Judgment - Reinsurance Focus

one has ever suggested that it is necessary to disclose the name
of the person interested in her who is desiring to insure or
reinsure his interest. . . . . .”
28.
As in the case of all such observations, this passage must be read in the context of the issues
that arose in that case. If that is done it will be seen that Scrutton J. was not seeking to
expound any general principles of law but was addressing himself to a particular issue
before the court, namely, whether in accordance with the ordinary practices of the
marine insurance market the defendant brokers were bound to disclose to the plaintiff
insurers the fact that the risks they were seeking to reinsure had been written by their
partners at a higher premium than that being proposed to the plaintiffs. In that context
one can understand why neither the judgment of another underwriter as to the
premium to be charged nor the identity of the proposed reinsured were material
matters. In my view the judge's remarks have limited application to a case such as the
present, save for his insistence that there had to be true disclosure of the ship and the
perils affecting her.
29.
Whether any particular circumstance is or is not material is a question of fact which the court
is usually invited to determine after hearing evidence from those who have practical
experience as underwriters. It is not a question which can be determined on the basis
of the agreed facts. I can understand that in many cases the identity of the undisclosed
principal will be a matter of indifference to the insurer, but I should be surprised if
that were so in the case of Sembawang since its right to be treated as a co-assured
would be likely to affect the insurers' ability to pursue a claim against it in the name
of CPL. It is no answer, as Mr. Kealey pointed out, to say that any claim by the
insurers under the Completion Contract would in any event have been met by a
counter-claim for breach of clause 15.12. At the time of the placing the insurers were
not aware of that clause and were therefore entitled to assess the risk on the basis that
they would be entitled to pursue a claim against the yard if the circumstances
otherwise justified it.
Mr. Flaux submitted that the insurers had in any event waived disclosure of Sembawang's
position as an undisclosed principal by including it as a co-assured under the terms of
the so-called 'Additional Assureds' clause, by the very fact that the law permits an
undisclosed principal to sue on the contract and by including in the 'Additional
Assureds' clause an undertaking to waive their rights of subrogation against anyone in
respect of whom Sea Trucks or CPL asked them to.
I am unable to accept any of those submissions. For the reasons given earlier I am unable to
accept that the clause in question bears the meaning suggested by Mr. Flaux and
therefore I do not accept that it rendered Sembawang a co-assured. The fact that the
law generally recognises the right of an undisclosed principal to sue and be sued on a
contract does not relieve the nominal insured from the duty to make full disclosure of
all material circumstances in each case, including any which may relate to his
undisclosed principal. That is essential to ensure a fair presentation of the risk to the
insurer. Although no attempt has been made to identify the terms of the 'Waiver of
Subrogation' clause to which the slip refers, I see no reason to think that the insurers