Insurance Law Monthly

The Court of Justice of the European Union has, in joined cases Churchill Insurance Co Ltd v Wilkinson; Evans v Equity Claims Ltd Case C-442/10, 1 December 2011, upheld the view of the Court of Appeal that the effect of the Consolidated Motor Insurance Directive, European Parliament and Council Directive 2009/103/ EC and s151(8) of the Road Traffic Act 1988 is not to allow an insurer to deny liability where the assured himself suffers personal injury while being driven in his own vehicle by an uninsured driver.

The long-awaited result of consultation on the various Issues Papers issued by the English and Scottish Law Commissions was published on 20 December 2011. English Law Commission Consultation Paper 201 and Scottish Law Commission Consultation Paper 152 is a lengthy document which addresses five issues: Issues Paper 4, Insurable Interest, January 2008; Issues Paper 6, Damages for Late Payment and the Insurer’s Duty of Good Faith, March 2010; Issues Paper 7, The Insured’s Post-Contract Duty of Good Faith, July 2010; Issues Paper 8, The Broker’s Liability for Premiums, July 2010; and Issues Paper 9, The Requirement for a Formal Marine Policy, October 2010. A further matter, the possible reform of the Fires Prevention (Metropolis) Act 1774, which was the subject of a short discussion paper in 2009, is dealt with briefly by the Law Commissions, but only to dismiss the need for reform. The Consultation Paper lists a series of questions to be answered by respondents. The analysis here outlines the most important of the proposals which are the subject matter of those questions.

The Court of Justice of the European Union has, in joined cases Churchill Insurance Co Ltd v Wilkinson and Evans v Equity Claims Ltd Case C-442/10, 1 December 2011, upheld the view of the Court of Appeal that the effect of the Consolidated Motor Insurance Directive, European Parliament and Council Directive 2009/103/EC and s151(8) of the Road Traffic Act 1988 is not to allow an insurer to deny liability where the assured himself suffers personal injury while being driven in his own vehicle by an uninsured driver.

Hanwha Non-Life Insurance Co Ltd v Alba Pte Ltd [2011] SGHC 271 is the first reported reinsurance decision in Singapore. The dispute raised a number of issues between the parties, the two most important being whether the reinsurers had the right to decline a declaration made to them under a reinsurance facility, and whether the terms of the underlying policy form had been incorporated into the reinsurance. The conclusions of Tan Lee Meng J are fully consistent with the analysis of the English courts on those matters.

The litigation on the recoverability of the costs of hiring a replacement vehicle shows no sign of abating. In the latest contribution to the learning on this subject, Sayce v TNT (UK) Ltd [2011] EWCA Civ 1583, the Court of Appeal has confirmed that there is no obligation on the victim of a road traffic accident to accept the offer of a replacement vehicle from the defendant rather than obtain a vehicle for him or herself.

The Financial Services and Markets Act 2000 requires persons carrying on insurance business in the UK to be authorised to do so by the Financial Services Authority. General (non-life) business is divided into 18 classes, as set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 SI 2001/3544, and authorisation is required if the business falls into any of the relevant classes. The question in Digital Satellite Warranty Cover Ltd v Financial Services Authority [2011] EWCA Civ 1413 was whether the applicant company was carrying on insurance business of one or more of the specified classes without authorisation. At first instance Warren J ruled that this was the case and that it was appropriate to grant a winding up order to the FSA on that basis. This was an appeal against that decision.

Insurance policies often mitigate the draconian effects of non-disclosure, misrepresentation and breach of warranty by a variety of clauses which restrict the assured’s duty. In The Seashell of Lisson Grove Ltd v Aviva Insurance Ltd [2011] EWHC 1761 (Comm) Teare J was called upon to construe the effect of Non-Invalidation Clauses and also a clause which prevented reliance on breach of warranty which had no causal link to the loss.

Credit hire cases continue to be a major source of litigation. In joined cases Pattni v First Leicester Buses Ltd; Bent v Highways and Utilities Construction and Anr [2011] EWCA Civ 1384 the Court of Appeal has once again reviewed the area. The judgment of Aikens LJ signals a change in terminology and also lays down the approach to be taken where the claimant has used credit hire facilities where there was no justification to do so.

Hanwha Non-Life Insurance Co Ltd v Alba Pte Ltd [2011] SGHC 271 is the first reported reinsurance decision in Singapore. The dispute raised a number of issues between the parties, the two most important being whether the reinsurers had the right to decline a declaration made to them under a reinsurance facility, and whether the terms of the underlying policy form had been incorporated into the reinsurance. The conclusions of Tan Lee Meng J are fully consistent with the analysis of the English courts on those matters.

Insurance and reinsurance disputes are often preceded by jurisdictional battles. This is unsurprising, because the place in which a case is heard will be significant for a determination of the law applicable to the contract in question and the application of the rules of construction under that law. In Faraday Reinsurance Co Ltd v Howden North America Inc and Anr [2011] EWHC 2837 (Comm) London market insurers were keen to keep a dispute concerning asbestos coverage out of the US courts, fearing far wider liability under the policy than they would face in England. The issue was whether insurers were entitled bring proceedings in England for a declaration as to the law applicable to the policy.

In Westport Insurance Corporation and Ors v Gordian Runoff Ltd [2011] HCA 37 arbitrators ruled that reinsurers were liable to the reinsured in that the losses fell within the scope of a reinsurance treaty. An appeal from that decision has, over a period of years, filtered up to the High Court of Australia, which has by a majority overturned the original award on a number of grounds, including error of law and failure by the arbitrators to give adequate reasons.