Brotherton & Ors v Aseguradora Colseguros S.A. & Anor

Brotherton & Ors v Aseguradora Colseguros S.A. & Anor

Materiality for insurance disclosure is determined at the time of contract placement based on the information then available to the underwriter. Allegations or reports, even if later shown to be unfounded, do not cease to be material if they would have influenced a prudent insurer's judgment at the time. Therefore, evidence as to the truth or falsity of such allegations is irrelevant, and the defence pleading that the allegations were unfounded is struck out.

Parties
Claimants: Peter Malcolm Brotherton and others; Defendant: Aseguradora Colseguros S.A.; Defendant: La Previsora S.A., Compania de Seguros
Jurisdiction
England and Wales
Judgment Date
26 February 2003
Procedural Posture
Commercial Insurance/reinsurance Dispute / Case Management Conference; Application to Strike Out Part of Defence
Outcome
Paragraph 5(1) of the amended defence struck out as irrelevant; defendants debarred from calling evidence to show allegations were unfounded.
Legal Topics
Materiality in Insurance Disclosure, Duty of Disclosure, Reinsurance Contracts, Moral Hazard, Striking Out Pleadings
Insurance Law Commercial Law Materiality in Insurance Disclosure Duty of Disclosure Reinsurance Contracts Moral Hazard Striking Out Pleadings

Case Brief

Summary, issues, holding and outcome

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Parties

Peter Malcolm Brotherton and others

Claimants

Aseguradora Colseguros S.A.

Defendant

La Previsora S.A., Compania de Seguros

Defendant

Procedural Posture

Commercial Insurance/reinsurance Dispute / Case Management Conference; Application to Strike Out Part of Defence

Legal Issues

  1. 1 Whether allegations made against a bank official, if subsequently shown to be unfounded, are material for the purposes of insurance disclosure at the time of contract placement
  2. 2 Whether evidence of the truth or falsity of such allegations is relevant to the materiality issue
  3. 3 Whether the defence pleading that allegations were unfounded should be struck out as irrelevant

Ratio Decidendi

Materiality for insurance disclosure is determined at the time of contract placement based on the information then available to the underwriter. Allegations or reports, even if later shown to be unfounded, do not cease to be material if they would have influenced a prudent insurer's judgment at the time. Therefore, evidence as to the truth or falsity of such allegations is irrelevant, and the defence pleading that the allegations were unfounded is struck out.

Court Disposition

Paragraph 5(1) of the amended defence struck out as irrelevant; defendants debarred from calling evidence to show allegations were unfounded.

Orders

  • Paragraph 5(1) of the amended defence is struck out.
  • Defendants are not permitted to adduce evidence to prove the allegations against Mr. Medina and others were unfounded.