CA-2024-000950 - [2025] EWCA Civ 1019

The conclusions reached so far mean that the appeal must be dismissed. It is therefore unnecessary to decide, but may be useful to draw attention to, a point which arose in argument. Section 4(6) of the 2015 Act provides that an insured ought to know ‘what should reasonably have been revealed by a reasonable search’, including the making of enquiries, language which might suggest that this is a purely objective question and that it does not matter what in fact such enquiries would have revealed.

However, if that is how section 4(6) is to be understood, it could mean that an insured who had done everything required by the Act to discover material circumstances by making reasonable enquiries nevertheless lost the benefit of its insurance because those enquiries would not in fact have revealed the circumstances in question, even though they should reasonably have done so. Such a result might be thought to be unfair, and contrary to the purpose of the 2015 Act.

Whether that is the effect of section 4(6) does not need to be determined on this appeal and probably cannot be, as the judge did not make (and did not need to make) all the findings which might be relevant to such a question. While the answer to the question must depend on the meaning of the words ‘what should reasonably have been revealed by a reasonable search’ in section 4(6), it appears that the Law Commission used the words ‘would’ and ‘should reasonably’ interchangeably, without focusing on the potential difference between them. Thus paragraphs 8.20 and 8.77 refer to information which a risk manager ‘would have discovered’ and to matters ‘which would be revealed’ by a reasonable search, while paragraph 8.86 says that:

‘We recommend that the insured ought to know only what should reasonably have been revealed by reasonable search. The insured should not be taken to have constructive knowledge of information which could not reasonably have been discovered, such as information which would have been withheld through negligence or fraud.’

Paragraph 56 of the Explanatory Notes refers to ‘information that could reasonably be expected to be revealed by a reasonable search of available information’ and suggests that this is largely a codification of principles derived from case law.

I would therefore leave this issue open, to be decided in a case where it will be decisive and all relevant findings have been made.