Whitlam v Andrew Hazel for Lloyds Syndicate 260 (t/a K6M Motor Policies At Lloyds)

In a contract of motor insurance, the duty of disclosure is shaped by the questions in the proposal form. An insurer may avoid for an innocent material non-disclosure where the omission induced the contract on the relevant terms; deceit is unnecessary. “Occupation and nature of business” is not confined to paid employment. It may require disclosure of wider occupational activity, including training to become a professional golfer. An answer describing the applicant only as a shop assistant was materially incomplete when the employer and golf-related business details were also omitted. Travel to an annual residential course or occasional amateur competitions was not realistically travel to and from a place of work other than the permanent workplace.

The insurer sought declarations that it was entitled to avoid the appellant’s motor insurance policy for non-disclosure. The policyholder had been working as a shop assistant while undertaking training through the Professional Golf Association to become a professional golfer. The Chelmsford County Court, before His Honour Judge Thompson, declared that the insurer could avoid the policy because the appellant had not disclosed that he was a trainee golf professional and had not disclosed intended use of the vehicle to and from a workplace other than his permanent workplace. The non-disclosure was found to be innocent. The appeal challenged both aspects of that declaration.

Scott Baker LJ gave the leading judgment. May LJ and Auld LJ agreed with his reasons and conclusions.

1. Disposition. The appeal was allowed to the limited extent that the declaration concerning use of the vehicle to and from a place of work other than the permanent workplace was discharged. The principal finding that the insurer was entitled to avoid for non-disclosure of the appellant’s occupation remained upheld.
2. Duty of disclosure. The assured must disclose facts material to the insurer’s appraisal of the risk which are known, or deemed known, to the assured but not to the insurer. Avoidance is available where the non-disclosure induced the contract on the relevant terms. Deliberate deceit is unnecessary. The court referred to the approach stated by Lord Denning MR in McNealy v Penine Insurance Co Ltd [1978] RTR 285, including the relevance of information known to the insured’s broker.
3. Scope of the proposal form. Questions in a proposal form may enlarge or limit the duty of disclosure. They must therefore be construed carefully. The reference to occupation and nature of business required the insurer to be given the whole picture and was not confined to paid employment.
4. Application to the occupation. The appellant’s training, golf-related work environment and activities made trainee golf professional the correct description of his occupation. The answer stating only that he was a shop assistant, coupled with the materially incomplete employer and address information, was incomplete and misleading. The underwriting evidence showed that disclosure of the golf-related information would have caused the proposal to be rejected, establishing materiality and inducement. The broker acted as the appellant’s agent, and the innocent character of the non-disclosure did not prevent avoidance.
5. Use of the vehicle. The appellant properly answered no to the question about transport to and from various places of work. Travel to an annual course and occasional amateur competitions was not realistically travel to and from places of work. May LJ emphasised that the decision turned on its unusual facts and did not decide broad questions about motor-insurance proposal forms.

• Court of Appeal (Civil Division): In [2004] EWCA Civ 1600, allowed the appeal to the limited extent of discharging the declaration concerning travel to a place of work other than the permanent workplace, while upholding the insurer’s right to avoid for non-disclosure.
• Chelmsford County Court: His Honour Judge Thompson declared that the insurer could avoid the policy for non-disclosure that the appellant was a trainee golf professional and intended to use the vehicle to and from another workplace. The non-disclosure was found to be innocent.