Cometsambre SA v Lloyd’s Insurance Company SA HIG 5321 - The Lowlands Mimosa
DMC/INS/26/02
England
Cometsambre SA v Lloyd’s Insurance Company SA HIG 5321 (The “Lowlands Mimosa”)
English Commercial Court: Butcher J: [2026] EWHC 1837 (Comm): 21 July 2026
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2026/1837.html
Guy Blackwood KC and Jamie Hamblen (instructed by Birketts) for Cometsambre (Insured)
Timothy Hill KC and Alex Carless (instructed by HFW) for Lloyd’s (Insurer)
MARINE INSURANCE: CHARTERERS’ LIABILITY POLICY: FREIGHT, DEMURRAGE & DEFENCE POLICY: VESSEL CHARTERED BY INSURED SUFFERED BULK SCRAP METAL CARGO FIRE CASUALTY ON BOARD: INSURER PURPORTED TO AVOID POLICIES, DENIED LIABILITY AND RETURNED PREMIUM TO INSURED: WHETHER INSURED BREACHED ITS DUTY OF FAIR PRESENTATION OF THE RISK WHEN RENEWING POLICIES FOR 2022 POLICY YEAR BY FAILURE TO DISCLOSE TO INSURER FIVE FIRES THAT DURING 2020 AND 2021 HAD OCCURRED IN ITS BULK SCRAP METAL ON QUAYSIDE AND VESSELS: WHETHER INSURER ENTITLED TO AVOID POLICIES: INTERPRETATION AND APPLICATION OF SECTIONS 3, 4, 5, 7 & 8 AND SCHEDULE 1 OF THE INSURANCE ACT 2015 (“IA”) TO FACTS OF CASE
Summary
The Insured had had policies in place with the Insurer since 2008 during which time only one stevedore damage claim had been made, one grounding claim threatened and no cargo fires disclosed. The policies were written on the basis that the bulk scrap metal cargoes handled by the Insured were non-hazardous. Unsafe scrap metal cargoes and other hazardous materials were excluded from the policies.
The High Court held that the Insured was in breach of its obligation to make a fair representation of the risk at the time the Charterers’ Liability (“C/L”) and Freight, Demurrage & Defence (“FD&D”) policies were renewed for the 2022 policy year. It had failed to disclose to the Insurer the fact that there had been, during the course of 2020 and 2021, two fires in the Insured’s stockpile of bulk scrap cargo ashore on its quayside and three fires on board vessels. In particular, the Insurer was held not to have waived its right to disclosure, had not been put on notice and was not presumed to know of the fires.
The High Court also held that the breach of the duty of fair representation had induced the Insurer to renew cover for the 2022 policy year because - had the fires been disclosed to the Insurer - it would not have renewed the policies on any terms because of the materially adverse increase in the risk, when the bulk scrap metal shipped no longer fitted the description of non-hazardous.
The High Court accordingly held that the Insurer had been entitled to avoid the policies, deny liability and return the premium paid to the Insured.
Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and Deputy Editor of DMC’s Case Notes
Background
The Insured was a Belgian bulk scrap metal merchant based in Ghent from where it shipped its cargoes from its quayside on board vessels it voyage chartered for delivery to its buyers and receivers abroad. Insurance policies were first placed in 2008 and renewed via brokers with the Insurer to cover L/C and FD&D risks.
The policies were subject to English law and jurisdiction and underwritten on a premium and on a basis that reflected only non-hazardous bulk scrap metal cargoes would be shipped, with cover for various types of dangerous scrap metals and other hazardous materials associated with such scrap being excluded from the policies.
One of the Insured’s cargoes was shipped on board the bulk carrier vessel “Lowlands Mimosa” in June 2022, which led to a fire on board and gave rise to a substantial claim being made against the Insured under the charterparty.
On discovering that there had been two fires in the cargo stockpile at the quayside and three on board vessels during 2020 and 2021, which the Insured had not disclosed during the 2022 policy year renewals, the Insurer purported to avoid the policies, denied liability, and returned the premium paid.
The Insured in response commenced High Court proceedings in London and claimed declarations that the Insurer was liable to indemnify it is respect of the charterparty claim and also in respect of its legal costs associated with the fire and the arbitration commenced by the shipowner against it under the charter.
Judgment
Having dealt with the background, the key facts, the policy terms, the key sections of and schedule to the Insurance Act 2015 (“IA” – fns.1-6) and the parties’ evidence and submissions, the Judge turned to analyse the case.
The Judge considered that the level of fire risk to be expected in the Insured’s scrap metal cargoes, despite such cargoes being expected to have a level of impurities, would be understood to be low, given the description of the cargoes and the exclusions in the policies. As a result, the Judge considered that a prudent underwriter would be expected to be influenced by the nature of the original presentation of the risk, in 2008, and by what was implied as to what such cargoes would consist of and their non-hazardous nature.
The Judge accepted the opinion evidence of the Insurer’s underwriting expert that a prudent underwriter would have wanted to take the two fires on the quayside and the three fires on board the vessels into account in deciding whether to write the risk, and that the patterns of the fires experienced made it particularly clear that they ought to have been disclosed.
The Judge also considered that the fact the Insured had not identified any particular reason why there had been an increase in the incidence of fires did not mean that they were not material to be disclosed. To the contrary, the Insured should have been very concerned as to why it could not identify the cause, despite having put measures in place to avoid such incidents.
The Judge, accordingly, considered it both credible and reasonable that the judgment of a prudent underwriter would be affected by knowledge of the fact and pattern of the fires experienced by the Insured when compared to what would have been expected of the Insured’s cargoes.
The Judge did not accept that the Insurer had been put on notice of the need to make any further enquiries under s.3(4)(b) of the IA by being informed of the nature of the cargoes and their knowledge of the general risks of such business, when they knew at the outset that there was at that stage no claims history and the Insurer had not since asked the Insured to fill in an updated questionnaire in subsequent years or asked for any further information about risk management, losses, incidents, claims or fires. The Judge considered this to be an improper attempt to reverse the burden of proof, because the burden of ensuring a fair presentation of the risk fell primarily on the Insured.
As to what the Judge considered the Insurer could be expected to know, it sufficed to say that, in relation to what insurers are presumed to know of the relevant circumstances under s.3(5)(d) of the IA, it was not established that the Insurer was presumed to have knowledge of the incidence of any of the five relevant fires, or of the fact that such fires must have been experienced by the Insured. That was particularly so after a long period in which there were no fires at all, with five fires then all happening over a period of 18 months.
Further, there was, in the Judge’s view, in relation to a waiver of disclosure by insurers under s.3(5)(e) of the IA, no waiver of disclosure by the Insurer simply because the Insured had only been asked at inception, in 2008, to provide its claims history and had not since been asked to fill in an updated questionnaire in subsequent years, nor to provide any further information about risk management, etc. None of that would have communicated to a reasonable insured that the Insurer was only concerned with the Insured’s claims history and was indifferent about whether fires may give rise to claims. It had, on the contrary, been clear at the outset that the enquiries made by the Insurer were designed to ensure that fire-risky cargo was not covered.
The Judge accepted the evidence of the actual underwriter that, if the earlier fires on board the vessels and on the quayside had been disclosed, he would not have renewed the policies on any terms. This was for two reasons. First, the premium earned was low, and so the simple fact that the fires occurred would not have made writing the business, in the face of the real risk of a fire on board a vessel potentially resulting in a large claim, a commercially viable proposition. Second, it was evident that there was a recurring pattern of fires in the cargoes, increasing in frequency, and so the likely cause of the fires was attributable to the poor quality of the cargoes being loaded and transported, probably due to a failure properly to sort the material before shipment. So, it was not a question of the level of premium or the deductible; renewal, therefore, would have been declined, because the fires that had occurred in 2020 and 2021 showed an increased risk profile.
For the above reasons, the Judge held that the Insurer was entitled to avoid the policies and to have returned the premium to the Insured as it had done. Accordingly, the Insured’s claim for declarations was dismissed.
Comment
This judgment is a good illustration of how the duty to make a fair presentation of the risk to underwriters reflects that contracts of insurance are founded on the parties acting in good faith when agreeing cover. The insurance market is reliant on being given material information that is relevant to assessing the risk being presented, in order to determine whether the business should be written and, if so, the premium that should be charged and on what terms to reflect the risk.
The judgment affirms that the burden is primarily on insureds to make a fair presentation of the risk. The fact that underwriters may be aware of the general risks of the business, may not make further enquiries before renewals and may be aware of a prior or a lack of claims history does not, absent good reason, give grounds to challenge avoidance for a material non-disclosure.
Footnote 1: Insurance Act 2015 Section 3 -
“The duty of fair presentation
(1) Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk.
(2) The duty imposed by subsection (1) is referred to in this Act as ‘the duty of fair presentation’.
(3) A fair presentation of the risk is one—
(a) which makes the disclosure required by subsection (4),
(b) which makes that disclosure in a manner which would be reasonably clear and accessible to a prudent insurer, and
(c) in which every material representation as to a matter of fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.
(4) The disclosure required is as follows, except as provided in subsection (5)—
(a) disclosure of every material circumstance which the insured knows or ought to know, or
(b) failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances.
(5) In the absence of enquiry, subsection (4) does not require the insured to disclose a circumstance if—
(a) it diminishes the risk,
(b) the insurer knows it,
(c) the insurer ought to know it,
(d) the insurer is presumed to know it, or
(e) it is something as to which the insurer waives information.
(6) Sections 4 to 6 make further provision about the knowledge of the insured and of the insurer, and section 7 contains supplementary provision.”
Footnote 2: Insurance Act 2015 Section 4 –
“Knowledge of insured
…
(3) An insured who is not an individual knows only what is known to one or more of the individuals who are—
(a) part of the insured’s senior management, or
(b) responsible for the insured’s insurance.
…
(6) Whether an individual or not, an insured ought to know what should reasonably have been revealed by a reasonable search of information available to the insured (whether the search is conducted by making enquiries or by any other means).
(7) In subsection (6) ‘information’ includes information held within the insured’s organisation or by any other person (such as the insured's agent or a person for whom cover is provided by the contract of insurance).
(8) For the purposes of this section—
…
(c) ‘senior management’ means those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised.”
Footnote 3: Insurance Act 2015 Section 5 –
“Knowledge of insurer
(1) For the purposes of section 3(5)(b), an insurer knows something only if it is known to one or more of the individuals who participate on behalf of the insurer in the decision whether to take the risk, and if so on what terms (whether the individual does so as the insurer’s employee or agent, as an employee of the insurer's agent or in any other capacity).
(2) For the purposes of section 3(5)(c), an insurer ought to know something only if—
(a) an employee or agent of the insurer knows it, and ought reasonably to have passed on the relevant information to an individual mentioned in subsection (1), or
(b) the relevant information is held by the insurer and is readily available to an individual mentioned in subsection (1).
(3) For the purposes of section 3(5)(d), an insurer is presumed to know—
(a) things which are common knowledge, and
(b) things which an insurer offering insurance of the class in question to insureds in the field of activity in question would reasonably be expected to know in the ordinary course of business.”
Footnote 4: Insurance Act 2015 Section 7 –
“Supplementary
(1) A fair presentation need not be contained in only one document or oral presentation.
(2) The term ‘circumstance’ includes any communication made to, or information received by, the insured.
(3) A circumstance or representation is material if it would influence the judgement of a prudent insurer in determining whether to take the risk and, if so, on what terms.
(4) Examples of things which may be material circumstances are—
(a) special or unusual facts relating to the risk,
(b) any particular concerns which led the insured to seek insurance cover for the risk,
(c) anything which those concerned with the class of insurance and field of activity in question would generally understand as being something that should be dealt with in a fair presentation of risks of the type in question.
(5) A material representation is substantially correct if a prudent insurer would not consider the difference between what is represented and what is actually correct to be material.
…”
Footnote 5: Insurance Act 2015 Section 8 –
“Remedies for breach
(1) The insurer has a remedy against the insured for a breach of the duty of fair presentation only if the insurer shows that, but for the breach, the insurer—
(a) would not have entered into the contract of insurance at all, or
(b) would have done so only on different terms.
(2) The remedies are set out in Schedule 1.
(3) A breach for which the insurer has a remedy against the insured is referred to in this Act as a "qualifying breach".
(4) A qualifying breach is either—
(a) deliberate or reckless, or
(b) neither deliberate nor reckless.
...”
Footnote 6: Insurance Act 2015 Schedule 1 –
“Other breaches
3 Paragraphs 4 to 6 apply if a qualifying breach was neither deliberate nor reckless.
4 If, in the absence of the qualifying breach, the insurer would not have entered into the contract on any terms, the insurer may avoid the contract and refuse all claims, but must in that event return the premiums paid.
…”
