Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482

Plaintiff entitled to recover insurance premiums following fraudulent misrepresentation


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.


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.


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.