Insurance Contracts CP - Law Reform Commission

eference to the plain and ordinary meaning approach to the construction of the warranty 30 , or via contra
proferentem interpretation of the warranty 31 , exact compliance remains the proposers primary obligation.
The old Irish case of Quin v National Assurance Company 32 held that the misdescription of the property
and usage of property was by the policy made a matter of warranty, not a representation, and in such a
case ―the materiality of the misdescription is then out of the question‖.
(6) A breach discharges the insurer from liability on the contract, even if the loss has no
connection with the breach or that the breach has been remedied before the loss
5.12 In the first situation covered by this fourth element, in MacGillivray‘s summation 33 of the law
relating to insurance warranties, the warranty is unaffected by any causation argument. A warranty that a
motor vehicle is in a roadworthy condition when it is not will allow the insurer to avoid the policy even if
the vehicle is damaged or destroyed by an unrelated event such as a fire in the premises where the
vehicle is garaged. 34 A promissory warranty to maintain a fire alarm which is not observed will be likely to
allow the insurer to decline to refuse to pay out a claim in respect of flood damage relating to the insured
property. 35 The second situation is illustrated by De Hahn v Hartley, 36 considered above; many of the
cases are marine insurance cases where an unseaworthy vessel is put into a seaworthy state prior to the
risk of loss or damage materialising, to no avail to the proposer. Rectification of the factual position
constituting the breach of warranty will not avail the insured.
(7) Amelioration of the strict rules relating to warranties
5.13 In relation to the duty of full disclosure, it has been shown that Lord Mansfield‘s formulation of
the duty 37 was tempered by a number of exceptions and that both the duty and the exceptions have been
gathered up into statutory form in s.18 of the Marine Insurance Act 1906. While Lord Mansfield did not
undertake a similar balancing exercise in relation to warranties, later judges have tried to minimise these
rules relating to warranties under the guise of seeking to interpret the contract in such a way as to give
effect to the intentions of the parties. Some examples may be instructive.
5.14 Warranties that prescribe a limited remedy or require materiality to be shown will limit the right
to avoid the policy. London Loan and Savings Co of Canada v Union Insurance Co of Canton Ltd 38
supports the view that, absent a stipulated right to avoid the policy, an insurer may recover only damages
or the relief actually set out in the contract. Repudiation of a claim without repudiation of the policy is not
possible: West v National Motor & Accident Insurance Union Ltd. 39
5.15 Some judges show a reluctance to view a warranty as a promissory or a continuing warranty.
Some courts will favour a warranty as being declaratory of existing facts and as not speaking to future
events. Sweeney & Kennedy‟s Arbitration 40 is the leading Irish case in which a question phrased as to
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eg Yorke v Yorkshire Insurance [1918] 1 KB 662; Rohan Construction Ltd v Insurance Corporation of Ireland
Ltd [1986] ILRM 419.
eg Weir v Northern Counties of England Insurance Company (1879) 4 LR (IR) 260; Sweeney and Kennedy‟s
Arbitration [1950] IR 85.
(1839) Jo & Car 316.
Paragraph 10-003.
Dawsons v Bonnin [1922] 2 AC 413; Farrell v SE Lancashire Insurance Co [1933] IR 36; O‟Callaghan v Irish
National Insurance Co (1934) 68 ILTR 248.
Law Commissions Consultation Paper (2007) paragraph 1.14.
(1786) 1 TR343; Foley v Tabor (1861) 2F&F 663
In Carter v Boehm (1766) 3 Burr.1905.
[1925] 4 DLR 676; Wood v Dwaris (1856) 11 Exch.493.
[1955] 1 All ER 800, This is a controversial decision but the judges view with ―distaste‖ the conduct of the
insurer in using an error that could have been an innocent mistake for rejecting a claim (Romer LJ at p.803).
[1950] IR 85.
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