Topic 6 - Uberrimae Fidei Flashcards
Pan Atlantic insurance v Pine top insurance
Marine insurance - House of Lords lays down tests for avoidance of policy on round of non-disclosure or misrepresentation
Pan Atlantic claimed payment from Pine Top under a contract of reinsurance. The defence was non-disclosure and misrepresentation. Pan Atlantic had not disclosed an insurance claim of $25,000 in relation to 1980, and had incorrectly stated that the total amount of claims in 1981 was $235,768 whereas it was in fact $468,168. Pan Atlantic had conceded, ever since the service of the amended Defence, that there had been inadvertent non-disclosure in respect of those items. It had not been suggested that the non-disclosure was deliberate.
Assicurazion v Arab Insurance Group
ARIG appealed a court order to pay Generali’s costs. The appeal focused on whether ARIG was misled about Munich Re’s involvement in a contract. Appeals courts can only overturn lower court decisions in specific situations. While a misrepresentation must influence an insurer’s contract decision, it doesn’t have to be the only reason. The original judge noted Mr. Rehman’s careful review of documents and found fault with Gay & Taylor’s financial practices. The appeals court confirmed it only reviews previous decisions, not re-tries cases. Ultimately, the court found ARIG was misled, reinforcing that misrepresentation must be a factor, though not necessarily the sole one. The criticism of Gay & Taylor’s finances was also upheld.
Banque Keyser Ullman (UK) Insurance Co v Skandia [1991] 2 AC 249.
DUTY OF CARE – CAUSATION
Facts
The plaintiff bank had made loans against property which the borrower had informed them valuable, and had also taken out insurance policies from the defendant to protect themselves against the risk of any shortfall on the realisation of the property. The borrower defaulted on the loan repayments, and it transpired that he had fraudulently misrepresented the value of the property. The defendants sought to avoid paying out on the insurance, relying on a ‘fraud exception’ clause in the policy. In the course of this disagreement, the plaintiff discovered evidence of a separate fraud by the brokers involved in the loan, which the defendant had been aware of before the loan had been made but had not disclosed. The plaintiff argued that the defendant owed a duty to disclose the information, and that had they done so they would not have trusted the broker, would not have entered the loan agreement, and would not have suffered any loss.
Issues
The issue was whether the defendant owed a duty to disclose the loss, and additionally whether a causal link could be established between the failure to disclose it and the loss suffered by the plaintiffs.
Decision/Outcome
The House of Lords held that no causal link could be established; even if the defendants had disclosed the information, the policies would still have been repudiated under the fraud exception clause. The mere fact that the defendant knew the plaintiff would not have entered the loan agreement but for his breach of duty (in failing to disclose the information) was insufficient to establish causation.
In reaching this conclusion, the House was willing to assume, without deciding, that a duty to disclose the information did exist.
Godfrey v Britannia Insurance
the assured did not disclose the fact that he had been told by doctors that he might be suffering from a minor kidney trouble, nor of the fact that he had a lung infection which could clear up with treatment. He was also suffering from recurrent attacks of pharyngitis, which he did not disclose. It was held that any reasonable man with no specialist knowledge of any kind would have known that he was in possession of knowledge and information relating to his health which were material and ought to have been disclosed.”
Carter v Bohem
Carter took out an insurance policy with Boehm against the fort being taken by a foreign enemy. A witness, Captain Tryon, testified that Carter was aware that the fort was built to resist attacks from natives but would be unable to repel European enemies, and he knew the French were likely to attack. The French successfully attacked, but Boehm refused to honour the indemnifier Carter, who promptly sued.
Lord Mansfield found in favour of the policyholder on the grounds that the insurer knew or ought to have known that the risk existed as the political situation was public knowledge:
Joel v Law Union &Crown Insurance
the insurers sought to avoid liability where the insured committed suicide out of mental depression. They claimed that the insured failed to disclose that she was suffering from acute depression. The court held that since she did not know, she owed no duty to disclose.
Akpata v African Alliance Insurance
Akpata took out a life insurance policy with African Alliance Insurance, having previously taken out a policy with another company. On the application, he answered “no” to questions about suffering from various internal ailments, including stomach ulcers or hemorrhages, and affirmed he was in good health. Four days later, he had a medical exam, but the report wasn’t included in the policy, only the application. Ten months later, Akpata died of stomach cancer. The insurance company refused to pay, claiming he failed to disclose a material fact, specifically that he’d previously complained of stomach pain. The court, however, ruled in favor of the beneficiary, stating that Akpata’s negative answers weren’t non-disclosure because the stomach cancer diagnosis (after a barium meal test) came after the insurance contract was finalized.
Blackley v National Mutual Life Assurance of Australia’
The duty to disclose is to disclose facts which come to notice,” and does not include suspicions or possible conclusion as matters of opinion.
Century Ins v Atuanya
The claim was rejected on the ground that the respondent had concealed the fact that his previous policy had been cancelled, a fact which the applicant company considered material.
Case Summary
The respondent was insured with the applicant company. When he was asked whether any policy of his had ever been cancelled, his answer was in the negative, he being apparently unaware at the time he was completing the proposal form that his previous policy had been cancelled. Subsequently. his car was involved in an accident whereby he claimed under the policy for loss and damage. Held:
The claim was rejected on the ground that the respondent had concealed the fact that his previous policy had been cancelled, a fact which the applicant company considered material. The dispute was referred to an arbitration, which decided that the applicant was liable to pay the respondent, as the latter had no knowledge of the cancellation at the material time. The applicant therefore brought an application, under S.12 (2) of the Arbitration Act, praying the court to set aside the award on the ground that the arbitration award was based on an incorrect proposition of law. Rejecting the application, the court said that an insurance proposal which asks for no more than what a proposer believes to be true may not be avoided on the ground of misrepresentation if the statement made by the proposer is honestly and reasonably believed by him to be true.
Glicksman v Lancashire and General Aasurance
Glicksman, the insured, whose natural language was Yiddish to the exclusion of English which he could neither read nor write,53 sought to take out an insurance policy for a business in which he was a co-partner. The insured answered c‘ No ” in reply to the question ‘c Have you ever been refused insurance before? ” This answer was correct if “you ” were to be read in the plural,, but it was not true if “ you ” referred to the singular as the appellant had been refused insurance when carrying on business alone. Their Lordships held that even if ‘‘ you ” were to be read in the plural, the insurance company could still avoid the policy on the ground that the insured had failed to disclose a material fact, i.e., that he had once personally been refused insurance
Anglo-Californian Bank Ltd v London and Provincial Marine and General Insurance Co Ltd
Concerned with a policy guaranteeing the solvency of some underwriters, the jury held that it was a material fact that the insured had not disclosed to the insurancelcompany that the underwriters were in serious financial difficulties.
London Assurance v Mansel
the assured, in a proposal for life assurance, was asked, inter alia, “Has a proposal ever been made on your life at any other office or offices? If so, where? Was it accepted at the ordinary premium, or at an increased premium, or declined? He replied: “insured now in two offices for £16,000 at ordinary rates. Policies effected last year.” The proposal was accepted, but the office later sought to set the contract aside on the ground of concealment of a material fact in effecting the assurance.
The concealed fact was the rejection of the assured’s proposal by several offices. It was held that he was guilty of concealment.
Locker & Wolf Ltd v West Australia Ins. Co.
the insured was asked in a proposal for a fire policy whether “this or any other insurance of ours [had] been declined by any other company?”. He answered “No”. He was issued with a policy. It emerged later that prior to the proposal in question, the insured had applied to another company for a motor vehicle policy which was refused on grounds of misrepresentation and non-disclosure of certain facts.
It was held that the obligation on a person making a proposal for insurance against five to disclose all material facts was not limited to matters exclusively related to fire risks, but extends to any matter which would influence the judgment of the insurer in deciding whether or not to refuse the risk. Slesser L. J. Said:
“It is elementary that one of the matters to be considered by an insurance company in entering into contractual relations with a proposed insurer is the question of the moral integrity of the proposer in what has been called the moral hazard.”3
Barclays Holdings u British National Insurance.
The insurance company denied
liability on a fire policy on the ground that the plaintiff committed a breach of his common law duty to disclose certain material facts including a previous refusal to accept a renewal of the plaintiff’s policy. Here it was admitted by the defendants’ expert witness that the refusal to renew was based on “commercial administrative reason” which did not reflect any moral hazard. It may then be said that any refusal which does not indicate that the “proposers were undesirable persons with whom to have contractual relations” is not material.”
Schoolman u Hall
The question was whether the plaintiff ought to have disclosed the fact that he had a criminal record in his proposal for burglary insurance. The convictions took place about 14 years prior to the effecting of the policy. No question was asked on the proposal form about previous convictions. A jury found that the convictions were material facts. The Court of Appeal refused to disturb that finding “despite the fact that the assured’s record related, as Asquith L. J. said, to a “dim and remote past.”
Lambert u Cooperative Ins. Soc
It was held that a wife who renewed a policy on jewelry belonging partly to herself and partly to her husband owed the insurers the duty of disclosing her husband’s previous convictions of receiving stolen cigarettes and conspiracy to steal and stealing shirts and record players. Both offences involved dishonesty.
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Woolcott v Sun Alliance
Woolcott insured his house against fire. Even though he had previous convictions for robbery, he did not disclose this in filling out the proposal form. He maintained that he was never asked about his past. and if asked he would have declared about the past convictions. Subsequently the house was destroyed by fire, and he claimed on the policy, which was refused by the insurer. Held: The nonconstituted a moral hazard, which the insurers would have had to assess before accepting the risk. Therefore this nondisclosure was of a material fact. Hence the insurer was entitled to avoid the policy
Canning v Farquhar
See above
Horne v Poland
It’s was held that the non-disclosure of the insured nationality as Romanian is material since Romanians were considered as untrustworthy and not good for insurance.
The court held that it is immaterial that the insured was not aware of this popular belief.
It is however doubtful that the decision will be followed now.
Horne v Poland
It’s was held that the non-disclosure of the insured nationality as Romanian is material since Romanians were considered as untrustworthy and not good for insurance.
The court held that it is immaterial that the insured was not aware of this popular belief.
It is however doubtful that the decision will be followed now.
Container Transport International u Oceanus.
The Court of Appeal unanimously agreed that a circumstance is material if it would have influenced the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk. The word “judgment”, according to Kerr L. J., is used in the sense of the formation of an opinion, and the word ‘influence’ means “the disclosure is one which would have had an impact on the formation of his opinion and on his decision-making process in relation to the matters covered by Section 18(2).”64
Northern Assurance v Idugboe
Fact: The plaintiff claimed for insurance coverage after his car, insured with the defendant company, was involved in an accident and became a total loss. The defendant company repudiated liability, alleging material non-disclosure of facts on the proposal form. The plaintiff, who was illiterate, had disclosed some information to the company’s agent, but the agent either didn’t record it correctly or at all on the form. Specifically, the plaintiff had prior insurance with another company which had declined comprehensive coverage, and this was not accurately reflected on the proposal.
Issue: Was the insurance company liable to pay the claim, considering the alleged non-disclosure of material facts on the proposal form, despite the plaintiff’s claim that he had disclosed these facts to the company’s agent? Was the agent acting on behalf of the company or the plaintiff when filling out the form?
Decision of the court: The court held that the agent, in filling out the proposal form, was acting as the agent of the proposer (plaintiff), not the insurance company. Therefore, the inaccurate information on the proposal form was attributable to the plaintiff, not the company. The court overturned the lower court’s judgment and dismissed the plaintiff’s claim. The court relied heavily on the precedent set in Newsholme Brothers v. Road Transport & Co. Ltd., which established that an agent filling out a proposal form is acting for the proposer, even if they are also an agent of the insurance company for other purposes. The court distinguished Bawden v. London, Edinburgh and Glasgow Assurance Co., noting that in Bawden, the extent of the agent’s authority was not defined, unlike in this case.
