaning works, it being in a dissembled state and in a plastic bag).
3. That Mr Malhotra lied to loss adjusters about Mr Vadhera finding insulation in the overflow of the cold-water tank (when in fact, the evidence supported that there was indeed insulation in the overflow, there was no benefit to the Claimant in it being Mr Vadhera who discovered it, and in any event who discovered it was immaterial to the claim).
4. That Mr Malhotra told loss adjusters that Mr Vadhera told him of what he had discovered on 12 July 2020, when it must have been 11 July 2020 (which was immaterial to the claim and provided no benefit to the Claimant).
Regardless, Aviva’s position was that the Fraud Condition had been breached such that it was entitled to refuse the claim.
An extension of the common law position
The common law has long prohibited recovery from an insurer where the insured’s claim has been fabricated or dishonestly exaggerated, a principle known as the fraudulent claims rule. In The Aegeon [2002] EWHC 1558 (Comm) Mance LJ extended that rule to apply to ‘collateral lies’ (i.e. fraudulent statements made in support of claims which are otherwise valid) which are material in that they:
a) directly relate to the claim;
b) are intended to improve the assured’s prospects of obtaining a settlement or winning the case; and
c) if believed, are objectively capable of yielding a not insignificant improvement in the insured’s prospects of obtaining a settlement or better settlement.
However, Versloot Dredging BV v HDI Gerling [2017] 1 AC 1 abolished that doctrine, establishing that the fraudulent claims rule does not apply to collateral lies. Giving a dissenting judgment, Lord Mance indicated that he would have upheld the test in The Aegeon, subject to potentially raising the threshold of materiality from a requirement for 'a not insignificant improvement' to the insured's prospects, requiring instead ‘a significant improvement’.
After Versloot, policy provisions purportedly allowing an insurer to reject a claim pursuant to collateral lies go further than the common law position. In Malhotra Leisure, the Judge accepted the Claimant’s submission that - in the absence of very clear words to the contrary - fraud conditions which seek to write in a power to decline claims on the basis of collateral lies should be read as taking effect subject to the limitations of the old common law doctrine, as set out in The Aegeon and modified in Versloot.
The specific wording of the Fraud Condition
The Judge further considered whether, by referring to a 'false' as opposed to 'fraudulent' or 'dishonest' statement in the Fraud Condition, the parties were intending that any false statement, including a statement made carelessly or without knowing it to be untrue, should be enough to entitle Aviva to reject a claim.
In finding that this was not the intention, he referred to the language of the Fraud Condition, which makes clear that it is dealing with fraudulent claims and collateral lies. In other words, the Court held that the Fraud Condition intended to address a situation where there was dishonesty, and did not apply to false statements made carelessly or innocently. Further, the wording of the Fraud Condition required that any false statement support the Claimant’s claim. In other words, it only applied to false statements made to assist in persuading Aviva to pay the claim, consistent with the common law position (both before and after Versloot).
Since there was no evidence of dishonesty on behalf of Mr Malhotra or any of the Claimant’s employees and/or associates, the Judge held that the Fraud Condition had not been breached and the Claimant was entitled to an indemnity in respect of the claim.
Key takeaways for policyholders
The obiter guidance in Malhotra Leisure on the interpretation of fraud conditions in insurance policies provides welcome protection for policyholders and reads as a cautionary tale for insurers. Allegations of dishonesty and fraud cannot be pleaded lightly, and there are professional obligations on insurers to first ensure that reasonably credible evidence exists establishing a prima facie case of fraud.
Following Malhotra Leisure, it is clear that courts will interpret conditions seeking to provide an insurer with the power to decline claims on the basis of collateral lies, subject to limitations of the old common law doctrine. In short, any collateral lie covered by a fraud condition must directly relate to the claim, be intended to improve the insured’s prospects and be capable of yielding a significant improvement in the insured’s prospects of obtaining a settlement or better settlement. Many of the allegations made in this case, including immaterial points such as whether Mr Malhotra was celebrating his birthday, and whether he was told certain facts on one day or the next, were never going to pass that test, and only served to distract from what was an otherwise covered claim.
Citation: Malhotra Leisure Ltd v Aviva Insurance Limited [2025] EWHC 1090 (Comm)
Abiigail Smith is an Associate at Fenchurch Law
Insufficiency of packing exclusion (Institute Cargo Clauses)
The Institute Cargo Clauses (“ICC”) are a set of standard marine cargo clauses maintained by the Joint Cargo Committee. The latest iteration of these clauses, the ICC 1/1/2009, offers three levels of cover in descending scope of protection: ICC ‘A’ (all-risks), ICC ‘B’ (named perils, broader), and ICC ‘C’ (named perils, narrower).
All three levels of cover are subject to a common set of excluded perils. One commonly encountered exclusion is clause 4.3 of the ICC 1/1/2009 (“the Packing Exclusion”), which excludes:
“… loss damage or expense caused by insufficiency or unsuitability of packing or preparation of the subject matter insured to withstand the ordinary incidents of the insured transit where such packing or preparation is carried out by the Assured or their employees or prior to the attachment of this insurance (for the purpose of these Clauses "packing" shall be deemed to include stowage in a container and "employees" shall not include independent contractors)”.
Where an insurer purports to decline cover in reliance on this exclusion, it is important for a policyholder to closely examine the insurer’s reasons for doing so. In every case, the burden falls on the insurer to prove that the loss was proximately caused by the excluded peril (i.e., the insufficiency of packing). This requires the insurer to show that:
- The packing or preparation of the subject matter insured was insufficient or unsuitable to withstand the ordinary incidents of the insured transit;
- The insufficiency or unsuitability of the packing or preparation was the proximate cause of the loss or damage;
- The packing or preparation was carried out by the assured or their employees; and
- The packing of preparation was carried out prior to the attachment of the insurance.
Each of these elements is considered below.
- The packing or preparation of the subject matter insured was insufficient or unsuitable to withstand the ordinary incidents of the insured transit
‘Packing’ and ‘preparation’ refer to those steps necessary to prepare the cargo for the loading process. ‘Packing’ generally encompasses the placing of an outer covering over the cargo or the placing of the cargo in a container, but may at times include the insertion of material into the cargo to protect internal components. ‘Preparation’ generally involves other acts that may be necessary to prepare the cargo for loading, for instance the removal or adjustment of mechanical parts.
In no case would ‘packing’ or ‘preparation’ refer to the very acts resulting in the cargo being loaded on board. Thus in The Icebird [1991] LMLN 312, the Supreme Court of Victoria held that the failure to properly secure helicopters in the hold of the vessel could not be considered an act of ‘packing’ or ‘preparation’.
The phrase ‘the ordinary incidents of the insured transit’ has not been considered in any reported judgment relating to the ICC. A leading textbook suggests that this phrase should be read broadly to impose a ‘a rigorous requirement for packing’. On this reasoning, ‘ordinary incidents’ would refer to all reasonably foreseeable circumstances of the insured transit. Thus, if the packing of cargo was insufficient to withstand foreseeably rough sea conditions such as sudden high winds, the exclusion would apply.
That said, the formula ‘the ordinary incidents of the insured transit’ closely mirrors the classic definition of inherent vice set out in Soya v White [1983] 1 Lloyd’s Rep 122, namely:
“the risk of deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty”.
The phrase ‘the ordinary course of the contemplated voyage’ has been ascribed a narrow meaning in the context of inherent vice. The UK Supreme Court has held that the phrase does not encompass all reasonably foreseeable weather conditions on a voyage, but instead stands as a counterpoint to voyages on which a fortuitous external accident or casualty did occur. In other words, loss or damage involving the intervention of a fortuitous external accident or casualty would not be regarded as taking place in the ‘ordinary course of the contemplated voyage’: see The Cendor MOPU [2011] UKSC 5. There is scope, therefore, for arguing that the ‘ordinary incidents of the insured transit’ should be understood in a similarly narrow fashion and that, where insufficiency of packaging is being relied upon by insurers to decline cover, a careful examination of the circumstances leading up to the loss should be carried out.
- The proximate cause of the loss or damage was the insufficiency of the packing or preparation to withstand the ordinary incidents of the insured transit
The onus falls on the insurer to prove that the insufficiency of packing was the proximate, i.e. the dominant, cause of the loss. This need not necessarily be the cause that was closest in time to the loss.
As a practical matter, a policyholder should consider whether some other cause was dominant. This might include, for example, extraordinary weather conditions (including temperature) or sea states, or unforeseeable delays. Ultimately the cause of a loss is a question of fact and policyholders with complex losses with multiple factors at play should seek the assistance of experts.
- The packing or preparation was carried out by the Assured or their employees
The Packing Exclusion only applies where the packing or preparation was carried out by the policyholder’s employees, rather than an independent contractor, and a policyholder should always consider this distinction.
It has been suggested that the rationale for the distinction is that insurers potentially have a right of subrogation against an independent contractor who carried out the packing or preparation, and may therefore be more willing to accept the risk of insufficient packing in that situation.
- The packing or preparation was carried out prior to the attachment of the insurance.
The Packing Exclusion only applies where the allegedly insufficient or unsuitable packaging was carried out “prior to the attachment of this insurance”. The time of attachment is governed by clause 8.1 of the ICC 1/1/2009, the first paragraph of which provides:
“[the] insurance attaches from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit …”
Cover under a policy subject to the ICC clauses attaches when the cargo is moved for ‘immediate loading’ onto the carrying vehicle. ‘Immediate’ in this context means as quickly as possible, without any unreasonable delay. As such, where goods are moved, albeit not for the purposes of the immediate loading (e.g. when cargo is moved into a holding area but loading onto the carrying vehicle only takes place several days later), it would be difficult to establish that the policy had attached at the time the cargo was moved into the holding area.
If the process of loading the cargo onto the carrying vehicle consists of several discrete steps taken in close succession, at which step would the insurance attach? Usefully for policyholders, case law suggests that the policy would attach when the first (rather than the last) of these steps is taken.
Thus in Swashplate v Liberty Mutual [2020] FCA 15, (i) a helicopter was moved out of a hangar and loaded into a container where it was secured, and (ii) the container was then loaded onto the carrying truck two hours later. The helicopter was damaged during transit as it had not been secured properly in the container. Insurers attempted to argue that the policy attached only when the container was loaded onto the truck. However, the Federal Court of Australia commented in obiter that the requirement for immediacy was satisfied once the helicopter was moved out of the hangar, and that the policy attached at that point. Since the error in securing the helicopter took place after the policy attached, the insurers could not rely on the Packing Exclusion.
Conclusion
Although we commonly see insurers seeking to decline cover on the basis of the Packing Exclusion, whether they are entitled to do so is often far from straightforward.
For example, we were recently consulted on behalf of a policyholder with a claim arising from molasses that had been packed into flexibags, which were then loaded on to shipping containers. The flexibags did not have automatic air vents and ended up bulging after being exposed to unusually high temperatures while in transit. It was questionable whether the Packing Exclusion was truly applicable, since the damage arguably was not caused by the ‘insufficiency or unsuitability of packing … to withstand the ordinary incidents of the insured transit’.
In short, for the Packing Exclusion to apply, the facts of the case must always fall within the four requirements identified above. A policyholder should thus closely scrutinise a declinature which relies on the Packing Exclusion and consider if the insurer has genuinely satisfied these requirements.
Authors
Toby Nabarro, Director, Singapore
Win for policyholder in triple insurance case
Watford Community Housing Trust v Arthur J Gallagher Insurance Brokers Limited [2025] EWHC 743 (Comm)
In a judgment favourable to policyholders delivered on 8 April 2025, the Commercial Court upheld a policyholder’s right to choose on which policy to claim where cover was provided under multiple policies. The Court also confirmed that, where insufficient cover is provided by an individual policy, the policyholder may claim sequentially under two or more policies.
Background
The Claimant was responsible for a serious data breach, the financial consequences of which were covered under three separate insurance policies arranged by the Defendant broker (a Cyber Policy, a Combined Policy, and a PI Policy, which contained indemnity limits of £1m, £5m and £5m respectively).
Each Policy contained an ‘Other Insurance’ clause, which provided that, where multiple policies covered the same loss, the Policy would only cover losses in excess of those covered by the other policy.
Following the breach, and on the Broker’s advice, the Claimant notified the Cyber Insurer but not the Combined or PI Insurers, resulting in late notification. The Combined Insurer eventually affirmed cover despite this; but the PI Insurer maintained a declinature, and it was common ground that it had been entitled to do so. As a result, the Claimant had £6m of available cover under the Cyber and Combined Policies.
The Broker subsequently accepted that its advice had been negligent.
As its losses arising from the data breach exceeded the £6m of available cover, the Claimant sued the Broker, alleging that but for its negligence, the Claimant would have been entitled to a total indemnity of £11m (being the sum of the indemnity limits of all three policies).
The Broker’s position
The Broker argued that the maximum total indemnity to which the Claimant would have been entitled, even absent its Broker’s negligence, was the maximum liability under any one Policy, i.e. £5m. The Broker further argued that, since the Policyholder had already received £6m from the Cyber and Combined Policies, it had suffered no loss in not being covered under the PI Policy, as it had already recovered more than the maximum indemnity to which it would have been entitled.
In support of its case that the maximum recoverable indemnity was only £5m, the Broker submitted, and the Court accepted, that the ‘Other Insurance’ clauses in each of the Policies all cancelled out one another. Accordingly, argued the Broker, this was a case of triple insurance where the Policies provided primary cover for £1m, £5m and £5m respectively.
The Broker then argued that. in such a case of triple insurance, a general principle of ratable contribution applied, such that the maximum indemnity to which the Claimant was entitled was the maximum liability under any one policy. As a result, each Insurer’s liability would be limited to an equitable proportion of that capped liability. For example in the current situation, the Cyber, Combined and PI insurers would each be liable for one-third of the first £1m of the Claimant’s loss, and (ii) the Combined and PI insurers would each be liable for one-half of the next £4m of the Claimant’s loss, such that the Claimant would be entitled to £333,333, £2,333,333 and £2,333,333 from the Cyber, Combined and PI Insurers respectively - ie, a total of £5m.
In addition, the Broker had an alternative argument that, since the Policies were worded such that none of the insurers had agreed to provide primary coverage when another primary policy existed, effect should be given to that intention, by limiting the total indemnity available to the maximum indemnity under any one policy, thus reducing each individual insurer’s liability.
Decision
In finding for the Claimant, the court held that, contrary to the Broker’s principal submission (which the court said had been mistakenly based on cases involving claims between insurers) ,there was no general principle of rateable contribution in cases involving double (or triple) insurance whereby a policyholder’s indemnity was capped at the highest limit of any one policy. Further, the policyholder could choose the order in which to claim under the available policies, and, if it failed to recover the whole loss from one, it could recover the balance from the other(s). It would then be a matter for the insurers to establish contribution between themselves.
In addressing the Broker’s alternative argument that the wording of the policies operated to restrict the total indemnity to the highest single limit, the Court accepted that the general proposition that the wording of the policies could have displaced the usual rule outlined above, but held that, as a matter of construction, that was not the effect here.
As the Judge explained:
“It seems to me that if an insured has paid more than one premium for more than one primary policy against liability incurred above a specified attachment point and up to a specified limit, absent an express contractual provision that provides otherwise, as a matter of general principle the insured should be able to recover the whole of its loss under one or more of the policies up to a maximum of the combined limits. Contribution, if it arises, is a matter for the insurers inter se and absent a rateable proportion clause in the policy is of no concern to the insured”.
The Broker was therefore liable for the Claimant’s losses which subsisted after payment by the Cyber and Combined Policies, subject to the limit of indemnity under the PI Policy.
The full judgment can be read here:
https://www.bailii.org/ew/cases/EWHC/Comm/2025/743.pdf
Authors
Matthew King, Associate (Foreign Qualified Lawyer)
Arbitration Act 2025 – What policyholders can expect
In the biggest legislative development in the field of arbitration in England for thirty years, the English Arbitration Bill received Royal Assent on 24 February 2025 and was enacted as the Arbitration Act 2025 (the Act). The date on which the Act will come into force is to be determined, but the Government has indicated that this will be “as soon as practicable”.
Rather than replacing the existing statutory framework, the Act amends and adds to the Arbitration Act 1996.
The intention of the Act is to reinforce England’s position as the best place to resolve disputes by arbitration. We consider below how the developments may affect policyholders.
Power to make award on summary basis
The Act codifies the power under which an arbitral tribunal may make a summary award in relation to a claim or issue if the tribunal considers that a party has “no real prospect of succeeding”. This brings welcome clarity, the previous position as to whether a tribunal had such power being uncertain.
This will not markedly change practice for parties used to arbitrating disputes under the LCIA rules, which have previously provided that a tribunal may find a claim is (i) inadmissible; (ii) manifestly without merit; or (iii) manifestly outside the jurisdiction of the tribunal. This change will therefore have the greatest impact on parties arbitrating under ad hoc rules, and offers those parties an opportunity to save time and resources when faced with unmeritorious claims or unmeritorious defences.
Applicable law
Previously, the common law has provided that the law governing an arbitration agreement will be determined by the law governing the underlying contract, unless otherwise provided.
The new approach under the Act provides that, absent express agreement, the law of the seat of the arbitration shall apply, and an express choice of law governing the underlying contract will not constitute an express choice in relation to the arbitration agreement.
While this may seem to lay observers like a technical point, the change in approach is significant. The previous (and criticised) position meant that parties to a non-English law contract, but with a London-seated arbitration agreement (which did not specify the law applying to the arbitration agreement), found that the arbitration agreement was not governed by English law. Parties would therefore not benefit from the full protection and support of English law, which generally seeks to uphold references to arbitration.
Jurisdictional challenges
The Act limits the scope to challenge an award on jurisdictional grounds such that the court will not hear objections which have not been first raised with the arbitral tribunal, or consider evidence that was not put before the arbitral tribunal, save where the applicant shows they did not know and could not with reasonable diligence have discovered that ground, or put the evidence before the tribunal during the arbitration proceedings. It will also not rehear evidence that was heard by the arbitral tribunal, unless the interests of justice dictate otherwise.
These changes represent a significant restriction on a party’s right to challenge substantive jurisdiction.
Upon hearing a jurisdictional challenge the court now has a menu of remedies, including remitting the award to the tribunal for reconsideration or declaring that the award (in whole or in part) has no effect.
In reducing the scope of jurisdictional challenges, parties should have more certainty that an arbitral award will be final.
Codification of Arbitrator’s duty of disclosure
The common law duty of an arbitrator to disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality has now been codified such that a proposed arbitrator must as soon as reasonably practicable disclose to the referrer (where disclosure is prior to appointment), or to the parties (where disclosure is after appointment), any circumstances which reasonably give rise to justifiable doubts to impartiality.
We would expect this codification to result in earlier disclosures, reducing the risk that a party will apply to remove an arbitrator, potentially scuppering the process.
Emergency Arbitrators
The Act provides welcome certainty as to the enforceability of final awards made by an emergency arbitrator, empowering them to make final awards which can be enforced by the courts.
Conclusion
It can be seen that the Act has introduced a number of changes that should increase the efficiency of the arbitral process and the certainty and enforceability of arbitral awards.
Where policyholders are referring adverse coverage decisions by insurers to dispute resolution, these changes should be welcomed, in the expectation that final decisions will be reached more quickly and economically.
Matthew King is an Associate at Fenchurch Law, Singapore.
Fenchurch Law warns the clock is ticking for Covid-19 Business Interruption claims
Fenchurch Law, the UK’s leading firm for insurance policyholders, has issued a warning to brokers to ensure their clients file any Covid-19 business interruption (BI) claims now, before they are time-barred.
Five years on from the pandemic, experts at Fenchurch Law are highlighting that the limitation period for Covid-19 BI claims will expire in March 2026, leaving affected businesses with less than a year to act.
Over the last five years, a series of high-profile battles between insurers and policyholders in the UK over BI wordings have expanded the scope of BI policies. The result is that policyholders now have more potential opportunities to receive compensation for the loss of business during the early months of the pandemic.
Fenchurch Law’s Managing Partner, Joanna Grant, warns that brokers need to act now to give their clients the best chance of success:
“Many industries were decimated by the pandemic that swept the world in 2020, with few more severely impacted than the hospitality industry, the long periods of lockdown taking a significant toll.
“During the last five years, we’ve fought for clients to get a fair outcome from their insurers. Though the pandemic was unprecedented, insurance policy wordings should be fair, proportionate and transparent, and we have found time and time again, that this was not the case. We’re still coming up against legal challenges regarding how to apply policy wordings, most recently the Non-Damage Denial of Access appeal brought by Liberty, which found for policyholders in holding that in composite policies, 'any one loss' limits applied separately to each policyholder rather than in aggregate across all policyholders. We are also involved in new cases being issued in court, including most recently a claim brought by the owner of the Franco Manca chain of pizzerias against QIC in respect of their Covid-19 losses.
For some businesses, there may be a long road ahead, so we urge brokers start talking to clients now, long before the liability period runs out.”
Joanna Grant is the Managing Partner of Fenchurch Law UK
Fenchurch Law and Saxe Doernberger & Vita, P.C. Announce Strategic Partnership to Strengthen Policyholder Representation
Saxe Doernberger & Vita, P.C. (SDV) and Fenchurch Law have announced a new partnership, uniting two leading firms focused on representing insurance policyholders in coverage disputes. On either side of the pond, SDV and Fenchurch Law share a common mission of levelling the playing field between policyholders and insurers. Now, both firms look forward to joining forces to offer an expanded range of services for multinational policyholders and brokers.
SDV and Fenchurch Law’s Commitment to Policyholders
SDV is one of the few U.S.-based firms dedicated exclusively to representing policyholders in insurance coverage disputes. SDV has locations in the Northeast, Southeast, and West Coast, serving clients all across America. A versatile firm, SDV brings together Big Law expertise with a boutique service approach to provide legal options for policyholders, tailored to their needs. Besides advocating for clients during coverage disputes, SDV also assists with policy purchase, renewal, and modification to help clients find the coverage they need.
SDV represents policyholders across a wide array of areas of practice, including bad faith claims, cyber risk, Directors & Officers liability coverage, disability insurance claims, Employment Practices Liability claims, environmental insurance, insurance for international businesses, life and disability insurance, municipal coverage, natural disaster coverage, policy review and analysis. The firm’s Risk Transfer practice group, robustly staffed, is specifically concentrated on comprehensive review of insurance policy and contract language to protect the interests of both individual policyholders and brokers.
Fenchurch Law is an international firm with offices in Copenhagen and Singapore, in addition to London and Leeds in the UK, that has long provided insurance advice and representation in complex, high-value claims. True to its founding values, Fenchurch Law advocates only for policyholders, never insurers. Its team includes attorneys with previous experience working on all sides of the insurance market, including as brokers, claims adjusters or insurer-side representatives, bringing deep industry expertise to help secure recoveries for policyholders in disputed claims.
Fenchurch Law’s clients include global multinationals, high net-worth individuals, and businesses of all sizes across a wide variety of sectors, both UK-based and across the APAC and Scandinavian regions. The firm has particular strengths in handling claims involving construction, property, energy, financial lines, political violence, and international risks insured into the London market.
Both companies have a rich history and proven track record as elite firms in the field of policyholder coverage disputes.
Two Firms with Shared Values and a Shared Purpose
Both firms have a history of supporting the insurance broker community, combining the firms’ legal skills with brokers’ commercial leverage to achieve the best possible outcomes for both policyholders. Both firms have also lived their commitment to never bring claims against brokers.
It is these shared values of focusing exclusively on policyholder interests, and working closely with insurance brokers, that have brought the two firms together in this new collaboration. Through this partnership, SDV and Fenchurch Law look forward to offering representation to international policyholders and brokers worldwide, on a scale that has not previously been possible.
This will allow more multinational businesses access to specialized representation in their coverage disputes and expert counsel when they are making high-value insurance policy purchase and renewal decisions. It will also empower both firms to extend the range of services and areas of practice offered to their existing and future clients by tapping into each other’s deep expertise in specific insurance concerns.
Neurodiversity Celebration Week – Ayo Babatunde
As part of our continued support of Neurodiversity Celebration Week (NCW), we asked associate Ayo Babatunde to share his personal experiences with dyslexia and dyspraxia. NCW is a global initiative aimed at challenging stereotypes and misconceptions about neurological differences.
Hello, my name is Ayo. I am an associate solicitor at Fenchurch Law, and I am dyslexic and dyspraxic.
If you are not familiar with dyspraxia, it’s a disability that affects movement, co-ordination and working memory. Our Deputy Managing Partner, Dan Robin, also has it, and has spoken about it as part of Neurodiversity Week (Q&A with Daniel Robin).
I was diagnosed with dyslexic and dyspraxic when I was 19. One of the things I have found hardest is acknowledging that my brain processes information differently. Part of my journey has been figuring out how my brain works to allow me to do my best in university and more recently the workplace.
I have put in a lot of time and effort (much through trial and error!) into understanding what specific techniques work for me. I’ve discovered that I really like mindmaps, tables and schedules, as they neatly organise information in a way that I can always refer back to (sort of like a crib sheet).
Part of managing my neurodiversity has been putting in place processes and frameworks to help me. For example, I love my regular walks around the City on my lunchbreak, as this gives time for my brain to reset (sort of like a brain-break!) which in turn allows me to be more productive.
For people with neurodiversity who have just been diagnosed, I would offer the advice that it’s important to understand what specifically works for you. We are all very different, even people with the same neurodiverse disability, so it is about putting in the time to figure out what best helps you individually. As alluded to above, this is unlikely to be a hole-in-one, but through trial and error you’ll get there. When you do, it is very rewarding.
Since joining Fenchurch Law, the conversation around neurodiversity is has been really honest and I’ve felt that I can be vulnerable about how my disabilities affect me in my day-to-day life. Through having a great support network at work and my own coping mechanisms, I have the confidence that I can achieve whatever I put mind to.
Thanks for reading!
Ayo Babatunde is an Associate at Fenchurch Law
Neurodiversity Celebration Week – Q&A with Daniel Robin
Neurodiversity Celebration Week (NCW) is a global initiative aimed at challenging stereotypes and misconceptions about neurological differences. As part of NCW, Deputy Managing Partner Dan Robin takes part in an open and insightful Q&A with Associate Dru Corfield, sharing his personal experiences and perspectives.
Dru: Hi Dan, thank you for agreeing to speak about your neurodiversity as part of neurodiversity week. It is an important conversation and something that the firm is big on supporting. I suppose the obvious first question is in what way are you neurodiverse?
Dan: I have dyspraxia.
Dru: And what does that mean to a layman? How does your dyspraxia manifest?
Dan: It affects my co-ordination, particularly hand-eye as my wife found out when we went (or tried to go) motorbike riding when we first met in Australia. Workwise it makes organisation challenging and has in the past affected my ability to write. It has also occasionally had an adverse effect on my time management.
Dru: How old were you when you were diagnosed, and what gave the game away?
Dan: 12. I think my parents sought a diagnosis based on issues with coordination and how disorganised I was with schoolwork.
Dru: What was the most difficult part of being dyspraxic as a teenager?
Dan: Back when I was in teenager in the late 90’s/early 00’s (don’t let the hairline fool you, I’m only 38) there was a real lack of awareness about dyspraxia, and at school the perception was that I was lazy and sloppy rather than ascertaining whether there was another reason behind it. It was also a challenge when first learning to drive, I started to learn on a manual car but quickly learnt that was not going to happen.
Dru: And how has public awareness of neurodiversity improved since you were diagnosed / a teenager?
Dan: It’s come on loads in the last 20 years. I think the biggest change is that neurodiversity has gone from being seeing as detrimental, to being accepted, to being seen in some circumstances as an asset.
Dru: How can being neurodiverse be an asset?
Dan: Where you have to work on certain things that don’t come naturally, it can make you better at then than those to whom it came naturally. As a Spurs fan (unfortunately), I will use Harry Kane as an analogy, had he not had setbacks and had to work on parts of his performance, he would not be the best striker in the world that he is today. There are also some neurological differences that lend themselves to the skills needed for professional services, running business etc.
Dru: How has it affected you rise at Fenchurch Law from an Associate in 2018 to the Deputy Managing Partner in 2024?
Dan: I think having to work on organisation skills and other elements of the roles I have had puts me in a unique position to help others / young members of staff – because simply put there were areas of my role which I wasn’t good at it but had to improve in order to develop. I would like to think that I am a good example of the fact that there are no barriers to progression if you are neurodiverse.
Dru: How have Fenchurch been with your neurodiversity?
Dan: The support has always been incredible; I was open from start and they immediately tried to put measures in to help me. I felt comfortable being able to tell the firm and they didn’t take it as a negative, because even 7 years ago the way neurodiversity was viewed in wider society was different to how it is seen today.
Dru: And finally, what advice would you give to neurotypical people when dealing with people with dyspraxia?
Dan: Take the time to understand. Particularly because it can manifest in a way that can be misinterpreted as someone having a lack of care, attention to detail or even laziness. There are measures in place to help with nearly all aspects needed for a professional services role, and it’s about working with the individual to work out what support they require. For example, with a junior lawyer, it may be accepting that they struggle with note taking in meetings, and finding a way to work with that, or they require instructions to them in a certain way.
Dru: Thanks very much for sharing, Dan.
Daniel Robin is the Deputy Managing Partner at Fenchurch Law.