Lloyd's Maritime and Commercial Law Quarterly
THE DUTY OF DISCLOSURE
La Banque Financière v. Westgate
The Good Luck
When sorrows come, said Shakespeare, they come not single spies but in battalions.1 It is a sorrow for those who have to try to keep abreast with developments in the law that two cases in the Court of Appeal of major importance in the field of insurance should not only be decided in close succession but that in each the facts were of hideous complexity, that in each almost every conceivable point was taken and that in each the judgments were inevitably of great length. Add to these the fact that one case wholly changed its name between the decision at first instance and that of the Court of Appeal and that under its original name it is also reported on entirely different issues,2 and the extent of the sorrows and the size of the battalions becomes apparent. Readers of horror stories will by now have appreciated that the two cases are Banque Keyser Ullmann S.A. v. Skandia (U.K.) Insurance Co. Ltd.,3 which in the Court of Appeal became La Banque Financière De La Cité S.A. v. Westgate Insurance Co. Ltd. (formerly named Hodge General & Mercantile Insurance Co. Ltd.4) (hereafter “Westgate”) and The Bank of Nova Scotia v. Hellenic Mutual War Risks Association (Bermuda) Ltd. (The Good Luck).5
In both the cases the many legal submissions made were analysed by the judges with the greatest care. Accurate legal analysis is essential to the development of the common law: sloppy analysis leads only to confusion and ultimately to one appeal after another, at great expense to the litigants. Even if there are parts of the judgments which may give cause for some doubt, anyone with an insurance problem in future is likely even indirectly to benefit from the huge amount of detailed and highly expert thought given to so many aspects of law, and not purely insurance law, both at first instance and in the Court of Appeal.5 If this note is not to become as long as the judgments,6 it will be necessary ruthlessly to simplify the facts and limit the topics to be considered. It will concentrate on those specifically relating to insurance.7 They are two in particular. First, what is the nature of the obligation
1. Hamlet, Act iv, Scene v.
2. E.g., Banque Keyser Ullmann S.A. v. Skandia (U.K.) Ins. Co. Ltd. [1988] 1 FTLR 360.
3. [1987] 2 W.L.R. 1300 (Steyn, J.); P. Matthews [1987] 1 LMCLQ 5.
4. [1988] 2 Lloyd’s Rep. 513. The Court of Appeal, in a judgment contributed to by all members and delivered by Slade, L.J., allowed the appeal. (The plaintiffs had changed their name. Skandia reached a compromise with them during the hearing of the appeal and dropped out.)
5. [1988] 1 Lloyd’s Rep. 514 (Hobhouse, J.); P. T. Muchlinski [1988] 1 LMCLQ 27. The decision of the Court of Appeal, allowing the appeal, was delivered on 22 March 1989.
6. The judgments in Westgate total over 100 pages in Lloyd’s Law Reports. The judgment of Hobhouse, J., in The Good Luck is 41 pages long and that of the Court of Appeal occupies 103 pages of transcript. (Stating these facts is not an implied criticism that any of the judgments are too long.)
7. Yet it is a splendid irony that neither case concerned a claim under an insurance policy and that The Good Luck was not even a case between an insurer and an insured.
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