Insurance Contracts CP - Law Reform Commission

and deny enforceability. The leading case is Wall and Wall v The New Ireland Assurance Co. 177 the
plaintiff, with the connivance of agents of the defendant insurance company, took out a number of policies
in his own name or the life of his mother, ostensibly under section 50(1)(a) of the 1936 Act, that is, to
cover reasonable expenses in connection with the death and funeral of his mother. The first two policies
were regarded as being potential losses, given the premiums and his mother‘s longevity, so three
additional policies were taken out as a form of insuring himself against such a remote loss on the first two
policies. While the five policies in question produced an assured sum that would not in itself have been
regarded as an unreasonable amount, the Supreme Court endorsed the trial judge‘s view that these later
three policies were gaming policies and therefore illegal under section 1 of the 1774 Act. The Supreme
Court also reasoned that it was possible to approach this case from the perspective of illegality even
through, on the facts, knowledge of the illegal purpose as between the proposer and the insurer‘s agents
could not be attributed to the insurer. Walsh J, giving the main judgment for the Supreme Court 178 stated:
―It does not appear to me that an insurance company should, nor is it contended for by the
respondents in this case, in the absence of knowledge on its own part be at the mercy of the
secret and undisclosed intentions of the person effecting such a policy of insurance if, on the
face of it, the transaction is legal. If, therefore, the plaintiff, Mark Wall, while ostensibly
effecting these five policies for the purpose of funeral expenses had the secret intention of
using three of them as a form of insuring himself against financial loss on the first two policies,
that fact or intention alone would not, even if proved to exist at the time, invalidate or render
illegal the policy. On the other hand I am satisfied that if it can be proved not merely that the
plaintiff had that intention but had communicated that intention to the Assurance Company or if
the Company had actual or imputed knowledge of that intention at the time the policy was
effected, the policy would, notwithstanding its ostensible purpose, be illegal.‖
(4) Pleas of illegality
2.104 While public policy considerations are sometimes used to explain why the law requires an
insurable interest to be shown by an insured – ―if the insured was not to have a property at the time of the
insurance or loss, any one might insure another‘s house, which might have a bad tendency to burning
houses‖ 179 – it should be noted that the insurable interest requirement is not the only means of deterring
fraudulent claims based on deliberate acts of destruction, for example. An assured cannot recover on the
foot on an insurance policy in respect of a loss caused by this own criminal or tortious act. 180 If the
deliberate act has caused a loss which is the natural or probable result of that act then the necessary
causal element will be present: Hardy v Motor Insurer‟s Bureau. 181 Clearly in cases where the insured is
found by a court to have deliberately set fire to his property there can be no right to enforce a fire
insurance policy, eg Michovsky v Allianz, 182 but the High Court ruled, in Gray v Hibernian Assurance
Co, 183 a case in which the (deceased) insured was suspected of having commissioned others to set fire to
his Dundalk public house, that the onus rests on the insurer to show the illegal bargain. The fact that in
177
178
179
180
181
182
183
[1965] IR 386.
Ó Dalaigh CJ, Walsh, Lavery, Kingsmill Moore and Haugh JJ.
Lord Chancellor Hardwicke in Sadler‟s Company v Badcock (1743) 1 Wils KB 8.
See generally MacGillivray, Insurance Law 11 th ed (Sweet & Maxwell 2008) Chapter 14.
[1964] 2 QB 745. Even negligent conduct causing loss may be caught in certain instances: Gray v Barr
[1971] 2 Q.B. 554. On moral hazard and Gray v Barr situations in South Africa, see Van Niekerk, ―The
Bloody-handed, Homicidal Beneficiary and the Materialisation of the Life Insurance Risk‖ (2009) 21SA Merc
LF 126, distinguishing international conduct and unlawful or wrongful conduct, citing Ellison Kahn, Bloody
Hand! Wills and Crime (2003).
[1964] IEHC 43.
High Court, 27 May 1993. For a decision of the Financial Services Ombudsman see July-December 2006
Complaints. Here, an insurer refused to honour an accident cash plan, suspecting the injury had occurred in
the cause of an illegal act. No criminal proceedings were possible. Applying Articles 34.1 and 38.1 of the
Constitutioon, the Ombudsman directed the insurer to pay the claim.
58