3.1 Insurer satisfies burden and avoids policy (England and Wales)

In the case of Genesisuk.net v Allianz Insurance Limited1, the claimant (G) sought to recover from the insurer (A) losses arising from a fire at its premises. A sought to avoid the policy on the basis (which G denied) that the fire had been deliberately set or procured by a Director of G. The precise legal basis of the policy avoidance is not apparent from the judgment, although a policy (rather than simply a claim) may be avoided in cases of fraud, either pursuant to a policy term, by operation of the common law rule to this effect, or by virtue of a breach of the continuing duty of utmost good faith.

The court held that A bore the burden of proof and that the test was the balance of probabilities “commensurate with the gravity of the charge”. Proof of motive is not a conclusive factor, but will be persuasive. It is not necessary to produce a seamless proof or “smoking gun”. Inferences will be used to fill gaps, so long as there is some credible evidence and ambiguities are not fatal. If there is sufficient unambiguous evidence against him, the insured’s previous reputation and respectability will not save him from adverse judgment.

Applying these principles and on the basis of the evidence before it, the court was satisfied that overall A had shown to the required high standard that G’s Director, or someone acting on his behalf, had deliberately caused the fire. A was therefore entitled to avoid the policy. The case is a useful reminder of the principles that the courts will apply in deciding such questions.

The full judgment can be found here: http://www.bailii.org/ew/cases/EWHC/QB/2014/3676.htm