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The Sugar Hut Group

A judgement involving the interpretation of warranties

Andrew Moncrieff

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Chronology

3 Feb 2009 The Sugar Hut Companies went into administration because of financial difficulties and new Companies with similar names were started to take over the businesses.

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Chronology

3 Feb 2009 The Sugar Hut Companies went into administration because of financial difficulties and new Companies with similar names are started to take over the businesses.

Sugar Hut Brentwood Ltd became Brentwood Sugar Hut

Sugar Hut Fulham Ltd became Fulham Sugar Hut

Newplex Trading Ltd (Basildon) trading as Sky Bar Sports Arena became Basildon Sky Bar Ltd

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17 March 2009 Broker informed that cover might not be renewed

21 March 2009 Cover expires and is taken over by new insurer who gave a £1000 discount

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17 March 2009 Broker informed that cover might not be renewed

21 March 2009 Cover expires and is taken over by new insurer who gave a £1000 discount

It was not disclosed that:The old companies had gone into administration because of financial difficulty

New companies had been formed rather than just changing the names

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16-19 June 2009 Surveys were carried out of the premises by a surveyor instructed by the insurer

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16-19 June 2009 Surveys are carried out of premises by surveyor instructed by insurer

13 September 2009 Fire at Brentwood premises

27 November 2009 Claim declined

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The Judge was not impressed by the Claimants’ arguments in trying to excuse the non-disclosure.

Had the facts been disclosed, insurers would have made further enquiries and might not have agreed cover at all.

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The Judge was not impressed by the claimant’s arguments in trying to excuse the non-disclosure.

Had the facts been disclosed, insurers would have made further enquiries and might not have agreed cover at all.

He was took note of :

The £1000 discount the insurer was persuaded to give

The failure of the insured to give evidence regarding his reply had he been asked for further details by insurers.

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The Breaches of Warranty

None was connected in any way to the fire

Kitchen extraction ductInspectionConstruction

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The Breaches of Warranty

None was connected in any way to the fire

Kitchen extraction ductInspectionConstruction

AlarmNot central station

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The Breaches of Warranty

None was connected in any way to the fire

Kitchen extraction ductFailed to make regular inspectionsDefective in construction

AlarmWas not connected to a central station

Waste binsWere not made of non-combustible materials

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‘A warranty……is a condition which must be exactly complied with, whether it be material to the risk or not.’

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Is it a true warranty or a suspensory condition?

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Is it a true warranty or a suspensory condition?

The use of the word ‘Warranty’ is a good start but is not conclusive

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Is it a true warranty or a suspensory condition?

The use of the word ‘Warranty’ is a good start but is not conclusive

A true warranty will be associated with a state of affairs

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Is it a true warranty or a suspensory condition?

The use of the word ‘Warranty’ is a good start but is not conclusive

A true warranty will be associated with a state of affairs

It can be considered a suspensory condition if a deadline is involved

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The kitchen extraction duct issue

“extraction ducts will be checked at least once every six months by a specialist contractor”

The last inspection was 6 months before the fire

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The kitchen extraction duct issue

“extraction ducts will be checked at least once every six months by a specialist contractor”

The last inspection was more than 6 months before the fire

Would have accepted it as a suspensory condition but that made no difference because it had still not been inspected at the time of the fire

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“exhaust ducting will be kept securely fixed and free from contact with combustible material”

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“exhaust ducting will be kept securely fixed and free from contact with combustible material”

Agreed to have been in contact over 114 mm

‘De-minimis’ argument – rejected

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“exhaust ducting will be kept securely fixed and free from contact with combustible material”

Agreed to have been in contact over 114 mm

‘De-minimis’ argument – rejected

Important protection and a true warranty

Impressed that the conditions were less stringent than the LPC which requires 150 mm clearance

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With four premises all covered under one policy, a breach at one

affected the cover at all four

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The Burglar Alarm Issue

The policy required a “NACOSS central monitoring station alarm to be installed and operational”.

The alarm at Brentwood was designed to ring a telephone number of an employee. It was not directed to an alarm monitoring centre or the Police. It didn’t even ring the employee.

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The Burglar Alarm Issue

The policy required a “NACOSS central monitoring station alarm to be installed and operational”.

The alarm at Brentwood was designed to ring a telephone number of an employee. It was not directed to an alarm monitoring centre or the Police.

Accepted that the alarm did not conform and that this affected the risk. Accepted that it was a True Warranty.

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The Wheelie Bin Issue Waste should be stored in:

“non-combustible lidded and lockable containers or

metal skips kept within designated areas.”

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In fact they were stored in HdPE which, while hard to light is organic (plastic) and will eventually burn

Insurer’s surveyor did not identify the bins as being of the wrong type. The Claimant sought to use this as a waiver of the Warranty, which the Judge rejected

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In fact they were stored in HdPE which, while hard to light is organic and will burn

Insurer’s surveyor did not identify the bins as being of the wrong type. The Claimant sought to use this as a waiver of the Warranty, which the Judge rejected

Judged the Claimant not to be in breach because if insurers had wanted metal bins they should have said so

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SUMMARY

Is it a true warranty or a suspensory condition? Calling it a warranty does not necessarily make it so

With four premises under one policy, a breach at one affected the cover at all four

A survey does not necessarily excuse the insured from breaches of warranty

Wording in warranties must be consistent and precise. Keep the conditions within industry standards.

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