Utmost good faith - The continuing duty and fraudulent claims

(Agapitos v Agnew [2002] EWCA Civ 247)

The law on the continuing duty of utmost good faith is baffling beyond comprehension. The notions that s17 of the Marine Insurance Act 1906 recognises a continuing duty of utmost good faith, and that the presentation of a fraudulent claim could amount to a breach of that duty, originated in The Litsion Pride [1985] 2 Lloyd’s Rep 437 . The House of Lords in Manifest Shipping Co v Uni-Polaris Insurance Co Ltd, The Star Sea [2001] Lloyd’s Rep IR 493 came close to breaking the link between fraudulent claims and the continuing duty. The judgment of Longmore LJ in K/S Merc-Skandia XXXXII v Certain Lloyd’s Underwriters, The Mercandian Continent [2001] Lloyd’s Rep IR 802 , rejected the suggestion of Lord Hobhouse in The Star Sea that The Litsion Pride had been incorrectly decided and came even closer to breaking the link between the continuing duty and fraudulent claims. The process has now been taken a step further by the Court of Appeal’s ruling in Agapitos v Agnew [2002] EWCA Civ 247, 6 March 2002, to be reported in [2002] Lloyd’s Rep IR. The key judgment was that of Mance LJ.