Ms Golvina had rented a cottage from Ms Fresca-Judd. The rent was some £2,800 per month. Ms Golvina was away from the cottage over the Christmas period in 2010 and while she was away, the pipes froze and then burst during a cold snap. The cottage was flooded and the damage caused allegedly amounted to some £128,089.71.
It was a clause of the tenancy that Ms Fresca-Judd would take out insurance against risks including water damage. The policy was taken out with NFU Mutual. The insurance duly paid out for the damage, but some time later Ms Golvina found herself facing a claim in Ms Fresca-Judd’s name, but actually by NFU Mutual, for the £128,089.71, on the basis that Ms Golina had breached the terms of her tenancy by not leaving the heating on a low level while away and was therefore responsible for the damage.
NFU Mutual brought the claim on the basis of subrogation. Under an insurance policy, if the insurer suffers loss because of an obligation to pay out, the insurer is subrogated to the position of the insured – taking on the insured’s rights to, for example, sue for damages.
When the matter reached trial, it turned out that NFU Mutual had two big problems.
First, subrogation cannot apply in an action against a tenant where the tenant is a co-insured under the policy. Ms Golvina argued that the tenancy clause meant that the insurance policy was for the benefit of both landlord and tenant, as it set out that the landlord would look to the insurer in respect of covered damage, not the tenant. NFY Mutual, via a subrogated claim, could not be in a better or different position than Ms Fresca-Judd. The court agreed – the clause meant that the insurance was for the benefit of both landlord and tenant and as such NFU Mutual had no subrogated rights.
And in any event, Ms Golvina denied having turned the heating off and insisted she had left it on low and that there had been a mechanical failure. NFU Mutual had no live evidence to the contrary and failed ton the balance of probabilities. So the claim would have failed on evidential grounds even if it could have been brought under subrogation.
This has been talked up as a very important, landmark case. I really don’t think it is, apart from for Ms Golvina, obviously. Ms Fresca-Judd in the form of NFU Mutual quite rightly lost, on well established principles of subrogation (and indeed evidence). Though of course the fact of bringing such a speculative and badly evidenced claim may say quite a lot about the insurer (we might note that Ms Golvina is apparently of sufficient means to meet such a demand).
But nothing in this judgment would stop a landlord’s insurers bringing a claim against a tenant where damage had been caused by the tenant’s acts or omissions and caused loss to the insurers, so long as the insurance was not arguably for the benefit of both landlord and tenant. And this is as it was before.