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Cite as: [2004] EWCA Civ 984

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Neutral Citation Number: [2004] EWCA Civ 984
Case No: A3/2004/0720


[2004] EWHC 643 (Comm)

Royal Courts of Justice
London, WC2A 2LL
26th July 2004

B e f o r e :



- and -



(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)


Andrew Neish (instructed by Clyde & Co.) for the Appellant
Julia Dias (instructed by Stockler Brunton) for the Respondent



Crown Copyright ©

    Lord Justice Mance:

  1. This is an appeal from part of Moore-Bick J's judgment on 19th March 2004 and order dated 26th March 2004. The appellant is a Lloyd's underwriter representing syndicate 9091. The respondent is a wholesale jeweller carrying on business in Av. Sao Luiz, Sao Paulo, and was insured with the appellant under a Lloyd's Jewellers Block Policy for the period 8th June 2000 to 7th June 2001. Mr Dalton Canelhas was managing director of and a shareholder in the respondent.
  2. The respondent's claim relates to a loss of jewellery from its premises in Av. Sao Luiz on 14th December 2000. The matter came before Moore-Bick J on an application for summary judgment. Moore-Bick J held that there were triable issues regarding misrepresentation and non-disclosure, but determined that the appellant had no arguable defence on any of the other grounds relating to construction and coverage which he had suggested. This appeal, by permission of the single judge, relates to only one of such suggested grounds, concerning the application of a special condition entitled "Holdup or Robbery Limit".
  3. The judge proceeded on the basis that the account of the loss given by Mr Canelhas was true. The appellant had nothing to suggest the contrary. The facts were therefore as follows. At about 11.00 a.m. on 14th December 2000, Mr Canelhas and his wife were returning from Sao Paulo Airport, where they had just picked up their son and Mr Canelhas's mother. Their car was boxed in and they were kidnapped and taken to an unknown location by six men dressed in Federal Police uniforms. Mr Canelhas was told that, if he followed their instructions, he would save his family, but that, if he did not, he would never see them again. He was told that he was to go to the respondents' office to get all the emeralds in stock. Attempts were made to fit him with a small camera and microphone, but these failed and he was given a two-way radio and a bag and backpack. He was asked whether his partners would agree to the surrender of the emeralds and it was even suggested that he carry a hand grenade to pressurise them into doing so should this be necessary. Mr Canelhas advised that this would not be necessary and refused to carry the hand grenade.
  4. Mr Canelhas and his son were then separated from the two women. A bomb belt was attached to the son, and Mr Canelhas was ordered to drive in his own car to his office, to stay in contact with the kidnappers by the two-way radio, to empty the respondent's safes, and to return to a location where the jewellery would be exchanged for Mr Canelhas's son. Mr Canelhas did this. More particularly, according to the report he made later that or the next day to the Brazilian brokers and police (as pleaded in the respondent's defence):
  5. "On arrival at the Claimant's Office at about 1.30 p.m., Mr Canelhas told other staff members of the kidnap and threats to his family's lives and that he and they must fill two bags (provided by the kidnappers) with large quantities of emeralds from four safes in the rear stock area of the Claimant's Offices, which they did."

    According to Mr Canelhas's later statement dated 18th December 2000, the kidnappers also

    "spoke loudly into the radio so that all within the office could hear that no one was to accompany Mr Dalton."
  6. The Lloyd's Policy was on O(E) N.M.A. 2480, with a schedule on form 2481. The schedule identified the respondent's Av. Sao Luiz premises as the address at which its business was carried on. The sums insured, for a premium of $30,000, were, under Item (1) of the schedule, $3,000,000 in respect of stock and merchandise and, under Item (2), $25,000 in respect of trade and office furniture. As regards stock and merchandise the property insured and perils insured against were as follows:
  7. "(1) Stock and merchandise used in the conduct of the Assured's business and bank notes AGAINST LOSS OR DAMAGE ARISING FROM ANY CAUSE WHATSOEVER, (subject to the terms, conditions and limitations of this Policy).
    Where it is not the subject of any other insurance effected by the Assured the property insured by this item is covered while within, or in transit within or between the territorial limits specified below but subject always to the terms, conditions and limitations of this Policy.
    Premises as stated above and Brazil".
  8. On the second page of the schedule there were Special Conditions which read as follows:
    It is a condition of this Policy, in respect of loss or damage by Burglary or Theft occurring at the Assured's premises, that the total value of all jewellery, gold and platinum goods, bullion, unset precious stones and pearls and watches left out of locked safe(s) and/or strong room(s) at night and at all other times when the premises are not open for business shall not exceed:-
    Nil in all,
    and the value of any one such item shall not exceed:-
    This Condition shall not apply during any period of temporary daytime closing if at the time of loss or damage there was present in the sales portion of the premises the Assured or an employee of the Assured in charge thereof.
    Underwriters' liability under Item (1) of the Schedule in respect of loss of or damage to property contained in the display windows at the Assured's premises by theft or attempted theft accomplished by or resulting from the smashing or cutting of such windows shall not exceed:-
    (i) when the premises are open for business or when the Assured or any of their employees (other than security personnel) are present at, or in attendance at, the premises:-
    Nil any one loss
    (ii) at all other times:-
    Nil any one loss
    Underwriters' liability under Item (1) of the Schedule in respect of loss of or damage to property by Robbery when the premises are open for business or when the Assured or any of their employees (other than security personnel) are present, at or in attendance at, the premises shall not exceed:-
    Underwriters' liability under Item (1) of the Schedule is limited to:-
    for any one loss elsewhere than at the Assured's premises specified in the Schedule or within any bank or safe deposit vault.
    Nothing in (A) II, (A) III or (B) above shall increase the sum insured shown against Item (1) of the Schedule."

    The entries "Nil" and the sum $240,000 were typed in.

  10. Form O(E) 2480 N.M.A. itself contains Exclusions, the first of which reads:
    The Policy does not cover:-
    1. Loss or damage by theft or dishonesty or dishonest deception committed by
    (a) any servant or traveller or messenger in the exclusive employment of the Assured (except when conveying property insured to the Post) or
    (b) any customer or broker or broker's customer or agent in respect of property entrusted to them by the Assured, his or their servants or agents unless such loss or damage arises when such property is deposited for safe custody by the Assured, his or their servants or agents, with such broker or customer or broker's customer or agent."
  12. The judge held that there was a loss of the emeralds at the respondent's premises when Mr Canelhas took and left with them, so that the Special Condition headed "Outside Limit" was inapplicable. That conclusion is not now challenged by the appellant. The judge held that the Special Condition headed "Holdup or Robbery Limit" was also inapplicable. The correctness of his judgment in that respect is the subject of the present appeal. His reasoning was this:
  13. "Bearing that in mind, it seems to me that when speaking of robbery the policy was referring to theft accompanied by an element of immediate violence. In my view, the clause is designed to set limits to the amount of cover available at times when the premises are vulnerable to attack and robbery in this context means violent theft from the premises by one or more persons entering from outside. I do not think that it is apt to cover a simple theft by a member of staff, nor what happened in the present case, which did not involve an attack of any kind on the premises or the staff. All that happened in this case was that the managing director took possession of stock and removed it."
  14. The policy is an English law policy placed with the appellant by the respondent through London (sub-)brokers. But it covers a Brazilian insured against property and perils in Brazil. It is common ground between the parties that concepts employed in it such as "Robbery" have to be understood, not in any technical English legal sense, but in the sense in which "ordinary commercial men" would understand them: see Algemeene Bankvereeniging v. Langton (1935) 51 Ll.L.R. 275.
  15. Miss Dias for the respondent suggests nonetheless that an understanding of the meaning which an ordinary commercial man would attach to the concept of robbery may be assisted by having in mind both the English and the Brazilian legal meanings. Her skeleton points out that under s.8 of the Theft Act 1968:
  16. "A person is guilty of robbery if he steals, and immediately before or at the time of doing so, and in order to do so, he uses force on any person or puts or seeks to put any person in fear of being then and there subjected to force".

    According to uncontradicted evidence filed by the respondent, robbery and extortion are under Brazilian law distinct and mutually exclusive crimes. Robbery is under s.157 of the Criminal Code:

    "Taking with the intention to steal someone else's personal property for oneself or another person through use of serious force or violence or after having deprived the victim, by any means, of the possibility of resisting the offence."

    Extortion is under s.158:

    "Constraining someone to do, suffer or refrain from doing something, through use of violence or serious threat and in order to obtain for oneself or for another person an undue economic advantage."

    The distinction is explained as being that in robbery the co-operation of the victim is dispensable, whereas in extortion the taking of the property depends on the conduct of the victim.

  17. In my view, detailed examination of the meaning under either legal system of the concept of "robbery" is inappropriate. The proper approach is to interpret the wording of the relevant clause as a whole in the context of this policy as a whole. The interpretation should be through the eyes of an ordinary commercial man the reason being that
  18. "Interpretation is the ascertainment of the meaning which a document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract".

    See Investors Compensation Scheme Ltd. v. West Bromwich B.S. [1998] 1 WLR 896.

  19. It is of course true that one would expect any ordinary reasonable commercial person obtaining or issuing a policy such as the present to have a general conception of "robbery" which one might also expect to correspond broadly with that used by legislators here and elsewhere. But a proper understanding of the Holdup or Robbery Limit clause requires consideration of how such a person would understand the whole clause in its context. That in turn involves considering the aim and purpose of the clause objectively ascertained from the language of the standard wording of this policy: see Prenn v. Simmonds [1971] 1 WLR 989 1381, 1385H and Reardon Smith Line Ltd. v. Hansen-Tangen [1976] 1 WLR 989, 995H, in each case per Lord Wilberforce.
  20. The policy is basically against all risks. The Special Conditions limit (or, as completed in the case of those in (A), effectively exclude) the underwriters' liability when they apply. Mr Neish for the appellant resists the proposition that they should be regarded as exceptions clauses. He observes that whether any and if so what limit exists in circumstances falling within the Special Conditions depends on negotiation and on the premium which an assured is prepared to pay. But it remains the role of the Special Conditions to restrict cover which would otherwise be general. If there were any real ambiguity about the meaning of the Holdup or Robbery Limit clause, I would therefore construe it against underwriters whose standard wording it is and who seek to rely on it now: see e.g. Dodson v. Dodson [2001] 1 Ll.R. 520, 531-2. But I do not think that there is any such ambiguity or that it is necessary to resort to this principle.
  21. The clause is on its face triggered by only three factors. There must be: (a) loss or damage to property (b) by robbery (c) at a time when the respondent's premises were open for business or the respondent or any of its employees (other than security personnel) were present at or in attendance at the premises. Mr Neish accepts however that something more must be read into the clause. The clause could not be triggered by the robbery of one of the respondent's travelling salesman in Rio de Janeiro which happened to occur during the hours when the respondent's premises in Sao Paolo were open or manned by persons other than security staff. The condition applicable in such circumstances would be (B), the Outside Limit clause.
  22. When one looks at the first two Special Conditions in (A), one sees a defined connection with the premises. Under Special Condition (A) I, headed Premises, the burglary or theft must occur "at the Assured's premises", and the condition is directed to the extra risk existing if merchandise is left out of any locked safe or strong room at night or when the premises are not open for business. Under Special Condition (A) II, headed Window Smash Limit, the loss or damage must be of or to merchandise "contained in the display windows at the Assured's premises by theft or attempted theft accomplished by or resulting from the smashing or cutting of such windows". The condition is directed to the extra risk of merchandise on display in such windows.
  23. It is therefore relevant to identify the extra risk to which Special Condition (A) III, the Holdup or Robbery Limit is directed. It is clear that it is the extra risk of robbery (or holdup) when the premises are open for business or the respondent or its employees (other than security personnel) are present at or in attendance at such premises. Since the reference to holdup only appears in the title to the clause, the clause may be said to be consistent with holdup being regarded either as being synonymous with or as being the typical core case of robbery. I would incline to the former view. But, however that may be, I consider that any ordinary conception of robbery involves one person inflicting or threatening violence against another to steal goods which that other owns or has under control and hands over as a result. It is unnecessary to consider in abstract terms how immediate the connection between the violence or threat, the two persons and the handing over might require to be. In the context of this particular clause, it is in my view clear, first, that the contemplated victims of violence or threats are the respondent itself (although in the case of a company that can only mean the respondent's controlling personalities) or its employees (other than security personnel), and, secondly, that the holdup or robbery contemplated is one taking place at the premises. The clause is directed at the special risk that such persons will be the object of a holdup or a robbery at such premises. An insured may cater for that, either by negotiating for cover under the Holdup or Robbery Limit clause or by engaging extra security to guard the premises when open or when staff are present or in attendance there. The risks of a director or employee being kidnapped or approached elsewhere, and being put elsewhere under some form of duress (violent or not) to take merchandise (whether overtly or surreptitiously) when later on the premises, are different risks, not in my judgment subject to any relevant exclusion or limit. (An employee who acted under duress would not himself be committing theft or acting dishonestly within exclusion No. 1 in form O (E) N.M.A. 2480.)
  24. On that basis, I agree with the judge that the clause was not aimed at and does not apply to circumstances such as those in this case. Mr Neish accepted that the only threats of violence communicated to Mr Canelhas, or through him to the respondent's staff, were threats of violence to Mr Canelhas's son (though one should probably add that there were also threats to Mr Canelhas about his wife's and mother's safety: see paragraphs 3 and 4 above.) No threats of violence were made against Mr Canelhas and no threats were made (even remotely by radio) that any violence would be directed against any member of the respondent's staff. Mr Canelhas was forced, as a result of threats of violence directed at his family members, to comply with the thieves' orders to take the emeralds. The respondent's staff were placed under effective duress, by virtue of the danger to Mr Canelhas's son, to assist Mr Canelhas (so far as necessary) to do this, and at any rate not to interfere. But this was not because Mr Canelhas or any of such staff were held up or robbed at the premises, or because the particular extra risk to which the clause is addressed ever materialised.
  25. Duress can take a variety of forms, many not involving any violence or threat of violence to anyone. The respondent's staff (and Mr Canelhas) acted under duress in this case, but the duress did not involve any violence or threat of violence in relation to them. It consisted of human and moral pressure which meant that they had no real option but to act as they did, once they knew of the risk to Mr Canelhas's son (and his wife and mother). Likewise, if Mr Canelhas had had some personal secret which he wished to keep from his family or the world, and the kidnappers had been able to threaten him with its exposure by visiting or telephoning him at home, he might have been placed under duress to do as he did, just as he in fact was by the threat of violence to his immediate family. Yet in none of these cases would underwriters be able to rely on the Holdup or Robbery Limit clause.
  26. The duress under which Mr Canelhas was placed had no connection with the premises. The commission of a theft such as occurred was not necessarily dependent on the premises being open for business or upon any other of the respondent's employees (other than security staff) being present at or in attendance at the premises. Nor was it necessarily dependent on other members of the respondent's staff having any awareness of what was occurring. Mr Canelhas could have been kidnapped, or (on a hypothesis such as that mooted in the previous paragraph) blackmailed, and obliged to drive to the premises and open them up and take the emeralds by himself at night. Mr Neish suggested that this would not in fact have been possible in the case of the respondent, because its safes were time-locked at night (a fact apparently revealed by the survey at or around the time of placing). But this must in the case of many similar insurances be a possible situation, and it is therefore a hypothesis by reference to which it is relevant to test the meaning of this standard clause. Mr Canelhas could also have been ordered, by a less brazen and ambitious gang, to go to the respondent's premises during opening hours, and to take surreptitiously as many emeralds as he could conceal in his briefcase or clothes without being observed by other staff members.
  27. Mr Neish sought to meet these points by submitting that the clause distinguishes between loss or damage when no member of the respondent's staff is at the premises and loss or damage when any of the respondent's staff is there, even if it is only a person such as Mr Canelhas acting under duress by reason of threats to his son. For reasons already given, that does not in my opinion marry with the aim of this clause, to address the extra risk of violence or threats of violence to persons at the premises. The clause is not addressing the risks of violence or of threats of violence elsewhere, causing someone to go to and (during opening hours) to enter or (at night-time) to open up the premises. As a separate and additional point, as I have already observed, no violence or threat of violence was directed to Mr Canelhas himself anywhere. Mr Neish also underlined the immediate temporal connection between the threats to Mr Canelhas's family and the removal of emeralds which he was ordered to commit. But that cannot assist the appellant when the threats occurred in a different place and were to different person(s) to those contemplated by the clause.
  28. Mr Neish submitted that, once the judge accepted, as he did, that the emeralds were lost when Mr Canelhas took them at and from the premises, it followed that the gang also stole them at the premises, through the innocent agency of Mr Canelhas. Since Mr Canelhas was acting under the threat of violence, it also followed, in Mr Neish's submission, that the ingredients of robbery were satisfied. But, once again, this faces the problems, first, that the threat was not of violence to Mr Canelhas and, second, that, even if it had been, it was not of violence to him (or to anyone else) at the premises. As to the second problem, even if the threat had been addressed to him rather than to his son or family, Mr Canelhas could not at one and the same time be regarded as the unwilling object and victim of such a threat and as the perpetrator of a robbery at the premises. I am quite prepared to assume, for the sake of argument, that the gang stole the emeralds through Mr Canelhas's unwilling agency when he took them at and from the premises. But it does not follow that this involved loss by robbery within the meaning of the Holdup or Robbery Limit clause. The position might have been different (it is unnecessary to express any view) if removal of the emeralds had only been possible by overcoming the opposition of the respondent's other employees by force or threats directed to them, and Mr Canelhas had in these circumstances been obliged to take the suggested hand grenade and had been prepared and able to terrorise the respondent's other employees with it into allowing him to remove the emeralds to hand over to the gang. But, if so, that would be because, on these very different facts, there would have been a loss by robbery at the premises - the robbery being carried out by the gang, through the agency of Mr Canelhas, albeit that he would (if he had no real option but to act as he did) himself have been an innocent party acting under duress.
  29. For these reasons, which in essence as I see it reflect the judge's admirably succinct statement of his conclusions, I agree with the judge that the Holdup or Robbery Limit clause has no application on the facts of this case, and would accordingly dismiss this appeal.
  30. Mr. Justice Munby:

  31. I agree and have nothing to add.
  32. Lord Justice Thorpe:

  33. I also agree.
  34. ORDER: Appeal dismissed; respondent to pay the appellant's costs of the appeal in the agreed sum of 12,070 within fourteen days in accordance with the order agreed in draft by both counsel and signed.
    (Order does not form part of the approved judgment)

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