The insured’s daughter was involved in a motor vehicle collision, for which she accepted she was liable. At the time of the collision the vehicle was insured by Allianz. The policy has been renewed by the insured’s daughter on her behalf.
Following an investigation, Allianz found that the insured’s driver’s licence had previously been suspended. The insured had failed to disclose the licence suspension upon renewal. Allianz declined to indemnify the daughter (an authorised driver of the insured vehicle) on the basis that it would not have renewed the policy if the licence suspension had been disclosed
The defendant contested the denial of her claim. Both the insured and her daughter claimed they had no knowledge of the licence suspension.
Hall & Wilcox acted for Allianz in this dispute. At the hearing, Allianz defended the claim principally on the grounds of non-disclosure. Complex circumstances surrounded the question of whether the insured and her daughter knew about the licence suspension. Magistrate Smith ultimately found that while the insured did not know her licence had been suspended, her daughter did.
Despite this finding, Magistrate Smith found that the insured’s daughter did not act as her mother’s agent because she had acted solely in her own interest (as the main driver of the insured vehicle). Given that the daughter’s claim was made as a third party beneficiary under section 48 of the Insurance Contracts Act 1984, Magistrate Smith found that she had no duty of disclosure.
Allianz appealed the decision arguing that, by renewing the policy on the insured’s behalf, the daughter must have been acting as her agent. It followed that she was obliged to disclose the licence suspension. Associate Justice Mukhtar upheld the appeal, finding that Magistrate Smith made an error of law in his conclusion that the daughter was not the insured’s agent.
Associate Justice Mukhtar held that an agent’s knowledge will be imputed to its principal for the purpose of section 21 of the Insurance Contracts Act, which codifies the duty of disclosure. In reaching this conclusion, he noted that it would be illogical to excuse an agent from making a disclosure of a matter which the agent knows is relevant to the insurer’s decision to accept the risk.
|This case confirms that the knowledge of an agent will be imputed to its principal with respect to the principal’s duty of disclosure under section 21 of Insurance Contracts Act 1984, even if the agency relationship is informal and arises in a domestic or family context.|