Agapitos v Agnew (The Aegeon)
The use of a fraudulent device to promote a claim, such as a lie told to strengthen it, was treated as a fraudulent claim, a rule later qualified by the Supreme Court in The DC Merwestone.
Facts
The Aegeon, a passenger vessel undergoing repairs, was destroyed by fire. The insurance policy contained a warranty that no hot work would be carried out on board. The owners claimed under the policy, and in the course of the litigation, the insurers alleged that the owners had lied about the hot work being carried out, in order to support the claim. The question was whether the use of fraudulent devices to promote a claim forfeited the claim.
Legal principle
The Court of Appeal held that the use of a fraudulent device or means to promote a claim should be treated as a sub species of making a fraudulent claim, so that the insured would forfeit the claim, at least where the fraud was directly related to the claim, intended to improve the insured's prospects of obtaining a settlement or winning the case, and would, if believed, tend to yield a not insignificant improvement in those prospects. Mance LJ also held that the duty of good faith in section 17 of the Marine Insurance Act 1906 did not apply after litigation had begun. The Supreme Court later held in The DC Merwestone that a lie which is irrelevant to the insurer's liability does not forfeit the claim.
Related cases on coverage, causation, claims and subrogation
- Castellain v Preston (1883) 11 QBD 380
- Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] AC 649
- Galloway v Guardian Royal Exchange (UK) Ltd [1999] Lloyd's Rep IR 209
- Global Process Systems Inc v Syarikat Takaful Malaysia Berhad (The Cendor Mopu) [2011] UKSC 5
- Gray v Barr [1971] 2 QB 554
- Lexington Insurance Co v AGF Insurance Ltd [2009] UKHL 40, [2010] 1 AC 180
- Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350
- Lord Napier and Ettrick v Hunter [1993] AC 713
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