Division: IN THE HIGH COURT, KUMASI
Date: 12TH JUNE, 1964
Before: SOWAH J
JUDGMENT OF SOWAH J
The plaintiff on 9 January 1963 filled in a proposal form for the insurance of his goods in his wholesale warehouse on plot 7, South Zongo, Kumasi. The answers to the questions on the proposal form were clearly stated to be the basis of the contract and the same were incorporated in the policy, number BB 325028, dated 9 January 1963.
On the night of 6 March 1963, barely two months after the contract of insurance had been entered into, it was alleged that thieves broke into the assured’s premises and removed large quantities of cotton material. The thieves must have been on the premises for several hours, and must have carried the goods away in a vehicle. It is of interest to note that no one on the premises heard anything of the burglary, though part of the premises were occupied by tenants and the police were not able to find any finger prints. The police however found that the lock was broken.
Amongst the questions on the proposal form were the following:
“2c. If not will any night watchman be employed or other special means of protection taken?
Answer: Yes night watchman . . .
6a. Are stocks and sales books kept? Answer: Yes.
6b. How frequently are they written up? Answer: Daily . . .
8c. Has such proposal or renewal ever been declined, withdrawn or subject to increased rate or special condition? Answer: No.”
The defendants alleged that the answers to these questions were false and amounted to misrepresentation or misstatements or that they were such breaches of the conditions and warranties as to entitle them to repudiate the claim.
Dealing first with the answer to question 8c I consider that the answer given by the plaintiff was not a misstatement. He stated that no proposal form of his has ever been declined or withdrawn at the time of renewal. Before giving this answer the plaintiff had stated in the proposal form that Norwich Union were his previous insurers and also that he had once claimed for a burglary upon the said insurance company. If I had come to the conclusion that the answer to question 8c is incorrect I would have held that the answers were not of such materiality as would have affected the contract of insurance. He had given enough material to the defendant corporation which should have put it on its inquiry especially when he disclosed that he is a person prone to being burgled.
The more important considerations were his answers to questions 2c, 6a and 6b. He had informed the defendant corporation that he would be employing a night watchman to watch the premises. Two months after taking the policy he had not employed a night watchman and there was no night watchman on the premises the night that he was burgled. Further, the insured also warranted as follows: “It is warranted by the insured that all burglary precautions are in force whenever the premises are without occupant.”
The plaintiff stipulated in the proposal form that he kept his accounts daily. After the burglary the accountants of the defendant corporation discovered that the plaintiff’s accounts had not been kept since 25 January 1963 and that from the state of his books the loss could not be ascertained.
As said before the answers in the proposal form were to be the basis of the contract. The answers given to 2c, 6a and 6b were false or incorrect and amounted to misstatements or misrepresentation. Quite apart from this the plaintiff has further warranted that he would keep in force all burglary precautions and in my view such precautions include the keeping of night watchman.
Further the plaintiff warranted that he would keep such books and accounts as would show a true and accurate record of all his business and the warranty applied separately to each and every branch of his business, that is to say, not only his wholesale business, but also his store. His failure to keep such books amounted to a breach of warranty.
Though counsel for the plaintiff conceded the foregoing matters, he argued that it was open to the defendant corporation to repudiate the whole of the contract on the grounds of misrepresentation and that as they did not repudiate the policy they were not entitled to repudiate a claim under the policy.
In support of this submission, counsel relied on the case of West v. National Motor and Accident Insurance Union Ltd.1 The brief facts of this case were as follows: The claimant insured the contents of his house and declared in the proposal form that the full value was £500. The proposal form required the intending assured or claimant to state the value of jewellery if it exceeded one third of the declared value but the claimant made no statement as to this. Burglary occurred in the house and the assessor estimated the goods stolen as follows: £530 5s. in respect of jewellery, £26 17s. 6d. in respect of personal effects and £56 in respect of cars stolen. The assessor also valued the contents at the date of the burglary at some £2,000 and the claimant agreed with the figure. The claimant having claimed for this loss, the insurance company repudiated the claim on the grounds of material misstatement or non disclosure relating to the value of the contents of the residence, but did not repudiate the policy which both sides agreed they could have done if the insurance company had wished to.
Both Lord Goddard C.J. and the Court of Appeal held that the insurance company were not entitled to repudiate the claim without also repudiating the whole of the policy.
I am of the opinion that the West case (supra) was decided on general principles, namely; that where a person has been induced by a material misstatement into entering a contract, on discovery of that fact, he is entitled to repudiate the whole of the contract and if he does not do so he will be bound by the contract and cannot repudiate a claim under it.
The issue here is different. The corporation is not only relying on misstatements for which they were entitled to repudiate the policy (which they did not do) the corporation are also relying firstly on breaches of condition in the policy and secondly on breaches of warranties.
In the West case (supra) Singleton L.J., after dealing with counsel’s submission continued2
“He added that the insurance company had not repudiated the policy. That submission led Romer, L.J., to ask him whether he was relying on any particular condition in the policy; and counsel replied that he was merely relying on the general principle that a claim could be repudiated when the proposal form contained a material under-statement or a material non-disclosure.”
In this case the defendant corporation is not relying on general principles, it is relying on a condition contained in the policy. It appears to me that this condition was inserted in the policy to provide for the position created by the West case (supra). Condition 2 of the policy states:
“If there shall have been any material misdescription of any of the property hereby insured or of any building or place in which such property is contained or any misstatement of any material fact to be known for estimating the risk or any omission to state such fact the company shall not be liable under this policy so far as it relates to property affected by any such misdescription misstatement or omission and if there has been any misstatement in answers to questions put by or on behalf of the company on the proposal of insurance or before or at the time the risk is undertaken by the company shall not be liable under this policy.”
(The italics are mine.) Thus the defendant corporation is entitled to reject the claim without necessarily repudiating the policy. They have covered themselves for such an exigency. The defendant corporation in terms of this condition is denying any liability under this policy.
I cannot see anything in the conduct of the defendant corporation amounting to a waiver of its rights. By the letter dated 6 May 1963 the defendant corporation repudiated the claim in forthright terms and gave reasons for so doing. I am also of the view that the defendant corporation was entitled to repudiate the claim without repudiating the policy for breaches of warranty. The consequences of non disclosure or misrepresentation are different from those arising out of breaches of warranty. In the former, i.e. false representation or non disclosure, the consequence is to make the contract voidable.
The party aggrieved, usually the insurer, has the right, when the matter comes to his knowledge, to elect whether or not he shall be bound, but unless and until he makes his election and by word or not repudiates the contract, it remains valid and binding. In the case of the latter, that is breach of warranty, the consequence is to discharge the insurers from liability as from the date of the breach.
For these reasons I consider that the defendant corporation was entitled to repudiate the claim without repudiating the policy as a whole. The plaintiff’s claim is therefore dismissed and judgment is entered for the defendants with costs assessed at 35 guineas.
DECISION
Action dismissed.
T. G. K.
