Category: Insurance case law · Reviewed by Jake Leat, Associate Director · Last reviewed June 2026
Commercial Court decision applying the statutory duty of fair presentation under the Insurance Act 2015 in a property damage claim where criminal proceedings against a director had not been disclosed.
Berkshire Assets (West London) Ltd was the owner of a property development in west London. It held a contractors’ all risks and related policy with AXA Insurance UK plc covering damage during the construction phase of the development. Substantial damage occurred to the property, giving rise to a significant claim under the policy.
The insurer declined the claim and sought to avoid the policy on the ground of breach of the duty of fair presentation under sections 3 and 7 of the Insurance Act 2015. The principal matter not disclosed at placement concerned criminal proceedings which had been brought in a foreign jurisdiction against a director of the insured. The proceedings related to alleged offences which did not bear on the construction risk itself but which the insurer contended were material to the moral hazard side of the risk.
The insured contended that the matter was not material in the statutory sense, that the proceedings were politically motivated and unfounded, that they would not have influenced a prudent insurer in deciding whether to write the risk or on what terms, and that the actual underwriter on risk had not been induced by the non-disclosure to write the policy on the terms agreed.
The case is one of the first substantial Commercial Court decisions to apply the duty of fair presentation under the Insurance Act 2015 to a contested property damage claim. It is therefore of particular importance for the developing case law under the Act, and for the practical handling of moral hazard disclosure under the new statutory regime.
The principal issues were whether the criminal proceedings against the director were material in the sense defined by section 7(3) of the Insurance Act 2015, whether the insured had complied with the duty of fair presentation under section 3 of the Act, whether the breach if any was a qualifying breach for the purposes of section 8, and what remedy if any was available to the insurer under Schedule 1.
A subsidiary issue concerned the operation of the proportionate remedies regime in Schedule 1, in particular the questions whether the insurer would not have entered into the contract at all had the matter been disclosed (in which case avoidance would be available) or would have written the contract on different terms (in which case proportionate reduction of the claim or other modification would be available).
The Commercial Court held in favour of the insurer. On the evidence, including expert underwriter testimony as to market practice and the insurer’s own underwriting guidance, the criminal proceedings against the director were material in the section 7(3) sense. They would have influenced the judgement of a prudent insurer in deciding whether to take the risk and on what terms. The insured had therefore failed to make a fair presentation of the risk.
On the question of remedy under Schedule 1, the court accepted on the evidence that the insurer would not have written the contract at all had the criminal proceedings been disclosed. The breach was accordingly a qualifying breach within section 8 and the insurer was entitled to avoid the contract under paragraph 2 of Schedule 1. The claim accordingly failed.
The judgment is a careful working through of the statutory provisions and represents an important early application of the Insurance Act 2015 in a contested commercial property claim. It confirms that moral hazard disclosure of the type previously addressed in cases such as North Star Shipping remains important under the new regime, and that the consequences of non-disclosure can still include full avoidance where the evidence supports it.
A criminal proceeding against a director or other principal of an insured may be material for the purposes of section 7(3) of the Insurance Act 2015 even where the alleged offence does not bear directly on the risk insured, where the prudent insurer would consider it in assessing moral hazard. The insured remains under a duty to disclose such matters under section 3 of the Act notwithstanding any belief that the proceedings are unfounded.
Where the evidence establishes that the insurer would not have entered into the contract at all had the matter been disclosed, the breach is a qualifying breach within section 8 and the insurer is entitled to avoid the contract under paragraph 2 of Schedule 1, without obligation to return premium where the breach was deliberate or reckless.
Berkshire Assets v AXA is one of the leading early decisions applying the Insurance Act 2015 in a contested commercial coverage dispute. It confirms that the substantive content of the duty of fair presentation under section 3 closely tracks the pre-Act common law on materiality and disclosure, but operates within the statutory framework of qualifying breach and proportionate remedies in section 8 and Schedule 1.
For brokers, the case is a clear warning that pending or threatened criminal proceedings against directors and senior managers must be disclosed at placement and renewal in any commercial class where moral hazard is engaged, including property, casualty, financial lines and specialty risks. The duty extends to proceedings which the insured believes to be politically motivated or otherwise unfounded; it is for the underwriter, not the insured, to decide what weight to give such matters.
For insureds, the case is a reminder that the Insurance Act 2015 has not significantly softened the consequences of non-disclosure where the insurer can establish that it would not have written the policy at all had the matter been disclosed. The proportionate remedies regime mitigates the consequences only where the insurer would have written the contract on different terms.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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