1964_MERCHANT_SHIPPING_ORDINANCE — Page 37

F

36

CAP. 2811

Merchant Shipping

[1986 Ed.

(c) in connexion with any liability, if before the happening of the event which was the cause of the death or bodily injury giving rise to the liability the policy was cancelled by mutual consent or by virtue of any provision contained therein, and either-

(i) before the happening of the said event the policy was surrendered to the authorized insurer, or the person in whose favour the policy was issued made a statutory declaration stating that the policy had been lost or destroyed; or

(ii) after the happening of the said event, but before the expiration of a period of 14 days from the taking effect of the cancellation of the policy, the policy was surrendered to the authorized insurer, or the person in whose favour the policy was issued made such a statutory declaration as aforesaid.

(3) No sum shall be payable by an authorized insurer under this section if, in an action commenced before, or within 3 months after, the commencement of the proceedings in which the judgement was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the non-disclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled so to do apart from any provision contained in it:

Provided that an authorized insurer who has obtained such a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgement obtained in proceedings commenced before the commencement of that action, unless before or within 7 days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the non-disclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he thinks fit, to be made a party thereto.

(4) If the amount which an authorized insurer becomes liable under this section to pay in respect of a liability of a person insured by a policy exceeds the amount for which he would, apart from this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person.

(5) In this section, the expression "material" means of such a nature as to influence the judgment of a prudent insurer in determin- ing whether he will take the risk, and, if so, at what premium and on what conditions; and the expression "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel, or has avoided or cancelled, the policy.

(6)