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Transthene Packaging Co Ltd v Royal Insurance

The plaintiff owned a company which manufacture and sold plastic bags, and was insured with the defendant, inter alia, against fire and loss of profit resulting from fire. When a fire occurred at the factory, the plaintiff claimed on his policy of insurance, but the insurance refused payment on the basis that: (a) the fire had been started deliberately by the plaintiff; and (b) the plaintiff had fraudulently claimed for the total loss of equipment, when such was not the case.

The court ruled that the insurers were not liable under the policy, because the plaintiff had fraudulently claimed for losses no incurred. The fire was adjudged to have been started by persons unknown. The judge ruled that the duty of utmost good faith is applicable also at the stage of making the claim.