HIH Casualty & General Insurance Ltd & Ors v Chase Manhattan Bank & Ors [2001] EWCA Civ 1250 (31 July 2001)

HIH Casualty & General Insurance Ltd & Ors v Chase Manhattan Bank & Ors [2001] EWCA Civ 1250 (31 July 2001)

The Truth of Statement clause does not exclude the right of insurers to avoid or rescind the contracts of insurance for fraudulent or negligent misrepresentation or non-disclosure by Heaths, nor does it exclude liability for damages under section 2(1) of the Misrepresentation Act 1967. The clause only protects Chase against innocent misrepresentation or non-disclosure. There is no general duty of care between insurer and assured for negligent misstatement in the context of insurance contracts absent special factors.

Citation
[2001] EWCA Civ 1250
Parties
Respondents (appeal No 3154), Appellants (appeal No 3155): HIH Casualty and General Insurance Limited & Others; Appellants (appeal No 3154), Respondents (appeal No 3155): The Chase Manhattan Bank & Others
Jurisdiction
England and Wales
Judgment Date
31 July 2001
Procedural Posture
Appeal From Queen's Bench Division, Commercial Court / Appeal on Preliminary Issues Following Trial of Preliminary Issues Before Aikens J
Outcome
Appeal dismissed in respect of Chase's argument for broader exclusion; cross-appeal by insurers on minor point allowed.
Legal Topics
Misrepresentation, Non Disclosure, Agency, Exclusion Clauses, Fraud, Negligence, Remedies in Insurance Contracts
Insurance Law Contract Law Tort Law Misrepresentation Non Disclosure Agency Exclusion Clauses Fraud +2 more

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Parties

HIH Casualty and General Insurance Limited & Others

Respondents (appeal No 3154), Appellants (appeal No 3155)

The Chase Manhattan Bank & Others

Appellants (appeal No 3154), Respondents (appeal No 3155)

Procedural Posture

Appeal From Queen's Bench Division, Commercial Court / Appeal on Preliminary Issues Following Trial of Preliminary Issues Before Aikens J

Legal Issues

  1. 1 Whether the 'Truth of Statement' clause excludes the right of insurers to avoid or rescind insurance contracts for misrepresentation or non-disclosure by the agent (Heaths), including where such conduct is fraudulent or negligent;
  2. 2 Whether damages are available for misrepresentation or non-disclosure against Chase as principal for Heaths' conduct;
  3. 3 Whether the clause excludes liability for damages under section 2(1) of the Misrepresentation Act 1967;

Ratio Decidendi

The Truth of Statement clause does not exclude the right of insurers to avoid or rescind the contracts of insurance for fraudulent or negligent misrepresentation or non-disclosure by Heaths, nor does it exclude liability for damages under section 2(1) of the Misrepresentation Act 1967. The clause only protects Chase against innocent misrepresentation or non-disclosure. There is no general duty of care between insurer and assured for negligent misstatement in the context of insurance contracts absent special factors.

Court Disposition

Appeal dismissed in respect of Chase's argument for broader exclusion; cross-appeal by insurers on minor point allowed.

Orders

  • Insurers entitled to avoid or rescind contracts of or for insurance for fraudulent or negligent misrepresentation or non-disclosure by Heaths.
  • Insurers entitled to damages for fraudulent or negligent misrepresentation under section 2(1) of the Misrepresentation Act 1967.