The defendant was convicted of causing death by careless driving in an accident in which a passenger died (and another was severely injured). Three motor insurers had a potential liability in respect of claims arising from the accident: (1) the claimant, which had issued a policy to the defendant in relation to another vehicle (a motorhome) which included an extension covering the driving of other vehicles; (2) Insurer A, which had similarly issued a policy for another vehicle which included an extension for driving other vehicles; and (3) the insurer of the vehicle involved in the accident.
The claimant brought proceedings seeking a declaration that it was entitled to avoid its policy under the Consumer Insurance (Disclosure and Representations) Act 2012 ("the 2012 Act"). The defendant did not attend the hearing and judgment was given in favour of the claimant. Insurer A then sought to set aside that judgment under CPR r40.9 which allows "a person who is not a party but who is directly affected by a judgment or order" to apply to set the judgment or order aside.
The judge accepted that Insurer A was materially and adversely and directly affected by the judgment against the defendant. The discharge of a co-insurer of identical status to Insurer A from any liability in relation to a very substantial claim meant that "Put simply, the bill goes up substantially".
The judge was then required to determine whether there was a real prospect of Insurer A obtaining a different result from the judgment. He held that, on the fact, there was not.
The insured had failed to take reasonable care when answering the following question: "Have you or any person who will drive the motorhome had any accidents, claims, damage….involving any motor vehicle….during the past 5 years whether or not a claim was made and regardless of blame?"
The insured had disclosed a windscreen claim (which had not cost his insurer any money) but failed to disclose an accident 2 years earlier which was caused by his wife (who was to be insured to drive the motorhome) whilst she was driving another vehicle.
Insurer A had sought to argue that the question had been "rolled-up" and the ABI has issued guidance that such questions can be difficult for consumers to answer. The judge pointed out that the 2012 Act "does not make any reference to trade or other guidance" and that "the correct approach is to give primacy to the 2012 Act".
The question was described by the judge as "objectively straightforward, clear and specific" and was answered by "a person who clearly knew what was required and also, given the detail in the answer: why".
Although the covering letter sent to the insured at the time had not stressed the importance of correct answers and a specific warning in the terms and conditions had been small and hard to read, "the question itself was clear and the answer showed that the effect of an accident upon the obtaining of insurance was well appreciated". The claimant was entitled to rely on the statutory presumption that a consumer knew that a matter was relevant to the insurer where a clear and specific question was asked.
Nor did it matter that the claimant had decided to return the premium, even though premium need not be returned under the 2012 Act if the qualifying misrepresentation is deliberate or reckless, unless that would be unfair to the consumer. The judge apparently accepted the argument that an insurer will often return the premium in order to avoid a dispute as to whether it would be unfair to retain it. It was also "a curiosity; but no more" that the insured had disclosed his wife's accident to another insurer. Furthermore, even if the insured had not known the value of the loss arising from his wife's accident, he should have disclosed the accident and the claimant could have obtained more details elsewhere.
Finally, the claimant gave evidence as to what it would have done had the wife's accident been disclosed. The judge concluded that that evidence could not be challenged, even though no supporting internal documentation was produced, and that Insurer A's counsel "goes too far when he argues that a relatively straightforward assertion within a witness statement by a person who has been employed within the insurance industry for 25 years and in a role that involves day-to-day management of the company's underwriting operations in the UK, cannot be taken at face value without extensive supporting disclosure".
There was therefore no real prospect of obtaining a different result and Insurer A's application failed.
COMMENT: The 2012 Act lists a number of factors to be taken account by the court in determining whether a consumer has taken reasonable care. These include "(b) any relevant explanatory material" and "(c) how clear, and how specific, the insurer’s questions were". In this case, the judge took the view that (c) could outweigh (b), especially where a question is partially answered by the insured.