1. See, for example, Clarke, M. A., The Law of Insurance Contracts (3rd edition, 1997), chaps 22–23Google Scholar; Tarr, A. A. and Kennedy, J. R., Insurance Law in New Zealand (2nd edition, 1992), chap. 4Google Scholar; Meng, Tan Lee, Insurance Law in Singapore (2nd edition, 1997), chap. 4Google Scholar; Tarr, A. A. and Tarr, J. R., Insurance, Title 22.1, The Laws of Australia, (2000), paras 45–88 Google Scholar; Park, S., The Duty of Disclosure in Insurance Contract Law, (1996).Google Scholar

2. See, for example, Carter, v. Boehm, (1766) 3 Burr 1905; 97 E.R. 1162; Gravelle, H., “Insurance Law and Adverse Selection” (1991) 11 International Review of Law and Economics, 23.CrossRefGoogle Scholar

3. See Rhea, S., “The Economics of Insurance Law” (1993) 13 International Review of Law and Economics, 145 CrossRefGoogle Scholar; Rothschild, M. and Stiglitz, J. “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information” (1976) 90 Quarterly Journal of Economics, 629 CrossRefGoogle Scholar; Tarr, J., “Disclosure in insurance law; contemporary and historical economic considerations” (2000) 6 International Trade and Business Law Annual 150.Google Scholar

4. See, supra, n.2 at 1909; 97 E.R. 1162.

5. See, for example, English Law Reform Committee, Conditions and Exceptions in Insurance Policies, (Fifth Report 1957)Google Scholar; English Law Commission, Report on Insurance Law, Non Disclosure and Breach of Warranty (Law Com No 104, 1980)Google Scholar; Australian Law Reform Commission, Report on Insurance Contracts (No 20, 1982)Google Scholar; New South Wales Law Reform Commission, Insurance Contracts: Non-Disclosure and Misrepresentation (1983)Google Scholar; Contracts and Commercial Law Reform Committee (NZ), Aspects of Insurance Law (1975)Google Scholar; Contracts and Commercial Law Reform Committee, Aspects of Insurance Law (2) (1983)Google Scholar; Meng, Tan Lee, Insurance Law in Singapore (2nd edition, 1997), pp.150–151.Google Scholar

6. Report on Insurance Law Reform (1997, London).Google Scholar

7. See, for example, the Insurance Law Reform Act 1977 (NZ), ss.4–7; Misrepresentation Act 1967 (UK); Misrepresentation Act, Cap 390, Singapore Statutes, Rev Ed, 1994. Of course, many cases of misrepresentation in which the statement complained of is itself not literally false, but in the broader context is false due to information that is withheld, are often decided on the basis on non-disclosure by the insured of material facts. See, for example, the discussion in Meng, Tan Lee, Insurance Law in Singapore (2nd edition, 1997), at p.84 Google Scholar. As Clarke, M. A., The Law of Insurance Contracts (3rd edition, 1997), p.583 Google Scholar, observes, the line between misrepresentation and non-disclosure “may be barely discernible, for example, in the case of misrepresentation by half-truth”. That is, cases in which the statement complained of contains nothing actually false, but where there is “such a partial and fragmentary statement of fact, as that the withholding of that which is not stated makes that which is stated absolutely false”; Peek, v. Gurney (1873) L.R.G.H.L. 377, per Lord Cairns, at p.403; see also, Hasson, R. A., “Misrepresentation and Non-disclosure in life insurance: some steps forward” (1975) 38 M.L.R. 89.Google Scholar

8. The precise legal basis for the duty has engendered considerable judicial and academic analysis. One view that has impressive support in precedent is that the duty arises from an implied term in the contract of insurance; see, for example, Blackburn Low & Co v. Vigors (1886) 17 Q.B.D. 553 Google Scholar, at 578 per Lindley LJ; Joel v. Law Union & Crown Insurance Co [1908] 2 K.B. 863. Strong support exists for the view that the duty of disclosure is a common law duty arising outside of the contract and applicable to all contracts uberrimae fidei; for example, in Khoury v. Government Insurance Office (NSW) (1984) 58 A.L.J.R. 502 Google Scholar the High Court of Australia held that the duty of disclosure was an obligation which was imposed by the common law as an incident of the relationship between insurer and insured. Their Honours point out that there were numerous conceptual difficulties in basing this duty on an implied term of the contract of insurance; for example, the duty of disclosure was logically anterior to the making of the contract and to treat it as a special implied term lay ill with the general rule that the dealings of parties preliminary to a formal contract were not part of the contract itself. See also Banque Financiere de la cite S.A. v. Skandia (UK) Insurance Co Ltd [1988] 2 Lloyd's Rep 513; and Davis, R., “The Origin of Duty of Disclosure under Insurance Law” (1991) 4 I.L.J. 71.Google Scholar

9. [1991] 2 A.C. 249. See also Norwich Union Life Insurance Society v. Qureshi (1998) 10 I.L.M. No 9 (life); Searle v. Hales & Co Ltd [1996] L.R.L.R. 68.

10. [1989] 2 Lloyd's Rep 238; see Davenport, (1989) L.M.C.L.Q. 251 Google Scholar; Clarke, (1989) 48 C.L.J. 362.Google Scholar

11. Report on Insurance Contracts (No 20, 1982), para. 328.Google Scholar

12. See also, Distillers Bio-Chemicals (Aust) Pty Ltd v. Ajax Insurance Co Ltd, (1973) 130 C.L.R. 1 at 31; Deaves v. CML Fire & General Insurance Co Ltd Google Scholar (1979) 23 A.L.R. 539 at 580.Google Scholar

13. See Banque Financiete de la cite v. Westgate Insurance Co Ltd (1990) 1 Q.B. 818 (C. A.)Google Scholar; [1991] 2 A.C. 249; Bank of Nova Scotia v. Hellenic Mutual War Risk Association “The Good Luck” [1989] 2 Lloyd's Rep 238.

14. See, however, National Mutual Life Association of Australasia Ltd v. Chandler (1991) ANZ Insurance Cases 61–053Google Scholar where the insurer successfully denied any payment under a disablement policy because the insured had breached the duty of utmost good faith; the insured made false statements to the insurer in progress claim forms and adopted “a misleading series of moves to cover those false statements”. See also, Ibrahim v. Greater Pacific Life Insurance Co Ltd (1996) 9 ANZ Insurance Cases 61–330 where the Supreme Court of New South Wales held, obiter, that an insurer could be precluded from relying upon a clause disentitling an insured from disability policy benefits in that such reliance would be failing to act with utmost good faith.Google Scholar

15. See, for example, Thompson v. Liverpool & London & Globe Insurance Co 23 F. Cas. No. 13, 966; Babatsikos v. Car Owners Mutual Insurance Co Ltd [1970] V.R. 297; Avon House Ltd v. Cornhill Insurance Co Ltd 1980) 1 ANZ Insurance Cases 60–429 Google Scholar; Barclay Holdings (Australia) Pty Ltd v. British National Insurance Co Ltd [1987] 8 N.S.W.L.R. 514.

16. See the Marine Insurance Act 1906 (U.K.), s.18; Marine Insurance Act 1908 (NZ), s.18; Marine Insurance Act 1909 (Australia), s.24; Marine Insurance Act, Cap 387, Singapore Statutes, Rev Ed, 1994, s.18. In Lambert v. Cooperative Insurance Society Ltd [1975] 2 Lloyd's Rep 485, the English Court of Appeal stated that section 18 of the Marine Insurance Act 1906 (U.K.), which provides for the application of the prudent insurer test, in the case of marine insurance, codified the common law applicable to all types of insurance contracts.

17. [1917] 2 K.B. 184.

18. [1916] 1 A.C. 650.

19. [1917] 2 K.B. 184, at 192.

20. [1995] 1 A.C. 501. Although the issues in this case arose under a policy of non-marine insurance, the House of Lords considered that it was convenient to consider these issues by reference to the Marine Insurance Act 1906 (U.K.) since it was accepted that in relevant respects the common law relating to general and marine insurance was the same. See judgment at p.518.

21. See, for example, Avon House Ltd v. Cornhill Insurance Co Ltd (1980) 1 ANZ Insurance Cases 60–429 Google Scholar; Container Transport International Inc v. Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd's Rep 476; Elston v. Phoenix Prudential Australia Ltd [1987] 2 Qd R 354.Google Scholar

22. Supra, n.20.

23. See Akedian Co Ltd v. Royal Insurance Australia Ltd (1997) 148 A.L.R. 480, at 487 (per Byrne J)Google Scholar. Cf: Tey Say Cheng v. North British and Mercantile Insurance Co Ltd (1921) F.M.S.L.R. 248 (adverse comment on the practicality of the actual insurer test).

24. This was what Kerr J was attempting to achieve in Berger and Light Diffusers Pty Ltd v. Pollock [1973] 2 Lloyd's Rep 442, at 463. He resiled from this position in Container Transport International Inc v. Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd's Rep 476, but Pan Atlantic, supra, n.20, vindicates his initial view that inducement of the actual insurer is required.

25. [1995] 1 A.C. 501, at 517 (per Lord Goff); at 531 (per Lord Mustill).Google Scholar

26. Clarke, M. A., The Law of Insurance Contracts (3rd edition, 1997), pp.604, 606.Google Scholar

27. A slightly broader test of materiality was later applied by the English Court of Appeal in St Paul Fire & Marine Insurance Co (U. K.) v. McConnell Dowell Constructors Ltd [1995] 2 Lloyd's Rep 116, at 124, that a non-disclosed circumstance is material where, had it been disclosed, the prudent underwriter would have appreciated that it was a different risk.

28. [1974] 1 N.S.W.L.R. 228.Google Scholar

29. [1976] 11 A.L.R. 167.Google Scholar

30. [1995] 1 A.C. 501, at 541.Google Scholar

31. See Barclay Holdings (Aust) Pty Ltd v. British National Insurance Co Ltd (1987) 8 N.S.W.L.R. 514 Google Scholar, Glass JA at 523 and Kirby P at 517. See also J, Kirby, “Marine insurance: is the doctrine of ‘utmost good faith’ out of date?” (1995) Aust Bar Rev 1 at 8Google Scholar; see also Sutton KCT, “Insurance” (1995) 23 A.B.L.R. 64 at 67.Google Scholar

32. Mayne Nickless Ltd v. Pegler [1974] 1 N.S.W.L.R. 228 Google Scholar, Samuels J at 239. See also Elston v. Phoenix Prudential Australia Ltd [1987] 2 Qd R 354 per Derrington J.

33. (1987) 8 N.S.W.L.R. 514.Google Scholar

34. (1987) 8 N.S.W.L.R. 514, at 518Google Scholar. See also General Accident Insurance Co Australia Ltd v. Kelaw Pty Ltd (1997) 9 ANZ Insurance Cases 61–369 Google Scholar, at 77,049 (Supreme Court Western Australia, Full Court). In this case, which was decided pursuant to provisions of the Insurance Contracts Act (1984) (Australia) discussed below, the court expressly endorsed the view that there is no obligation upon the insured to disclose every circumstance in the past that might be of interest to the insurer; a distinction should be drawn between matters of general interest and determinative circumstances relevant to the critical decisions whether to accept the insurance and, if so, at what premium and on what conditions.

35. [1995] 1 N.Z.L.R. 736.Google Scholar

36. [1995] 1 N.Z.L.R. 736, at 740.Google Scholar

37. [1908] 2 K.B. 863.Google Scholar

38. [1908] 2 K.B. 863 Google Scholar, at 884. See also London General Omnibus Co Ltd v. Holloway [1912] 2 K.B. 72, at 85Google Scholar; Dalgety & Co Ltd v. Australian Mutual Provident Society [1908] V.L.R. 481, at 500; Lee v. British Law Insurance Co Ltd [1972] 2 Lloyd's Rep 49, at 56; Kathirvelu v. Pacific & Orient Insurance Co Sdn Bhd (1990) 3 M.L.J. 312 Google Scholar; Toh Kim Lian v. Asia Insurance Co Ltd (1996) 1 M.L.J. 149.Google Scholar

39. See the Marine Insurance Act 1906 (U.K.), S.18(1); Marine Insurance Act, Cap 387, Singapore Statutes, Rev Ed, 1994, S.18(1); Marine Insurance Act 1909 (Australia), s.24(l); Marine Insurance Act 1908 (NZ), S.18(1). These subsections relevantly provide “… the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which in the ordinary course of business, ought to be known by him.”; See, for example, Economides v. Commercial Union Assurance Co PLC [1997] 3 W.L.R. 1066.Google Scholar

40. Blackburn, Low & Co v. Vigors (1887) 12 App Cas 531, at 537.

41. London General Insurance Co v. General Marine Underwriters Association [1921] 1 K.B. 104 Google Scholar; Australia & New Zealand Bank Ltd v. Colonial & Eagle Wharves Ltd [1960] 2 Lloyd's Rep 241.

42. See Dalgety & Co Ltd v. Australian Mutual Provident Society [1908] V.L.R. 481 at 500, where Cussen J observed that the extension of the obligation to disclose matters of which the proponent ought to have knowledge “probably has little or no application to the case of a man effecting an insurance on his own life”. The matter was left open in ANZ Bank v. Colonial and Eagle Wharves Ltd; Boag (Third Party) [1960] 2 Lloyd's Rep 241 where a Lloyd's all-risks policy was involved; but in Blackley v. National Mutual Life Association of Australasia Ltd [1970] NZLR 919 at 931 and Avon House Ltd v. Cornhill Insurance Co Ltd (1980) 1 ANZ Insurance Cases 60–429 at 77, 228Google Scholar, cases involving life and fire insurance respectively, the wider obligation to disclose is accepted; and see Mutton v. Insurance Corp of Ireland Ltd (1985) 3 ANZ Insurance Cases 60–630 Google Scholar where Yeldham J (in a case involving motor vehicle insurance) held that the duty of disclosure extends to material facts which an insured ought, in the ordinary course of business, to have known. Similarly in Edwards v. AA Mutual Insurance Co (1985) 3 ANZ Insurance Cases 60–668 Google Scholar (in a case involving fire insurance on a house) Tompkins J said “it appears that the duty goes further to the extent that he is required to disclose not only what he knows but also what ought, in the ordinary course of affairs, to be known to a proponent”. Note that in State Insurance General Manager v. McHale (1992) 7 ANZ Insurance Cases 61–102 Google Scholar Richardson and Hardie Boys JJ endorse the comment by McKenna J in Lambert v. Co-operative Insurance Society Ltd [1975] 2 Lloyd's Rep 485 at 490:

“first, what does the applicant know or what can he be taken to know and, secondly what must he disclose. His knowledge, actual or presumed, will include such inferences as an ordinary person using reasonable care and judgment would draw from the facts known to him, for example, a headache. If the ordinary man would not have inferred a serious malady from a headache, knowledge of a malady cannot be proved.”

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43. Clarke, M.A., The Law of Insurance Contracts (3rd edition, 1997), p.611.Google Scholar

44. Proudfoot v. Montefiore (1867) L.R. 2 Q.B. 511, at 521.

45. Blackburn, Low & Co supra, n.40.

46. (1989) 16 N.S.W.L.R. 673.Google Scholar

47. Wiliams, Glanville, Textbook of Criminal Law (2nd ed, 1983), p.970 Google Scholar states that one of the functions of the alter ego doctrine is to ensure that “the device of incorporation is not a bolthole for people who committ offences.”

48. London General Insurance Co v. General Marine Underwriters' Association [1921] 1 K.B. 104; Regina Fur Co Ltd v. Bossom [1957] 2 Lloyd's Rep 466; [1958] 2 Lloyd's Rep 425.

49. See Tesco v. Nattrass [1972] A.C. 153; South Australian Housing Trusty. SGIO (1989) 51 S.A.S.R. 1, at 23Google Scholar; VACC Insurance Ltd v. BP Australia Ltd (2000) 11 ANZ Insurance Cases 61–457.Google Scholar

50. See, for example, London General Insurance Co v. General Marine Underwriters Association [1921] 1 K.B. 104, at 110Google Scholar; Hamilton v. Whitehead (1988) 166 C.L.R. 121, at 127.Google Scholar

51. See, for example, the Marine Insurance Act 1906 (UK), S.18(3)(C); Marine Insurance Act, Cap 387, Singapore Statutes, Rev Ed, 1994, S.18(3)(C); Marine Insurance Act 1909 (Australia), s.24(3)(c); Marine Insurance Act 1908 (NZ), S.18(3)(C). The relevant subsection provides that in the absence of enquiry the insured does not have to disclose “… any circumstances which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of business, as such, ought to know.” See also Carter v. Boehm (1766) 3 Burr 1905, at 1911Google Scholar; St Margaret's Trust Ltd v. Navigators & General Insurance Co Ltd (1949) 82 LI L Rep 752; Blackley v. National Mutual Life Association of Australasia Ltd [1972] N.Z.L.R. 1038; Macfie v. SGIO (Qld) (1985) 3 ANZ Insurance Cases 60–606.Google Scholar

52. See, for example, Tate v. Hyslop (1885) 15 Q.B.D. 368, at 378Google Scholar; Equitable Life Assurance Society v. General Accident Assurance Corporation (1904) 12 S.L.T. 348, at 351Google Scholar; Pacific and Orient Insurance Co Sdn Bhd v. Lim Sew Chong [1985] 2 M.L.J. 60.Google Scholar

53. (2000) 11 ANZ Insurance Cases 61–458.Google Scholar

54. Clarke, M.A., The Law of Insurance Contracts (3rd edition, 1997), p.622.Google Scholar

55. Park, , Marine Insurance (5th edition, 1802), p.178 Google Scholar; cited in Clarke, M.A., The Law of Insurance Contracts (3rd edition, 1997), p.622.Google Scholar

56. (1996) 9 ANZ Insurance Cases 61–304.Google Scholar

57. Supra, n.56 at 76,399.

58. [1996] L.R.L.R. 237.

59. See references at n.49 supra.

60. Insurance Law in Singapore (2nd edition, 1997), p.122 Google Scholar. See, for example, Tan Kang-Hua v. Safety Insurance Co (1973) 1 M.L.J. 6 Google Scholar; Pacific & Orient Insurance Co Sdn Bhd v. Lim Sew Chong (1985) 2 M.L.J. 60.Google Scholar

61. See, for example, Leen v. Hall (1923) 16 LI L R 100 Google Scholar; cf: Bates v. Hewitt (1867) L.R. 2 Q.B. 595.

62. See, for example, George Cohen, Sons & Co v. Standard Marine Insurance Co Ltd (1925) 21 LI L R 30 Google Scholar; Roberts v. Plaisted [1989] 2 Lloyd's Rep 341.

63. Canadian Indemnity Co v. Canadian Johns-Manville Co (1988) 54 D.L.R. (4th) 468 Google Scholar; (1990) 72 D.L.R. (4th) 478, at 495, 506, 508.Google Scholar

64. See, for example, Marc Rich Co AG v. Portman [1997] 1 Lloyd's Rep 225.

65. See, for example, the Marine Insurance Act 1906 (U.K.), S.18(1); Marine Insurance Act, Cap 387, Singapore Statutes, Rev Ed, 1994, S.18(1); Marine Insurance Act 1909 (Australia), s.24(l); Marine Insurance Act 1908 (NZ), S.18(1).

66. Generally as to the time for disclosure, see Lishman v. Northern Maritime Insurance Co Ltd (1875) 10 LR CP 179; Re Yager and Guardian Insurance Co Ltd (1912) 108 L.T. 38 Google Scholar; Commercial Union Assurance Co v. Niger Co Ltd (1922) 13 LI L Rep 65; Lambert v. Co-operative Insurance Society [1975] 2 Lloyd's Rep 485 at 487; New South Wales Medical Defence Union Ltd v. Transport Industries Insurance Co Ltd [1985] 3 ANZ Insurance Cases 60–680 Google Scholar; (1985) 4 N.S.W.L.R. 107 Google Scholar; compare Black King Shipping Corp v. Massie; The “Litsion Pride”; (1985) 1 Lloyd's Rep 437; Permanent Trustee Australia Ltd v. FAI General Insurance Co Ltd (1998) 44 N.S.W.L.R. 186.Google Scholar

67. See, for example, the Marine Insurance Act 1906 (U.K.), s.18(3)(a); Carter v. Boehm (1766) 3 Burr 1905, at 1911; St Paul Fire & Marine Insurance Co (U.K.) Ltd v. McConnell Dowell Constructors Ltd [1995] 2 Lloyd's Rep 116, at 124.

68. See, for example, the Marine Insurance Act 1906 (U.K.), S.18(3)(C); Carter v. Boehm (1766) 3 Burr 1905, at 1911; Hair v. Prudential Assurance Co Ltd [1983] 2 Lloyd's Rep 667, at 673; Tat Hong Plant Leasing Pte Ltd v. Asia Insurance Co Ltd [1993] 3 S.L.R. 563.Google Scholar

69. See, for example, the Marine Insurance Act 1906 (U.K.), s.18(3)(d); De Maurier (Jewels) Ltd v. Bastion Insurance Co Ltd [1967] 2 Lloyd's Rep 550.

70. Joel v. Law Union & Crown Insurance Co [1908] 2 K.B. 863; Roselodge Ltd v. Castle [1966] 2 Lloyd's Rep 113 at 127; Babatsikos v. Car Owners' Mutual Insurance Co Ltd [1970] V.R. 297 at 301; Pana Vana Letchumanan Chettiar v. Jupiter General Insurance Co Ltd [1939] M.L.J. 39; Lee Bee Soon v. Malaysia National Insurance Sdn Bhd [1980] 2 M.L.J. 252.Google Scholar

71. Home v. Poland [1922] 2 K.B. 364 at 365Google Scholar ; Babatsikos v. Car Owners' Mutual Insurance Co Ltd [1970] V.R. 297 at 305; Eagle Star Insurance Co Ltd v. National Westminster Finance Australia Ltd (1985) 58 A.L.R. 165 Google Scholar ; (1985) 3 ANZ Insurance Cases 60–634 Google Scholar ; compare Visscher Enterprises Pty Ltd v. Pacific Insurance Co Ltd (1980) 1 ANZ Insurance Cases 60–419 Google Scholar . See Pickering, “Proving Underwriting Practices in Court on Issues of Non-Disclosure and Breach of Contract” (1991) 4 Insurance Law Journal 52.Google Scholar

72. Glicksman v. Lancashire and General Assurance Co [1925] 2 K.B. 593 at 609Google Scholar; Peters v. National Insurance Co of New Zealand Ltd (unreported, High Court, Wellington, 21 May 1982, A321/80, Quillam J); Mutton v. Insurance Corp of Ireland Ltd (1985) 3 ANZ Insurance Cases 60–630 at 78,868.Google Scholar

73. See Jester-Barnes v. Licenses & General Insurance Co Ltd (1934) 49 LI L Rep 231; Glicksman v. Lancashire and General Assurance Co [1927] A.C. 139 at 143; Edwards v. AA Mutual Insurance Co (1985) 3 ANZ Insurance Cases 60–668.Google Scholar

74. Jones v. Provisional Insurance Co (1857) 3 C.B.N.S. 65 at 86Google Scholar; 140 E.R. 662; Darwen v. Southern Cross Assurance Co Ltd [1936] Q.S.R. 105; National & General Insurance Co Ltd v. Chick [1984] 2 N.S.W.L.R. 86 Google Scholar; State Insurance Ltd v. Fry (1991) 6 ANZ Insurance Cases 61–075.Google Scholar

75. See, for example, Thomson v. Weems (1884) 9 App Cas 671; Joel v. Law Union & Crown Insurance Co [1908] 2 K.B. 863 Google Scholar; Deaves v. CML Fire & General Insurance Co Ltd (1979) 23 A.L.R. 539 Google Scholar; National & General Insurance Co Ltd v. Chick [1984] 2 N.S.W.L.R. 86 Google Scholar; (1984) 3 ANZ Insurance Cases 60–579 Google Scholar. It is not essential that the proposal and the policy contain a “basis” clause; if the policy contains a “basis of the contract” clause but not the proposal, the clause is part of the contract and amounts to a warranty of the truth of particulars supplied (see Dawsons Ltd v. Bonnin [1922] 2 A.C. 413). But, if the proposal alone contains a basis clause the clause is not part of the contract. Generally see Hasson, R. A., “The ‘Basis of the Contract Clause’ in Insurance Law” (1971) 34 M.L.R. 29 CrossRefGoogle Scholar, and the cases there cited.

76. [1922] 2 A.C. 413.

77. Supra, n.76 at 421. See also Yorkville Nominees Pty Ltd v. Lissenden (1986) 60 A.L.J.R. 218, at 224.Google Scholar

78. The operation of these clauses has been curtailed by statute in Australia and New Zealand: see the Insurance Contracts Act 1984 (Australia), s.24; the Insurance Law Reform Act 1977 (NZ), ss.4, 5.

79. See the Marine Insurance Act 1906 (U.K.), S.18(1); Marine Insurance Act, Cap 387, Singapore Statutes, Rev Ed, 1994, S.18(1); Marine Insurance Act 1909 (Australia), s.24(l); Marine Insurance Act 1908 (NZ), S.18(1).

80. MacKender, Hill & White v. Feldia AG [1966] 2 Lloyd's Rep 449, at 455.

81. Abram v. Westville [1923] A.C. 773, at 781; Johnson v. Agnew [1980] A.C. 367.

82. See, for example, Pan Atlantic Insurance Co Ltd supra, n.20.

83. Insurance Contracts Act 1984 (Australia), s.9(d); s.9A (as inserted by the Insurance Laws Amendment Act 1998 (Australia), s.3.)

84. Discussion Paper 63, July 2000.

85. See the Australian Law Reform Commission, Report on Insurance Contracts (No 20, 1982), para. 180.

86. (1984) 58 A.L.J.R. 502.Google Scholar

87. In Permanent Trustee Aust Ltd v. FAI General Insurance Co Ltd (1998) 10 ANZ Insurance Cases 61–408 Google Scholar , Hodgson CJ emphasised that “… known in section 21(1) means more than suspected or believed. What is required is that the matter should be the subject of a true belief, held with sufficient assurance to justify the term ‘known’.” (at 74,525).

88. (1987) 4 ANZ Insurance Cases 60–813 Google Scholar. See, also, Derrington, D. K. and Ashton, R., “What Have They Done to the Common Law? Disclosure and Misrepresentation,” 1 Insurance Law Journal 1 (1988)Google Scholar, at 4; also Derrington, D. K. and Ashton, R., The Law of Liability Insurance (1990), p.167.Google Scholar

89. (1987) 4 ANZ Insurance Cases 60–813, at 74,998.Google Scholar

90. (1998) 10 ANZ Insurance Cases 61–394 Google Scholar

91. (1989) 5 ANZ Insurance Cases 60–933.Google Scholar

92. Ibid., at 76,035, where the knowledge of the insured's broker was deemed to be the knowledge of the insured; see also Lindsay v. CIC Insurance Ltd (1989) 5 ANZ Insurance Cases 60–913 Google Scholar; (1989) 16 N.S.W.L.R. 673 Google Scholar, where Rogers CJ held that the knowledge of an agent was deemed the knowledge of the insured for the purposes of section 21(1). The Chief Justice further said that the knowledge of the agent is not confined to the agent charged with effecting the insurance. See, however, the comments by Derrington, D.K., “Liability Insurance Contracts Act: Where Do We Stand?,” Qld Law Soc. Journal 5 (1990)Google Scholar, at 8.

93. Advance (NSW) Insurance Agencies Pty Ltd v. Matthews (1989) 63 A.L.J.R. 365 Google Scholar; (1989) 166 C.L.R. 606 Google Scholar; (1989) 5 ANZ Insurance Cases 60–910 Google Scholar; see Ball, M., “Misrepresentation and Non-disclosure under the Insurance Contracts Act: Advance (NSW) Insurance Agencies Pty Ltd v. Matthews,”Google Scholar (1988) 1 Insurance Law Journal 77 Google Scholar; Nicholson, K., “Fraudulent Non-disclosure under the Insurance Contracts Act 1984 (Australia): The Problem of Joint and Composite Policies,” (1989) 2 Insurance Law Journal 82 andGoogle Scholar “Advance (NSW) Insurance Agencies Pty Ltd v. Matthews in the High Court,” (1989) 2 Insurance Law Journal 214.Google Scholar

94. Ibid., at 75,839. It may be noted that the Court of Appeal considered at length whether the policy was a composite or a joint policy. The majority in the High Court did not consider it necessary to decide the issue whilst Deane J decided that it was a joint policy of insurance. As to the effect of the classification, if any, see Courtenay, D. P., “The Innocent Mortgagee: Insurance without Cost,” (1989) 63 Australian Law Journal 587.Google Scholar

95. See, in particular, the majority judgment: (1989) 63 A.L.J.R. 365, at 369.Google Scholar

96. See Callaghan, J., “The New Insurance Legislation,” Seminar Paper for The Law Society of South Australia, 17 04 1985, p.13 Google Scholar; see also the Insurance Act 1902 (NSW), section 18A; discussed by Sutton, K., 12 Australian Business Law Review 215 (1984)Google Scholar. Note also the comment by Brooking J in Twenty-first Maylux Pty Ltd v. Mercantile Mutual Insurance (Aust) Ltd (1990) 6 ANZ Insurance Cases 60–954, at 76, 304–76, 305Google Scholar. Note that in Henry Rae & Court v. FAI General Insurance Co Ltd (1992) 7 ANZ Insurance Cases 61–101 Google Scholar, the Supreme Court of Western Australia emphasised that inducement of the particular insurer was essential before a misrepresentation could be material; General Accident Insurance Co Australia Ltd v. Kelaw Pty Ltd (1997) 9 ANZ Insurance Cases 61–369.Google Scholar

97. See Sutton, K., Insurance Note, [1985] 13 A.B.L.R. 48, at 51.Google Scholar

98. See, generally, Tarr, A., “The Insurance Contracts Act Revisited,” (1991) 4 Insurance Law Journal 227 Google Scholar. See, also, Twenty-first Maylux Ltd supra, n.96 at 76, 304–76, 305Google Scholar; Ibrahim v. Greater Pacific Life Insurance Co Ltd (1996) 9 ANZ Insurance Cases 61–330.Google Scholar

99. (1989) 5 ANZ Insurance Cases 60–941 Google Scholar. This case went on appeal to the Full Court of Western Australia; see (1990) 6 ANZ Insurance Cases 60–986 Google Scholar. The Appeal Court did not disturb the trial judge's finding that no notice had been provided pursuant to section 22; section 21 was not considered on appeal.

100. See Derrington, D. K., “Liability Insurance Contracts Act: Where Do We Stand?,” Qld Law Soc Journal 5 (1990)Google Scholar, at 8; see also Twenty-first Maylux Pty Ltd supra, n.96; and Derrington, D. K. and Ashton, R., “What Have They Done to the Common Law? Disclosure and Misrepresentation,” (1988) 1 Insurance Law Journal 16.Google Scholar

101. Kelly, D. St. L., “Review of the Insurance Contracts Act 1984,” Conference Proceedings, 30 May 1977, Sanctuary Cove, at p.5 Google Scholar, is critical of this position. He asks “[i]f I disclose everything I think is, or may be, relevant to the insurer, haven't I discharged that duty? What does it matter that someone else more intelligent or more knowledgeable or more thoughtful (the supposed reasonable person in my circumstances) would have done better? It's me you are insuring, not someone else! Let insurers ask questions specifically enough for them to get the information they need. After that, rely on concealment.”

102. In Macfie v. State Government Insurance Office (Qld) (1985) 3 ANZ Insurance Cases 60–606, Derrington J held that the mere possession of information is not knowledge and there ought to be a connection between the acquisition of the information by the insurer (or its agents) and the particular application for insurance.Google Scholar

103. See section 24 of the Insurance Contracts Act 1984 (Australia).

104. This will not follow where an answer is incomplete, but not obviously so.

105. (1987) 4 ANZ Insurance Cases 60–784.Google Scholar

106. The plaintiff was fined $100 for being party to the offence.

107. (1978) 4 ANZ Insurance Cases 60–784, at 74,793.Google Scholar

108. Idem. Technically, however, the conviction was in relation to the theft by the insured's brother-in-law of petrol from a boat to fill a motor vehicle's petrol tank. Therefore, construed widely, the question could cover this particular situation.

109. See section 3.

110. See Australian Securities and Investments Commission Circular No G1/98 Insurance Laws Amendment Act 1998—New Duty of Disclosure Provisions and Other Changes.

111. Regulation 2B inserted by SR No 191 of 1999, Sch 1, item 3.

112. Section 21A(2).

113. Section 21A(3).

114. Section 21A(4).

115. Insurance Contracts Act 1984 (Australia), section 22 (discussed below).

116. General Insurance Enquiries and Complaints Scheme Annual Report 1998, p.6.

117. Section 21A(5).

118. Section 21A(6).

119. Section 21A(7).

120. A prescribed form of writing is given in Schedules 1 and 2 to the Insurance Contracts Regulations SR No 162 of 1985; see Regulation 3 and section 22(2) of the Act. The Australian Law Reform Commission's Report on Multiculturalism and the Law (1992) recommends clearer advice to consumers of the general nature and effect of the duty of disclosure under the Insurance Law Amendment Act. The disclosure requirement in relation to section 21A was added by Insurance Laws Amendment Act 1998 (Australia), section 3. Similarly, in Singapore, the Insurance Act Cap 142, Rev Ed 1994, s.24, makes it mandatory for the insurer to warn the insured in the proposal form for insurance that non-disclosure or misrepresentation of a material fact could lead to loss of benefits under the policy.

121. Insurance Contracts Act 1984 (Australia), section 22(3).

122. Ibid., sections 11(2), 11(9). See Breville Appliances Pty Ltd v. Ducrou (1992) 7 ANZ Insurance Cases 61–125 Google Scholar; Alexander Stenhouse Ltd v. Austcan Investments Pty Ltd (1993) 7 ANZ Insurance Cases 61–166 Google Scholar; cf: Austcan Investments Pty Ltd v. Sun Alliance Insurance Ltd (1992) 7 ANZ Insurance Cases 61–116.Google Scholar

123. (1990) 6 ANZ Insurance Cases.Google Scholar

124. (1989) 5 ANZ Insurance Cases 60–941 Google Scholar, at 76,130. Thus Keall J held that the insurer had not either orally or in writing informed the insured of her duty of disclosure. This decision was affirmed by the Full Court of the Supreme Court in Lumley General Insurance Ltd v. Delphin (1990) 6 ANZ Insurance Cases 60–986 Google Scholar. See, also, Breville Appliances Pty Ltd v. Ducrou (1992) 7 ANZ Insurance Cases 61–125 Google Scholar. The Full Court did not consider section 21 of the Insurance Contracts Act 1984 (Australia) as the trial judge's finding, that the insurer did not give notice pursuant to section 22, was not disturbed.

125. (1999) 10 ANZ Insurance Cases 61–442 Google Scholar, at 75,024.

126. Kelly, D. St. L., “Amendment to the Insurance Contracts Act 1984: Misuse of the Omnibus Bill Procedure,” 15 Australian Business Law Review 275 (1987)Google Scholar

127. Insurance Contracts Act (Australia), s.28(1). See, for example, General Accident Insurance Co. Australia Ltd v. Kelaw Pty Ltd (1997) 10 ANZ Insurance Cases 61–369 Google Scholar. Compare Kerr J in Berger & Light Diffusers Pty Ltd v. Pollock [1973] Lloyd's Rep 442, at 463; Somers J in Avon House Ltd v. Cornhill Insurance Co Ltd (1980) 1 ANZ Insurance Cases 60–429 Google Scholar; see discussion above, and see, also, Itobar Pty Ltd v. Mackinnon & Commercial Union Assurance Co (1985) 3 ANZ Insurance Cases 60–610 Google Scholar; Pan Atlantic Insurance, supra, n.20.

128. Insurance Contracts Act 1984 (Australia), s.28(2). For recent detailed analysis of fraud, see FAI General Insurance Co Ltd v. McSweeney (1998) 10 ANZ Insurance Cases 61–400, at 74, 348–74, 354.Google Scholar

129. Advance (NSW) Insurance Agencies Pty Ltd v. Matthews (1989) 5 ANZ Insurance Cases 60–910 Google Scholar; (1989) 166 C.L.R. 606.Google Scholar

130. Ibid., at 75, 837; at 617.

131. Insurance Contracts Act 1984 (Australia), s.28(3). Generally, see Ball, M., “Reducing Claims under the Insurance Contract Act 1984,” (1992) 5 Insurance Law Journal 1.Google Scholar

132. See Advance (NSW) Insurance Agencies Pty Ltd v. Matthews (1989) C.L.R. 606 [in particular, the judgment of Deane J at 622 where he rejects (obiter) the analysis of this point in Advance (NSW) Insurance Agencies Pty Ltd v. Matthews (1987) 4 ANZ Insurance Cases 60–813 Google Scholar; Ferrcom Pty Ltd v. Commercial Union Insurance Co of Australia Ltd (1993) 176 C.L.R. 332 Google Scholar affirming Commercial Union Assurance Co of Australia Ltd v. Ferrcom (1991) 22 N.S.W.L.R. 389 Google Scholar; Zurich Australian Insurance Ltd v. Contour Mobel Pty Ltd (1990) 6 ANZ Insurance Cases 60–984, at 76,559Google Scholar; Duthie v. Rolf H Wick & Association (Aust) Pty Ltd (1994) 8 ANZ Insurance Cases 61–223 Google Scholar. See Australian Law Reform Commission, Report on Insurance Contracts (No. 20,1982), paras 192,194. Also see notes to draft Bill in Appendix A of the Commission's Report, p.184, and Derrington, D. K., “Liability Insurance and the Insurance Contract Act: Where Do We Stand?,” Qld Law Soc Journal 5 (1990)Google Scholar, at 11; see, also, the comments of Brookings J in Twenty-first Maylux Pty Ltd. supra, n.96 at pp.76, 306–76, 307; and Derrington, D. K. & Ashton, R., The Law of Liability Insurance (1990), pp.172–173 Google Scholar. See, also, dicta of Hanson J in Burns v. MMI-CMI Insurance Ltd (1994) 8 ANZ Insurance Cases 61–228 Google Scholar, and Sutton, K., “An Assured's Duty of Disclosure” 23 Australian Business Law Review 225 (1995).Google Scholar

133. For example, in Ayoub v. Lombard Insurance Co (Aust) Pty Ltd (1989) 97 F.L.R. 285 Google Scholar, Rogers CJ was not prepared to conclude, on the whole of the evidence, that the insurer would not have issued the cover note had the misrepresentation not been made by the insured. His Honour found that “the practice of the [insurer] was not sufficiently uniform,” (at 287). See also Bauer Tonkin Insurance Brokers v. CIC (1996) 9 ANZ Insurance Cases 61–298.Google Scholar

134. Australian Law Reform Commission, Report on Insurance Contracts (No 20, 1982), para. 196.Google Scholar

135. Plasteel Windows (Aust) Pty Ltd v. CE Heath Underwriting Agencies Pty Ltd (1989) 5 ANZ Insurance Cases 60–926, at 75, 970 and 75, 971, per Cole J.Google Scholar

136. See, for example, Von Braun v. Australian Associated Motor Insurers Ltd (1999) 10 ANZ Insurance Cases 61–419.Google Scholar

137. Insurance Contracts Act 1984 (Australia), s.29(1)(c).

138. Ibid., s.29(1)(d). See also the Life Insurance Act 1945 (Australia), s.83 which gives special treatment to mis-statements of the age of the life insured. By virtue of S.86A of the Life Insurance Act 1945 (Australia), s.83 does not apply to or in relation to a policy to which the Insurance Contracts Act 1984 (Australia) applies.

139. Insurance Contracts Act 1984 (Australia), s.29(2).

140. Whether under s.29(2) or s.29(3) or otherwise.

141. See the Insurance Contracts Act 1984 (Australia), s.29(2), (3), (4), (5), (6).

142. See, for example, Carter Bros v. Renouf (1962) 111 C.L.R. 140.Google Scholar

143. For a discussion of proportionality , see the English Law Commission, Report on Insurance Law, Non-Disclosure and Warranty (Law Com No 104, 1980), para. 4.7Google Scholar; Australian Law Reform Commission, Report on Insurance Contracts (No 20, 1982), paras 188–190.Google Scholar

144. Section 83 will continue to regulate the position as far as contracts not covered by the Insurance Contracts Act (Australia) are concerned—essentially, contracts of life insurance entered into before 1 Jan. 1986. See the Life Insurance Act 1945 (Australia), S.86A.

145. As enshrined in ss.12 and 13 of the Act.

146. Insurance Contracts Act 1984 (Australia), sections 31(1), (2). See Von Braun v. Australian Associated Motor Insurers Ltd (1999) 10 ANZ Insurance Cases 61–419.Google Scholar

147. (1989) 5 ANZ Insurance Cases.Google Scholar

148. The expression is that of Callaghan, “The New Insurance Legislation” (Seminar Paper for the Law Society of South Australia, 17 April 1986), p.18.

149. Insurance Contracts Act 1984 (Australia), section 31(3).

150. Idem.

151. Insurance Contracts Act 1984 (Australia), section 31(4).

152. Ibid., s.31(l). See, for example, Von Braun v. Australian Associated Motor Insurers Ltd (1999) 10 ANZ Insurance Cases 61–419.Google Scholar

153. 1957; Cmnd 62.

154. Ibid., para. 14. See also English Law Commission, Report on Insurance Law, Non-Disclosure and Breach of Warranty (Law Com No 104, 1980), para. 4.58; NSW Law Reform Commission, Insurance Contracts: Non-Disclosure and Misrepresentation [1983] L.R.C. 34.

155. [1975] 2 Lloyd's Rep 465 Google Scholar ; see also Kelsall v. Allstate Insurance Co Ltd, The Times, 20 March 1987 (CA).

156. [1975] 2 Lloyd's Rep 465 at 491Google Scholar. A similar lament is expressed in the joint judgment of Richardson and Hardie Boys JJ in State Insurance General Manager v. McHale (1992) 7 ANZ Insurance Cases 61–103 at 77, 439Google Scholar where they state: “the law in New Zealand as to materiality and the duty of disclosure is not satisfactory. It can lead to uncertainty and injustice. It is unfortunate that it was not addressed when the 1977 reforms were enacted. The test of the reasonable assured has much to commend it.” See also the comments of Cooke P in this case; (1992) 7 ANZ Insurance Cases 61–103 at 77,433.Google Scholar

157. Insurance Law, Non-Disclosure and Breach of Warranty (Law Com No 104,1980). The Commission notes of para 9.1 that: “The English law concerning non-disclosure and warranties has been strongly criticised by our courts and by academic writers. The fact that its full application is capable of causing hardship to persons who insure in their private capacity is already recognised by the measures of self-regulation adopted by the insurance industry in the Statements of Insurance Practice. However, we have no doubt that these do not provide any adequate substitute for the reform of the law which is clearly needed, particularly since they leave the insurer in the position of judge and jury as to whether or not the full rigour of the law should be applied in individual cases.”

158. Meng, Tan Lee, Insurance Law in Singapore (2nd edition, 1997)Google Scholar, at 150–151, observes that “While it is accepted that disclosure of material facts by the insured is necessary to protect the insurer's interests, the law has leaned too much in favour of insurers on many occasions.”

159. The Contracts and Commercial Law Reform Committee in New Zealand delivered two major reports on insurance law; namely, Aspects of Insurance Law (1975)Google Scholar and Aspects of Insurance Law (2) (1983)Google Scholar. Extensive reforms to the law of insurance were enacted in the Insurance Law Reform Act 1977 (NZ) and in the Insurance Law Reform Act 1985 (NZ). These reforms are discussed in detail in Tarr, A. A. and Kennedy, J. R., Insurance Law in New Zealand (2nd edition, 1992)Google Scholar. While written statements in proposals and other documents are the subject of express controls (see, for example, Insurance Law Reform Act 1977 (NZ), ss.4, 5), general duty of disclosure reform has not been promulgated.

160. See Sutton, K., Insurance Law in Australia and New Zealand (1980), p.104.Google Scholar

161. Roselodge Ltd v. Castle [1966] 2 Lloyd's Rep 113 at 132.

162. Joel v. Law Union & Crown Insurance Co [1908] 2 K.B. 863 at 864Google Scholar; Guardian Assurance Co Ltd v. Condogianis (1919) 26 C.L.R. 231 at 245Google Scholar; Home v. Poland [1922] 2 K.B. 364 at 367Google Scholar; Roome NO v. Southern Life Association of Africa (1959) 3 S.A. 638 Google Scholar; Anglo-African Merchants Ltd v. Bayley [1970] 1 Q.B. 311 at 319.Google Scholar

163. Report on Insurance Contracts (No 20,1982), para. 180. Generally, see the Insurance (Amendment) Act 1983 (NSW); noted by Sutton, K. (1984) 12 A.B.L.R. 215.Google Scholar

164. Ibid.

165. First report, April 1975, para. 29.

166. See Sampson v. Gold Star Insurance Co Ltd [1980] 2 N.Z.L.R. 742 Google Scholar; Barnaby v. South British Insurance Co Ltd (1980) 1 ANZ Insurance Cases 60–401.Google Scholar

167. See, for example, Woolcott v. Sun Alliance and London Insurance [1978] 1 W.L.R. 493.Google Scholar

168. Section 7(4).

169. Damages could be assessed along the lines advocated by the Australian Law Reform Commission in their Report on Insurance Contracts (No 20, 1982), para. 188; that is, by notionally treating the non-disclosure as a term of the contract, damages would be the difference between the cost to the insurer of bearing the risk it has agreed to bear and the cost to the insurer of bearing the actual risk.

170. For example, the Minors Contracts Act 1969; the Illegal Contracts Act 1970; the Contractual Mistakes Act 1977; the Contractual Remedies Act 1979; the Credit Contracts Act 1981 and the Contracts (Privity) Act 1982. See also Insurance Contracts Act (1984) (Australia), ss.21, 22.

171. Insurance Law in Singapore (2nd edition, 1997), p.151.Google Scholar

172. Ibid., p. 152.

173. As discussed above, pursuant to s.22 of the Insurance Contracts Act 1984 (Australia) an insurer is required before a contract of insurance is entered into to clearly inform the insured in writing of the general nature and effect of the duty of disclosure, and non-compliance with this provision would relieve an insured from liability for non disclosure, except where that failure to disclose was fraudulent. Similarly, in Singapore, the Insurance Act Cap 142, Rev Ed 1994, s.24, makes it mandatory for the insurer to warn the insured in the proposal form for insurance that non-disclosure or misrepresentation of a material fact could lead to loss of benefits under the policy.

174. Report of Insurance Law Reform (1997, London).Google Scholar

175. See recommendations 4, 5 and 6.

176. See the Australian Law Reform Commission, Report on Insurance Contracts (No 20, 1982), para. 177, 183, 193.

177. See, for example, KPMG 1999 Insurance Industry Survey.

178. Insurance Law Reform, The Response of the Association of British Insurers to the National Consumer Council Report 1997 (1997, London: ABI).Google Scholar

179. See, for example, paras 2.1, 2.2, 9.1, 9.2.

180. See Discussion Paper 63, at para. 6.68.

181. See Discussion Paper 63, at para. 6.68.

182. See, for example, Clarke, M., “The marine insurance system in common law countries: status and problems.” Paper: Marine Insurance Symposium, Oslo, 4–6 06 1998 Google Scholar; Schoenbaum, T., “Warranties in the law of marine insurance: some suggestions for reform of English and American law” (1999) 23 Tulane Maritime Law Journal 1 Google Scholar; Luxford, D., “The Marine Insurance Act: Chronologically Challenged Legislation?” Paper: MLAANZ Annual Conference, Wellington, 5–8 Nov. 1995 Google Scholar; Derrington, S., “The Law Relating to Non-Disclosure, Misrepresentation and Breach of Warranty in Contracts of Marine Insurance: A Case for Reform”, Ph.D Thesis, University of Queensland, Australia (1998).Google Scholar

183. This is recognised by the Australian Law Reform Commission particularly in the light of possible moves towards harmonisation of international marine insurance regimes: See Discussion Paper 63, para. 2.34.

184. Supra, n.20.

185. See Insurance Contracts Act 1984 (Australia), s.9A; inserted by the Insurance Law Amendment Act 1998 (Australia), s.3.

186. Cf: Discussion paper 63, para. 2.27.