Utmost good faith

Reliance on disproved facts

In Brotherton v Aseguradoa Colseguros SA [2003] EWCA Civ 705, forthcoming in Lloyd’s Rep IR, the Court of Appeal has upheld the first instance decision of Moore-Bick J, discussed in the May 2003 issue of Insurance Law Monthly, and has all but held that a decision by insurers to avoid a policy is not one which can be overturned by the courts in the light of subsequent evidence demonstrating that the facts relied upon had been proved immaterial even though material at the time of presentation. The leading judgment of Mance LJ considers the circumstances in which rumours are material facts, and then discusses the ability of the insurers to rely upon those rumours to justify an avoidance for non-disclosure even where it is later shown that the rumours were unfounded.