Insurance Contracts CP - Law Reform Commission

non-disclosure or misrepresentation to defeat a claim successfully, rather than raise the
seemingly more complicated issue of fraud. Those cases that to exist have arisen in the
claims context and are all of very recent origin. Historically Irish insurers have relied on indirect
and unrelated defences to avoid paying what they believed to be a fraudulent claim. With
many of these defences no longer available, insurers nofaced by what they believe to be a
fraudulent claim are forced to confront head-on the issue of fraud. 56
4.50 Both Lord Hershell‘s speech and the extract from MacGillivray were applied in McAleenan v
AIG (Europe) Ltd. 57 The plaintiff was employed as a solicitor in the practice of Michael Lynn & Co. Mr
Lynn was the principal and in preparing an application for professional indemnity cover Mr Lynn stated on
the proposal form that the plaintiff was a partner in the firm. After holding that this was both untrue and a
material misstatement, Finlay Geoghegan J went on to consider whether the misstatement was fraudulent
in the light of two further findings, (1) that the plaintiff did not know of Mr Lynn‘s misstatement, (2) she
signed the form on behalf of the practice, in Mr Lynn‘s absence from his office. Finlay Geoghegan J
continued:
―Neither of the above findings precluded a finding of fraud in the making of the false statement
if the untrue statement was made ―recklessly‖, in the sense that the term was used in Derry v
Peek, ie careless as to whether the statement be true of false. It is clear that ―careless‖ for this
purpose is not the same as when used in relation to the tort of negligence. The carelessness
must be something greater, if it is to constitute recklessness for the purposes of fraud. As
pointed out by Lord Herschell, in the extract from his speech referred to above, a statement
may be considered as made recklessly where the circumstances are such that the Court
considers that the maker can have no real belief in the truth of what he states. It appears to
require an objective consideration by the Court as to whether the circumstances in which the
plaintiff signed the Proposal Form (and, by doing so, made the representations or statements
contained therein) were so careless as to whether the statements were true or false that the
Court must conclude that she could have had no real belief in the truth of the statements
contained in the Proposal Form….On her own evidence, notwithstanding that the Form, when
presented to her for signature, had been completed, she did not read the answers given in
relation to her status in the practice and was unaware of the type of person by whom the Form
was required to be completed and signed, notwithstanding the express statement at the start of
the Form and the description immediately under which she signed. As already stated her
actions must be considered in the context of the obligations of ‗utmost good faith‘ in relation to
the completion of a proposal form for insurance of which she was or ought to have been aware.
Considering the matter from the plaintiff‘s potential belief in the truth of the statements made in
the competed Proposal Form, as on her own evidence, she was unaware of what statements
she was making by signing the Form, - and was unaware of the person expressly required to
sign the Form. It is not possible for me to conclude that she had any belief in the truth of the
statements made.‖ 58
4.51 Irish case-law on fraudulent misrepresentation does not suggest that the law contains any
critical problems generally. The question whether fraud raises any particular difficulties in terms of
consumer confusion in particular was considered by the Law Commissions in the 2007 Joint Consultation
Paper and again in the 2009 Report and Draft Bill. The proposals on avoidance for fraud generally follow
common law patterns. Indeed, while the Consumer Insurance (Disclosure and Representations) Bill 2011
56
57
58
Corrigan & Campbell, A Casebook of Irish Insurance Law (Oak Tree Press 1994) at 322
[2010] IEHC 128. See also Goldsmith Williams v Travellers Insurance [2010] Lloyd‘s Law Reports IR 309.
[2010] IEHC 128, at paras 123-4. Contrast Odyssey Cinemas Ltd v Village Theatres Three Ltd [2010] NICh 1,
[2010] NICA 25, above, on the negligence/recklessness boundary. Furay v Eagle Star and British Dominions
Insurance (1922) 56 ILTR 23, 109.
104