A policy provided an indemnity against employer’s liability under the 1906 Act, but required employers to keep a wages book and to notify the insurers of details of all remuneration paid during the period of insurance within one month from the end of the period, with provision for retrospective adjustment of the premium if the figures differed from those which had been used to calculate the original premium. The insurers repudiated liabilitysaying the insured, who was a small farmer with one employee, did not keep a wages book. The policy contained a clause providing that observance ‘of the conditions of this policy’ should be a condition precedent to insurer’s liability. Held (by majority): Since the sole object of the condition was to provide for the adjustment of premiums, compliance with it was not a condition precedent to liability. The clause could not have been intended to refer to all the provisions of the policy as some were incapable of being conditions precedent. Having analysed the wages clause and held that parts of it were not so capable, he concluded that the condition: ‘is one and entire, and it is to my mind unreasonable to hold that one sentence in its middle is a condition precedent while the rest of the condition cannot be so considered. A policy of this nature, in case of ambiguity or doubt, ought to be construed against the office and in favour of the policy-holder, and it seems to me unreasonable to hold that the office can escape from all liability by reason only of the omission to duly record in a proper wages book the name of every employee and the amount of his wages. This is only required for the purpose of the statement which, by the proposal, the insured agreed to render at the end of each period of insurance. In my opinion, it ought not to be regarded as in any sense a condition precedent, and it follows that, in my opinion, the appeal fails and must be dismissed with costs.’ Farwell LJ, concurring, stated: ‘It is especially incumbent on insurance companies to make clear, both in their proposal forms and in their policies, the conditions which are precedent to their liability to pay, for such conditions have the same effect as forfeiture clauses, and may inflict loss and injury to the assured and those claiming under him out of all proportion to any damage that could possibly accrue to the company from non-observance or non-performance of the conditions. Accordingly, it has been established that the doctrine that policies are to be construed ‘contra proferentes’ applies strongly against the company: In Re Etherington.’
Judges:
Cozens-Hardy MR, Farwell LJ
Citations:
[1912] 1 KB 415
Statutes:
Workmen’s Compensation Act 1906
Jurisdiction:
England and Wales
Cited by:
Cited – Pilkington United Kingdom Limited v CGU Insurance Plc QBD 28-Jan-2004
The claimants had installed glass tiles in a roof. They fractured, and facing a claim for damages, they sought payment from their insurers. The claimants argued that the risk of fracture meant that the damage occurred upon installation, the insurers . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 09 May 2022; Ref: scu.198322