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Category: Insurance case law · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed June 2026
Court of Appeal decision refusing summary judgment to insurers on two security warranties in a commercial combined policy, holding that the insured had a real prospect of successfully arguing for a narrower construction at trial.
AC Ward & Son, a member of the Booker group, operated a warehouse at Victor House, West Thurrock, Essex. Over the weekend of 17 and 18 March 2007 professional burglars broke in at first-floor level, reached the mezzanine where stock was stored, and stole about £450,000 of cigarettes and alcohol. None was recovered.
The warehouse was insured under a “Multiline Commercial Combined Policy”, Section C of which covered theft of stock up to £1.5 million. The insurers refused the claim on a variety of grounds relating to security arrangements, and in August 2008 applied for reverse summary judgment under CPR 24.2 on the basis that the claim was bound to fail because two warranties in the policy had been breached: a Protection Maintenance Warranty and a Burglar Alarm Maintenance Warranty. The insured opposed the application on the ground that the issues were too numerous and factually complex to be decided summarily.
On 19 December 2008 HHJ David Mackie QC dismissed the application. The insurers appealed.
Whether the insurers were entitled to summary judgment — that is, whether the insured had no real prospect of successfully resisting the insurers’ construction of the two warranties, and whether there was any other compelling reason for the case to go to trial.
The Court of Appeal dismissed the appeal. It did not decide what the warranties mean; it decided only that the insured had a real prospect of succeeding on its own construction, so the point had to be determined at trial.
Etherton LJ recorded that the insurers accepted the judge’s ruling that both provisions were warranties, breach of which on the policy’s own terms “voids the contract from the time of the breach”. On the insurers’ interpretation the consequences were, as he put it, draconian: if any security protection installed at the warehouse at any time during the policy was not in full and effective operation at all times when the premises were closed or unattended, the whole policy and all cover would be automatically discharged — even if the defect was unknown to the insured, could not reasonably have been known to it, was not caused by it, and was later remedied. It is trite law, he observed, that if underwriters wish to have a warranty with draconian consequences they must stipulate for it in clear terms.
Against that background the court held that the insured had a real prospect of successfully contending that its narrower reading gave the policy a more reasonable commercial meaning — limiting the protections to those identified in the original proposal, limiting the burglar alarm provisions to an alarm stated in the schedule and approved by the insurers, and limiting the warranties to defects within the insured’s knowledge or reasonably capable of being so. The court also noted that the warranties were standard terms of the insurers’ commercial combined policy affecting many other policyholders.
The appeal was dismissed and no order was made on the respondent’s notice. The trial of the action was due to take place in November 2009.
This was an appeal against the refusal of summary judgment, and the Court of Appeal expressly left the construction of the warranties to be decided at trial. The case is therefore not authority for any particular meaning of the Protection Maintenance Warranty or the Burglar Alarm Maintenance Warranty.
What it does support is narrower and procedural: where an insurer’s construction of a security warranty would automatically discharge the whole of the cover for a defect the insured neither knew of nor could reasonably have known of, an insured’s contrary construction is not fanciful, and the point is unsuitable for summary determination. It also restates the established principle that a warranty with draconian consequences must be stipulated for in clear terms.
The case is a practical illustration of how security warranties in commercial property wordings are argued about, and of the courts’ reluctance to resolve their construction summarily where the consequence would be the automatic discharge of an entire policy.
Note that the law has since moved on. Sections 10 and 11 of the Insurance Act 2015 abolished the rule that breach of warranty automatically discharges the insurer’s liability, replacing it with a suspensory regime, and restricted the ability of insurers to rely on breach of a term relating to a particular type or location of loss where the breach could not have increased the risk of the loss that actually occurred. The commercial problem the case illustrates — wide security warranties applied to losses they had nothing to do with — is largely what those provisions were enacted to address.
For brokers, the practical point remains: security warranties should be checked against what the client actually has installed and can realistically maintain, and any mismatch raised with underwriters before inception rather than after a loss.
By Apex Insurance Brokers on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Apex Insurance Brokers on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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