Division: IN THE HIGH COURT, KUMASI
Date: 23 MARCH 1964
Before: DJABANOR J.
NATURE OF PROCEEDINGS
ORIGINATING SUMMONS brought by the plaintiff against the defendants who were refusing to satisfy a judgment debt in accordance with the terms of the Motor Vehicles (Third Party Insurance) Act, 1958, claiming an amount of £G2,404 15s.
JUDGMENT OF DJABANOR J.
On or about the 29 June 1961, the plaintiff was involved in a motor accident while travelling in vehicle No. AN. 293 driven by one Kofi Fofie. The accident was caused by the negligence of the said Kofi Fofie.
On or about 16 January 1963, the plaintiff commenced proceedings against Osei Kwaku alias Emmanuel Osei and Kofi Fofie for damages for the injuries she sustained in the accident and on 27 June 1963 judgment was entered in her favour for £G2,404 15s. and 63 guineas costs. The said vehicle was at the time of the accident insured by the Lion of Africa Insurance Co. Ltd. whose assets and liabilities have now been taken over by Guardian Assurance Company. The said Guardian Assurance Company, the defendants in this originating summons, are refusing to satisfy the judgment debt in accordance with the terms of the Motor Vehicles (Third Party Insurance) Act, 1958,1 on the ground that:
“The vehicle was at all material times the property of Assad & Co. of Kumasi, and subject to hire-purchase agreement between Assad & Co. and one Kwaku Appiah. By virtue of clauses 6 (j) and 8 of the said hire-purchase agreement the effect of any purported sale or parting with the possession of the vehicle to a third party by the said Kwaku Appiah was to terminate the said agreement and all rights of the said Kwaku Appiah thereunder. Kwaku Appiah purported to have sold this vehicle to Emmanuel Osei, who insured it with the defendants. The defendants are now saying that the purported sale of the vehicle to the said Emmanuel Osei was in breach of the hire-purchase agreement, and that by virtue of clauses 6 (j) and 8, the agreement having determined at the time of the purported sale, the said Kwaku Appiah could not convey any property in the vehicle to Emmanuel Osei, and the said Emmanuel Osei accordingly could not have acquired any insurable interest in the vehicle.”
The issues therefore that I am to determine, as set out in the summons for direction are:
1. Whether or not clauses 6 (j) and 8 of the hire-purchase agreement between Assad & Co. and Kwaku Appiah operated to terminate Kwaku Appiah’s rights under the said agreement.
2. Whether or not at the time the agreement was effected Osei Kwaku alias Emmanuel Osei had an insurable interest in the vehicle.
3. Whether by virtue of the provisions of section 10 (1) of the Motor Vehicles (Third Party Insurance) Act, 1958, the defendants are bound to satisfy the judgment debt and costs mentioned in the claim.”
Clauses 6 (j) and 8 of the hire-purchase agreement provide that should the hirer try to sell the vehicle in breach of the agreement the owners—Assad & Co. may forthwith terminate it and seize and possess the vehicle. In my view all that the clause does is to empower the owner to terminate the agreement. Like any other contract when one party breaks it the other party may have the right to terminate it, a right which he may or may not exercise. But whether Assad & Co. exercised the right or not is not very material here, for the vehicle was never owned by Kwaku Appiah. He could never give legal title to Emmanuel Osei. That leads me to the next point.
It has been forcefully submitted that Emmanuel Osei has no insurable interest in the vehicle and that the insurance he took out was void ab initio. Both counsel referred to the definition of insurable interest in Stroud’s Judicial Dictionary (3rd ed.), Vol. 2, p. 1484, para. 15, where it is stated that:
“(15) An insurable ‘interest’ in goods ‘does not, necessarily, imply a right to the whole, or a part, of a 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 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 of advantage or benefit but for those risks or dangers, he may be said to be INTERESTED IN the safety of the 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’ (per Lawrence, J., Lucena v. Craufurd, 2 B. & P.N.S. 302).”
Counsel for the plaintiff contended that mere possession or retention of the vehicle gave the possessor sufficient insurable interest in the vehicle. At least in compliance with the Motor Vehicles (Third Party Insurance) Act, 1958, the possessor of the vehicle was insuring against the damage that might fall to his using it not against the property in the vehicle alone. This case raises a question of general interest and considerable importance in the law of motor insurance, and I have done my best to look up all the law on the matter.
From a study of the case of Lucena v. Craufurd2 decided by the House of Lords in June 1808 and subsequent literature I have come to the conclusion that it is not necessary that one must be an owner in order to have an insurable interest in the thing. The position is discussed with clarity in Denis Browne’s Treatise, MacGillivray on Insurance Law (5th ed.). I will quote from p. 219, para. 445:
“445. Definition of Insurable interest in property is not confined to the absolute legal ownership. Generally, any person who is so situated that he will suffer loss as the proximate result of damage to or destruction of the property has an insurable interest in it. But there must be some direct relationship to the property itself, for otherwise the interest is too remote and therefore not insurable. In Lucena v. Craufurd Lord Eldon said, ‘I am unable to point out what is an interest unless it be a right in the property or a right derivable out of some contract about the property,’ and if we add to this, ‘or some legal liability to make good the loss,’ we get a substantially accurate definition of insurable interest in property. Some modern American cases support the rather wider proposition that a person has an insurable interest in property by the existence of which he receives a benefit, or by the destruction of which he would suffer loss, regardless of title, legal or equitable.”
The paragraph on possession makes it even clearer still:
“448. Possession. The mere possession of property is probably sufficient to give the person in possession an insurable interest in it. Even if the possession is wrongful as against the true owner, such as that of a mere trespasser, it is a right which is recognised by law as available against all the world except those who can show a better title.
In a motor-car insurance case Roche J. (as he then was) suggested that a person driving a car with the consent of the owner might have an insurable interest in respect of that temporary possession.
A person in possession of property may sue a third person who has negligently damaged or destroyed it, and may recover from him the full amount of damage up to the total value of the property, and it would seem to follow that a person in possession of property has on that ground alone an insurable interest to the full value. Mr. Bunyon was of that opinion; but the authorities are not unanimous on the point, and it is arguable that the insurable interest arising from the possession of any property is a limited interest corresponding to the market value of the right of possession or to the responsibility of the person in possession to the owner for accidental damage to or loss of the property. But even if possession is not by itself sufficient to give an insurable interest up to the full value of the property, the possession of it by the person who has insured it is prima facie proof of ownership, and therefore proof of possession is sufficient in the first instance to establish an insurable interest to the full value.”
In the result I must hold that at the time that Emmanuel Osei insured the vehicle in question, though it was not his property, he still had an insurable interest in it, and that therefore he is liable to be indemnified under that contract of insurance. And there is his further that I find. It is accepted law that a policy of insurance is a personal contract between the insurers and the insured. In this case Emmanuel Osei was accepted by the defendant company and the vehicle he insured too was accepted by the insurance company. In my view in compliance with that agreement the company is bound to Emmanuel Osei in terms of the contract of insurance since the company is not seeking to set the policy aside on the ground of non-disclosure.
The third issue for determination is whether or not the defendants are bound by the provisions of section 10 (1) of the Motor Vehicles (Third Party Insurance) Act, 1958, to satisfy the judgment debt. The answer must be yes. It seems to me that the section is set out to protect third parties and ensure that they get paid the judgment debt won against the assured. According to the section the insured company may not pay the judgment debt only on the specified instances set out in subsection (2) and (3). In addition to that the insurers may of course refuse to pay if in accordance with the law of contract they can plead that they have not insured the vehicle concerned, or they have not insured the alleged assured. Otherwise they have to set the policy aside within the specified time or satisfy the judgment debt.
In the result I must declare that Emmanuel Osei is liable to be indemnified by the defendant and that therefore the defendants, by virtue of the provisions of section 10 (1) of the Motor Vehicles (Third Party Insurance) Act, 1958, must satisfy the judgment obtained by the plaintiff against the said Osei Kwaku also known as Emmanuel Osei and Kofi Fofie to the tune of £G2,404 15s. and 63 guineas costs.
Plaintiff will have the costs of this application assessed at 50 guineas.
DECISION
Judgment for the plaintiff.
N.A.Y.
