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Appeal Court rules against AXA in multi-million pound coverage dispute with Ted Baker

19 February 2014

The Court of Appeal has today dismissed insurance group AXAs application to appeal an earlier High Court ruling in a multi-million dispute over coverage with clothing retailer Ted Baker.

In December 2008 three employees working at one of Ted Bakers warehouses in London were arrested, charged and later convicted of stealing stock from the retailers premises between 2004 and 2008. As a result of the theft the retailer suffered a significant loss running into seven figures.

Ted Baker was insured by AXA along with two co-insurers, Fusion and Tokio Marine, under a commercial combined insurance policy. The retailer sought to bring an insurance claim for £1m for the loss of stock and £3m for consequential loss or business interruption. However AXA declined cover arguing that the terms of its policy did not cover claims for employee theft and if it wanted to the retailer would have needed to take out fidelity cover in line with market practice. It also argued for rectification as neither party had intended the insurance cover to extend to employee theft. AXA, along with the co-insurers, also alleged that non-disclosure and misrepresentation on behalf of the retailers brokers rendered any cover void.

In 2012 the High Court overturned an earlier county court judgment and ruled that the terms of the theft extension clause was full meaning the retailer was covered for its direct losses. In doing so the High Court also confirmed that the retailer could claim for loss of profits under the Business Interruption section of the policy. In addition the Court did not agree with AXAs argument that the parties did not intend employee theft to be insured and lastly the judge also dismissed the allegations of non-disclosure and misrepresentation.

AXA sought permission to appeal and todays Court of Appeal ruling has reasserted the High Courts earlier judgment and dismissed their application to appeal.

Nichola Evans, partner at law firm Browne Jacobson who acted for Ted Baker, commented:

"Todays ruling is a damning indictment of AXAs case. Not only was the judge left unimpressed by the arguments put forward by AXAs legal team but he was scathing in his summing up by suggesting reliance on the wording of the policies by AXA was "futile" given that it had earlier been held that there was cover, that they could not rely on silence as conveying a shared assumption as to what a policy meant and that new evidence disclosed did not affect the fact that the appeal did not have any real prospect of success.

"Todays ruling is a wake-up call to insurers that clear stated policy terms will not be overridden by the courts because the coverage was either not what was intended by one or more parties or went against asserted market practices."


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Lakhbir Rakar

Lakhbir Rakar

PR Manager