Wayne Tank cases

“When finding the significance of words used in insurance contracts – such as ‘flood’ – Judges have used general rules of building which, in consequence, have allowed them to make as they will. However, Judgess have non used this freedom to profit consumers by, for illustration, promoting insurance companies to do clear the bounds of their policies. Possibly the new statutory steps will offer more protection” . Discuss.

There is no inquiry that the first proposition set out above is accurate – the regulations of contract reading provide Judgess with wide powers to decide vague or unsure insurance commissariats. However, it is submitted that when the rules established inYoung v Sun Alliance[ 1 ] ,Gray V Barr[ 2 ] , andWayne Tank & A ; Pump[ 3 ] are extracted and considered, the tribunals have non needfully favoured insurer’s readings as urged upon them. [ 4 ]

Youngis an appropriate point of beginning. The issue inYoungturned upon the definition of the term ‘flood’ as set out in a residential insurance policy ; the householder claimed that H2O harm caused by ooze that resulted in an overruning toilet met the contractual definition. The Court of Appeal acknowledged that ‘flood’ may pull different significances – ‘ ” Peoples frequently use the word ‘flood ‘ conversationally to depict an flood of H2O in their houses… but in my judgement it is non what is meant by ‘flood ‘ in the insurance policy. A ‘flood ‘ is something big, sudden and impermanent, non of course at that place, such as a river overruning its Bankss. In my judgement the H2O in the complainant ‘s toilet was non at that place as the consequence of a ‘flood ‘ within the significance of the policy. ” [ 5 ]

The Court elaborated with the observation that ‘… an ordinary ( individual ) would state, ‘The H2O is deluging my floor ‘ , I have no uncertainty. But we come back to the inquiry: Is it a inundation? Is it a inundation in a clause which refers besides to ‘storm and tempest ‘ ? — which I think contributes to giving a coloring material to the significance of it…I think it is really mostly a inquiry of grade. ” [ 6 ]

The logical thinking inYoungwas applied in a ulterior H2O harm instance,Rohan Investments Ltd. [ 7 ] to accomplish exactly the opposite consequence – 1 that benefited the consumer – through a more generous reading of ‘flood’ : ‘…Young( does ) non set up any general-purpose list of standards … where an insured homeowner seeks to retrieve under his policy for harm caused by an immersion of H2O to his belongings which would be described normally and of course as a inundation. All of their Lordships inYoungappear to hold been affected in the fortunes of that instance by the deficiency of play and graduated table in the event giving rise to the undoubted implosion therapy of the toilet, that is, the slow, preventable ooze of H2O up into its floor.’ [ 8 ] …

Wayne Tankestablished that where a policy provides cover against one of two or more coincident causes of loss, a claim will lie under the policy provided that there is no relevant exclusion. Where a policy contains an express exclusion in regard of loss ensuing from a specified cause, the insurance company is non apt notwithstanding the fact that there may hold been aconcurrentcause of the loss covered by the policy. [ 9 ]

The instance jurisprudence that followedWayne Tankfrequently presents troubles in the appraisal of what constitutes a concurrent cause. InEarl v Cantor Fitzgerald[ 10 ] , the Court reviewed a set of internal company regulations ( that operated like an insurance strategy ) refering the definition of the term ‘sickness’ , in visible radiation of an employee’s incapacity due to spinal hurt that was exacerbated by depression and inordinate intoxicant usage. The Court held that: ‘…if illness requires some supervening disease and does non include alcohol dependance or personality defect, these can non decently be regarded as excepted hazards of the sort with which the tribunal was concerned in Wayne Tank … . I am satisfied that Mr. Earl ‘s status was the consequence of the combined effects of disease of the spinal column, depression and intoxicant dependance … [ 11 ]

Dunbar V Plant[ 12 ] is a utile fact state of affairs against which to measureGray V Barrand its articulation of the traditional regulation that one may non gain from their ain misdoings. The cardinal issue was whether the forfeiture regulation applies to a subsister of a suicide treaty who committed the offense of helping and abetting the decease of the other party to the treaty. [ 13 ] The undermentioned transition fromGraywas cited and apparently sidestepped inDunbar– ‘The logical trial, in my judgement, is whether the individual seeking the insurance was guilty of deliberate, knowing and improper force or menaces of force. If he was, and decease resulted therefrom, so, nevertheless unintended the concluding decease of the victim may hold been, the tribunal should non entertain a claim for insurance. ” [ 14 ]

Plant did non apparently commit an ‘act of violence’ as contemplated byGray; Plant’s claim was denied as being the fruit of a contract to take part in a offense ( reding self-destruction ) that offended public policy.

TheUnfair Contract Footings Actand the back uping ordinances have non provided a important alteration of way for consumers. Standard signifier understandings must be interpreted in the visible radiation of the corporate statutory government ; as an illustration, inFirst National Bank[ 15 ] the tribunal had a clear chance to do a broadly consumer oriented statement refering banking fees imposed in a standard signifier contract. The House of Lords declined to handle an burdensome strategy for a consumer as an unjust one, [ 16 ] notwithstanding the accent placed upon ‘fairness’ constructs in the Regulations and the continued handiness of the common jurisprudence rule ofcontra proferentem.[ 17 ]

In decision, the current province of the jurisprudence is one that exemplifies the proverb ‘case by instance analysis’ . Consistent legal rules may be readily identified in the governments ; how the tribunals choose to use these rules is wholly a fact specific exercising.


Clarke, Malcolm A. ( 1997 )Policies and Percepts of Insurance: An Introduction to Insurance LawOxford: Clarendon Press

Table of Cases

Director General of Fair Trading V First National Bank [ 2002 ] 1 AC 481

Dunbar V Plant[ 1997 ] EWCA Civ 2167

Earl v Cantor Fitzgerald International[ 2000 ] EWHC 555 ( QB )

Gray V Barr[ 1971 ] 2 QB 554

Investors Compensation Scheme Ltd V West Bromwich Building Society[ 1998 ] 1WLR 896

Rohan Investments Ltd v Cunningham & A ; Ors[ 1998 ] EWCA Civ 44

Wayne Tank & A ; Pump Co. Ltd v Employers ‘ Liability Assurance Corpn Ltd[ 1974 ] QB 57

Young v Sun Alliance and London Insurance[ 1976 ] 3 All ER 561

Table of Statutes and Regulations

Unfair Contract Footings Act, 1977

Unfair Footings in Consumer Contracts Regulations1999

Unfair Footings in Consumer Contracts ( Amendment ) Regulations2001