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Trenwick
International Limited ("Trenwick") insured Fortis Bank ("Fortis")
in respect of fraudulent receivables under a policy which provided for
a two year limitation period on the bringing of action. In February
2000, Fortis notified a potential claim in respect of fraudulent transactions
under an invoice discounting agreement. In May 2000 Trenwick made it
clear that it was investigating under a reservation of rights. During
the course of negotiations, a representative of Trenwick stated that
he would recommend an interim payment. This did not take place and Fortis
issued proceedings in July 2003 claiming £1m under the policy.
Trenwick defended the claim on the basis that it had been brought outside
of the contractual limitation period, Fortis having discovered the loss
in February 2000.
Fortis argued that there had been agreement that Trenwick would not
rely on the limitation period under the policy. However, the Court found
that even on the basis of Fortis' evidence of their discussions, there
was no implied agreement on the part of Trenwick not to rely on the
limitation provisions. There would have had to have been an appropriate
and unequivocal representation by Trenwick that it would not rely on
the clause amounting in effect to an offer not to do so followed by
an acceptance and valuable consideration on the part of Fortis. These
elements were not present.
Fortis argued in the alternative that Trenwick was estopped from relying
on the clause or had waived its right to rely on it. However, the Court
found that there was nothing in the correspondence that could possibly
amount to an unequivocal representation that Trenwick was not going
to rely on the limitation clause. There was no evidence of any relevant,
objectively clear, unequivocal, unambiguous and unconditional promise
by Trenwick not to rely on this defence. Further, Fortis and Trenwick
had not proceeded on the basis of an underlying assumption that the
limitation clause would not be relied on, so Fortis could not establish
estoppel by convention.
Fortis' claim therefore failed.
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