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'''Summary'''
In this judgment, the Court of Appeal upheld the decision at first instance and - in the context of insurance claims - applied the full rigour of the fraudulent device devices doctrine as expressed (obiter) in the case of The “Aegeon”. It declined to introduce any element of proportionality in its application. The Court also held that the forfeiture of the claim as a consequence of the application of the doctrine was not contrary to Article 1 of the European Convention on Human Rights as enacted into English law.
This case note is based on an article that appeared in a ‘Briefing’ published by the London solicitors Waltons & Morse, authored by Kish Sharma, a barrister at the firm, and Christopher Chatfield, a partner in the firm
With regard to the first legal issue, the Court recognised that the decision in the “Aegeon” was obiter and that none of the relevant authorities was binding on the Court of Appeal. Nevertheless, the Court held that there were “several [in fact six] powerful reasons” why that case should be applied by the Court of Appeal as a matter of binding ratio. These were that:
(1) The “Aegeon” was authoritative ;
(2) The “fraudulent devices” doctrine shared the same basis (that is, the obligation of utmost good faith) as the rule as to fraudulent claims and the same rationale, that is, of deterring fraud on the insurer ;
(3) It had the same public policy justification as the rule as to fraudulent claims ;
(4) The Law Commissions of both Scotland and England in their recent reports considered the “fraudulent devices” doctrine and the “Aegeon” itself to be good law ;
(5) Authority for the doctrine antecedent to the “Aegeon” could be found and
(6) The “Aegeon” had been cited “without disapproval” in a number of subsequent cases and in n most leading textbooks .
The Court then went on specifically to consider the proportionality of the rule which had concerned the Judge so greatly. It noted that the question of proportionality had received no or only limited consideration in the authorities. However, the Court considered that it was precisely the draconian effect of the rule that gave the doctrine its deterrent effect and therefore its justification .
