Hazel (For Lloyd’s Syndicate 260, t/a kgm Motor Policies At Lloyd’s v Whitlam [2004]
- Reported: [2004] EWCA Civ 1600
- Year: 2004
- Court: Court of Appeal
- Read full case: Here
FACTS:-
On the 28th January 2000, Mr Whitlam, the Defendant was a trainee golf professional travelling back from a five day residential course at the Professional Golf Association (“PGA”). He stopped on a lay-by to make a call on a mobile phone. When the call was completed, he pulled out of the lay-by and collided with two motorists. One was killed. The Defendant was prosecuted for careless driving but acquitted. His insurer, KGM Motor Policies at Lloyd’s sought to avoid the insurance policy for material non-disclosure. Their reasons were that the Defendant had not disclosed that he was a trainee golf professional and furthermore that he had not disclosed that he was intending to use his vehicle to and from a place of work, which was other than his permanent place of work. It was accepted that the Claimant’s non-disclosure was entirely innocent.
The Defendant had submitted a signed handwritten proposal form to his motor insurance broker on the 16th April 1999. The broker then produced a printed form to his broker dated 20th April 1999 with some alterations which the Defendant signed. In the original handwritten form the Defendant had described his occupation and nature of business as a shop assistant and he gave details of his employer. The broker changed the proposal form by excluding reference to the Defendant’s employer. There was a box on the printed form, on which the proposed was required to complete his employment status, followed by two further boxes headed “occupation and nature of business – both full and part-time”. The broker inserted the words “shop assistant retailing”. The second was headed “employer and business address”. The broker inserted “Worthing Road Horsham”. In the original handwritten form the Defendant had given more complete information in the second box, which he had completed as follows:- “Neil Burke – Horsham Golf and Fitness Worthing Road”
The Defendant registered with the PGA in July 1997, as his ambition was to be a professional golfer (an ambition that he had in fact by the time of this appeal achieved). At that time he was working at a golf shop as a shop assistant, which was one of the requirements of membership of the PGA. He was also required to play in tournaments and take examinations. His employer contributed towards the cost of the course. At the time of the accident he had a further three years of study before he could hope to attain the status of professional golfer.
The insurers gave evidence to the effect that they were interested in all three boxes on the proposal form. The risk profile was all about the Defendant’s occupation and his business. KGM were only prepared to provide cover for those occupations which presented a low risk, and that was how they were able to charge a competitive premium. If the information on the handwritten form and in particular the word “golf” had appeared on the printed form, the application would have been rejected. Specific evidence was given as to how KGM’s computerised system worked. The proposed occupations that appeared on the list and would have been rejected if inputted on Mr Whitlam’s behalf included sportsman, professional sportsperson, sports coach, golfer and golf club professional. The evidence also showed that if “trainee golf professional” had been inputted, it would have been rejected as an unacceptable risk.
The Defendant had told the police after the accident that he was a trainee golf professional, and he had described himself in this fashion in his criminal statement.
HELD:-
Scott Baker LJ gave the lead judgment.
KGM were interested in the whole picture of what the Defendant was doing. The Defendant’s occupation was material in motor insurance because experience showed insurers that some occupations carry significantly higher risks of accident rates and losses than others. Scott Baker LJ referred to the 10th edition of McGillivray on Insurance at paragraph 17.8 that records the general rule where an insurance contract is taken out. The insured has to disclosed to the insurer all facts material to an insurer’s appraisal of the risk, which are known or deemed to be known by the insured but neither known nor deemed to known by the insurer. Breach of this duty enables the insurer to avoid the contract so long as he can show that the non-disclosure induced the making of the contract on the relevant terms. KGM’s proposal form contained a clear warning about disclosure.
Furthermore the duty of disclosure extended to the insurance broker, as was said in McNealy v. Pennine Insurance Co. Ltd. [1978] RTR 285.
Scott Baker LJ came to the conclusion that Mr Whitlam had given an incomplete and misleading answer to these questions. He did so in good faith and very probably because of the alterations made by his broker. However the fact that he did not mislead the insurance company deliberately did not matter.
The judge at first instance had also declared that Mr Whitlam did not disclose that he was intending to use his vehicle to and from a place of work, which was other than his permanent place of work. Mr Whitlam had been asked whether the car would be used for transport to and from various places of work to which he replied in the negative. He had already said that it would be used for travelling to and from his permanent place of work. Scott Baker LJ did not think that travelling by car on an annual visit to a course at the Belfry or occasional visits to amateur competitions could realistically be regarded as transport to and from various places of work. Accordingly that declaration should not have been made.
Lord Justice May and Lord Justice Auld agreed. Lord Justice May added that in his view, this appeal turned on its own unusual facts. It should not be seen as deciding questions of broad application about answers in proposal forms for motor insurance.
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