Airdrie sheriff dismisses partnership’s claim for damages arising from misinformation around refused insurance renewal

About this case:

• Citation:
  [2026] SC AIR 12
• Judgment:
  External link
• Court:
  Sheriff Court
• Judge:
  Sheriff Anthony McGlennan

Angela Singh and Sunita Marwaha, trading as J&M Properties, sought damages from George Weightman & Company for averred negligence, which they claimed led another insurer to consider they had made a material misdeclaration in obtaining cover from them. The defender argued that the level of specification provided did not give it fair notice of the pursuer’s case, and the specification of quantum of damages was similarly lacking.

The case was heard by Sheriff Anthony McGlennan at Airdrie Sheriff Court, with Forster, solicitor, appearing for the pursuer and Manson, advocate, for the defender.

Relying on the terms

In the year 2013/14, the pursuer had an insurance policy in respect of a commercial property in Larkhall Industrial Estate arranged by the defender with insurer AIG. At the conclusion of the policy the pursuer engaged the defender to have the policy renewed, but AIG were not prepared to provide insurance. This was because repairs which required to be made to the property were outstanding.

In a letter dated 16 January, the defender wrote to the pursuer and stated that AIG was no longer in the market for risks such as the pursuer’s and would not be offering terms for the 2014/15 period. By this time, the defects identified that were the true reason AIG declined cover had been remedied. The pursuer averred that, had the true reason been given in the defender’s letter, they would have made representations to AIG to that effect and probably had their policy renewed.

Faced with an absence of insurance cover, the pursuer proceeded to engage a different broker and obtained a policy from AVIVA with their assistance. In doing so, relying on the terms of the defender’s letter, the pursuer declared that AIG had withdrawn from offering insurance for their class of business. When the pursuer made a claim to AVIVA following extensive fire damage to the property, AVIVA declined to honour the policy taking the view that there was a material misdeclaration in the proposal form.

The pursuer averred that it was reasonably foreseeable that they would present the information in the defender’s letter to a new insurer or broker, and therefore also foreseeable that a new insurer would rely on the fact that false information had been provided as a basis to repudiate liability. However, the defender submitted that the pursuer also required to make averments that, had AVIVA been informed of the true reason for AIG declining cover, it would nevertheless have provided insurance and conferred the benefit of the policy upon the pursuer when the fire occurred.

Separately, the defender submitted that there were no pleadings that the AVIVA policy contained an agreed value. Absent an agreed value, the amount payable to the pursuer for a total loss would be the value of the property at the time of destruction. There were no averments regarding this, and accordingly no basis upon which the court could calculate quantum.

‘But for’ test

In his decision, Sheriff McGlennan said of the averred causal link: “Whilst it is not specified, the averments infer that the misdeclaration identified by AVIVA was the erroneous statement as to why AIG were no longer willing to provide insurance cover. It is pled that the misstatement was caused by the defender’s provision of false information in the January 2014 letter. As such, the pleadings undoubtedly set out the wrongful act by the defender. The difficulty for the pursuer lies in what they offer to prove to establish that the defender’s wrongful act caused the loss.”

He continued: “The commonly accepted true reason for AIG having refused to cover the property is crucial. AIG were not prepared to insure the property because of their view that required repairs remained outstanding. Causation of loss is not axiomatic in that circumstance. The ‘but for’ test requires to be engaged. The pleadings need to set out the position the pursuer would have been in had the wrong not been committed by the defender. The pursuer requires to offer to prove that but for the false information provided AVIVA would nevertheless have provided an insurance policy for the property. The pursuer’s pleadings do not do so.”

Explaining what was missing from the pursuer’s pleadings, the sheriff said: “A basis for loss predicated on what would have been paid out upon a renewed AIG policy is quite distinct from the pursuer’s case that the loss emanates from negligence which caused AVIVA to refuse to make payment in terms of their policy – as set out, inter alia, at Article 5 of condescendence. However, if the loss of the benefit of a renewed policy with AIG is a basis of the claim there are similar issues concerning causation of loss. The pleadings would require averment that AIG would have been satisfied by the repairs carried out and that they would have recanted from their previous refusal to insure the property.”

He concluded on quantum: “Quoad the damage to the property the pleadings amount only to averment as to the insured value of the same. It is not averred that the policy was a valued policy, nor was that argued at debate. Consequently, the limited finding in fact that could be made would be to find that the property was insured to a maximum of £850,000.00. The figure on its own tells the court nothing about the loss suffered. There were no pleadings as to the value of property at the date of the loss.”

Sheriff McGlennan therefore sustained the defender’s pleas on specification, dismissed the action, and found the pursuer liable to the defender in the expenses of the cause.