Acasta European Insurance Company Limited v Rose Nat Eshiett & Ors

1. This is the trial of a claim brought under the procedure in Part 8 of the Civil Procedure Rules, seeking determination of the extent of the liability of the Claimant ("Acasta") under the insurance arrangements (“the Insurance Cover”) covering properties consisting of a house at 19a St Paul’s Crescent, London NW1 9UE ("the House") and block of flats at 53 Agar Grove, London NW1 9UE ("the Apartment Block") respectively. As expressed in the claim form, Acasta seeks a declaration that “the limit of indemnity payable by the Claimant under a policy of insurance in respect of the apartment block known as 53 Agar Grove, London NW1 9UE is £1,500,000 (index linked) only” .

2. The Defendants all have an interest in the Apartment Block, or one of the seven flats within it (“the Flats”) , and are insured under the Insurance Cover. Their position is that there is not a single composite form of insurance covering the Apartment Block but rather a separate form of insurance cover for each flat. They say that, as a result, the limit of indemnity for each flat, rather than the entire Apartment Block, is £1,000,000.

3. It is common ground that the claim raises an issue that is purely one of contractual construction. Although there are other issues between the parties, including disputes over the defects that have given rise to claims under the Insurance Cover and the extent of the remedial work required to remedy those defects, these issues await separate resolution after determination of the issue of construction raised by these proceedings. Background The Property

4. In 2015, the Second Defendant, Prime Metro Properties (UK) Limited (“Prime”) purchased land at 51 Agar Grove, London NW1 9UE and 53 Agar Grove, London NW1 9UE. Thereafter, its associated company Prime Metro Developments Limited ("the Developer") had the buildings on the land demolished and in May 2016, engaged a construction company called Cite Construction Limited (“Cite”) to build the Apartment Block and the House at a cost of £1,894,000 plus VAT pursuant to a JCT Design and Build Contract 2011 (as amended). There seems to be some uncertainty as to when practical completion of the Apartment Block and the House occured, but it is likely that it happened in April 2018 and in January 2019 respectively.

5. Prime became the freehold owner of the Apartment Block and granted long leases of certain flats to the other Defendants but three flats were not disposed of under this process and remain in the possession of Prime. It has also retained possesson of the external, structural parts (including the timber frame) and the communal or common parts of the Apartment Block and remains responsible for insuring those parts in its capacity as freeholder.

6. The freehold interest in the House has been sold by Prime but the purchaser has no involvement in the present proceedings. The Insurance Cover

7. It is common ground that Cite constructed and insured the Apartment Block. On 15 September 2016, a Mr Darren Clarke (one of Cite's directors) completed an insurance proposal for the Apartment Block, Flats and the House which he submitted to Global Home Warranties Limited (“GHW”) , a “scheme administrator” acting as agent for Ark Insurance Group Limited, which in turn acted as underwriting agent for Acasta. The total build value or sum insured was stated to be £1.4 million.

8. Thereafter, GHW provided a quote for structural defects insurance to be provided by Acasta. This quote referred to cover being sought under a policy for "Plots 1 - 8, Agar Grove, Camden, London NW1 9UE" and referred to one premium being payable. The quote included a statement under the heading “Demands and Needs” describing the cover as latent defects insurance “in the form of a residential warranty accepted by most mortage lenders for your project”. There was also a statement that the “…policy cannot be incepted until a series of satisfactory surveys have been carried out by us and the property reaches practical completion…”.

9. This quote was accepted by Cite and a single premium of £6,840.44 was charged. Documentation regarding the cover was then sent by GHW under cover of a letter dated 17 May 2017 and an email confirming that cover was in place was sent on 22 May 2017. Also included was a statement of fact and a “Summary of Cover”. The statement of fact and accompanying schedule referred to the House and Apartment Block (and each of the Flats within the Apartment Block). The “Summary of Cover” stated that it "provides for the repair of hidden defects in the structure of the residential property that become apparent after the date of practical completion and provided that they are notified to Insurers before the expiry date shown in the Insurance Period Certificate" . It also explained that the cover was in three sections. These provided three different types of cover that were intended to be operative at different times. Section 1 protected deposits paid to the Developer in the event of the Developer's insolvency prior to practical completion. Cover under Section 1 was conditional upon a “Building Period Certificate” (“BPC”) being issued. Section 2 indemnified against physical damage caused by structural defects in the completed Apartment Block and took effect after practical completion. Cover under Section 2 was conditional upon an “Insurance Period Certificate” (“IPC”) being issued. Section 3 indemnified against the remediation costs of contamination. Cover under Section 3 was also conditional upon an IPC being issued. The ”Summary of Cover” stated in relation to Section 2: " Structural Insurance Period - From the date of practical completion and for the balance of the period of cover, the policy provides for putting right any actual physical damage caused by a defect in the design, workmanship, materials in the structure of the Residential Property".

10. The Insurance Cover was subject to the policy wording used by Acasta as at that date. It appears, however, that some of the Defendants may have been provided with newer versions of the policy wording and there is a dispute over whether the original policy wording was ever provided to the Defendants. It is common ground that this is of little practical significance since the material provisions of the original and newer versions of the wording are the same.

11. The material provisions of the Insurance Cover (set out in the original wording which had defined terms in bold) are as follows: " UNDERSTANDING THE POLICY Unless otherwise stated on the Building Period Certificate, Insurance Period Certificate, the Schedule, any endorsements elsewhere in this Policy, the Policy provides the Policyholder with the following benefits: 1….

2. Once the building of the Residential Property has been completed; a.The Residential Property is insured from the date of practical completion or the Insurance Commencement Date whichever is the latter [sic] and as specified in the Insurance Period Certificate for a period expiring 10 years from the date of practical completion against Major Damage caused by structural or latent defect during the course of construction (Section 2)… TECHNICAL ASSESSMENT The Residential Property insured by the Policy is subject to a system of checks and inspections by the Qualified Building Surveyors appointed by the Scheme Administrators. Qualified Building Surveyors must have completed all their inspections before the Insurance Period Certificate will be issued... DEFINITIONS Wherever the following words appear in bold in the Policy wording, they will have the undermentioned meaning. BUILDING PERIOD CERTIFICATE The certificate issued on behalf of the Insurer to signify acceptance of each Residential Property for insurance under Section 1 hereunder... COMMON PARTS Those parts of a multi-ownership building (of which the Residential Property is a part), for a common or general use, for which the Policyholder has joint ownership or legal responsibility. The excess of each claim for common parts is £1,000 per Residential Property within the continuous structure up to a maximum of £10,000 each claim… INSURANCE COMMENCMENT DATE The date shown on the Insurance Period Certificate signifying the start date of cover under sections 2 and 3 of this Policy… INSURANCE PERIOD CERTIFICATE The Certificate issued on behalf of the Insurer to signify acceptance of each Residential Property for insurance under Sections 2 and 3 hereunder… LIMITS OF INDEMNITY The liability of the Insurer in respect of Sections 1, 2 and 3 shall not exceed the amounts shown on the Building Period Certificate and Schedule or the Insurance Period Certificate and Schedule or the Limits of Indemnity as detailed by this Policy, whichever is the lesser amount. The Limits of Indemnity are index-linked in accordance with General Condition 3 of this Policy. MAJOR DAMAGE a) Destruction of or physical damage to a load bearing element of the Residential Property caused by a defect in the design, workmanship, material or components of the Structure which adversely affects the Residential Property's structural stability, resistance to damp and/or water penetration… Which is discovered and notified to the Insurer via the Scheme Administrator , during the Structural Insurance Period … NEW DEVELOPMENT A Residential Property or group of Residential Properties located at the Site for which a Building Period Certificate and/or an Insurance Period Certificate will be or has been issued by the Insurer . For the purposes of this definition New Development does not include any building works other than the Residential Property detailed in the Insurance Certificate . POLICYHOLDER The purchaser or owner of the property which is the subject of this insurance acquiring a freehold or leasehold interest in the Residential Property or their successors in title and their assigns or mortgagees in possession, to the extent of their respective rights and interests. The definition of Policyholder also includes a purchaser who has paid a deposit to the Developer in respect of the Residential Property stated in the Building Period Certificate . QUALIFIED BUILDING SURVEYOR The surveyor appointed by the Scheme Administrator who carried out checks and inspections solely on behalf of the Insurer and for no other purpose. RESIDENTIAL PROPERTY(IES) The property described in the Insurance Period Certificate comprising: a)The Structure … c) Any Common Parts retaining or boundary walls forming part of or providing support to the Structure … STRUCTURAL INSURANCE PERIOD (SECTIONS 2 and 3 OF THE POLICY) The period starting from the Insurance Commencement Date , expiring 10 years from the date of practical completion as shown in the Insurance Period Certificate . STRUCTURE The following elements shall comprise the Structure of the Residential Property :.. d)Any external finishing surface (including rendering) necessary for the water-tightness of the Waterproof Envelope … POLICY BENEFITS … SECTION 2 STRUCTUAL INSURANCE PERIOD The Insurer will indemnity (sic) the Policyholder against all claims discovered and notified to the Insurer via the Scheme Administrator during the Structural Insurance Period in respect of the cost of complete or partial rebuilding of or rectifying work to the Residential Property which has been affected by Major Damage provided that the liability of the Insurer does not exceed the reasonable costs of rebuilding each Residential Property to its original specification. The Excess for each and every claim is specified in the Insurance Period Certificate and the Schedule.... GENERAL CONDITIONS …

3. INDEX LINKING The Limits of Indemnity and Excess referred to within the Insurance Period Certificate will be separately increased in line with the RICS Building Index or 5% per annum compound, whichever is the lesser, on each anniversary of the start of the Insurance Commencement Date . For the purpose of settlement of any claim hereunder the Limits of Indemnity , as adjusted in accordance with the foregoing provisions shall be regarded as the Limits of Indemnity at the time of discovery by the Policyholder of such claim. LIMITS OF INDEMNITY The maximum amount the Insurer will pay for any and all claims under the various Sections of this Policy is as follows: SECTION 2 - STRUCTURAL INSURANCE PERIOD The maximum the Insurers will pay for all claims relating to a Residential Property is £1,000,000 or the rebuilding cost of the Residential Property , whichever is the lesser. The limit for all claims for all Residential Property's in one continuous structure is £1,500,000. The limits for Section 2 are index-linked in accordance with General Condition 3 of the Policy."

12. A BPC was issued on 17 May 2017. This stated that the insurance policy had the reference number “APG0001-055188”; the policyholder was " The buyer or owner acquiring a freehold, leasehold …interest in the Residential Property within the New Development or their successor in title, or any mortgagee or lessor with a legal interest therein‚…" ; the "Residential Property Address" was the House with a sum insured of £315,972 and the Apartment Block with a sum insured of £1,084,028; the period of insurance under Section 1 of the Policy was "From 17/05/2017 to the date of practical completion" ; and the " Insurance Commencement Date for Sections 2 & 3 Below" was "Date of practical completion" . The Defendants have questioned whether the BPC had any effect since they believe that Cite did not in fact contract for it.

13. It appears that inspections of the Flats were duly completed by the “Qualified Building Surveyor” appointed by GHW (using the language of the Insurance Cover) and on 20 April 2018, GHW, as agent for Acasta, issued IPCs for each of the Flats and Acasta thereby accepted each Flat as a "Residential Property" for insurance under Sections 2 and 3. The individual IPCs, referred to individual sequential policy numbers for each of the Flats in the form "APG0001055188-1APT" for Flat 1, "APG0001-055188-2APT" for Flat 2, and so on. Their definition of "Policyholder" was the: "The buyer or owner acquiring a freehold, leasehold …interest in the Residential Property within the New Development or their successor in title, or any mortgagee or lessor with a legal interest therein…" and identified the residential address as that of the individual Flat within the Apartment Block. Each certificate also stated that the following limits of indemnity applied: " The maximum the Insurers will pay for all claims relating to a Residential Property is £1,000,000 or the rebuilding cost of the Residential Property, whichever is the lesser" and " The limit for all Residential Property's (sic) in one continuous structure is £1,500,000 or the rebuilding cost of the continuous structure, whichever is the lesser" . The "Insurance Commencement Date" was stated to be 20 April 2018; and “ Section 1 Period of Insurance" was stated to be "Not Applicable" . The period of insurance for Sections 2 and 3 was "10 years from the Insurance Commencement Date".

14. IPCs were issued in relation to the House on 16 January 2019 and 26 March 2019. The second certificate stated a policy number of "APG0001-055188-1" and the residential property address given was that of the House.

15. As anticipated in the email sent to Cite by GHW on 22 May 2017, the Defendants who acquired a leasehold interest in the Flats each received a “Home Owner’s Pack” from Acasta comprising an IPC for their Flat, the Insurance Cover wording (which may not have been the original as opposed to revised Insurance Cover wording) and a “Home Owner’s Guide” giving advice on moving in, the operation of heating systems, electricity safety and other practical matters regarding home ownership. The Defects

16. In 2019 complaints were made regarding defects in the Apartment Block and House. The precise scope, nature and extent of the defects in the Apartment Block and the level of remedial work required to remedy them are in dispute.

17. For the purposes of this claim it is agreed by Acasta that it should be assumed that there has been “Major Damage” to the Apartment Block and individual flats owned or leased to the Defendants for the purposes of the Policy (caused by water ingress to the Apartment Block and damp within the Flats because mortar of an inappropriate strength and density was used in the outer leaf brickwork). Parties' Positions and the Issues for Determination

18. The Claimant's case in summary is that: (1) the Insurance Cover is in the form of a single, composite, policy of insurance comprising several sections that was incepted on 17 May 2017; (2) cover under Section 1 took effect upon inception and expired upon practical completion; (3) on inception, cover under Section 2 of the policy was suspended pending (or was conditional upon) IPCs being issued and so, for the Flats, commenced when the IPCs for them were issued on 20 April 2018; (4) the Apartment Block is "one continuous structure" for the purposes of the “Limit of Indemnity Provision”; and (5) The Flats were all “Residential Properties” within one continuous structure (i.e. the Apartment Block) and thus the limit of Acasta's liability under the Insurance Cover is £1,500,000 (index linked).

19. The Defendants' case in summary is that: (1) A separate insurance policy was issued for each of the Flats with each receiving a separate IPC; (2) If Acasta had intended for the “Limit of Indemnity Provision” to apply to all flats collectively, then it ought have issued a single IPC, as opposed to mutiple IPCs, listing all of the Flats or it could have had multiple policies with a shared aggregate limit; and (3) Since the IPCs each refer only to one Flat the "continuous structure" limit for the purposes of the “Limit of Indemnity Provision” is not engaged. Legal Principles The Correct Approach to Construction

20. Acasta has drawn attention to and relied upon the principles of construction of relevance to insurance policies that were reviewed and summarised by Bryan J in Bluebon Ltd v Ageas UK Ltd [2018] Lloyd's Rep IR 503 at [24] to [30]. The analysis in Bluebon , however, does not suggest any significantly different approach from that adopted in respect of the construction of other commercial contracts. After considering the decisions in Rainey Sky SA v Kookmin Bank [2011] 1 WLR 2900 and Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 , Bryan J made the following observations in connection with the insurance context: “26. In relation especially to insurance policies, it follows that the words used ought to be given the interpretation which having regard to the context and circumstances, would be placed on them by ordinary men of normal intelligence conversant with the subject matter of the insurance – see MacGillivray on Insurance Law , 11th Edition, para.10-052, cited with approval by Flaux J in A C Ward & Son Ltd v Catlin (Five) Ltd (No 2) [2010] Lloyd’s Rep IR 695 ; [2010] 2 All ER 683 at para. 164.

27. In case of doubt or ambiguity, preference will be given to a construction which accords with business commonsense – see Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191 , per Lord Diplock at page 201. This process can involve looking at the commercial consequences of any particular construction – see Re Sigma Finance Corporation [2010] 1 All ER 571 per Lord Mance at para 12”.

21. Having then referred to the speech of Lord Neuberger JSC in Arnold v Britton [2015] AC 1619 at [14] to [23] and in Wood v Capita Insurance Services Ltd [2017] AC 1173 with the emphasis on construction as a unitary exercise, Bryan J concluded at [30] by stating that: “30. In the present case, and in relation to the issues of construction that arise, it matters not whether one starts from the text of the Policy, or its surrounding factual matrix. I readily accept that interpretation is, as Lord Clarke stated in Rainy Sky (para 21), a unitary exercise, and where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense”.

22. Mr. Harrison, counsel for the Third and Fourth Defendants, also drew attention to the more recent judgment of HH Judge Pelling KC in Project Angel Bidco Limited v Axis Managing Agency Limited [2023] EWHC 2649 (Comm) , at [15] where a summary was provided of the applicable principles, that was adopted by the Court of Appeal on appeal in the same case (see [2024] EWCA Civ 446 ). But I do not regard this decision as having differed in any significant way from the approach adopted by Bryan J. Further, as HH Judge Pelling observed, at the start of his summary of the applicable principles: ”The framework principles that apply to the construction of an insurance contract are those that apply to the construction of any other contract”.

23. In this instance, however, there is a feature identified by Mr Harrison that, in my judgment, does qualify the adoption of an approach that has regard to the “surrounding factual matrix” in the manner suggested in the second passage from Bluebon quoted above. As is evident from the definition of “Policyholder”, the cover provided under the Insurance Cover in this case was intended to be in a standard form that would be for the benefit of all purchasers of the Flats, their mortgagees and successors in title, each of whom could not be expected to know of all of the previous dealings between Acasta, Prime, the Developer and Cite.

24. Where a contract creates rights that are intended to be negotiable or to pass to third parties who will have no way of knowing of the past dealings between the parties who negotiated that contract, the relevance of such dealings to the process of construction will be more limited. As explained Lord Bingham of Cornhill in Dairy Containers Limited v Tasman Orient CV [2004] UKPC 22 , at [12]: “There may reasonably be attributed to the parties to a contract such as this such general commercial knowledge as a party to such a transaction would ordinarily be expected to have, but with a printed form of contract, negotiable by one holder to another, no inference may be drawn as to the knowledge or intention of any particular party. The contract should be given the meaning it would convey to a reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed (the Hombur g case,at p754 ,para73, per Lord Hoffmann)…”

25. This may lead to a greater emphasis on the textual analysis of the contractual documentation, as is illustrated in the context of an instrument creating pension rights, in Buckinghamshire v Barnado’s [2019] ICR 495 where Lord Hodge (giving a judgment with which all other members of the Supreme Court agreed) explained at [14] to [16]: “…the scheme confers important rights on parties, the members of the pension scheme, who were not parties to the instrument and who may have joined the scheme many years after it was initiated. Fifthly, members of a pension scheme may not have easy access to expert legal advice or be able readily to ascertain the circumstances which existed when the scheme was established. 15 Judges have recognised that these characteristics make it appropriate for the court to give weight to textual analysis, by concentrating on the words which the draftsman has chosen to use and by attaching less weight to the background factual matrix than might be appropriate in certain commercial contracts: Spooner v British Telecommunications plc [2000] Pens LR 65, paras 75—76 per Jonathan Parker J; BESTrustees v Stuart [2001] Pens LR 283, para 33 per Neuberger J; Safeway Ltd v Newton [2018] Pens LR 2, paras 21—23 per Lord Briggs JSC, giving the judgment of the Court of Appeal. In Safeway , Lord Briggs JSC stated, at para 22: “the Deed exists primarily for the benefit of non-parties, that is the employees upon whom pension rights are conferred whether as members or potential members of the Scheme, and upon members of their families (for example in the event of their death). It is therefore a context which is inherently antipathetic to the recognition, by way of departure from plain language, of some common understanding between the principal employer and the Trustee, or common dictionary which they may have employed, or even some widespread practice within the pension industry which might illuminate, or give some strained meaning to, the words used.” I agree with that approach.... 16 The emphasis on textual analysis as an interpretative tool does not derogate from the need both to avoid undue technicality and to have regard to the practical consequences of any construction. Such an analysis does not involve literalism but includes a purposive construction when that is appropriate. As Millett J stated in In re Courage Group Pension Schemes [1987] 1 WLR 495 , 505 there are no special rules of construction applicable to a pension scheme but its provisions should wherever possible be construed to give reasonable and practical effect to the scheme. Instead, the focus on textual analysis operates as a constraint on the contribution which background factual circumstances, which existed at the time when the scheme was entered into but which would not readily be accessible to its members as time passed, can make to the construction of the scheme.” Composite Policies

26. Ms. Dixon KC, for Acasta, drew attention to the observations in MacGillivray on Insurance Law (15 th Edn.), at [1-202] to [1-204], that it is “commonplace for reasons of commercial convenience to insure the interests of a number of insured persons under one policy of insurance” and, further, “Where the interests of different persons in the same insured subject matter are diverse interests, a policy expressed to insure all interested persons must be construed as a composite policy which is intended to insure each co-insured separately in respect of his own interests”.

27. The nature of such “composite” policies was considered by the Court of Appeal in Liberty Mutual v Bath Racecourse [2025] EWCA Civ 153 in the context of business interruption insurance and claims arising from the COVID-19 pandemic. Sir Julian Flaux C. (giving the judgment of the court) described a composite policy in the following terms at [161] to [162]: “[161] The starting point, as I see it, is that the composite policy contains in one document what is, as a matter of legal analysis, a series of separate contracts of insurance insuring each of the insureds. As Mr Kramer KC pointed out, the insurers have not appealed the judge’s finding to that effect at [266] which also records that, at least as regards Starboard, this was common ground at trial. In any event, the analysis that a composite policy comprises a series of contracts of insurance with each policyholder insured separately is supported by the authorities. [162] Thus, in New Hampshire , Potter J, having discussed the question whether the policy was joint or composite, concluded that it was composite and said at 1715H; 147 rhc: “Accordingly, I am satisfied that in this case the insured companies were insured severally in respect of their several interests”. That conclusion was confirmed by the Court of Appeal in the passage quoted at [78] above. The submission by Mr Scorey KC that the Court of Appeal had not grappled with that issue is unsustainable and flies in the face of what the Court actually said in that passage. The analysis that there is a series of contracts of insurance insuring each policyholder separately also emerges from Corbin & King , where, at [231] Cockerill J said: “A policy which insures the interests of a number of different insured persons under one policy of insurance is a “composite policy” and takes effect legally by way of separate contracts of insurance between Axa and each of the individual insured companies.” ”

28. The Court of Appeal had also to consider the impact of the nature of the policies under consideration on the issue of whether there were individual limits on cover or one aggregate limit. Sir Julian Flaux C. addressed this at [164] to [165]: “ [164] Given that the composite policy comprises a series of contracts of insurance insuring each policyholder separately, it is clear (and indeed was not disputed by the insurers) that the DOA clause in the Bath Racecourse policy and the POAND clause in the Starboard policy are to be construed as applying to each insured policyholder separately, in other words the “Business” with which there has been interruption or interference is the business of that insured and no other and the “Premises” affected are those of that insured and no other. In the case of both the Bath Racecourse claimants and the Starboard claimants, each insured only had an interest in its own racecourse etc or hotel and did not have any interest in premises operated by the other insureds. Furthermore, the danger from Covid-19 was different in the case of each insured and its premises. This is demonstrated by the fact that, as I pointed out in argument, one of the Starboard insureds was the owner of the Ibis in Leicester, which was a Covid hotspot, so the danger was more extreme for that insured than for a Starboard insured which owned a hotel elsewhere in the country. [165] I agree with Mr Gruder KC that, in those circumstances, if it had been intended that there was only one shared aggregate limit for the DOA or POAND cover, one would have expected that to be clearly set out in the policy wording, together with some provision to deal with priority of competing claims. In my judgment, in the absence of any provision in the insurance that the limit in the DOA clause in the Bath Racecourse policy or the POAND clause and Extension 15 in the Schedule to the Starboard policy was intended to be an aggregate one (as was the case in Technip ), the correct construction of those limits is that they are applicable to each insured separately. [166] I do not consider that it is necessary to rely upon any “presumption” that there are separate limits applicable to each insured in the case of these composite policies. Rather, the conclusion that the limits are ones applicable to each insured and not aggregate limits is a matter of the proper construction of the respective policies. That approach accords with what is said by Professor Merkin in the passage cited at [95] above. I also agree with Mr Kramer KC that it is what the reasonable policyholder under these composite policies would expect to be the position with regard to the limits. In the absence of some provision, as in Technip , that the limits were in the aggregate across all the insureds, the reasonable policyholder would not expect its own limits to be eroded by someone else’s claim”.

29. It is, however, important to note the context of the approach taken by the Court of Appeal, which appears from the following passage, at [93], that noted a concession: “[93] [Counsel] accepted that whether or not limits are individual or aggregate might also depend on the factual matrix, in the sense that the businesses insured might be so interconnected in the sense that they are affected in the same way by profits or losses, making an aggregate limit more likely. Here though, the insureds were entirely separate, miles apart, conducting different businesses with different managers and different financial accounts. Therefore, in a case like the present the Court should proceed on the basis that a composite policy was taken out for convenience, not because the insureds were intending to do anything which intermingled their businesses, although Mr Kramer KC accepted there had been no evidence at trial as to why the insureds took out a composite policy”. Discussion

30. Much of the focus of the argument of the parties has been on the question of whether the Insurance Cover was a composite policy or comprised separate individual policies. In my judgment, however, this argument is not directed to the key question. This is essentially for two reasons. First, as set out in Liberty Global and the earlier cases there cited, a composite policy is in any event, on legal analysis, a series of separate contracts of insurance insuring each of the insureds separately. Secondly, as Mr Harrison for the Third and Fourth Defendants, accepted, entirely separate insurance policies could be drafted in such a way to create cover with a shared aggregate limit. The key issue is therefore not whether a composite as opposed to individual series of policies is in issue but whether on the proper construction of the limit of indemnity wording it applies in the aggregate or individually.

31. The focus therefore must be on the wording of the definition of “Limits of Indemnity” in the Insurance Cover. In my judgment there is little doubt that the first part of that definition results in the limit for claims in respect of loss in respect of any individual Flat being £1million. That is the natural reading of the provision and how one would expect it to be reasonably understood by the constituency to whom the document is directed. It also gives full effect to the fact that the insurance is distinct for one “Residential Property” defined as a specific Flat (whether viewed as a composite policy or a separate and distinct one).

32. The second part of the definition of “Limits of Indemnity” gives rise to the real question for resolution. The wording “ The limit for all claims for all Residential Property's in one continuous structure is £1,500,000” is in my judgment one that gives rise, in this particular context, to an overall aggregate limit, essentially for the following reasons: (1) On a natural reading of this wording it is reasonably clear that there is a typographical error and the reference should be to “Residential Properties”. (2) Elsewhere in the wording of the Insurance Cover, there are references to “Residential Properties” plural which are clearly to other Flats. For example, in the section headed “The Right to Cancel”, there is reference to the “Residential Property” including “Common Parts by which the Policyholder is jointly responsible with owners of other Residential Properties ”. There is similar usage in the definition of “New Development”. It would be strange and unlikely for the term “Residential Properties” to have one meaning in one part of the Insurance Cover and a different meaning in another part. (3) Given the limit of £1 million for claims in repect of one individual Flat and the above meaning attributed to “Residential Property’s”, the natural reading of the second limit on cover of £1.5 million is one that is an aggregate limit given that all of the Flats were indeed in one continuous structure. (4) An aggregate level of cover in respect of interconnected properties at the same location that were likely to be impacted in the same way by a structural defect is unsurprising – the situation is very different from the one considered in Liberty Global where the relevant businesses were widely separated and operated in very different circumstances and would be impacted in quite distinct ways. (5) An aggregate level of cover under this part of the Insurance Cover is consistent with the approach adopted in the wording for other parts, where aggregate limits are set. For example, in Section 1 the limit of indemnity was set at £1 million for “the New Development” and in Section 3 (which addresses “Contamination”) the limit of indemnity is expressed as follows: “The Insurer’s Limit of Indemnity for all Residential Properties on one Site is £1,000,000”. (6) An aggregate level of cover under Section 2 of £1.5 million is not surprising in circumstances where the rebuild cost for the whole development was stated to be £1.4 million in the documentation that led to the implementation of cover and provision was made for index linking of the indemnity limits under General Condition number 3. (7) Whilst in Liberty Global the Court regarded it as unlikely that an insured would expect their level of cover to be eroded by claims made by others, that was because of the lack of any wording to indicate the contrary. In this case there was such wording. (8) Although, I accept that it is quite possible for there to be surplus wording in a standard form document of the type used for the Insurance Cover in this case, I do not regard the wording here as mere surplusage. On a natural reading, the provisions in the “Limits of Indemnity” section, which were repeated in the IPCs, were intended to create two limits, one specific to the relevant Flat and the other an aggregate limit. Conclusion

33. In light of the above, I will make a declaration in the form sought in paragraph (a) of the claim form.

34. I will hear submissions on costs and any other consequential matters, if these cannot be agreed.