Kyle Bay Ltd (T/A Astons Nightclub) v Underwriters Subscribing Under Policy No. 019057/08/01: ComC 29 Mar 2006

The court was asked whether the Claimants were entitled on the grounds of mistake and misrepresentation to re-open an insurance claim which they compromised with the Defendant underwriters. The claimant said that the it had taken out with the defendant was ‘declaration-linked’, and was not therefore subject to average, whereas the settlement of the business interruption component of its insurance claim following a fire was based on the common mistaken assumption and/or a misrepresentation by the defendant. That assumption or misrepresentation was to the effect that the Policy was not declaration-linked, but was on the ‘gross profits basis’ and was accordingly subject to average. As a result, the claimant agreed with, and received from, the defendant the Settlement figure of some andpound;205,500, whereas, on the basis that the Policy was declaration-linked, the claimant should have received some andpound;100,000 more.
Held: the action failed. The claimant was held to its agreement. The court rejected the claimant’s contention that it should not be bound by the Settlement, or that it should be allowed to reopen the Settlement, based on the argument that the Settlement agreement was liable to be set aside on the ground that both the claimant and the defendant were negotiating under a common mistake as to a fact fundamental to the Settlement, or on the ground that the defendant had negligently misrepresented to the claimant a fact fundamental to the Settlement, namely that the Policy was not declaration-linked, whereas, in fact, it was.


Jonathan Hirst QC DJ


[2006] EWHC 607 (Comm), [2006] Lloyd’s Rep IR 718




England and Wales

Cited by:

Appeal fromKyle Bay Ltd (T/A Astons Nightclub) v Underwriters CA 7-Feb-2007
The claimant had been insured under a business interruption insurance policy issued by the respondent defendaants. A claim had arisen, and had been settled, but the caimant said that the parties had mistaken the basis of the policy and had settled . .
Lists of cited by and citing cases may be incomplete.

Insurance, Contract

Updated: 05 July 2022; Ref: scu.239805