||All England Reporter
|| All ER (D) 308 (May)
|| EWCA Civ 705
||Court of Appeal, Civil Division
Ward, Buxton and Mance LJJ
||Michael Swainston QC and Roger Masefield (instructed by Reynolds Porter Chamberlain) for the claimants.
||Richard Millett QC and Edmund King (instructed by Clyde & Co) for the defendants.
||22 May 2003
Insurance - Insured - Duty of disclosure - Material non-disclosure - Contracts of reinsurance covering losses caused by dishonest or fraudulent acts of bank employees - Media reports of serious impropriety on part of bank's employees - Defendants not disclosing reports - Materiality of non-disclosure if reports shown to be false - Entitlement of defendants to trial on issue of falsity of reports.
It would be an unsound step to introduce a principle of law which would enable an insured either not to disclose intelligence which a prudent insurer would regard as material or subsequently to resist avoidance by insisting on a trial where (i)if insurers never found out about the intelligence, the insured would face no problem in recovering for any losses which arosehowever directly relevant the intelligence was to the perils insured and (quite possibly) to the losses actually occurring; and (ii)if insurers found out about the intelligence, then (a)they would in the interests of their syndicate members or shareholders have normally to investigate its correctness, and (b)the insured would be entitled to put its insurers to the trouble, expense and risk of expensive litigation, and perhaps force a settlement, in circumstances when the insurers would never have been exposed to any of that, had the insured performed its prima facie duty to make timely disclosure.
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