An insurance company had engaged a main contractor to handle repairs to houses insured under its policies. The contractor had engaged the claimant subcontractor to carry out the works at the defendants’ homes, but then went into insolvent liquidation before the works were paid for. The claimant now sought payment direct from the insured. The defendants denied any contract with the claimant, despite mandates signed by them.
Held: The claims failed. It was both a perfectly possible reading of the mandate and far more consonant with the commercial common sense of the situation to interpret it to mean that, although the insurer will be responsible for paying the cost of the insured losses, the householder will remain liable for all other costs, namely the policy excess and any works not covered by the insurance.
The court considered the possible application of the contra preferentem rule: ‘The fact that the contra proferentem rule is a matter of common law whereas regulation 7 (2) is a creature of statute is no reason to differentiate between their applications; the 1999 Regulations give wholesale effect to a European Directive and it is unnecessary to suppose that they were intended to affect the common law relating to contractual interpretation. The occasions on which the principle of construction and the common-law rule apply are the same: their operation is limited to cases of genuine interpretative doubt or ambiguity’
The contracts were to be determined on the standard rules for construction. If the terms were unambiguous then the 1999 Regulation had no application, and ‘ it is impermissible to prejudge the construction of the mandates by presupposing an analysis that ignores them. The mandates were in fact signed. A common reason for having written express contracts is to impose and assume liabilities that would not otherwise be implied.’
Keyser QC J
[2013] EWHC 484 (QB)
Bailii
Unfair Terms in Consumer Contracts Regulations 1999 7
England and Wales
Citing:
Cited – Investors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
Cited – Chartbrook Ltd v Persimmon Homes Ltd and Others HL 1-Jul-2009
Mutual Knowledge admissible to construe contract
The parties had entered into a development contract in respect of a site in Wandsworth, under which balancing compensation was to be paid. They disagreed as to its calculation. Persimmon sought rectification to reflect the negotiations.
Held: . .
Cited – St Edmundsbury and Ipswich Diocesan Board of Finance v Clark (No.2) CA 1973
When looking at a contract ‘one must construe the document according to the natural meaning of the words contained in the document as a whole, read in the light of surrounding circumstances.’
The contra preferetem rule can only come into play . .
Cited – Mira Oil Resources of Tortola v Bocimar NV ChD 1999
Colman J discussed the application of the contra preferentem rule: ‘Further, this is not a case where the meaning of the words is so finely balanced that the contra proferentum rule should be applied in favour of the owners. If in the view of the . .
Cited – Association of British Travel Agents Ltd v British Airways Plc CA 2000
Sedley LJ described the common-law rule of contra preferentem, that any doubt as to the meaning of contractual words will be resolved by construing them against the party that put them forward, as ‘a principle not only of law but of justice’ and . .
Approved – The Financial Services Authority v Asset L I Inc and Others ChD 8-Feb-2013
The court was asked whether so-called ‘land-banking’ schemes were ‘collective investments schemes’ within section 235.
Held: Andrew Smith J discussed the difference in effect between the contra preferentem rule, and regulation 7 of the 1999 . .
Cited – Rainy Sky Sa and Others v Kookmin Bank SC 2-Nov-2011
Commercial Sense Used to Interpret Contract
The Court was asked as to the role of commercial good sense in the construction of a term in a contract which was open to alternative interpretations.
Held: The appeal succeeded. In such a case the court should adopt the more, rather than the . .
Cited – Pink Floyd Music Ltd and Another v EMI Records Ltd CA 14-Dec-2010
The defendant appealed against an order made on the claimant’s assertion that there were due to it substantial underpayments of royalties over many years. The issues were as to the construction of licensing agreements particularly in the context of . .
Cited – Direct Travel Insurance v McGeown CA 12-Nov-2003
The contra proferentem interpretation rule is to be invoked only in cases of genuine doubt or ambiguity. Auld LJ said: ‘A court should be wary of starting its analysis by finding an ambiguity by reference to the words in question looked at on their . .
Cited – Du Plessis v Fontgary Leisure Parks Ltd CA 2-Apr-2012
The claimant, who owned a holiday mobile home on the respondent’s site challenged the raising of site fees, saying that the contract was unfair. Previously all site fees were equal within the site, but the respondent had introduced a scheme which . .
Cited – Brown and Davis Ltd v Galbraith CA 1972
The defendant’s car was damaged in a collision. It was taken to the plaintiff’s garage for repair. The defendant’s insurers contracted with the defendant to pay for the repairs for a specified amount. The plaintiff carried out repair work, and the . .
Cited – Curtis v Chemical Cleaning and Dyeing Co CA 1951
The defendant sought to rely on an exemption clause in its garment cleaning contract. The defendant’ shop assistant had said that it extended only to damage to beads and sequins, whereas by its terms it covered all liability for damage to articles . .
Cited – Amalgamated Investment and Property Co Ltd (in Liq) v Texas Commerce International Bank Ltd CA 1982
The court explained the nature of an estoppel by convention.
Lord Denning MR said: ‘The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with cases. That is why I have not gone . .
Cited – Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd CA 6-Apr-2006
Moore-Bick LJ discussed whether the court should give effect to a non-reliance clause in a contract saying: ‘It is common to include in certain kinds of contracts an express acknowledgement by each of the parties that they have not been induced to . .
Lists of cited by and citing cases may be incomplete.
Contract, Insurance, Consumer
Leading Case
Updated: 02 November 2021; Ref: scu.471743