Fraud in the Claims Process - The scope of the post-contractual duty

The long-running dispute as to the existence and scope of any post-contractual duty of utmost good faith owed by the assured to his insurers, triggered by the judgment of Mr Justice Hirst in Black Sea Shipping Corporation and Wayang (Panama) SA v Massie , The Litsion Pride [1985] 1 Lloyd’s Rep 437 , is closer to resolution. In October of this year the House of Lords is due to hear the appeal in Manifest Shipping Co v Uni-Polaris Insurance Co Ltd and La Reunione Europeene, The Star Sea [1997]1 Lloyd’s Rep 360 , and it is to be hoped that the speeches will provide definitive guidance on the outstanding issues. However, it is certainly possible for the House of Lords to dispose of that case by a very narrow ruling as to the cut-off point for any post-contractual duty, as the determinative issue in that case could be whether fraud by the assured after the commencement of legal proceedings against his insurers gives the insurers the right to avoid the contract. In the meantime, the carefully reasoned decision of Mr Justice Aikens in K/S Merc-Scandia XXXXII v Certain Lloyd’s Underwriters , June 2000, forthcoming in Lloyd’s Rep IR, has all but rejected the reasoning of Mr Justice Hirst and has denied the existence of any general post-contractual duty of utmost good faith.