Where a clause in an insurance policy makes little sense, or seemingly cannot express the intention of the parties, how far will the courts go to enforce what they perceive to be the intent of the agreement? This question goes to the heart of the English approach to interpretation of contracts.
Contract clauses will generally be given their expressed, ordinary meaning: the parties, within certain limits, having the freedom to contract on whatever basis they wish. The court will only reluctantly intervene and, where it does, must be very clear and careful about the grounds. The recent judgment in Blackburn Rovers Athletic Football Club v. Avon Insurance (15 November 2004) considered this issue afresh.
In this case the Blackburn Rovers' striker, Martin Dahlin, suffered an injury to his back whilst taking part in a training match. Although it was not immediately clear that the injury would have long-term consequences, it proved to be serious enough to prevent him from competing in top-class football and ultimately his disability put an end to his professional career. Blackburn had obtained insurance from the defendants against the risk of injury to its players, and made a claim under that policy. The insurers rejected the claim on the grounds that Dahlin's disablement had not been caused by the injury alone, but resulted directly or indirectly from a degenerative condition of the lower spine and was therefore not covered by the policy.
The insurance policy paid out in the event that an insured person sustained an actual bodily injury or illness (as defined elsewhere in the policy). 100% of the sum insured was payable in the event of permanent total disablement (which, within the meaning of the policy, Dahlin had suffered). Under the exclusion section of the policy, however, it stated "This insurance does not cover death or disablement directly or indirectly resulting from or consequent upon: 4. Permanent Total Disablement attributable either directly or indirectly to arthritic or other degenerative conditions in joints, bones, muscles, tendons or ligaments".
The judge expressed the issues relating to the application of this exclusion were to be decided as follows: whether the exclusion was incapable of bearing any rational meaning; whether it was to be literally construed in favour of the insured; and whether degenerative changes that were (a) typical of the male population of the relevant age; and (b) typical of top-class professional...