3.1. Insurer’s onus in proving fraudulent non-disclosure (Australia)
The recent NSW Supreme Court case of Poole v Chubb Insurance Company1 is illustrative of the difficulties faced by insurers in proving fraudulent non-disclosure.
Mr Poole was a director of Doyles Creek Mining P/L (DCM). DCM was granted a mining exploration license by the former NSW Minister of Mineral Resources. Mr Poole was subsequently investigated by the NSW Independent Commission Against Corruption (ICAC) regarding the granting of this license.
Mr Poole sought indemnity for his legal costs relating to the ICAC inquiry under a directors and officers liability policy issued by Chubb. Chubb sought to avoid the policy due to fraudulent non-disclosure (pursuant to s28(2) of the Insurance Contracts Act). Chubb’s insurance proposal form required disclosure of any facts or circumstances known that might afford valid grounds for a future claim. Mr Poole did not make any disclosure. However, Chubb alleged that Mr Poole knew:
- That DCM’s submissions to the Minister (the Submissions) in applying for the mining license contained false or misleading statements.
- Public controversy regarding the granting of the license had emerged.
- These facts indicated that a public inquiry into Mr Poole’s conduct was possible.
The Court disagreed and ordered Chubb to indemnify. In doing so, the Court noted that Chubb bore the onus of proof, and the test for fraud required that the Court have an “actual persuasion of the mind” that, on the balance of probabilities, Mr Poole subjectively knew that the information provided to Chubb was false. While the Court found the Submissions did include some misleading statements, Chubb could not prove that Mr Poole knew these statements were misleading at the time. Nor could Mr Poole (or any reasonable person) have known at the time that media reports into the granting of the license would lead to a public inquiry.
The full text of this decision can be found at:http://www.caselaw.nsw.gov.au/decision/54a640003004de94513dcace
3.2. Conflict of laws: competing jurisdiction clauses (England and Wales)
In AmTrust Europe Ltd (A) v Trust Risk Group SpA (T), (A) applied for a mandatory injunction against (T) requiring payment of approximately €32 million into a bank account, an amount which (A) claimed (T) had misappropriated. (T) denied misappropriating money and challenged the Court’s jurisdiction, arguing that the dispute between the parties should be heard in an Italian arbitration.
In determining the above, Blair J had to consider competing jurisdiction and arbitration clauses in different agreements between the parties. In 2010, (A) and (T) had entered into a Terms of Business Agreement (TOBA) which was subject to English law and jurisdiction. In 2011, the parties and (A)’s parent company entered into a Framework Agreement which included the TOBA as a schedule. The Framework Agreement contained an Italian law and jurisdiction clause.
Blair J noted that where there are competing law and jurisdiction clauses, the “one-stop” presumption set out by Lord Hoffman (obiter) in Fiona Trust & Holding Corp v Privalov & ors would carry considerable weight. That is, that unless there was some rational reason for disputes to be determined by different tribunals, it was more likely that both parties intended one set of jurisdiction and dispute resolution provisions to govern the agreement between them.
Blair J accepted (A)’s claim that the two agreements were dealing with different subject matters: the TOBA dealt with premium whereas the Framework Agreement dealt with exclusivity. As such different choices of law and jurisdiction clauses might be expected. Further, he distinguished the case from the Fiona Trust“one-stop” presumption because the agreements had been entered into at different times. He decided that the arbitration clause applied only to the Framework Agreement and that the English court had jurisdiction in accordance with the TOBA. (T) has appealed the decision. The case is a useful guide to the principles the English court will apply in determining jurisdiction where there are competing law and jurisdiction clauses.
The full judgment can be found here: http://www.bailii.org/ew/cases/EWHC/Comm/2014/4169.html
3.3. Allianz Vie fined €50 million (France)
By decision of 19 December 2014, the French Prudential Control Authority (“Autorité de contrôle prudentiel et de resolution”, ACPR) imposed a heavy fine on Allianz Vie for not having set up an effective system to find beneficiaries of unclaimed life insurance policies. The decision is mainly based on the finding that Allianz Vie had not, until recently, organised itself in order to properly implement the law of 17 December 2007 (the law) which imposes a duty on insurance companies to search for beneficiaries of life insurance contracts who have not declared themselves after the death of the insured.
Allianz Vie has criticised the decision which, according to the insurer, does not take into account the substantial financial and human efforts which have been made to implement the law.
Before Allianz Vie, two other insurers, BNP Paribas Cardiff and CNP Assurances, had already been sentenced in 2014 on the same grounds (with fines of €10 million and €40 million respectively).