Yesterday the High Court made an important ruling on the legal principles applicable to avoidance of cover and waiver in the context of ATE insurance policies. The Defendant insurer, Great Lakes, had underwritten an ATE policy in 2005 to cover the adverse costs liabilities of CPH enterprises in its proceedings against the Claimants, Persimmon. CPH lost the case and its key witnesses were found to have been systematically dishonest. Great Lakes consequently avoided cover on grounds of material non-disclosure and misrepresentation. It also relied on breaches of various claims conditions. When CPH was not able to meet its liability to pay Persimmon’s costs, Persimmon had the company wound up and sought to enforce the policy for its own benefit. Following a four day trial, Steel J. found that Great Lakes was entitled to: (i) avoid cover; and/or (ii) refuse to indemnify CPH by virtue of CPH’s breach of conditions precedent within the policy.  Persimmon’s claim was dismissed in its entirety. 

Sue Carr Q.C. and Jonathan Hough acted for the successful Defendant insurer, Great Lakes.

For the full judgment of the Commercial Court, please click here.

For a short article on the decision, by Can Yeginsu, please click here.