Super Chem Products Llt v American Life & General Insurance Co Ltd & Others (2004)

Privy Council
[2004] UK PC2
Lords Bingham, Steyn, Hope, Rodger and Sir Kenneth Keith
January 2004

The Claimant insured, Super Chem, appealed from the decision of the Court of Appeal of Trinidad & Tobago which dismissed its claims against the Defendant insurer, American Life, for sums due under two insurance policies. American Life alleged that Super Chem's two actions had been commenced out of the time prescribed in the policies, that the fire was caused by the arson of Super Chem or with its complicity and that Super Chem had breached the claims co-operation provision in each of the policies.

In support of its case, Super Chem relied on Viscount Haldane's opinion in Jureidini v National British & Irish Millers Insurance Co Ltd (1915) AC 499, to the effect that by alleging fraud an insurer was thereby giving up the right to invoke other conditions of the policy. In other words that American Life, by alleging fraud, had lost the right to rely on any breach of the claims provisions.

It was held that, properly understood, American Life's defence of arson was not a repudiation of the contract but a defence based on the contract. It had not accepted any repudiatory breach as terminating the contract. Arguments based on Jureidini had to be rejected. It was stated, in terms, that Viscount Haldane's observations do not represent good law. The Court of Appeal held that contract law cannot and does not prevent an insurer from resisting a claim on alternative bases, when involving an allegation of fraud and the other breaches of policy conditions. It would be contrary to principle and business common-sense, which underpin English commercial law, to require an insurer to choose between alleging fraud, thereby abandoning the right to invoke other conditions of the policy, or to rely on those provisions, thereby giving up the right to allege fraud. It was held that Viscount Haldane's statement in Jureidini has "bedevilled our commercial law for too long".