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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Mann & Anor v Lexington Insurance Company [2000] EWCA Civ 256 (11 October 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/256.html
Cite as: [2001] 1 Lloyd's Rep 1, [2000] EWCA Civ 256
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Case No:A3/2000/2604
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
COMMERCIAL COURT (Mr Justice Timothy Walker)
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 11 October 2000
LORD JUSTICE WALLER
LORD JUSTICE LAWS
and
LORD JUSTICE KAY
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Mann & Anr |
Claimant/ | |
- and - |
||
|
Defendant/ |
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr Michael Swainston (instructed by Reynolds Porter Chamberlain for the Claimant/Applicant)
J Flaux Esq QC, Rebecca Sabben-Clare (instructed by Radcliffes for the Respondent)
- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court
Crown Copyright
LORD JUSTICE WALLER:
1. This is an appeal from a judgment of Timothy Walker J delivered on 20th June 2000 in which he made certain rulings on preliminary issues ordered by Morison J on 31st March 2000.
2. The preliminary issues concerned the proper construction of the words of a retrocession.
3. The first claimant DP Mann and syndicate were reinsurers who had taken 25% of the primary risk and retroceded 20% to the defendants. The second claimant had reinsured 1.7%, and retroceded that percentage 100% to the defendants. The primary risk was written by an Indonesian insurer P.T. Asuransi Central Asia, and covered stores in Indonesia belonging to PT Ramayana. Those stores were at different locations, and were identified in a schedule. That schedule was attached to all three layers of insurance.
4. The terms of the retrocession were evidenced by cover notes issued by Aon Group Limited no policy documents being issued. There is no material difference between that of the first claimant and that of the second claimant and thus it is possible to concentrate on the terms of one cover note. The terms included the following:-
"TYPE: Fire, Lightning, Explosion, Aircraft Damage, Riot, Strike, Malicious Damage, Smoke Damage, impact of Vehicles (including own vehicle), Earthquake, Volcanic Eruption, Tsunami, Typhoon, Storm, Flood, Water Damage and consequential loss resulting therefrom reinsurance as original."
"INTEREST: "1) Real and Personal Property
2) Loss of Rent.
Of the insured's business interests being Shopping Centres, Department Stores, Supermarket, Grocery Stores, Warehouses and Offices Restaurant and Playground and as more fully defined on the Original Policy."
"SUM INSURED: USD 5,000,000 per occurrence but in the annual aggregate separately for Flood and Earthquake"
"CONDITIONS: This reinsurance is subject to the same terms and conditions as the original Policy except as otherwise provided herein and reinsurers will follow the settlements (excluding ex gratia) of the original Policy as far as applicable ...
"DEDUCTIBLES: 2.50% of adjusted claim subject to minimum IDR.25,000,000 each location any one occurrence ...."
"PREMIUM: USD 175,000 (100% Annual Adjustable on declared values or pro rata).
5. In the course of unrest which preceded the resignation of President Suharto, much commercial property in Indonesia was attacked including some PT Ramayana stores. A map has been produced by the loss adjusters as to the location of the different stores which suffered damage. The judge was shown the map as were we. The defendants do not accept the accuracy of the map. They took the point before Timothy Walker J that there was no provision for evidence to be taken on the trial of the preliminary issues and no requirement that facts should be assumed. It was perhaps unfortunate that in relation to the trial of preliminary issues intended to assist the parties to resolve an issue of principle in order to save a lengthy trial, that a more constructive approach was not taken to agreeing or assuming facts, but, since the defendants, certainly before this court, accepted that the losses were sustained in the course of rioting over two days, 14th and 15th May 1998, and that the stores affected are some distance apart, it is unnecessary to dwell on the lack of co-operation.
6. The primary insurance paid each of the claims in relation to each of the stores and the reinsurer claimants did the same. The precise terms of the Primary Insurance are not easy to discern from the papers before us, but so far as the reinsurance is concerned "the sum insured" was up to IDR 30,000,000,000 "each and every loss, each and every location" [to be contrasted with the terms of the retrocession "US$ 5,000,000 per occurrence but in the annual aggregate separately for Flood and Earthquake"]. The terms of the deductible were however identical to those of the retrocession (Supplemental Bundle pages 28 and 29).
7. The defendants insisted that the losses should be treated as a single occurrence for the purposes of the retrocession. Their case was as per paragraph 11(2) of their amended defence as follows. I will not incorporate the underlining or the parts expunged by amendment.
"This is the correct treatment of the Losses because they were all occasioned by the same episode of civil commotion assuming the proportions of or amounting to a popular rising, which occurred in May 1998, was deliberately instigated by members of the government then in power, and which had as its principal aim or aims: (i) the creation of circumstances in which new, more stringent, law enforcement measures were justified; and/or (ii) persuading the IMF to ease restrictions which it had imposed upon foreign aid. Further or alternatively, the Losses were all the result of one and the same cause or combination of causes, namely:
a) mass social unrest generated by spiralling inflation, the depreciation of the Indonesian Rupiah against the U.S. Dollar, food shortages, very high levels of unemployment and the collapse of the Indonesian economy generally; and/or
b) deliberately orchestrated rioting which occurred on 14 and 15 May 1998."
8. Preliminary Issues
Morison J took the view that it was really an issue of principle that divided the parties, and that it should, with the aid of appropriately drafted preliminary issues, be possible to save the expense of an extensive trial during which the uprisings in Indonesia and their cause or causes might be minutely examined over some days. Mr Flaux for the defendants accepted that it was really an issue of principle which divided the parties, but submitted that it was his clients' case (1) that "per occurrence" was a term of aggregation, and (2) that his clients should have the opportunity to establish on the evidence that there was one riot and that the one riot and the losses caused thereby was one occurrence to which the limit of US$ 5,000,000 applied. He accordingly opposed the ordering of a trial of preliminary issues.
9. Morison J ordered the trial of the following preliminary issues.
1. What is the proper interpretation of the Sum insured Clause in the
Retrocession Agreement pleaded in paragraph 3 of the Points of Claim ("the
Retrocession")?
2. Regardless of the motivations of those who perpetrated damage to the
relevant Ramayana stores, did the Losses (as defined in paragraph 4 of the
Points of Claim and as scheduled to the Amended Reply) necessarily constitute
more than one "occurrence" within the meaning of the Retrocession:-
(1) by reason of the different localities at which they occurred; and/or
(2) by reason of the different times at which they occurred?
3. If issue 2 is answered "no", how does it affect the number of
occurrences if:
1. the damage to all of the relevant Ramayana stores was instigated by one
single group or faction?
2. The damage to different Ramayana stores was instigated by different groups
or factions, each acting for its own separate purposes?
3. The damage to particular Ramayana stores was caused by opportunistic acts of
individual criminal behaviour, without any purpose other than the intention of
the perpetrators to commit theft or other criminal offences?
4. The damage to particular Ramayana stores was partially instigated by one or
more factions and partially caused by opportunistic acts of individual criminal
behaviour, without any purpose other than the intention of the perpetrators to
commit theft or other criminal offences?
10. The trial of the Preliminary Issues came on before Timothy Walker J. He
accepted Mr Flaux's submissions. He accepted that the words "per occurrence"
produced an "aggregation provision". He was of the view that the losses did
not necessarily constitute more than one occurrence (1) by reason of
the different localities at which they occurred; and/or (2) by reason of the
different times at which they occurred, and thus answered Question 2 "no". He
recorded Mr Flaux's concession that if the circumstances were as per 3 (2) and
(3) Mr Flaux would not be suggesting that damage to the different stores was
one occurrence, but otherwise held that a trial must take place so as to
resolve whether there was one riot or several riots.
11. In the view he formed the judge was much influenced by the terms of the
deductible "2.50% ... each location any one occurrence" which he described as
"the other important clause". He expressed his view as follows:-
"Thus the deductible clause necessarily contemplates that any one
occurrence can cover more than one location. If for example ten stores are
affected by one occurrence, then there is a deductible on each store for the
purposes of recovery. The approach taken in the deductible clause is
entirely consistent with the perils insured against, a large number of which
are obviously able to affect more than one location. Thus (leaving aside
Riot for the moment) Earthquake, Volcanic Eruption, Tsunami, Typhoon, Storm
and Flood are all fully capable of doing damage over a wide area. Having
drawn these conclusions from the wording of the contract itself, I go to the
three Preliminary Issues."
12. The difficulty I have with this reliance on the deductible clause is that
although I would accept that if it be right that "occurrence" in the sum
assured clause means what the judge thought it meant, then he would be right
as to his view on the deductible clause; if he was wrong however the
deductible clause still makes sense and indeed the same sense as it makes in
the reinsurance contract, that a deductible should be applied to each loss
occurring at each location. What can be argued, and is argued by Mr Flaux, is
that the use of the word "location" as well as the word "occurrence" in the
deductible clause, points to there being a distinction between the two. Thus,
Mr Flaux submits, if Mr Swainston's submission were to lead to "occurrence"
and "location" meaning precisely the same, that would be a pointer against Mr
Swainston's construction. The use of the word "occurrence" without reference
to "location" is clearly a point which needs further consideration.
13. There are really two questions. First, was it intended by use of the
words "per occurrence" in contrast to the words "each and every loss, each and
every location", to produce a situation where losses to more than one store at
their different locations, would be subject to the sum insured limit of
$5,000,000 where, for example, a typhoon or volcanic eruption damaged more
than one store? Second, if so, and since that would have to be on the basis
that a typhoon or volcanic eruption damaging properties at different locations
could be one occurrence, could the defendants establish that rioting affecting
properties at different locations at different times was one riot or occurrence
thereby limiting the claim for all properties to $5,000,000?
The authorities
14. The authorities cited went to two points; first the meaning of the word
occurrence, and second to the extent to which in construing a retrocession or
reinsurance policy regard could be had to the terms of the underlying
insurance.
15. Rix J, as he then was, in Kuwait Airways Corporation v Kuwait
Insurance Co [1996] 1 Lloyds Rep 664 analysed the authorities which
considered the meaning of occurrence in the insurance context. I make
no apology for citing a substantial part of his reasoning which itself
incorporates an important part of the reasoning of Sir Michael Kerr in his
arbitration award in Dawson's Field Award (Mar 29 1972). Each case
does depend on its own terms and circumstances, thus the assistance given must
be taken with that in mind but the passages are instructive.
16. In the Kuwait case Rix J was concerned with a war risks policy in
which the relevant limit was subject to the qualification "any one occurrence,
any one location", and the question was whether the capture of 15 aircraft at
Kuwait airport was one occurrence or 15 occurrences.
17. In Dawson's Field Michael Kerr QC as he then was, was concerned
with an excess of loss clause which spoke of ultimate net loss sustained in
respect of - "each and every loss ... and/or occurrence and/or series of
occurrences arising out of one event."
18. The arbitration was concerned with the hijacking of four aircraft one of
which was blown up at Cairo airport and three of which were blown up at
Dawson's Field. In his arbitration award, quoted by Rix J at 686, Michael
Kerr QC said as follows:-
"I consider that I have to approach the present problem by putting myself
in the position of an informed observer at Dawson's Field on 12th September
1970, watching the preparations for the blowing up of the aircraft, the
evacuation of the immediate vicinity and the blowing up of the aircraft.
During this period he would of course have seen a multiplicity of actions
and events including a number of separate explosions which destroyed the
aircraft. Would he then say that the destruction of the aircraft was one
occurrence or a series of occurrences? The answer must be subjective. No
one contended that each explosion was a separate occurrence. In my view
there was one occurrence, one event, one happening; the blowing up of three
aircraft in close proximity more or less simultaneously, within the time
span of a few minutes, and as a result of a single decision to do so
without any one being able to approach the aircraft between the first
explosion and their destruction. I cannot regard this as a "series of
occurrences" . . .
I have already dealt with the Respondents' contention that the proximate
cause of the destruction of the aircraft were the hijackings, which I cannot
accept. I accept their contention that if the aircraft became total losses
by hijacking (which I reject) then the hijackings could not be aggregated for
any purpose under the Clauses. Since the aircraft were hijacked by different
persons and in widely separated localities it would be impossible to treat
the hijackings as a single occurrence. I also reject the contention faintly
and more or less formally advanced by the Claimants that the hijackings arose
out of one event, viz. The PFLP's overall plan. I agree that a plan cannot
by itself constitute an event. But it was then said on behalf of the
Respondents that the destruction of the aircraft at Dawson's Field could also
not be said to have arisen out of one event, because the only unifying event
could have been the decision or order to blow up the aircraft. But in my
view this approach is much too narrow, though this view must admittedly be
coloured by my view about "occurrence". The destruction of the aircraft
arose from the decision or order to detonate the explosive charges in them
which was thereupon carried out in the way described above. If three
aircraft become total losses because of a decision or order to blow them up
together is carried out, why is the carrying out of the destruction or order
not one event?"
19. Rix J then continued as follows:-
"It seems to me that these authorities justify the following propositions. An
"occurrence" (which is not materially different from an event or happening,
unless perchance the contractual context requires some distinction to be made)
is not the same as a loss, for one occurrence may embrace a plurality of
losses. Nevertheless, the losses' circumstances must be scrutinized to see
whether they involve such a degree of unity as to justify their being described
as, or as arising out of, one occurrence. The matter must be scrutinized from
the point of view of an informed observer placed in the position of the
insured. In assessing the degree of unity regard may be had to such factors as
cause, locality and time and the intentions of the human agents. An occurrence
is not the same thing as a peril, but in considering the viewpoint or focus of
the scrutineer one may properly have regard to the context of the perils
insured against.
I have already made my findings of fact regarding the circumstances of the
aircrafts' loss. In my judgment the aircraft were already lost on Aug. 2, and
not merely when flown away."
20. At 689 Rix J continued:-
"The position is, therefore, that the aircraft were all lost on Aug. 2. There
is unity of time. There is also unity of location, as Mr Webb in my judgment
rightly concedes. There is unity of cause, for, whichever of the insured
perils is the appropriate one, it operates alike in respect of all aircraft.
There is unity of intent. Moreover, since the contract in question is one of
war risks, the context is one in which it must be fair, if appropriate, to
describe the relevant occurrence in broader as distinct from narrow terms. How
then does one describe an occurrence in and by reason of which KAC became
dispossessed of all 15 aircraft standing at the airport at the time of invasion
and capture of the airport, in circumstances where the Iraqis intended to
exercise dominion over those aircraft and to fly them out of Kuwait to Iraq as
soon as they could logistically do so? In my judgment the occurrence is the
successful invasion of Kuwait, incorporating the capture of the airport and
with it KAC's aircraft on the ground; at its narrowest it is the capture of the
KAC fleet at Kuwait airport. On either view, it seems to me, those matters are
appropriately described as one occurrence."
21. Axa v Field [1996] 2 Lloyds Rep 233 was also cited on the
occurrence aspect for the sentence in Lord Mustill's speech at 239:-
"In ordinary speech, an event is something which happens at a particular time,
at a particular place , and in a particular way." But it is on the relevance to
construction of the underlying insurance to the reinsurance where to my mind
that authority is of most assistance. At 238 Lord Mustill said:-
"On appeal, the reasoning of Mr Justice Phillips was upheld: [1996] 1 Lloyd's
Rep. 26. Prominent among the reasons given were three themes whose importance
extends beyond this particular dispute; and since I venture to differ from
each, I will turn to them straight away. The first is an assumption that where
a direct insurer takes out reinsurance, and where both policies contain
provisions enabling the amount of losses to be added together, the parties are
likely to have intended their effect to be much the same. This assumption may
very well be correct where the reinsurance is of the proportionate kind, under
which the reinsurer is sharing the risk assumed by the direct insurer. In such
an event it is indeed likely that the treatment of multiple losses, and hence
the outcome of the parallel contracts, was meant to be the same. But where a
reinsurer writes an excess of loss treaty for a layer of the whole account (or
the whole of a stipulated account) of the reinsured I see no reason to assume
that aggregation clauses in one are intended to have the same effect as
aggregation clauses in the other. The insurances are not in any real sense
back-to-back."
22. It was that passage which Tuckey LJ had in mind when he quoted the
following passage from the speech of Lord Griffiths in Vesta v Butcher
[1989] AC 852 at 895 and added a comment of his own at paragraph 12 of his
judgment in Groupama Navigation et Transports and others v Catatumbo CA
Seguros (CAT 20th July 2000):-
"In the course of his speech Lord Griffiths said at page 895:
"In the ordinary course of business reinsurance is referred to as
`back-to-back' with the insurance, which means that the reinsurer agrees that
if the insurer is liable under the policy the reinsurer will accept liability
to pay whatever percentage of the claim he has agreed to reinsure. A reinsurer
could, of course, make a special contract with an insurer and agree only to
reinsure some of the risks covered by the policy of insurance, leaving the
insurer to bear the full cost of the other risks. Such a contract would I
believe be wholly exceptional, a departure from the normal understanding of the
back-to-back nature of reinsurance and would require to be spelt out in clear
terms. I doubt if there is any market for such a reinsurance."
This statement cannot apply to all reinsurance but has not been doubted where
the reinsurance is proportionate such as the reinsurance in this case and in
Vesta where the reinsurer shares a proportion of the underlying risk
written by the insurer. (See Lord Mustill in Axa Reinsurance (UK) plc v
Field [1996] 1 WLR 1026, [1996] 3 All ER 517 at 1033H-1034B)."
23. Later at paragraph 17 he said:-
"I did not understand Mr Donaldson to quarrel with the presumption that in a
proportionate reinsurance of the kind with which this case is concerned, there
is a presumption that, in the absence of clear words to the contrary, the scope
and nature of the cover afforded is the same as the cover afforded by the
insurance.. That at least I think is the effect of Vesta and it makes obvious
commercial sense. As the cases show, the same does not necessarily apply to
provisions relating to ancillary or procedural matters such as claims control,
law and jurisdiction and arbitration. So no significance can be attached to
the fact that such provisions are not the same in the two contracts."
24. Mance LJ reached the same conclusion as Tuckey LJ, and said this at
paragraph 33:-
"The conclusion to which I have come applies because the warranties in the
insurance and reinsurance were in terms effectively identical. It is only the
differing proper laws of the two contracts which opens the argument that,
whatever the warranty's effect in the original insurance, the express warranty
in the reinsurance has a different, overriding effect. Had the two contracts
contained warranties expressed in different and irreconcilable terms, different
considerations could have arisen. Likewise, if the reinsurance had contained a
warranty which had in terms no counterpart in the insurance. It would then be
clear that the two contracts were not and could not to that extent be treated
as back-to-back. There would be no possibility of reconciling them. . . .
."
Submissions
25. Mr Flaux referred to the term of the retrocession which incorporated the
terms of the original policy subject to qualification as follows:-
"this reinsurance is subject to the same terms and conditions as the original
Policy except as otherwise provided herein and reinsurers will follow the
settlements (excluding ex gratia) of the Original policy as far as
applicable."
26. He submitted that the sum insured term "per occurrence but in the
annual aggregate separately for Flood and Earthquake" was so different from
the equivalent in the reinsurance and the original policy that it clearly
"otherwise provided". He submitted that the words in the retrocession "per
occurrence" must have been chosen deliberately so as to produce a
difference.
27. He further submitted that many of the perils eg fire, explosion, aircraft
damage, riot (obviously), strike, earthquake, volcanic eruption, typhoon, storm
and flood were perils that might well affect more than one location in the
course of one occurrence, and thus that there was every reason to infer that
the change of wording was directed to a plurality of losses arising out of one
occurrence.
28. Thus the submission was that an occurrence could on the wording cover
more than one location and that his clients should be entitled to establish
that the losses were caused by one orchestrated riot which would under the
policy (he submitted) would be one occurrence.
29. Mr Swainston's argument was that prima facie where reinsurers and
retrocessionaires took a proportion of the risk, one would need clear words to
produce an aggregation of the claims or losses when what was prima facie the
retrocessionaire's share was claimed under the retrocession. Prima facie the
reinsurer received a share of the premium in return for accepting a share of
the risk, and likewise the retrocessionaire took a share of the premium for
accepting his share of the risk. Aggregation would be unusual where the
reinsurance was proportionate, and clear words would be needed if aggregation
was to be achieved. The only clear words were those that expressly aggregated
losses flowing from Flood and Earthquake.
30. In the same way as he would suggest that under the deductible the correct
interpretation was one which simply contemplated that in relation to each
location, a deductible would applied in relation to each occurrence, he
submitted that in the sum insured clause "the occurrence" related to each
location, and was not intended to be an aggregating provision.
31. He submitted that it is to give no effect to the express aggregation of
Flood and Earthquake to suggest that because those perils and fire,
volcanic eruption, typhoon and storm, could all cause damage over a wide area,
the intention must be inferred that the word "occurrence" was intended in
effect to aggregate losses caused by any of those perils.
32. His submission was that "per occurrence" in the sum insured clause
contemplated an event which was loss occurring and that when viewed from the
insured's perspective, was a separate event. He submitted that even in an
earthquake or flood situation where the flood or earthquake struck the
different shops at the different locations, albeit there might be some unity
of time, there would in fact be separate occurrences, and aggregation would
only take place as a result of the express words.
33. In any event he submitted that even if the last submission were wrong,
the allegations of the defendants of rioting orchestrated to take place at
different locations and at different times only had one unifying factor which
was the orchestration, and on any view that could not produce one occurrence
which limited the recovery under the sum insured clause.
Discussion
34. I admit that at one time I was impressed by Mr Flaux's argument that the
use of the word "occurrence" without reference to "location" had produced a
situation in which it was possible that one Flood or Earthquake or Typhoon
causing losses to stores at different locations might be one occurrence for the
purposes of the retrocession thereby limiting the recovery to $5,000,000 for
all locations. Equally it seemed to me that even then he had an uphill battle
to bring the pleaded facts of rioting causing damage at different locations
and at different times unified only by a common orchestration, within the
concept of one occurrence.
35. On reflection however it seems to me that in fact Mr Flaux `s arguments
are misconceived on both points.
36. Obviously the word occurrence has a meaning in the insurance context, but
it, (and a sum insured provision as a whole), must take its meaning finally
from the surrounding terms of the policy including the object being sought to
be achieved by the retrocession. It is relevant that under the retrocession a
share of the underlying premium was being accepted for a share of the
underlying risk. Under the reinsurance the perils included "Fire, .... Riot,
Strike, Earthquake, Volcanic Eruption, Typhoon, Storm, Flood". Although any
of those might, in what in loose terms could be called "one occurrence", cause
damage to stores at the individual locations, the reinsurance was up to a
certain figure "each and every loss, each and every location" and the
deductible was "2.50% each location any one occurrence".
37. Mr Flaux must be right that a bargain was struck between the reinsurer
and the retrocessionaire which did allow the retrocessionaire to aggregate
certain losses. But if Mr Flaux is right in his arguments, then what the
reinsurer accepted was that losses should be aggregated not only so far as
"Flood and Earthquake" was concerned (by use of the express words), but also
in relation to all the other perils above referred to. The reinsurer was thus
accepting on Mr Flaux's argument that although he would have no right to
aggregate at all, but had to pay in relation to each occurrence so far as each
location was concerned, if the damage was caused by any of the perils
which could cause damage at more than one location , the retrocessionaire
would be entitled to aggregate.
38. Mr Flaux would submit that that would depend on whether it was a one
occurrence case, but true as that may be, his argument really came to saying
that if damage was caused by one of the perils which could cause damage at
different locations, that peril would be an occurrence within the terms of the
policy.
39. I cannot accept that it was intended that the retrocessionaire should be
entitled to aggregate other than for Flood and Earthquake for which he
expressly provided. In my view it can be seen from the underlying reinsurance
that "each and every loss, each and every location" had its equivalent in the
deductible "each location any one occurrence". The deductible in the
reinsurance thus could not conceivably have contemplated that one
occurrence can cover more than one location because in that policy it did not.
The deductible then appeared in the same terms in the retrocession. In my
view it did not change its meaning at this stage. Indeed it seems to me that
far from the words of the deductible pointing to the construction which the
judge preferred, I believe it points the other way. It seems to me that the
"occurrence" which the sum insured is referring to is the same occurrence to
which the deductible is pointing both in the reinsurance and then the
retrocession. It is thus an occurrence at a particular location. That is not
to say the "occurrence" means the same as "location". It does not. But the
occurrence has to occur at the particular locations, and cause loss and damage
at the same to be an occurrence within the contemplation of this policy. If
the retrocessionaire was to achieve the result for which Mr Flaux contends he
would , where he is taking a share of the risk for a share of the premium as he
is here, have had to use much clearer words.
40. The very fact that the stores which were the subject of this insurance
were at locations some distance apart would indicate to me that it was not
intended that the use of the word "occurrence" would have the far reaching
consequences suggested by Mr Flaux.
41. That factor points to the need for clear words as already indicated, but
it also leads into the second aspect. Even assuming that the word "occurrence"
is not limited to an occurrence at a particular location, what follows ?
42. In my view it would still not be right to construe the retrocession as
meaning that provided a peril which has damaged more than one property has
happened, the limit of $5,000,000 applies to all the damage to all the
properties suffering under that peril. That is in essence what Mr Flaux's
argument comes to. Even if the construction I have placed on the sum insured
clause is too restrictive from the retrocessionaire's point of view, it does
not follow that it was the intention of the parties that a wide construction
of "occurrence" was intended. The factors which I have prayed in aid on the
strict construction aspect, also point to "occurrence" not being given a wide
interpretation. The question which would have to be answered is whether the
damage suffered by properties was one occurrence or resulted from one
occurrence, and that would not be so simply because they were suffered as a
result of one peril even if there was some unity of time.
43. During the course of argument different examples were given of what might
or might not be one occurrence. For example, damage caused by a typhoon to
two semi-detached properties, was something Mr Swainston was inclined to
accept might be one occurrence or resulting from one occurrence. But that
example is far away from the facts as pleaded by the defendants in this case,
and indeed far from the facts of this case altogether. This case is about
stores at different locations. If three or four were damaged by the same
typhoon at their different locations at the same moment in time, then if
the argument so far addressed on the terms of the policy were wrong, the
argument for saying "one occurrence" clearly becomes stronger. Mr Swainston
would argue however that there is still a lack of unity of place, and that
each store as it is damaged would constitute a separate occurrence. There is
force in that submission, and it may be that even in the instance of a typhoon
the same result is reached as I have reached by a process of construction by
simply applying the reasoning in the Kuwait Case or Dawsons Field
to what is an "occurrence".
44. But in any event in the instant case it is not one typhoon which has
caused damage at one moment in time. What has caused the losses are the acts
of rioters over a wide area, at different locations, and over two days. It
seems to me that Mr Flaux had to accept that he could not point to any unity
in time nor any unity as to place. All he could point to as a unifying factor
was the fact (as his clients would seek to prove), that the riots were
centrally orchestrated by the Government, and that there were agents
provocateurs present at each of the locations where damage was suffered. He
submitted that if his clients could establish that unifying factor, they would
be able to establish there was "one riot", and thus one occurrence.
45. In my view, even if there might be a circumstance in which an occurrence
could cover damage to more than one property, it seems to me difficult to
conceive of a situation in which if the properties were some distance apart,
and if there was lack of unity of time, there could still be one occurrence by
virtue of some factor as "orchestration". The reasoning of Michael Kerr QC
and Rix J seems to me applicable to a general consideration of the meaning of
the word occurrence in the insurance context, and I find no support in their
reasoning for Mr Flaux's submission. Indeed his submission seems to me to be
contrary to the last paragraph of Michael Kerr QC's award quoted by Rix J with
approval at 686.
46. My answer to the preliminary issues would thus be:
1. see above.
2. Yes.
3. Not applicable.
47. I would be in favour of allowing the appeal.
48. Lord Justice Kay: I agree.
49. Lord Justice Laws: I also agree.
Order: Appeal Allowed. A minute to be lodged with the court.
(Order does not form part of approved judgment)