The court discussed the general principles as to the meaning of ‘inducement’ in the context of insurance contract.
Held: If the three underwriters who gave evidence had been told the truth, on no view would they have underwritten the insurance at the same premium on terms which included subsidence risk. The court also considered the role played by presumption that if the recipient had known the truth, he would still have been willing to make the contract, but only on different terms, notably, but not only as to premium. ‘The existence of such a presumption is recognised in the authorities (Halsbury’s Laws vol 31 par 1067) ‘Inducement cannot be inferred in law from proved materiality, although there may be cases where the materiality is so obvious as to justify an inference of fact that the representee was actually induced, but, even in such exceptional cases, the inference is only a prima facie one and may be rebutted by counter evidence.’ ‘ and there is ‘the need to distinguish ‘materiality’ from ‘inducement’, although inevitably the two overlap. Here, the evidence of the three underwriters who did give evidence and of the expert witnesses was clear. If the underwriters had been told the true state of the ground conditions, as revealed by the 1982 report, and of the conflicting views expressed by the authors of that report and by Worleys, then they would have called for further information and in all probability either refused the risk or accepted it on different terms. In fact, all four underwriters including Mr Earnshaw accepted it without any relevant enquiries. There is no evidence to displace a presumption that Mr Earnshaw like the other three was induced by the non-disclosure or misrepresentation to give cover on the terms on which he did. In my judgment, these insurers also have discharged their burden of proof.’
Evans LJ
[1995] 2 Lloyds Rep 116
England and Wales
Citing:
Approved – Edgington v Fitzmaurice CA 7-Mar-1885
False Prospectus – Issuers liable in Deceit
The directors of a company issued a prospectus, falsely stating that the proceeds were to be used to complete alterations to the buildings of the company, to purchase horses and vans and to develop the trade of the company. In fact it was to pay off . .
Cited – Smith v Chadwick HL 18-Feb-1884
Unclear Words Insufficient as Representation
A purchaser claimed to have entered into the contract in reliance on the truth of a misrepresentation by the seller. The plaintiff claimed damages for deceit through having been induced to buy shares in an iron company by false representations in a . .
Cited by:
Cited – Assicurazioni Generali Spa v Arab Insurance Group (BSC) CA 13-Nov-2002
Rehearing/Review – Little Difference on Appeal
The appellant asked the Court to reverse a decision on the facts reached in the lower court.
Held: The appeal failed (Majority decision). The court’s approach should be the same whether the case was dealt with as a rehearing or as a review. . .
Cited – Mundi v Lincoln Assurance Ltd ChD 24-Nov-2005
The defendant life insurance company sought to avoid payment alleging non-disclosure. At first they suggested first one then a second and then a third reason for non payment as each previous reason looked like failing. They relied now on . .
Lists of cited by and citing cases may be incomplete.
Contract, Insurance
Updated: 19 January 2022; Ref: scu.187265