Case Law

Shock horror: “Innocent Non-Disclosure” clause applies to innocent non-disclosure

12 April 2016
By Michael Hayes

A case reported on 23 March involved a provision which one might ordinarily have described as an “Innocent Non-Disclosure” clause (albeit it was not entitled that): it protected the policyholder against the consequences of any material non-disclosure unless it had been “deliberate or fraudulent”. The Insurers had nevertheless attempted to argue that the clause did not apply where the policyholder had failed to disclose information as a result of an honest but mistaken belief that the information had not needed to be disclosed.

Predictably enough(?), the court (Coulson J) rejected the Insurers’ arguments, holding that they would lead to an “absurd [and] wholly unbusiness-like result”.

Why did Insurers even take the point? Surely it wasn’t simply because there was almost £18m at stake?

See Mutual Energy Ltd v Starr Underwriting & Travellers

The full judgment is here:

Jonathan Corman is a Partner at Fenchurch Law.