Post‐Contractual Good Faith ‐ A Further Change in Judicial Attitude1
| Published date | 01 May 2005 |
| Date | 01 May 2005 |
| Author | André Naidoo |
| DOI | http://doi.org/10.1111/j.1468-2230.2005.00547.x |
CASES
Post-Contractual Good Faith - A Further Change in
Judicial Attitude
1
Andre
ŁNaidoo
n
INTRODUCTION
In recent years the post-contractual duty of good faith has been the subject of
considerable judicial debate in a number of cases.
2
Although these cases address
the notion of a general post-contractual duty, they have all been in the context
of the duty imposed upon the assured. Such a duty only serves to bene¢t the
insurer andcan create an imbalance in the absence of any reciprocal post-contrac-
tual obligations on the insurer. However, more recently, the perceived mutuality
of the good faith duty inspired the Court of Appeal in Drake Insuranceplc vProvi-
dentInsurance plc
3
to develop further, the dutyimposed upon insurers.
4
The impor-
tance of this further shift in judicial attitude is a welcome development that
should not be understated. It means there is a further constraint on the conduct
of insurers during performance of the contract, a contract that is all too familiar
with, not only commercial parties, but also consumers.
The development of the insurer’s duty raises a numberof crucial issues. Firstly,
the extent of the obligation owed; secondly, the remedy for abreach of the duty
and ¢nally, the signi¢cance of such a development in the wider context. These
issues have to be approached with a view to the perceived mutuality of the duty,
and consequently, the rather confused backdrop of the assured’s post-contractual
duty which hasbeen in retreat in recent years.
5
n
Lecturer in law, De MontfortUniversity.I am grateful to Professor Robert Merkin, Professor David
Oughton and an anonymous refereefor their helpful comments. The usual disclaimars apply.
1 This title is a reference to the paper published i n an e arlier volume of this review, H. Y. Yeo,‘Post
Contractual Good Faith-Change in Judicial Attitude?’ (2003) 66 MLR 425.
2ManifestShipping Co.Ltd.v.Uni-Polaris Shipping Co. Ltd and Others,(The Star Sea) [2001] UKHL/1;
[2001] 1 Lloyd’s Rep 389; K/S Merc-Scandia XXXXII vUnderwriters of Lloyd’s PolicyNo. 25T1054 &
Others, (The Mercandian Continent), [2001] EWCACiv 1275; [2001] 2 Lloyds Rep 563,(CA); Agapit os
vAgnew, (The Aegeon) [2002] EWCA Civ 247; [2002]2 Lloyd’s Rep. 42.
3 [2003] EWCACiv 1834; [2004] Lloyd’s Rep. 268, Reversing the ¢rst instance decision of Moore-
Bick J.[2003] EWHC 109; [2003]Lloyds’ Rep. I.R.793.
4 The arguments submitted in DrakevProvident aboutthe insurer’sduty were based on the decision of
Colman J. in StriveShipping CorporationvHellenic MutualWar Risks Association, (The GreciaExpress)
[2002] EWHC203; [2002] 2 Lloyd’s Rep.88. On the insurer’sduty applying to the claims handling
process see the Court of Appeal re-insurance cases of Gan InsurancevTa i P i n g I n s u r a n c e (No.2) [2001]
EWCA Civ1047;[2001] Lloyd’s Rep. I.R.667 and Eagle StarCo Ltd vJ N Cresswell& Another [2004]
EWCA Civ 602.
5BlackKing Shipping vMassie(The LitsionPride) [1985] 1Lloyds Rep.437 represents the high-pointof
this post-contractual duty. Subsequently, recent cases in n 2 above, have restricted the scope of the
rThe Modern LawReview Limited 2005
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2005) 68(3)MLR 464^474
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