Female high court judge, Justice Agnes Actie has ruled against a local insurance company that was refusing to honour an agreement with a motor vehicle owner that was one of its clients.
Vehicle owner Selwyn Redhead was forced to seek legal redress after NEWIM tried to avoid ownership of a policy of insurance signed with him on the basis of non-disclosure or misrepresentation of a material fact by the policyholder.
The issue arose after the vehicle got into an accident and the insurance company did not want to honour any financial liability on the grounds that Redhead was not the material owner of the vehicle as the necessary transfer of ownership was not recorded in Inland Revenue even if he had purchased it from the sellers.
Redhead purchased the Vehicle from Cosmos Williams and Richard Steele for $13,500.00, and upon purchasing the vehicle paid the relevant fee at the Inland Revenue Department(IRD) and signed the appropriate transfer form.
However, the previous owners did not go into IRD to complete the transaction in full.
NEWIM claimed in the case that Redhead did not disclose this information to the company when it entered into the policy agreement with him.
“Based on the failure of the claimant (NEWIM) to prove that the non-disclosure by the defendant was material, and further, that the non-disclosure induced the claimant to enter into the contract with the defendant, the claimant is accordingly not entitled to avoid the policy of insurance in issue,” the female high court judge said in her ruling.
As a public service, THE NEW TODAY reproduces the decision handed down by the judge in which NEWIM was held liable:
[34] The claimant has failed to put before the court any precedent which demonstrates that such a non-disclosure is indeed material. Counsel for the claimant strenuously relies on the case of N.E.M. (West Indies) Insurance Limited v Eugenia Vernette Brooks, yet this case can be distinguished, in that, the vehicle in issue was unregistered along with the other material nondisclosure in the proposal form. The vehicle in the case at bar is registered, albeit not in the defendant’s name.
[35] The claimant has also failed to put before the court any expert evidence which supports its view that the non-disclosure was material. The court in Brooks held that there was not an iota of evidence that the insurer was induced by the non- disclosure of the fact that Ms Brooks failed to produce the registration certificate from the transport board. This court is of the same view. The form was accepted and approved by the company without insisting on the presentation of the registration form from the Inland Revenue Department. It is the defendant’s evidence that he has been the registered owner of other vehicles insured with the very same company and none of the circumstances listed by Padfied at paragraph hereof was canvassed by the claimant.
[36] It is trite law that he who alleges and seeks to establish their rights in law must prove his case, and on a balance of probabilities. Given this state of the law, and in light of the law generally being sufficiently tender to insurers who seek to avoid contracts for non-disclosure, the court is not satisfied that the claimant has proven that the non-disclosure by the defendant was material. The court is also of the view that the claimant has not demonstrated that the alleged material non- disclosure induced it in accepting the risk on the terms that it did.
[37] It is the argument of the claimant that it would not have authorised the issuance of the said policy of insurance to the defendant as the defendant had no insurable interest in the vehicle.
[38] On the issue of Insurable Interest, Halsbury’s Laws of England, 4th Edition, Vol 25, at paragraph 633 states the following:
“The precise nature, extent or value of the insurable interest in a contract of insurance is irrelevant. An equitable or beneficial interest of any kind is as effective for this purpose as a legal interest”.
[39] Jones J in Smith v Fournillier et al cited Lawrence J in Lucena v Craufurd whose statement continues to be of assistance with respect to providing a general definition of insurable interest:
“A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it….. And whom it importeth, that its condition as to safety or that quality should continue: interest does not necessarily imply a right to the whole, or part of the thing, nor necessarily and exclusively that which may be the subject of privation, but the having some relation to, or concern in the subject of the insurance, which relation or concern by the happening of the perils insured against may be so affected as to produce a damage, detriment, or prejudice to the person insuring: and where a man is so circumstanced with respect to matters exposed to certain risks or dangers, as to have a moral certainty or advantage or benefit but for those risks or dangers, he may be said to be interested in the safety of a thing. To be interested in the preservation of a thing, is to be so circumstanced with respect to it as to have benefit from its existence, prejudice from its destruction. The property of a thing and the interest devisable from it may be very different: of the first the price is generally the measure, but by interest in a thing every benefit and advantage arising out of or depending on such a thing may be considered as being comprehended”.
[40] Furthermore, the statement of Brett, M.R. in Stock v Inglis is also of some relevance. He states:
“In my opinion it is the duty of a Court always to lean in favour of an insurable interest, if possible, for it seems to me that after underwriters have received the premium, the objection that there is no insurable interest is often, as nearly as possible, a technical objection, and one which has no real merit, certainly not as between the assured and the insurer. Of course, we must not assume facts which do not exist, nor stretch the law beyond its proper limits, but we ought, I think, to consider the question with a mind, if the facts and the law will allow it, to find in favour of an insurable interest.”
[41] Firstly, the position of the claimant with regard to the lack of insurable interest is contradictory to its previous position on the materiality of the non-disclosure that the premium of the policy would have been affected. In this instance, the claimant is stating that it would not have entered into contract with the defendant, whereas, prior, its position was of a difference in terms of a contract it would have entered into with the defendant.
[42] Secondly, it is the evidence of the defendant that although he was not the de facto registered owner of the Vehicle, he was the owner in possession of the vehicle. Further, the defendant raises the point that on the proposal form the Vehicle is indicated to be the subject of a hire purchase or mortgage agreement, the practical effect of which must be deemed to be considered by the claimant in issuing the policy. The Act specifies that the owner of the vehicle subject to a hire purchase agreement is the person in possession of the vehicle under that agreement, and in the instant case, it is the defendant’s evidence that he was actually the person in possession of the vehicle.
[43] Based on the foregoing statements of law, and given the evidence of both parties, the court finds that the defendant had an insurable interest in the Vehicle sufficient to obtain a policy of insurance in accordance with the Act.
[44] In any event, it is the court’s view on the evidence that if it was disclosed to the claimant that the vehicle was unregistered, on the balance of probabilities, the claimant would have insured the Vehicle. The very existence of the question and options on the form suggests that unregistered vehicles are capable of being insured, thus the non-disclosure of the registration of a vehicle cannot be said to have induced the claimant to enter into a contract with the defendant.
[45] Consequently, based on the evidence in the round, the claimant has failed to establish that it was induced by the non-disclosure to enter into contract with the defendant.
Whether the claimant is entitled to avoid its policy of insurance with the defendant for non-disclosure of a material fact and or false representation of facts
[46] Section 14 (3) of the Act gives the insurer the ability to pay no sum if a declaration is obtained that it is entitled to avoid the policy 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. Section 14 (3) states that:
“No sum shall be payable by an insurer under subsections (1) and (2) or under section 14A, if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgement was given, he or she has obtained a declaration that, apart from any provision contained in the policy, he or she 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 or she has avoided the policy on that ground, that he or she was entitled to do so apart from any provision contained in it:
Provided that an 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 judgment obtained in proceedings commenced before the commencement of that action, unless before or within seven days after the commencement of that action he or she has given notice thereof to the person who is the plaintiff in the proceedings specifying the non-disclosure or false representation on which he or she proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he or she thinks fit, to be made a party thereto.”
[47] Based on the failure of the claimant to prove that the non-disclosure by the defendant was material, and further, that the non-disclosure induced the claimant to enter into the contract with the defendant, the claimant is accordingly not entitled to avoid the policy of insurance in issue.
Conclusion
[48] Based on the foregoing, the court finds that the claimant has failed to prove its claim.
[49] It is therefore ordered and declared as follows:
(1) The claimant’s claim stands dismissed.
(2) The defendant’s counterclaim is granted in part.
(3) The claimant is entitled to honour the policy of insurance dated 12th May 2011 and any judgment in relation to the motor vehicle accident which occurred on 10th October 2012 on the ground that the policy was not obtained by material non-disclosure or by representation of fact which was false in some material particulars.
(4) Agreed costs to the defendant in the sum of $5,750.00.
Agnes Actie
High Court Judge
By the Court
Registrar