Opinion

Mistake: Sometimes all it takes is one letter...

Published Date
Jun 4, 2024
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  • Zaynab Ahmed
The Court of Appeal has found that an alleged typo in a warranty and indemnity insurance policy did not amount to an obvious mistake. As a result, the insurance did not cover the claimed breach of warranty.

W&I Insurance 

Project Angel, a special purpose vehicle, purchased warranty and indemnity insurance following its acquisition of Knowsley Contractors. 

Subsequently, Project Angel claimed that the sellers of Knowsley were in breach of warranties relating to anti-bribery and corruption and sought to claim under the policy.

The claimed mistake

The appeal centred around Project Angel’s argument that there was a contradiction between:

  • the exclusion of liability for any loss arising out of an “ABC Liability”, defined as “any liability or actual or alleged non-compliance by any member of the Target Group or any agent, affiliate or other third party in respect of Anti-Bribery and Anti-Corruption Laws” and
  • a schedule called the cover spreadsheet where it expressly stated that the warranties for “Bribery and Corruption” were “covered”.

Project Angel claimed that the definition of ABC Liability contained an obvious error that the word “or” should have been “for”, so the exclusion should be read more narrowly as only excluding “liability [f]or actual or alleged non-compliance … with Anti-Bribery and Anti-Corruption Laws”. 

No obvious cure

The question was only put as a matter of corrective interpretation not rectification. The court accepted that there was an inconsistency: the “policy appears to give with one hand and take away with the other”.  However, it ultimately held that judicial intervention requires “an obvious error”, not merely an “apparent contradiction” and, crucially, a “clear means of cure”. In this instance, even if a mistake existed, its cure was not obvious: why amend the definition of ABC Liability, rather than the drafting of the cover spreadsheet? 

Consequently, the decision of the judge at first instance stood: the function of the cover spreadsheet was to identify those obligations for which in principle cover was provided but subject always to any express exclusions.

Judgment: Project Angel v Axis

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Zaynab Ahmed

Trainee

London