The post-contractual duty of insurers

The ambit of the post-contractual duty of utmost good faith is uncertain in its scope but, at least as far as the assured is concerned, establishing breach by the insurers is likely to be of little value after a loss has occurred because the only remedy is avoidance ab initio. In Stansfield Group Pte Ltd v Consumers’ Association of Singapore [2011] SGHC 122 various ingenious attempts to find an alternative basis for a duty whose breach would give rise to damages were waved away by Judith Prakash J.

SGP: the background

SGP was the owner of two private educational organisations in Singapore, Stansfield College and Singapore Institute of Commerce, offering tertiary education to local and foreign students. CASE was a registered society whose principal aim was to protect consumers, and it administered various accreditation schemes with the object of encouraging fair business practices. One of its schemes related to private education, the CaseTrust for Education. From 1 September 2005 membership was required for any private educational establishment that wished to admit foreign students. One of the requirements for membership was the adoption of a scheme which protected student fees, and SGP met this requirement by taking out two insurance policies which provided each student with coverage for 70% of the fees paid. The policies obtained by SGP provided for repayment of student fees either when SGP was unable to carry on business or upon death or total permanent disability of the student.