Summary

An insurer had not waived the requirement that the insured disclose certain material incidents that had occurred prior to the inception of the policy and had been induced by the insured's non-disclosure to enter into the policy on the agreed terms. The insurer was therefore entitled to avoid the policy ab initio on the ground of material non-disclosure.

Facts

The claimant company (N) sought a declaration that the defendant insurer (S) was obliged to indemnify it under policies of insurance for losses caused by a fire at N's premises. At the time of the fire, N had been insured under a policy issued on behalf of S. N had submitted a claim under the policy that S purported to avoid ab initio on the ground of material non-disclosure, it having learnt of three incidents that had taken place at N's premises in recent times. Those incidents, which consisted of a violent attack on N's managing director and two armed robberies, had all occurred prior to the inception of the policy. It being accepted that the incidents were material and that the absence of knowledge of them had induced S enter into the policy on the agreed terms, it fell to be determined as a preliminary issue whether S had waived disclosure of the incidents. N contended that S had waived the right to disclosure of the incidents by reason of the limited nature of the information that it had chosen to seek by way of the claims declaration contained in the proposal form. N argued that a reasonable person reading the proposal form would have concluded that S had waived the right to know about any insurance claims for less than £10,000 made more than five years ago, even if otherwise material, and that it followed that S had waived any right to disclosure of a wider range of matters of a similar kind: thus, the waiver extended not merely to claims but also to circumstances capable of giving rise to claims, no matter how material the incident in question might be.

Held

S's proposal form had sought information about the claims history of N and associated persons. Losses featured under that heading only for the purpose of elucidating the date of the incident leading to the claim, the details of the incident itself, the quantum of the claim, and the amount outstanding. It was far-fetched to suggest that the request for such additional information somehow showed that S was not interested in any other incident that resulted in a loss, no matter how serious, substantial or material, and whether or not within the scope of any subsisting policy, merely because N had chosen not to make a claim or had been unable to do so. In those circumstances, there had been no waiver by S of any obligation to disclose an incident that might have given rise to an insurance claim but did not do so and the three incidents had fallen into that category. No reasonable person reading the proposal form and giving proper consideration to its terms could or should reasonably and fairly have been justified in concluding that S did not want to hear about those incidents even though no loss had occurred and no claim had been made, Doheny v New India Assurance Co Ltd (2004) EWCA Civ 1705, (2005) 1 All ER (Comm) 382 applied. The preliminary issue was resolved in favour of S and it followed that N's claim had to be dismissed.

Judgment for defendant