The claimant sold fire extinguishers. Three failed, resulting in damage to the purchaser’s properties. His insurers refused to pay an indemnity saying that the failure was the failure of a piece of machinery (the switchgear) and was not covered by the policy. He appealed against a decision supporting the insurers.
Held: The court re-iterated the principles of construing contracts: ‘a presumption that the words in question should be construed in their ordinary and popular sense; that a commercial document, such as an insurance policy, should be construed in accordance with sound commercial principles and good business sense; that the commercial object of the contract as a whole, or the particular clause in question, will be relevant in resolving any ambiguity in the wording; and that in a case of true ambiguity, the construction which produces the more reasonable result is to be preferred. I would only add by way of comment that difficulty of construction is not the same thing as ambiguity.’ The endorsement was not limited to fire and intruder alarms and any switchgear, control panels and machinery associated with them. The word ‘machinery’ is capable of encompassing a wide range of devices which operate by means of physical movement to perform a particular function. On this basis, the failure of a piston would be a failure of machinery, but a failure in pressure of the master cylinder would not.
Sir Anthony May PQBD, Thomas LJ, Moore-Bick LJ
[2008] EWCA Civ 1460, [2009] Lloyd’s Rep IR 488, [2009] 1 All ER (Comm) 1166
Bailii
England and Wales
Citing:
Appeal from – Reilly v National Insurance and Guarantee Corporation Ltd ComC 11-Apr-2008
. .
Cited – Absalom v TCRU Ltd CA 19-Dec-2005
Longmore LJ discussed the construction of a contract: ‘(i) the aim of the exercise is to ascertain the meaning of the relevant contractual language in the context of the document and against the background to the document. The object of the enquiry . .
Cited – The ‘Arsa’ 1925
The court considered whether an outlet valve in the hull of a shape amounted to ‘machinery’. . .
Cited – Aktion Maritime Corporation of Liberia v S Kasmas and Brothers Ltd 1987
The parties contracted for the sale of a ship under the Norwegian sale form. The court considered whether the contract was properly cancelled and or novated and whether an anti-corrosion system forming part of the hull was machinery within a . .
Cited – Antaios Compania Naviera SA v Salen Rederierna AB (‘the Antaios’) HL 1984
A ship charterer discovered that the bills of lading were incorrect, but delayed withdrawal from the charter for 13 days. They now sought leave to appeal the arbitration award against them.
Held: Though he deprecated extending the use of the . .
Cited – Lovelidge v Anselm Odling and Sons Ltd 1967
The court was asked whether a flexible revolving drive shaft was ‘machinery’.
Held: A drive shaft connecting an electric motor to a cutting wheel could itself constitute machinery. . .
Lists of cited by and citing cases may be incomplete.
Insurance, Contract
Updated: 10 November 2021; Ref: scu.278984