In the case of Liberty Insurance Pte Ltd & ANOR v Argo Systems FZE [2011] EWCA Civ 1572 it was held that the judge at first instance had erred in concluding that Liberty (the appellant insurer) had made an unequivocal representation to Argo (the insured) that it no longer intended to rely on its legal right to be discharged from liability under a policy of marine insurance as a result of Argo’s breach of a warranty.
Liberty had written a letter in 2003 reserving its right to rely on other terms of the policy in support of its denial of coverage. The Court of Appeal found that the fact that Liberty did not seek to rely on Argo’s breach of warranty until nearly seven years after the letter, when it was raised in its defence, did not constitute an unequivocal representation that it would not rely on the breach . Consequently, there had been no waiver so Liberty was able to plead and rely on Argo’s breach of warranty.
The court stated that, in the absence of special circumstances (of which there were none in this case), silence and inaction were, when objectively considered, equivocal and could not of themselves constitute an unequivocal representation as to whether a person would or would not rely on a particular legal right in the future.