(c) Any circumstance as to which information is waived by the insurer…”
Since the disclosure obligation of the agent under section 19 is expressly subject to the provisions of section 18 as to circumstances which need not be disclosed, it was argued, the insurers’ waiver of Chase’s duty relieved Heaths also and thus operated to relieve Chase of any liability as principal.
This is not in my opinion a tenable argument. For reasons which are readily understandable in the commercial context, the insurers relieved Chase of its usual obligation to disclose. It could not be supposed that the insurers did not require any disclosure of information of material circumstances, only that they were not looking to Chase to get it. Phrase  makes plain that the insurers were not waiving disclosure of information of any material circumstances but were relieving Chase of its disclosure obligation altogether. Chase relied in argument on the rhetorical question posed by Saville LJ in Société Anonyme d’Intermediaries Luxembourgeois v Farex Gie  LRLR 116 at p 157:
“Why should it be a breach of good faith sufficient to deprive the assured of his contract if the agent fails to disclose something which, had the assured known of it, would not have had to have been disclosed by the latter?”
But on the present assumed facts the answer is clear: it is a breach because the insurers have chosen to rely not on disclosure by Chase, distanced from the detail of the transaction, but on disclosure by the agent, actively involved.
It was common ground, and rightly so, that phrase , read with phrase , precludes avoidance of the policy by the insurers on the ground of innocent misrepresentation by Heaths: if the phrase does not have that effect, it has no effect at all. But the parties were divided as to how much further protection the phrase gives to Chase and in particular whether its effect is to deny Heaths’ authority to speak for Chase and whether it denies the insurers their usual remedies if Heaths were guilty of negligent or fraudulent misrepresentation.
Chase contended that the effect of phrase  is to deny the authority of Heaths to speak for Chase. The Judge and the Court of Appeal both rejected this argument:  1 Lloyd’s Rep 30, paras 47, 70;  2 Lloyd’s Rep 483, para 144. These decisions were plainly correct. There is nothing in the clause which could reasonably be understood as denying or restricting the implied and apparent authority of Heaths as Chase’s agent.
In submitting that phrase  does not deny the insurers their usual legal remedies for negligent misrepresentation by Heaths, the insurers drew sustenance from the well-known principles propounded by Lord Morton of Henryton giving the judgment of the Board in Canada Steamship Lines Ltd v The King  AC 192 at p 208. There can be no doubting the general authority of these principles, which have been applied in many cases, and the approach indicated is sound. The Courts should not ordinarily infer that a contracting party has given up rights which the law confers upon him to an extent greater than the contract terms indicate he has chosen to do; and if the contract terms can take legal and practical effect without denying him the rights he would ordinarily enjoy if the other party is negligent, they will be read as not denying him those rights unless they are so expressed as to make clear that they do. But, as the insurers in argument fully recognised, Lord Morton was giving helpful guidance on the proper approach to interpretation and not laying down a code. The passage does not provide a litmus test which, applied to the terms of the contract, yields a certain and predictable result. The Courts’ task of ascertaining what the particular parties intended, in their particular commercial context, remains.
In relation to negligent misrepresentation, the key to the understanding of phrase  in my view lies in the provision that Chase shall have “no liability of any nature…”. This is comprehensive language, clearly chosen to give Chase an extended immunity. It cannot refer simply to the liability of Chase to suffer the avoidance of the contract, since that is the subject of express provision in phrase . So the language must be intended to preclude the liability of Chase for damages under section 2(1) of the 1967 Act for any negligent misrepresentation by Heaths and also any right of the insurers to avoid the policy on that ground.
I find nothing commercially surprising in this interpretation, from the viewpoint of Chase or the insurers. In a complex transaction of this kind, the possibility that Heaths as agent might make and fail to correct a representation which was later held to be both untrue and negligent would be very real. Chase, distanced from the transaction, would have little knowledge of what was represented and little opportunity to correct it. It could reasonably seek protection against loss or diminution of its security on such a ground. The insurers for their part might reasonably accept this chink in their armour, recognising that their rights against Heaths in such an eventuality would remain unimpaired.
Does phrase  then operate to protect Chase against any liability for damages or any risk of avoidance if the insurers should be induced to enter into the contract by any fraudulent misrepresentation of Heaths acting as the agents of Chase? In submitting that such is the effect of the phrase, Lord Grabiner QC for Chase emphasised the comprehensive language already noted, “no liability of any nature”. Read literally, those words would cover liability for fraudulent misrepresentation, or deceit. If Chase’s security for its loan is to be cast-iron, the policy must stand even if induced by the deceit of Heaths.
This is not a negligible argument. But neither the Judge nor the Court of Appeal accepted it and I am satisfied that they were right not to do so. For, as Rix LJ observed more than once in his judgment (paras 160, 169), fraud is a thing apart. This is not a mere slogan. It reflects an old legal rule that fraud unravels all: fraus omnia corrumpit. It also reflects the practical basis of commercial intercourse. Once fraud is proved, “it vitiates judgments, contracts and all transactions whatsoever”: Lazarus Estates Ltd v Beasley  1 QB 702 at p 712, per Denning LJ. Parties entering into a commercial contract will no doubt recognise and accept the risk of errors and omissions in the preceding negotiations, even negligent errors and omissions. But each party will assume the honesty and good faith of the other; absent such an assumption they would not deal. What is true of the principal is true of the agent, not least in a situation where, as here, the agent, if not the sire of the transaction, plays the role of a very active midwife…
It is clear that the law, on public policy grounds, does not permit a contracting party to exclude liability for his own fraud in inducing the making of the contract. The insurers have throughout contended for a similar rule in relation to the fraud of agents acting as such…I do not however think that the question need be finally resolved in this case. For it is in my opinion plain beyond argument that if a party to a written contract seeks to exclude the ordinary consequences of fraudulent or dishonest misrepresentation or deceit by his agent, acting as such, inducing the making of the contract, such intention must be expressed in clear and unmistakable terms on the face of the contract…I think it clear that…the language of phrase  falls well short of what is required to meet Chase’s objective, as both the Judge (para 81(3)) and the Court of Appeal (paras 159, 160) held.
In relation to misrepresentation, phrase  adds nothing to phrase : there may be no avoidance for innocent or negligent misrepresentation, but the phrase does not, for reasons already given, apply to fraudulent misrepresentation. In relation to non-disclosure, there was some difference of opinion between the Judge and the Court of Appeal.
I think it plain, giving fair effect to the language of this phrase, that innocent or negligent non-disclosure by Heaths is to give the insurers no right to avoid the policy. The phrase refers to “any…non-disclosure by other parties…”; the English law on non-disclosure is widely recognised to be very strict; and any other reading would weaken Chase’s security to a point which would, it may be inferred, have been unacceptable to it. But fraudulent non-disclosure raises a more difficult problem.
The Judge held that phrase  did not exclude the insurers’ right to avoid the contract of insurance in circumstances where the breach of the independent duty of disclosure by Heaths was the result of deliberate concealment of material facts:  1 Lloyd’s Rep 30, paras 76–77. In the Court of Appeal, doubt was cast on the meaning of “fraudulent non-disclosure” ( 2 Lloyd’s Rep 483, para 165) and it was questioned whether the law had distinguished between innocent, negligent and fraudulent non-disclosure (paras 163, 168)…
…Rix LJ makes an important but uncontentious point: that silence, where there is a duty to speak, may amount to misrepresentation…Since an agent to insure is subject to an independent duty of disclosure, the deliberate withholding from the insurer of information which the agent knows or believes to be material to the risk, if done dishonestly or recklessly, may well amount to a fraudulent misrepresentation. If, in the present case, the insurers establish nondisclosure by Heaths of this kind, nothing in the truth of statement clause deprives them of their ordinary right to avoid the policy and recover damages against Chase and Heaths.
Whether, on the facts of this case, the insurers can establish any deliberate and dishonest or reckless non-disclosure by Heaths which does not amount to a misrepresentation, must be doubtful. In Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd  1 AC 501 at p 549, Lord Mustill pointed out that “in practice the line between misrepresentation and nondisclosure is often imperceptible.” But section 84 of the 1906 Act appears to accept the possibility of fraudulent non-disclosure and I do not think such possibility need be rejected on conceptual grounds. If it were to be established, I would agree with the Judge that phrase  does not exclude the insurers’ ordinary right to avoid.
I would for my part answer the preliminary issues in this way:
On the true construction of the contracts of or for insurance pleaded in the [amended] particulars of claim No 1999 Folio 1413 [the insurers’ action] and on the assumption that the facts and matters pleaded in those particulars of claim are true, the insurers are entitled in law
(a) to avoid and/or rescind the contracts of or for insurance against Chase on the grounds, but only on the grounds, of fraudulent misrepresentation or as regards the contracts of insurance fraudulent non-disclosure by Heaths as agent of Chase;
(b) to damages from Chase for, but only for, fraudulent misrepresentation by Heaths as agent of Chase and fraudulent non-disclosure by Heaths as agent of Chase if, but only if, such fraudulent non-disclosure by Heaths amounts to fraudulent misrepresentation.
On the Court of Appeal’s narrow point relating to fraudulent non-disclosure not amounting to misrepresentation, the insurers’ appeal succeeds, and should be allowed to that extent. The cross-appeal by Chase fails and must be dismissed.’
4.1.3 Proving Non-Disclosure
Expert evidence may be adduced by an insurer to assist the court in its determination of whether or not a non-disclosed fact is material (see Yorke v Yorkshire Insurance Co Ltd [1918–19] All ER Rep 877, per McCardie J; and Roselodge Ltd v Castle (below, )). The determination of materiality is necessarily a fact intensive exercise: see, for example, James v CGU Insurance plc  Lloyd’s Rep IR 206.
 Reynolds v Phoenix Assurance Co  2 Lloyd’s Rep 440
[The issue of reinstatement that arose in this case is considered in chapter 13, ; the insured’s failure to disclose a criminal conviction is considered below, .
‘Before coming on to the evidence itself I should consider one further preliminary point. In this branch of the law it is permissible for either side to adduce evidence relating to what would be regarded as material. The question at once arises, what is the nature of such evidence and what are the powers and duties of the Court in relation to it? Mr Wilmers maintains that the Court’s only duty is to listen to the evidence, decide whether the witness is telling the truth and, if he is, go on to decide whether he is a reasonable and prudent underwriter. If both decisions are favourable then the Court must act on that evidence. Now I should say at once that I am satisfied that all the insurance witnesses (and such witnesses are called by both sides) were truthful in so far as they dealt with factual questions and also that they all appeared to me to be at any rate prudent underwriters. So far as the word “reasonable” is concerned Mr Wilmers says this merely means “rational” and has none of the connotations of the word as used in the term the “reasonable man”. Apparently underwriters never ride on the Clapham omnibus.
Now I do not accept these arguments. In the first place the evidence of insurers called in this way is expert evidence in the sense that such witnesses are assisting the Court in deciding what a reasonable and prudent underwriter would or would not do. They are not to give evidence of what they themselves would do, because their evidence is expert, that is opinion evidence and not factual. They are to give evidence of what, in their opinion, having regard to the general practice of underwriters, a reasonable underwriter would do. There is a world of difference between saying — “A reasonable underwriter, in my opinion, would do so and so: I would do so myself”; and saying — “I would do so and so, and because I am a reasonable underwriter, it must follow that that is what a reasonable underwriter would do”. The former is unobjectionable expert evidence; the latter is not only logically fallacious but also not really acceptable evidence at all…The test of such a witness is not whether he is telling the truth, but whether he is giving an honest opinion. Further, in giving expert evidence such witnesses are only assisting the Court not deciding the matter.
It seems to me therefore that although I may derive assistance from such expert testimony as has been put before me, I am not bound to regard it as conclusive of what a reasonable and prudent underwriter would do.’
4.1.4 (iii) Scope of the Duty
It will be recalled that section 18 of the 1906 Act requires disclosure of all facts which are known or presumed to be known by the insured and which are material to the underwriter’s determination of the risk. Facts known or presumed to be known by the underwriter need not be disclosed. Decisions illustrating the scope of the insured’s duty of disclosure typically relate either to physical or moral hazard. The latter category is generally concerned with the insured’s claims history (including prior refusals to insure) or criminal past.
4.1.5 Physical Hazard
Physical hazard can pose problems especially in life or health insurance because an insured may not be aware that a particular condition is symptomatic of a more serious health risk. In Joel v Law Union and Crown Insurance Co (1908) 99 LT 712, Fletcher-Moulton LJ gave the following example:
‘I will suppose that a man has, as is the case with almost all of us, occasionally had a headache. It may be that a particular one of these headaches would have told a brain specialist of hidden mischief, but to the man it was an ordinary headache indistinguishable from the rest. Now, no reasonable man would deem it material to tell an insurance company of all the casual headaches he had had in his life, and if he knew no more as to this particular headache, there would be no breach of his duty towards the insurance company in not disclosing it.’
 Cook v Financial Insurance Co Ltd  1 WLR 1765 (HL)
[Cook effected disability insurance with FI commencing on 15 October 1992. The policy contained an exclusion clause which provided that: “No benefit will be payable for disability resulting from (a) any sickness, disease, condition or injury for which an insured person received advice, treatment or counselling from any registered medical practitioner during the 12 months preceding the commencement date…” The insured, who regularly went running, collapsed in July 1992 while on a training run. He saw his GP but she could find nothing untoward. On 4 September he again visited her complaining of pain and breathlessness while running. She thought he may be suffering from a viral infection but referred him by letter dated 7 September to a cardiologist to exclude the possibility of angina. On 16 October the insured was examined by the cardiologist who diagnosed angina. In December he was advised to give up work and he claimed under the policy on the ground that he was unable to work due to angina. The insurers refused payment relying on the exclusion clause.]
‘The questions which arise on these facts may be stated as follows. (1) Did the plaintiff receive advice, treatment or counselling for angina prior to 15 October? If not, (2) is it enough to bring the case within the exclusion that he received advice, treatment or counselling for symptoms which later turned out to be those of angina?
If, as I think, treatment for a disease requires some knowledge on the part of the doctor of the disease which he is treating, in order to bring the case within the exclusion clause, so advice for a disease must also require knowledge on the part of the doctor of the disease about which he is giving advice. A doctor does not give advice within the meaning of the clause by saying, “I do not know what is wrong with you; go and see another doctor.” The earliest date on which the plaintiff received advice for angina was therefore 16 October, when he saw Mr Flint. If on 7 September Dr Thorns had suspected angina, it might have been different. But on the facts as found by the judge, that was not the case. Dr Thorns did not suspect angina. She chose to exclude angina by getting a second opinion. But she might just as well have chosen to exclude respiratory disease.
I turn to the second question. Is it enough that the plaintiff received advice for symptoms which turned out to be those of angina? In my opinion the answer must also be “No,” unless the insurers can read the word “condition” as including symptoms of a generalised kind which might indicate any number of different diseases, or none…
The point is a narrow one, and made to seem all the narrower because the contract of insurance was concluded on the day before the plaintiff saw the consultant. But one can imagine cases where the timescale is much longer. Take a man who complains to his doctor that he is suffering from headaches. The doctor can find nothing wrong, and recommends a strong painkiller. Eventually it transpires that the man has a brain tumour. Can it really be said that he received advice for his brain tumour when he first went to see his doctor? Clearly not. Nor, I think, can it be said that he received advice for his condition.
At the other end of the scale one might take the case of a man with a very high temperature who is taken to an isolation hospital suffering from Cape Congo Fever or some other rare disease. Obviously he is receiving treatment within the meaning of the exclusion clause from the moment of his arrival in hospital, even though the disease cannot at first be diagnosed…
In the present case the plaintiff signed a declaration that he had not consulted a doctor other than for minor illnesses. When he came to read the exclusion clause he was entitled to assume that it related only to major illnesses for which he had consulted a doctor. It could not relate to minor illnesses with which, as the insurers had made clear from the form of the declaration, they were not concerned…I would allow the appeal.’
4.1.6 Moral Hazard
Previous convictions of the insured and connected persons
 Roselodge Ltd v Castle  2 Lloyd’s Rep 113
[The insureds who were diamond merchants effected an all risks policy with the insurers. The proposal form did not ask, and the insureds did not disclose, whether any of their employees had previous convictions. When the insureds sought to recover under the policy on the ground that R, their principal director, had been robbed of diamonds valued at some £304,590, the insurers repudiated liability on the basis of non-disclosure in respect of two material facts. First, R. had been convicted of bribing a police officer in 1946 and was fined £75. Secondly, M, the insureds’ sales manager, had been convicted of smuggling diamonds into the USA in 1956, and had been employed by the insureds within a year of his release from prison.]
‘In the course of time it was found that in many cases the evidence of underwriters if fully accepted would work serious hardship to assureds, particularly to dependents suing upon life policies, unless some check was imposed. Accordingly, though in some of the earlier cases to which I have been referred there are certain rather oblique references to the point, it was not until the case of Joel v Law Union and Crown Insurance  2 KB 863, that one finds in the judgment of Fletcher Moulton LJ, at p 883, a passage (which has been much debated before me and which learned Counsel for the defence submitted was wrong in law) in which the learned Lord Justice says this…:
“…There is, therefore, something more than an obligation to treat the insurer honestly and frankly, and freely to tell him what the applicant thinks it is material he should know. That duty, no doubt, must be performed, but it does not suffice that the applicant should bona fide have performed it to the best of his understanding. There is the further duty that he should do it to the extent that a reasonable man would have done it; and, if he has fallen short of that by reason of his bona fide considering the matter not material, whereas the jury, as representing what a reasonable man would think, hold that it was material, he has failed in his duty, and the policy is avoided. This further duty is analogous to a duty to do an act which you undertake with reasonable care and skill, a failure to do which amounts to negligence, which is not atoned for by any amount of honesty or good intention. The disclosure must be of all you ought to have realized to be material, not of that only which you did in fact realize to be so.”
…In my judgment…the judgment of Fletcher Moulton LJ in Joel’s Case contains, if I may respectfully say so, a correct statement of the law on the topic. It has the merit…of emphasising that even under the present practice of admitting expert evidence from underwriters as to materiality, the issue as to disclosability is one which has to be determined as it was in Lord Mansfield’s day by the view of the Jury of reasonable men.
…Each of [the expert] witnesses was emphatic in the view that in a jewellery insurance of this kind the moral hazard is important. Mr Archer defined the moral hazard as the risk of honesty and integrity of the assured, and, in the case of a company, the honesty and integrity of any executives or key personnel (though I think he meant the risk of dishonesty and lack of integrity). The moral hazard he considered of particular importance in the case of jewellery insurance, “because of the smallness and little weight of the jewellery and because in jewellery insurance there is often a lack of adequate documentation and jewellery is very easily disposed of.” This seems to me to be a reasonable view…
Turning now to the evidence of Mr Lindley and Mr Archer as to the materiality of Mr Rosenberg’s conviction 20 years before, it is true that both these witnesses stated in plain terms that they would not have written the risk had that fact been disclosed; but they were driven in cross-examination to state such extreme views that I am unable to accept their evidence on this point. It is not necessary to cite specific examples of their extreme views. But I would mention one. Mr Archer stated that in his view a man who stole apples at the age of 17 and had lived a blameless life for 50 years is so much more likely to steal diamonds at the age of 67 that if he had told him this when putting forward a proposal at the age of 67, he would not have insured him. Many other instances of the like character can be cited from the transcript…
In the result, I have come to the conclusion that it is not established to my satisfaction that Mr Rosenberg’s offence and conviction on a matter which has no direct relation to trading as a diamond merchant was a material fact which would have influenced a prudent underwriter. Furthermore if the test be that laid down by Fletcher Moulton LJ in Joel’s Case, sup., I am satisfied beyond any doubt that a reasonable business man would not have imagined for a moment that this was a matter which the proposer should have disclosed as material. If any relevant question had been asked in the proposal form and untruthfully answered, the position would clearly be quite different.
I now turn to the question of Mr Morfett’s conviction and engagement. In connection with this matter I find myself in some difficulty. Though Mr Lindley and Mr Archer and Mr Spratt gave very emphatic evidence as to their views of the materiality of this fact, no one of them gave evidence as to what their attitude would have been if they had been told the full story of Mr Morfett’s engagement and subsequent rehabilitation…
As it seems to me, the position must be viewed as at the date when the 1964 insurance or possibly the 1963 insurance was put forward. Would a prudent underwriter, having heard the whole story, have declined the risk or altered the premium, or, applying the Joel test, would a reasonable man at that date have thought that this whole story was a matter which was material to be disclosed?
In the course of the case and the submissions which followed it, Mr Caplan has sought to draw a distinction between smuggling goods through Customs and other offences of dishonesty…I do not imagine any reasonable person would suppose that when insuring his property against burglary he ought unasked to disclose to his underwriters that he or one of his trusted employees had on occasions brought through the Customs a bottle of brandy without declaring it, though this may involve a criminal offence.
But the matter involved here is different. Mr Morfett had been convicted of smuggling a large quantity of diamonds worth some $40,000 through the American Customs. It may be he was a mere carrier, but he was being party to a dishonest transaction.
After anxious consideration of the matter in all its aspects, I have reached the conclusion and so find that the average reasonable business man, though no doubt impressed by Mr Rosenberg’s charitable act in attempting and apparently succeeding in rehabilitating a man who had paid his penalty, would appreciate that Mr Morfett remained or might remain a security risk and that underwriters should have been given the opportunity to decide for themselves whether the story as a whole was one which would have influenced them in accepting the risk as offered for fixing the premium…
Though with great reluctance, in view of the conclusion I have reached as to the honesty of the claim and as to Mr Rosenberg’s charitable action towards Mr Morfett, I find that this plea of non-disclosure succeeds.’
 March Cabaret Club & Casino Ltd v London Assurance  1 Lloyd’s Rep 169
[The insureds, Mr and Mrs Skoulding, had effected a fire policy covering the premises of a club and restaurant owned by them. Upon renewal of the policy in April 1970, Mr Skoulding failed to disclose that he had committed the offence of dishonestly handling stolen goods in June 1969 for which he was convicted at the Old Bailey in June 1970. He was fined £2,000.]
‘Be it noted also that whereas there is a presumption that matters dealt with in a proposal form are material, there is no corresponding presumption that matters not so dealt with are not material. If any authority were required for that proposition one can find it in the case of Schoolman v Hall [above, ]…
In the light of some of the evidence, particularly that of Mr Edmunds, I was concerned at one stage in this case about how one could reconcile the presumption of innocence and the privilege of non-incrimination with the duty of disclosure on the facts as I have outlined them. After argument I realise that my doubts were based upon a fallacy. One must remember that there is no estoppel by acquittal save as between the Crown and the person acquitted. There is nothing to prevent one party to civil proceedings, if the fact be material and relevant, attempting to prove that another party to those proceedings has in truth committed a crime of which that other party has been previously acquitted in a criminal Court. See Gray v Barr  2 QB 554 [chapter 10]…Thus, even if Mr Skoulding had been acquitted prior to the renewal in April, 1970, there would in this case have been nothing to prevent insurers attempting to prove that he had nevertheless committed the offence. If they had succeeded and if Mr Skoulding had, as here, failed to disclose that he had committed the offences, then this would, notwithstanding his acquittal, have been a material non-disclosure entitling insurers to avoid the policy. No one has a right to a contract of insurance, and if a proposer has committed a criminal offence which is material and ought to be disclosed he must disclose it, despite the presumption of innocence, which is only a presumption, and despite the privilege of non-incrimination, which is only a privilege — or he must give up the idea of obtaining insurance at all.
There is one thing, however, which I would like to add. Had it been material I would have been prepared to hold in this case that in any event Mr Skoulding ought to have disclosed the fact of his arrest, charge and committal for trial at the date of renewal, even though in truth he was innocent. What I do not agree with and would not be prepared to accept, although Mr Edmunds in his evidence sought to say to the contrary, is that if, prior to renewal, Mr Skoulding had been acquitted, there would then have been any duty on him to disclose his arrest, committal and acquittal — unless that acquittal was unjustified because he had in fact committed the offence and insurers were prepared so to allege and to prove it. To suggest that a proposer should disclose an acquittal when insurers do not propose to challenge it is in my judgment erroneous and seeks to point a path which, as at present advised, I firmly decline to tread.’
 Lambert v Co-operative Insurance Society  2 Lloyd’s Rep 465 (CA)
[In April 1963 the insured effected an “All Risks” policy covering her own and her husband’s jewellery. At this time she was not asked and did not disclose her husband’s conviction some years earlier for receiving stolen cigarettes for which he was fined £25.00. The policy contained a condition which provided that it would be ipso facto void if there was non-disclosure of a material fact. The policy was renewed each year. In December 1971 the insured’s husband was again convicted for offences involving dishonesty and sentenced to a prison term. This was not disclosed at the next renewal. In April 1972 the insured claimed for lost or stolen items of jewellery. The insurers repudiated liability].
‘I too would dismiss this appeal. While Mr Lewis has been able to refer to a number of judgments…in which the language suggested that it is only what a reasonable proposer would consider relevant that has to be disclosed, I do not think that in any of those cases the Judges were directing their minds to the problem of whether the test is the mind of a reasonable proposer or that of a reasonable underwriter. They were concerned to dismiss the contention that only the facts which the proposer considered material need be disclosed.
One strong pointer to its being the view of a reasonable underwriter which is relevant is that it has for long been the practice, as was said by McNair J in Roselodge Ltd v Castle, at p 129, for evidence to be admitted of underwriters as to what they would consider relevant. If the question were what a reasonable member of the public would consider material, such evidence would not be relevant and it is difficult to see that any expert evidence would be admissible…
In providing by statute that the test should be that of the insurer in marine insurance cases, I think that Parliament was doing no more than inserting in its code of marine insurance law what it regarded as the general rule of all insurance law…’
 Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Grecia Express)  2 Lloyd’s Rep 88
[The facts are immaterial].
‘In my judgment, it is quite clear from section 18 of the Marine Insurance Act, 1906 that the attribute of materiality of a given circumstance has to be tested at the time of the placing of the risk and by reference to the impact which it would then have on the mind of a prudent insurer.
In this connection it is for present purposes necessary to distinguish between three types of circumstances:
(1) allegations of criminality or misconduct going to moral hazard which had been made by the authorities or third persons against the proposer and are known to him to be groundless;
(2) circumstances involving the proposer or his property or affairs which may to all outward appearances raise a suspicion that he has been involved in criminal activity or misconduct going to moral hazard but which he knows not to be the case;
(3) circumstances involving him or his business or his property which reasonably suggest that the magnitude of the proposed risk may be greater than what it would have been without such circumstances.
As to case (1), if an allegation of criminal conduct has been made against an assured but is as yet unresolved at the time of placing the risk and the evidence is that the allegation would have influenced the judgment of a prudent insurer, the fact the allegation is unfounded cannot divest the circumstance of the allegation of the attribute of materiality. For example, if the proposer had told the insurer of the allegation and also that it was unfounded, the insurer might well have preferred not to trust the word of the assured or might have preferred to conduct his own investigation before agreeing to underwrite the risk.
As to case (2), it is, in my judgment, quite unrealistic for underwriters to require disclosure of facts, which the proposer knows to have no bearing on his honesty or integrity, on the basis that a suspicious person when told of those facts might believe that it did have such a bearing. Unlike case 1 where a third party has made a specific allegation against the proposed assured, case 2 involves that the assured should evaluate for himself perfectly innocent facts to see whether they might be misconstrued by an underwriter as indicating his dishonesty. I do not consider that the duty of the utmost good faith involves as rigorous an approach as this. Nor, indeed, did the [insurers’] expert, Mr Hunt…Provided that there has been no outward allegation material to the proposer’s integrity and that he is in truth innocent, the mere suspiciousness of the facts does not render them disclosable.
As to case (3) by parity of reasoning, if the assured knows of facts which, when viewed objectively, suggest on the face of it that facts might exist (“the suggested facts”) which would increase the magnitude of the risk and the known facts would have influenced the judgment of a prudent insurer, the known facts do not cease to be material because it may ultimately be demonstrated that the suggested facts did not exist. That which invests the circumstances with materiality is emphatically not the existence of the suggested facts, but the existence of the known facts, for the underwriter is entitled to take into account the risk that the suggested facts may be true and the proposer is not entitled to deprive the underwriter of that opportunity because he personally believes albeit he does not know for certain that the suggested facts are untrue…