Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482
Plaintiff entitled to recover insurance premiums following fraudulent misrepresentation
Facts
With a Mr Thomas, the defendants entered into five life insurance policies on the lives of others. Thomas ceased paying the premiums. One of the defendants’ agents induced the plaintiff to enter into five duplicate polices. The plaintiff discovered that the policies were illegal and void in terms of the Assurance Companies Act 1909 and sued to recover the premiums she had paid under them.
Issues
At first instance, it was held that the plaintiff could not recover, even if the premiums had been obtained by fraudulent misrepresentation, as such policies were prohibited by law. Upon appeal, the plaintiff argued that because the jury had found that the defendants’ agent had been fraudulent, the parties were not in pari delicto (i.e. equally at fault) and so she should be able to recover.
Decision/Outcome
The plaintiff’s appeal was successful. The present case was a clear case of fraud by the defendant. The Court referred to British Workman’s and General Assurance Co. v. Cunliffe (1902) 18 Times L. R. 425 where the Court found that money could be recovered expressly on the ground that the statement on which the assured acted had been fraudulent. There was even stronger evidence of fraud in the present case. Therefore, the parties were not in pari delicto and the plaintiff, who was innocent in the circumstances, was entitled to recover the premiums. The 1909 Act did not affect her rights to recover because it imposed a penalty upon a friendly society, such as the defendant, from issuing this type of policy.
Updated 19 March 2026
This article accurately summarises the Court of Appeal’s decision in Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482. The case remains good law as an illustration of the in pari delicto principle and the availability of restitution where one party has been induced into an illegal contract by the other’s fraud.
Readers should be aware that the broader legal landscape surrounding illegal contracts has developed significantly since 1916. The Law Commission’s recommendations on illegality led to the Supreme Court’s influential decision in Patel v Mirza [2016] UKSC 42, which replaced the traditional rule-based approach with a more flexible, policy-based discretionary approach to recovering money paid under illegal contracts. Courts must now consider the underlying purpose of the relevant prohibition, any relevant public policy, and whether denial of the claim would be proportionate. The in pari delicto principle discussed in this case remains a relevant factor under that framework, but students should not treat the older case law in isolation without reference to Patel v Mirza and subsequent cases applying it.
The Assurance Companies Act 1909 has long since been repealed and replaced; the relevant regulatory framework for insurance is now principally found in the Financial Services and Markets Act 2000 and associated FCA rules, though this does not affect the legal principles illustrated by this case.
