Division: IN THE SUPREME COURT
Date: 29 JUNE 1964
Before: MILLS-ODOI, ACOLATSE AND APALOO JJSC
JUDGMENT OF APALOO JSC
This is an appeal from the judgment of the High Court, Accra, Akainyah J. (as he then was) delivered on 9 July 1963. That judgment, awarded in favour of the plaintiff (hereinafter referred to as the respondent) sums of money which he claimed were due to him from the appellant company (hereinafter called the appellants) under two policies of insurance.
In order to appreciate the argument advanced in this appeal, it is necessary to relate the facts which are, fortunately, far from complex. The respondent is an ice cream manufacturer and has a factory which is situated in house No. C 44/2, Kwame Nkrumah Avenue, Accra. In that factory, he has his plant and machinery. In order to provide against the risk of their destruction by fire, he took out a policy of insurance with the appellants who, as their name implies, are an insurance company. The latter were incorporated by an Act of Parliament in England and have their head office in Norwich, England. Their letterhead shows that in this country, their local head office is in Ghana Co-operative Bank Buildings, Accra. The first policy of insurance taken out by the respondent was dated 24 September 1959, but was expressed to be effective from 14 August 1959 to 14 August 1960. It was renewed in November 1960 for a period of one year. The machinery insured was all set out in a schedule to the certificate of insurance and it was insured for a total sum of £G21,500. On 30 September 1959 the respondent took out another
policy of insurance with the appellants and by this, the appellants agreed to indemnify him up to a maximum sum of £G800 in respect of such miscellaneous expenses as he might incur for any period not exceeding twelve months during which his business might be interrupted or interfered with. This policy was also renewed on 15 November 1960 but was said to be effective for one year from 1 November 1960.
On 15 December 1960, while these two policies were current, fire broke out in the respondent’s store. The only eye-witness account of this fire was given by the respondent’s first witness by name police sergeant Samuel Kwami. He put the time of the fire at about 9.35 p.m. He said it was a fairly big fire but was brought under control in about twenty to twenty-five minutes. The fire was put out by the fire brigade who apparently pumped into the store a large quantity of water. Mr. Kwami said he found in the store six machines. They did not appear to have been burnt but the store was left in ankle-deep of water.
The pith of the respondent’s claim was that this fire wholly destroyed his plant and machinery and he therefore submitted a claim to the company for total loss. The respondent himself assessed the pre-accident value of the various machines. Together with a stock of ice cream and bicycles which he alleged were damaged by the fire, the respondent submitted a claim for an aggregate sum of £G16,300. He also submitted a claim on the miscellaneous expenses policy. At the date when the writ was issued, he claimed for four months at the rate of £G800 per month. Twelve months had elapsed by the time the action was heard and he accordingly amended his claim to cover the maximum insured period of twelve months.
When the respondent submitted his claim to the appellants, the latter caused two companies, namely Hughes King (Ghana) Ltd. and G.M.P. Ltd. to examine the machines and report. The former of the two companies examined the mechanical part of the machines while the latter examined the electric motors and other electrical installations. In due course both companies submitted reports to the appellants. The substance of these reports was that the damage to either the mechanical or electrical part of the machinery was infinitesimal. Both companies considered that the damage could be put right in the paltry sums of £G5 and £G1 10s. respectively. Accordingly, the appellants offered to indemnify the respondent in the total sum of £G6 10s. The respondent declined to accept this sum and promptly commenced proceedings.
Pleadings were, as usual, filed and thereafter, the respondent took out a summons for directions in which he set out three issues. In view of the evidence, these issues were less than inapt and I do not propose to recite them. When the case was almost at an end, the appellants sought and were granted leave to amend paragraph five of the statement of defence to accord with the attitude adopted by them. As amended, paragraph five of the statement of defence reads as follows:
“The defendants admit liability to pay to the plaintiff the sum of £6 10s. as the total sum representing the damage suffered by the plaintiff as a result of the fire.”
Accordingly, the questions which the learned trial judge must eventually answer in this case, were substantially accurately formulated by Mr. Quashie-Idun, learned counsel for the appellants, in the course of his address and were reproduced in the judgment of the learned trial judge as follows, “The issue is: Has the fire caused damage to the plaintiff’s machines and if so, to what extent?” As the appellants themselves admitted that the fire caused damage to the respondent’s machines, I would myself formulate the questions as follows: Has the fire entirely destroyed the respondent’s machines or damaged them beyond repair? If the answer to this question be yea, then the only matter that would merit consideration would be the pre-accident value of the machines. If the answer to the question be nay, the next question which naturally suggests itself is: To what extent were the machines damaged by the fire?
Like the appellants, the respondent also caused the machines to be examined by two companies, namely, the Caramafra Ltd. and S.C.O.A. and by some technicians. Representatives of these companies and the individual technicians gave evidence for the respondent and representatives of the two companies which examined the machinery at the instance of the appellants also gave evidence for the latter. The learned trial judge rejected the evidence of the expert witnesses called on behalf of the appellants on grounds which were severely criticised by counsel for the appellants. He preferred the technical evidence led on behalf of the respondent. The learned judge read that evidence as entitling him to conclude in one breath that, “the plaintiff’s machinery was destroyed by being damaged beyond repair,” and in another breath
that, “the fire damaged the plaintiff ‘s machinery to the extent that it was uneconomic to repair and was therefore totally destroyed.” Whatever language the learned judge used, it is manifest that he was of opinion that the machines were useless to the respondent and that he considered that the latter was entitled to recover from the appellants their full pre-accident value. He accepted the respondent’s word for this and proceeded to award him the total sum of £G16,300 claimed by him. With regard to the claim for miscellaneous expenses, the learned judge, obviously misled by the averment in paragraph three of the statement of claim, thought that the appellants insured the respondent against loss of profits and holding that both policies (exhibits C and D) were what are known in insurance parlance as “valued policies,” awarded the respondent the full sum of £G9,600 claimed by him.
Against this judgment the appellants appeal to this court. The notice of appeal contains three main grounds, the second of which complained that the learned judge erred in three specified respects. On 23 May 1964, three additional grounds were filed and when hearing of the appeal commenced before us on 25 May last, counsel for the appellants was granted leave to argue the three additional grounds. The first ground of appeal argued is what appears in the notice of appeal as ground (a) and reads as follows, “The plaintiff failed to prove that his machines and plants had been damaged by fire over and above the damage found and accepted by the defendant.” On this ground, counsel for the appellants referred us to that part of the judgment in which the learned judge summarised the evidence of the expert witnesses called by the respondent and in particular to one sentence in which the judge put together the effect of their evidence that “the machinery was ‘seized’ and damaged beyond repair.” Counsel referred us to the evidence of these witnesses, namely, Messrs. Brown, Croom, Tetteh and Othman and submitted that contrary to the judge’s view, all these witnesses said the machines could be repaired. Accordingly, counsel submitted that the learned judge’s finding was at variance with the unanimous evidence of the respondent’s expert witnesses and was therefore wrong. That being the position, counsel for the appellants contended that as the appellants’ obligation was merely to put back as far as money can what the fire had taken away of the respondent’s machinery, the respondent was obliged to establish to what extent his machinery was damaged. Counsel seriously submitted that the respondent wholly failed to establish the extent of the damage. He pointed out that all the respondent’s expert witnesses agreed that it was not possible to tell accurately the extent of the damage without disassembling the machines. But none of these witnesses, on their own admission, stripped down the machines. Accordingly, they were in no position to swear as to the extent of the damage which the appellants were under an obligation to make good. Counsel therefore argued that the respondent was entitled to no more than was admitted by the appellants, and the learned judge was in error inasmuch as he held otherwise.
In my judgment, this contention is formidable and seems almost unanswerable. Counsel for the
respondent attempted to answer it by argument which sounds rather less than convincing. It was submitted for the respondent that it was unnecessary to find out the full extent of the damage before arriving at a conclusion that the machines were damaged beyond repair. Counsel said it was enough to see an approximate amount of the damage. This, said counsel, the respondent’s witnesses have seen by the external examination undoubtedly conducted by them. In. the end said counsel, the respondent’s obligation was to establish a prima facie case and for this purpose all that is necessary is to produce evidence that some damage was done. That having been done, the real issue became: Was the machinery damaged beyond economic repair and if that be so, what was its value at the time of the damage? Counsel said there was clear evidence that the damage was not capable of economic repair and this has been accepted as a fact by the learned trial judge. That being the position, the only other question worthy of attention was the pre-accident value of the machines. On this, counsel referred us to the pleadings and submitted that the respondent’s averments as to the value of the machines were not controverted and must be deemed to have been admitted. The respondent, however, said counsel, gave oral evidence of this value ex abundantia cautela. Again, this the learned judge expressly adverted to and accepted. Accordingly, counsel contended that the appellants’ complaint in the first ground was untenable.
In order to determine which of these rival contentions is right, it seems to me necessary to attempt an answer to the two questions which I have propounded earlier in this judgment. It seems plain enough that it cannot be said on the evidence in this case that the machines were wholly destroyed in the ordinary meaning of that word. Indeed Sergeant Kwami who saw the machines on the morning of 16 December said they did not even appear to have been burnt. That however does not mean they may not have suffered some damage. The learned judge thought the machines were damaged beyond repair. In my opinion, the judge read too much into the evidence of the respondent’s witnesses. I think they said the opposite. Mr. Brown said, “The machines can be repaired but to do so the machines must be dismantled to remove all traces of moisture—the enemy of refrigeration.” Mr. Tetteh, the fridge mechanic, also thought the machines can be repaired. Mr. Othman did not express any view whether or not the machines can be repaired. Mr. Croom however thought the machines “cannot be economically repaired.” But a consideration of his report (exhibit B) leads me to think that he was of opinion that the machines could be put to good order again but did not think his company could do so on a business footing or at profit. In the penultimate paragraph of his report, he said: “We as a company asked to be excused from estimating for the work of putting this equipment in good order again as we could not make an economical repair.” If repair was not technically feasible, it is obvious he would not have expressed himself in that manner. In my opinion, the respondent has not made it out that the machines were either wholly destroyed or damaged beyond repair.
That being so, the respondent was under an obligation to show the extent to which the machines were damaged. He cannot make good his claim to indemnity otherwise. The two engineers called by the respondent namely Mr. Brown and Mr. Croom were agreed that in order to determine the extent of the damage, it was necessary to disassemble the machines. Mr. Brown who is a refrigeration engineer said he examined two only of the machines as the others had nothing to do with refrigeration. In his report to the respondent (exhibit A) he said, “An accurate estimate can be made only after the compressor and condenser units have been disassembled to ascertain the extent of the water and heat damage.” He said although it was not difficult to dismantle the machines, it takes time to do so. He did not dismantle the two machines presumably because he was unable to afford the time. Mr. Croom also conducted merely an external examination of the machines and concluded that the compressors were, as he put it, “seized.” He explained that that meant that the pistons and bearings “would not move as they should.” He gave four reasons as the probable cause of the “seizing” but was non-committal as to which was the actual cause. He thought this could be determined only by stripping the machines open. Accordingly, not only was Mr. Croom not able to say what caused the immobility of the pistons and bearings of the respondent’s machines, but he was not able to pin it down to either fire or water damage. Like Mr. Brown, he also did not strip the machines open although both he and Mr. Croom agreed that that was the only open sesame, so to speak, for the determination, with anything approaching accuracy, of the extent of the damage suffered by the respondent’s machines. Accordingly, in so far as the respondent assumed the onus of proving the extent of the damage suffered by his machines and the correlative liability of the appellant to indemnify him pro tanto, he failed out of the mouths of his own witnesses. In my judgment, the respondent failed not only to show the extent of the damage caused to his machines by the fire but also that such damage was beyond repair. It follows therefore that he was entitled to recover no more than was admitted by the appellants and I am satisfied for my part that the learned trial judge was in error when he held otherwise.
The next logical ground of appeal worthy of consideration is what appears in the notice of additional grounds of appeal as (f) and reads: “The learned trial judge was wrong in law in holding that exhibits C and D the plaintiff’s insurance policies are valued policies.” On this ground, counsel referred us to that part of the judgment in which the learned judge in effect held that as the appellants by their representatives examined the respondent’s books of account before insuring his expenses, it was idle for the appellants to argue that the policies were not valued ones. It was contended on this ground that the policy cannot be a valued one unless the value of the machinery is specified in the policy and there is an endorsement in the policy that the value of the machinery is accepted and the insurance company agrees to pay that amount. Counsel referred us to the evidence of Mr. Coltart, the Kumasi inspector of the appellants, on the meaning of a valued policy and also relied on the case of Elcock v. Thomson.1 It was
submitted that no such endorsement appears in either policy, but that on the contrary, clause (10) of the “Miscellaneous Expenses” policy (exhibit D) obliged the respondent to prove his expenses by the production of books of account.
For the respondent, it was submitted that the respective amounts for which the properties were insured are marked or stated at the back of each of the fire insurance and “Miscellaneous Expenses” policies (exhibits C and D) but were not so marked on a theft policy taken out by the respondent from the appellants (exhibit H). This shows, said counsel, that these two are valued policies. Counsel also submitted that the respondent’s books were thoroughly examined by an accountant at the behest of the appellants and this shows that these policies were intended to be valued ones, and the respondent had led enough evidence to show that he was entitled to his claim on this part of his case.
As I have said, what was insured on the policy marked exhibit D was “Miscellaneous Expenses.” The policy expressly stated that nothing was insured in respect of profits. The period covered by the indemnity is stated as six months. There is nothing in the policy to show that this was subsequently extended to twelve months. But as the appellants expressly admitted paragraph (3) of the statement of claim which stated that the period covered by the indemnity was twelve months, there must have been a subsequent agreed variation. As to whether the “Miscellaneous Expenses” policy in insurance trade parlance is known as a valued policy, one can only rely on the available evidence. The only person who sought to explain this was Mr. Coltart and I have already adverted to his evidence. If this evidence is right, then neither of the policies is a valued one. Mr. Coltart is no stranger to the insurance business and, by virtue of his office, was in a position to speak with some authority on insurance terminology. The effect of his evidence is that in a valued policy, the quantum of indemnity is agreed beforehand and no question of proving it arises. This view of the matter is borne out by the cases of Blascheck v. Bussell 2
and Elcock v. Thomson (supra). In Chitty on Contracts (22nd ed.), Vol. 2 at paragraph 857, the following appears, “A claim under a policy of indemnity is a claim for unliquidated damages. Where the policy is a valued one the measure of indemnity is the agreed value . . .” There is nothing in the “Miscellaneous Expenses” policy (exhibit D) which shows that the appellants agreed to pay the exact sum of £G800 in the event of a loss arising within the terms of the policy. That sum clearly represents the maximum sum for which the appellants accepted liability. The obligation cast on the respondent by clause (10) of the policy by which he was to produce books of account in proof of a loss within the policy, negatives any contention that exhibit D is a valued policy. In my opinion, neither of the policies is a valued one and the learned trial judge was wrong in holding the contrary. That being so, the respondent was under an obligation to prove the expenses made by him, if he was to recover under the policy. His counsel submitted that he led enough evidence to entitle him to succeed on this policy.
In my opinion, he has not. His evidence in proof of his loss consists in his bare declarations alone and is as follows:
“I pay £G220 a month rent for the factory (i.e. £G150 for the factory and £G70 for the wholesale store where the ice cream stock is kept). I employed 25 workmen, 50 commission sellers. The wages and salaries of these workmen are included in the claim for loss of profits. I employ one expatriate assistant manager at a salary of £G150 a month. The average monthly wages and salaries of the workmen was £G280. As for the commission sellers they got thirty-three and one-third per cent of the sales made. At the end of every month I paid about £G1,000 in wages and miscellaneous expenses.”
For my part, I cannot believe that that is a businessman’s way of proving his recurrent expenditure and if the learned judge had not concluded in his mind that this was a valued policy of which no proof was required, I feel grave doubt whether he would have held this claim proved. It seems to me wholly anomalous that a person who contracted with an insurance company to prove his claim by “books of account and other business books, vouchers, invoices, balance sheets and other documents” can come to a court of law and ask that his claim should be held proved by his bare oral declarations alone. In any event, what the respondent is entitled to recover under the policy in question is the actual expenses incurred by him during the period of twelve months in which his business was interrupted, bearing in mind, his own legal obligation to take steps to minimise his losses. In my opinion, the respondent failed to prove his claim under the “Miscellaneous Expenses” policy (exhibit D) and ought not to have been awarded anything under it.
The real battle that was fought in this case between the respondent and the appellants was fought on the issue of the respondent’s entitlement in respect of the machinery and the moneys due under the “Miscellaneous Expenses” policy. The respondent however made claims and succeeded on two other items, namely, bicycles and the stock of ice cream. The argument addressed to us on either of these was meagre. This is understandable. In view of the substantial sum involved in the “Machinery” and “Miscellaneous Expenses” claims, the small claims of £G50 and £G250 made on these two items were not more than straws in the wind. Both claims were made and can only have been made under the fire policy (exhibit C). The property insured by this policy was carefully itemised in a schedule. Save item one, the other items insured various machines and plant. Accordingly, these two claims can only be made
under item one. The property insured under this item was described as “contents, consisting of stocks of sugar, milk powder, syrup, essence and the like.” Bicycles cannot be the like of sugar, milk powder, etc. True, bicycles may be used with advantage in the ice cream trade but to say that it is of the same genus as sugar, milk powder and essence, would be doing too much violence to language. I think the two bicycles were not insured and ought to be held excluded from the property insured in item one by the rule of construction known as the ejusdem generis rule. It follows that the award of £G50 made in respect of them was made in error.
That brings me to the last item of the claim, namely, the stock of ice cream. That was plainly insured under item one of the fire policy (exhibit C) and the only question that calls for determination is, whether the destruction by fire and the value were proved. I think they were proved. The respondent said in evidence that he left 20,000 blocks of ice cream in the factory overnight. These were destroyed by the fire. This is an inherently credible story and the value he put on them was eminently reasonable. Had the respondent entered this stock in his books, it would have been more businesslike and would have facilitated proof but the absence of a written record is, by itself, not sufficient to discredit a very probable story. On this aspect of the case, the matter did not rest on the respondent’s lone declaration. He was supported by an obviously disinterested witness, namely, Police Sergeant Kwami. The latter said in evidence, “I saw ice cream in two refrigerators damaged. It all melted.” I think the respondent has proved
the destruction of the ice cream and its value as well as anyone may in this country and he is entitled to recover the sum of £G250 from the appellants. In my opinion, the learned trial judge was right in awarding this sum in his favour.
A good many other grounds were urged against the judgment by counsel for the appellant but as the view I have formed of the two main grounds is sufficient to dispose of this appeal, no useful object would be served in discussing them. In order that this judgment may not be of inordinate length, I will abstain from considering them.
In view of what I have said in the foregoing paragraphs of this long judgment, the respondent is entitled to the sum of £G6 10s. admitted by the appellants for damage to the machinery and the sum of £G250 for the destruction by fire of the ice cream stock, and to nothing else. This is a hard result for the respondent and it is impossible not to feel some sympathy for him. But this court is governed by principles of law and not by the hardship of any individual case. In any event, we ought to resist the temptation of allowing our feelings to get the better of our judgment.
Accordingly, I would allow the appeal and set aside the judgment appealed from. In lieu of it, I would enter judgment for the respondent against the appellants for the sum of £G256 10s. The respondent would be entitled to costs only on this sum and I would assess it at 35 guineas. But as the respondent ought to have failed in the court below on his claims for the destruction of the machinery and on the “Miscellaneous Expenses” policy, the appellants are entitled to their costs in that court. Using the costs awarded to the respondent as a guide, I would order that the appellants do recover from the respondents in the High Court assessed at 250 guineas and any costs paid by the appellants be refunded save and except the assessed costs of 35 guineas. The appellants will also have their costs in this court fixed at £G89 14s.
JUDGMENT OF MILLS – ODOI J.S.C.
I agree.
JUDGMENT OF ACOLATSE J.S.C.
I also agree.
DECISION
Appeal allowed.
S. A. B
