Lloyd's Maritime and Commercial Law Quarterly
ENGLISH INSURANCE DECISIONS 1996
Charles Mitchell*
A. Regulation
1. Fuji Finance Inc. v. Aetna Life Insurance Co. Ltd 1
Nicholls, V.-C., determined as a preliminary issue in the litigation between the parties that a policy issued by the insurer was not a contract of insurance for the purposes of the Life Assurance Act 1774, s. 1, that the insurer had therefore issued the policy in breach of the Insurance Contracts Act 1982, s. 16 (which prohibits insurance companies from carrying on any activities otherwise than in connection with or for the purposes of their insurance business), but that this fact did not render the policy unenforceable. The insurer appealed.
Held (C.A.): The policy in question was an insurance contract for the purposes of the Life Assurance Act 1774, s. 1, and so was void for failure to comply with that section (this aspect of the court’s judgment is considered below, at para. 12).
It followed that there was no need for the court to decide the s. 16 point. However, speaking obiter, Morritt, L.J., thought that the effect of s. 16 was not to invalidate policies issued in breach of the section, while Sir Ralph Gibson, and Hobhouse, L.JJ., took the opposite view, that the section would render such policies void.
Comment: Their Lordships found it difficult to come to a clear decision on the effect of s. 16, Hobhouse, L.J., remarking that “it has been a matter of judicial comment now for over 50 years that Parliament causes unnecessary uncertainty by enacting provisions which prohibit or render unlawful activities or actions without saying at the same time what is to be the effect (if any) on the validity or enforceability of the transactions referred to”. It seems inevitable that the point will resurface in the courts before long; in the meantime, insurers would be unwise to assume that they can rely on contracts entered into in breach of s. 16.
2. R. v. Wilson (Rupert) 2
The defendant was convicted by Judge Crawford, Q.C., and a jury in the Birmingham Crown Court of carrying on an unauthorized insurance business, contrary to the Insurance Companies Act 1982. He appealed from his conviction on the ground that he had never
* Lecturer in Law, King’s College London. I am most grateful to Adam Fenton for drawing some of these cases to my attention, and for providing me with a copy of the Court of Appeal’s judgment in The Star Sea. But responsibility for errors and for the views expressed here is mine alone.
1. Decided 4 July 1996. Reported [1996] 3 W.L.R. 871; [1996] 4 All E.R. 608; [1996] L.R.L.R. 365. Noted Young [1996] Int. I.L.R. 363. Nicholls, V.-C.’s decision at first instance is reported at [1995] Ch. 122.
2. Decided 25 July 1996. Reported [1996] The Times, 14 August.
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