Win Win – Insurance Act 2015 duty of fair presentation addressed by the Court of Appeal

Posted: 19/09/2025

Despite being granted royal assent over ten years ago, there has been relatively little light cast on the Insurance Act 2015 in the English courts since its inception, with few cases brought under the act going to judgment.

A recent decision of the Court of Appeal addresses the duty of fair presentation under the IA 2015 - Delos Shipholding SA & Ors v Allianz Global Corporate and Specialty SE & Ors, the Win Win [2025] EWCA Civ 1019. The findings in this case relate specifically to which individuals within a corporate entity are relevant for the purpose of deemed knowledge, and what the court will deem they ought to have known at the time of placing.

Background

In February 2019, the Win Win was detained by the Indonesian navy for 'illegal parking'. Following the prolonged detainment of the vessel, owners brought a claim for Constructive Total Loss (CTL) against insurers under their policy, which included the American Institute Hull War Risks and Strikes Clauses. Our earlier article discussing the first instance decision can be accessed here. In summary, insurers tried to rely on exclusion clause 1(e), which excludes cover for detentions in respect of customs or quarantine regulations, 'and similar arrests'. They also raised a non-disclosure defence. The sole director of the one-ship company that owned the Win Win was charged by Greek authorities in 2018 for his alleged involvement in one of the largest heroin shipments ever intercepted. These charges were not disclosed to insurers at the time of placing.

The appeal related to both these issues. As to the exclusion clause, insurers argued that the phrase 'and similar arrests' widened the scope of the clause to cover any detention under peacetime laws. The Court of Appeal disagreed, construing the exclusion as covering detentions under customs and/or quarantine regulations, with 'and similar arrests' encompassing other regulations with comparable purposes. The Court of Appeal found that the detention by the Indonesian navy was completely unconnected to any such regulations, and therefore the appeal failed on this point.

The duty of fair presentation

Section 3 of the IA 2015 sets out the insured's duty of fair presentation of the risk:

'The disclosure required is as follows…

(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.'

Section 4 sets out what the insured is deemed to know or ought to know for the purposes of this duty. Crucially, in the context where the insured is a company, the court will determine the knowledge of senior management or the individuals responsible for the company's insurance. Senior management is defined in the IA 2015 as:

'…those individuals who play significant roles in the making of decisions about how the insured’s activities are to be managed or organised.'

The knowledge they ought to know will encompass 'what should reasonably have been revealed by a reasonable search of information available to the insured.'

Schedule 1 of the IA 2015 sets out the insurer's remedies for breach of this duty. The defendant insurers sought a remedy under paragraph 5:

'If the insurer would have entered into the contract, but on different terms (other than terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms if the insurer so requires.'

The first instance decision

At first instance, the Commercial Court found that the director did not form part of senior management. He acted solely on instructions from senior members of the corporate group to which the registered owner of the vessel belonged. The director therefore had no substantive role in running the company and the non-disclosure defence failed. Moreover, the court rejected the notion that a reasonable search required the corporate group to ask the director, a respected practicing lawyer, whether he was subject to any criminal proceedings. The court did nevertheless say that the charges were a material circumstance. If they had been disclosed prior to placing, the judge found that insurers would have only entered into the contract on the condition that the director resign.

The defendant insurer's arguments

The insurers submitted on appeal that a sole director of a company with no employees would invariably constitute senior management for the purposes of the duty, as there could be nobody else who could be said to form part of that management. Indeed, the starting point should be that a director is considered part of senior management. Insurers argued that the registered owner was a special purpose vehicle whose only activity consisted of dealing with the paperwork associated with the company’s administration. That comprised the organisation of the company’s activities and was a matter in which the director had a significant role. As a director, he therefore should have been asked whether he knew of any material circumstance which might affect the risk, at which point the criminal charges should have been disclosed.

Insurers sought a remedy under para 5 of schedule 1 to the IA 2015. Following the High Court's finding, insurers argued that the insurance contract should be treated as containing a condition that the director resign. As this had not been complied with, insurers were entitled to reject the claim. For reasons set out below, the Court of Appeal did not need to make a finding on this issue.

The Court of Appeal's decision

Who constitutes senior management?
Determining the individuals who constitute senior management in any given case is a question of fact that requires a comprehensive assessment of the circumstances. This involves identifying the insured’s activities, pinpointing the individuals responsible for managing and organising those activities, and evaluating the significance of each person’s role in the decision-making process. 

The Court of Appeal agreed with the first instance decision in this regard. The use of special purpose vehicles with nominee directors is common practice in the shipping industry. In any transaction involving the registered owner, the parties would have perceived themselves as engaging with the corporate group rather than this specific director. It was also wrong to say that the registered owner only served an administrative function. On the facts, its activities consisted of owning and operating the vessel for profit, activities which the director took no part in. He therefore was not considered to be part of senior management. In the judge's words, 'he simply did as he was told'. This decision illustrates that it is perfectly possible for an individual to be part of senior management for the purpose of the IA 2015 without holding a formal position at the relevant organisation.  

What ought the insured to have known?
Given the director had no operational role in the company, the court decided it would have been pointless to ask him whether he knew anything of the risk insured. Those responsible for the vessel in the wider group would have known that the director did not know anything about its commercial or technical management. The director was a respected professional advisor to the corporate group, with whom he had a long standing relationship. It was correspondingly held that the senior management had not failed to make reasonable searches.

Conclusion

On the above basis, the judges held that the claimant did not have actual or constructive knowledge of the director's criminal charges. They therefore did not go on to consider whether they agreed with the first instance decision that the criminal charges were a material circumstance, or as to appropriate remedies. Nevertheless, this case touches on important issues for consideration at placing. The clarity as to who constitutes senior management in the context of ship management is also welcome, particularly given the prevalence of corporate structures similar to those in this case.

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