Reference no: EM133613163

Question

Mr. John Bedward was a sole proprietor dealing in the manufacture and supply of concrete blocks. He owned a block factory with machinery and equipment which he financed from his personal savings as well as money which he inherited from his late father.

After years of operating as a sole proprietor, he was encouraged by a business colleague to form a company so that he could get the benefits of limited liability. Mr. Bedward therefore incorporated "Bedward Blocks Ltd." and all the business assets including the machinery and equipment became the property of the newly incorporated business.

Another business colleague advised Mr. Bedward that it would be prudent to insure the company's assets. Mr. Bedward decided to insure the assets. He figured that since he was the one who had acquired these assets before the incorporation of the business, the proceeds, if any, would be paid personally to him if the assets were damaged.

Mr. Bedward had by now retired from actively running the business and appointed his nephew as the new managing director.

About six months after taking out the insurance, there was a fire at the factory and all the assets were damaged. Mr. Bedward wanted the proceeds from the insurance policy but the insurers refused to pay him. The new managing director also stated that he would not assist his uncle, as he wanted the proceeds for the business to purchase new equipment and machinery.

Mr. Bedward is livid and comes to you for advice as to whether he would be successful in filing a claim against the insurance company in order to get the insurance money. He is saying that he was the one who over the years had acquired these assets.

Required

Using case law and the headings of Issue, Rule, Application/Analysis and Conclusion (The IRAC Method) advice Mr. Bedward.