The claimant's insurers avoided its Commercial Combined Insurance policy following a fire at the premises, after they discovered that the claimant had failed to disclose two criminal convictions of its owner. The claimant then brought a professional negligence claim against its insurance brokers. It alleged that the brokers had failed to pass on information to the insurers and also that the brokers had breached their duty of care by failing to highlight the importance of disclosure. Much of the case therefore turns on the particular facts. The judge found as follows:
(1) Allegation that brokers failed to pass on information: Although the judge accepted that the claimant's owners gave plausible evidence (and were more likely to remember specific conversations than the brokers, who dealt with large numbers of clients on a daily basis), and had no motive to only disclose the convictions when an insurable event had occurred, he found in favour of the brokers on this issue. He accepted that, if they had been told (and the claimant alleged they had been on three separate occasions), the brokers would have appreciated the importance of the convictions and would have taken action.
(2) Allegation that brokers failed to elicit information or highlight the importance of disclosure: The claimant accepted (the judge said rightly) that there was no general rule that specific oral advice as to material disclosure must be given, or a specific enquiry regarding a material piece of information must be made. The judge held that the brokers had not breached their duty on the facts of this case. Although a lot of documentation had been sent to the claimant, the material paperwork was limited in amount and clearly highlighted: "The explanations of the duty of full disclosure of material facts were clear and full and attention was properly drawn to them; they were not tucked away where they might not be seen". There was no need to specify that convictions are material facts.
In reaching this conclusion, the judge also noted that it is the court, and not the particular profession, which is the "ultimate arbiter of the applicable standard". Although it is usual to require expert evidence, there is no rule of law that expert evidence is required in every professional negligence case: "expert evidence is not required if the practice or conduct complained of has no rational basis or is so obviously unsupportable as to require no such evidence for it to be found to be negligent". However, in this case, a lack of expert evidence was said to have limited the possibility of finding that the brokers had breached their duty of case. ICOBS guidance had not supported the claimant's arguments either.
In any event, the judge held that an oral explanation of the duty of full disclosure would not have made any difference, since the claimant's owner had had a "cavalier" attitude and had signed the relevant forms in a reckless manner.