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Legal Minds

14 September 2016 / by / in

Collateral Lies

There are a number of types of lies:-

– White lies

– Broken promises

– Fabrications

– Bare faced lies

– Exaggerations

– Deceptions

In Versloot Dredging v HDI Gerling [2016] UKSC45, the Supreme Court held the insurers of a ship could not repudiate liability on the ground that the insured had told a lie in presenting the claim, if the lie proved to be irrelevant and immaterial to the claim. The owners of the ship told the insurers untruthfully that the crew had informed them that the bilge alarm had sounded at noon, but could not be investigated because the ship was rolling in heavy weather. The vessel’s loss was found to have been caused by peril of the seas.

The lie was a “fraudulent device” rather than a fraudulent claim, namely a claim that has been fabricated or dishonestly exaggerated. It was a “collateral lie”, irrelevant and immaterial to the insured’s claim. The insurer loses nothing if it meets a liability it always had.

If you cannot tell the truth, make sure your lies are collateral lies.

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John specialises in commercial and civil fraud litigation. Admitted as a solicitor in 1983, John worked in private practice and in-house for a leading life assurance company before establishing Bivonas with Antony Brown in 1997. John has extensive experience in a wide range of courts and tribunals including the UK Supreme Court, the Court of Appeal and the Divisional Court. He has been involved in a number of important reported cases.