HIGH COURT, TAMALE
Date: 10 SEPTEMBER 1975
ATA-BEDU J
CASES REFERRED TO
(1) Biddle v. Johnston [1965] 2 Lloyd’s Rep. 121; 109 S.J. 395, D.C.
(2) Goodbame v. Buck [1940] 1 K.B. 107; [1939] 4 All E.R. 107; 161 L.T. 348; 103 J.P. 393; 83 S.J. 850; 56 T.L.R. 36; 65 LI.L. Rep. 27.
NATURE OF PROCEEDINGS
ACTION by the plaintiffs against the defendants as insurers to recover a judgment debt under the Motor Vehicles (Third Party Insurance) Act, 1958, s. 10. The facts are sufficiently stated in the judgment.
COUNSEL
E. O. Appiah for the plaintiffs.
Ibrahim Mahama for Allotei Cofie for the defendants.
JUDGMENT OF ATA-BEDU J
In compliance with section 3 (1) of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), one Alhaji Yahaya took out an insurance policy in respect of the peril of death or bodily injury to any person caused by or arising out of the use of his passenger motor vehicle No. AT 7431 as required by section 6 of the said Act. The policy of insurance is numbered 256860 issued by the defendants, as approved insurers, commencing, as alleged by the insured, from 1 April 1967 to 30 April 1968. In pursuance of section 6 (4) of the Act, the defendants delivered to the said Alhaji Yahaya, in respect of the policy a certificate of insurance in the prescribed form bearing the number 241367 in which the period of the currency of the policy is stipulated as alleged above.
On 13 April 1968, which on the face of the said certificate of insurance, was within the alleged period of cover, the plaintiffs were travelling as fare-paying passengers in the said vehicle No. AT 7431 on the Savelugu-Bolgatanga road when as a result of the negligent driving of the said vehicle by one Bawa Wangara, a servant or agent of the said Alhaji Yahaya, the vehicle went off the road into a ditch and thereby caused injuries to the plaintiffs.
In the suit numbered 66/70 at the High Court, Tamale, against the said Alhaji Yahaya on 19 October, the court, in its judgment dated 24 January 1972, awarded the plaintiffs damages including costs as follows: first plaintiff 2,600.00; second plaintiff 11,100.00; third plaintiff 03,100.00; fourth plaintiff 3,100.00 and fifth plaintiff 11,100.00.
By virtue of and under section 10 of the Act, this action has been instituted against the defendants to recover the above sums awarded as damages totalling 31,000.00. The plaintiffs claim also interest on the said 031,000.00 at the rate of 20 per cent per annum from 24 January 1972 until payment.
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The main defence of the defendants is that they are not liable because the accident occurred outside the period of the currency of the policy which they allege commenced from 1 April 1967 to 31 March 1968. They say that the expiry date of 30 April 1968 inserted in the certificate of insurance was a typographical error and that an action had been taken at the High Court, Accra, for a declaration for rectification.
The crucial point around which the controversy revolves is the period of the cover of the policy. What counsel for the plaintiffs alleges as questions for the determination of the court are:
(1) What was the period of insurance under the policy?
(2) Having regard to section 10 of the Act whether the court can rectify the policy and if it can whether such rectification can affect the rights of the plaintiffs in this case?
(3) Whether without notice of any attempt to rectify the policy being given to the third party (i.e. the plaintiffs) any rights of the plaintiffs can be affected by rectification’?
(4) Quite apart from the Act, whether the court can properly rectify a document whose effect has long come to an end and especially after the third party had acquired rights thereunder?
On these points, except the first and the third, what counsel for the defendants has submitted is that rectification is not the bone of contention in this action. In paragraph (5) of the statement of defence, the averment is just that the defendants had commenced an action in the High Court, Accra, against the said Alhaji Yahaya to rectify the said date of “30 April 1968,” which they say is not the date of expiry, to read “31 March 1968”, as appears in the policy. What I have to determine therefore, inter alia, are the questions: (1) whether there has been any action resulting in an order rectifying the alleged typographical error of the expiry date either on the face of the said insurance certificate or in both the certificate and the policy; (2) whether notice of the action for the rectification was given to the plaintiffs as third parties; (3) whether without any such notice the rights of the plaintiffs can be affected by rectification; and (4) what was the period of expiration of the policy of insurance. It is trite law that if the defendants rely on the alleged typographical error and that action for rectification, the onus of proof lies on them.
In paragraph (3) of the statement of claim, it is alleged that the accident occurred on 13 April 1968 during the currency of the said policy when the certificate of insurance was in full force and effect. But this is denied in paragraph (7) of the statement of defence. The defendants deny also their liability under section 10 of the Act which imposes a duty on the insurer to satisfy judgments obtained against persons insured in respect of third party risks.
In reply to the defendants’ denial in paragraph (7) of the defence, the plaintiffs say that the defendants are estopped as against the plaintiffs from denying that the date of expiry of the policy of insurance was 30 April 1968 as stipulated in the certificate of insurance and allege as particulars of the estoppel the following:
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(1) The Motor vehicles (Third Party Insurance) Regulations, 1959 (L.N. 12 of 1959) required the defendants to insert the date of expiry of the policy in the certificate of insurance;
(2) The defendants inserted as the date of expiry of the policy 30 April 1968;
(3) The insured of the defendants used the motor vehicle on the road on the basis of the certificate as being a lawful user;
(4) The plaintiffs, whilst the vehicle was apparently being lawfully used, were injured.
On the contrary, the defendants say in their statement of defence that the period of cover of the said policy issued to the insured was from 1 April 1967 to 31 March 1968 (a period of twelve months) which what is was stated in the proposal form executed and thumb printed by the said Alhaji Yahaya but not from 1 April 1967 to 30 April 1968 and that Alhaji Yahaya was aware of this period of twelve months. There can be no doubt that the period of the currency of a policy of insurance is expected to be defined with certainty and that the length is a matter of agreement between the parties. I do not find any provision in the Motor Vehicles (Third Party Insurance) Regulations, 1959 (L.N. 12 of 1959), nor in the Act itself limiting the cover period, but the common practice is to limit it to twelve months. However, it is said that a period longer than twelve months may not be deemed unusual (see Halsbury’s Laws England (3rd ed.), Vol. 22, para. 465). As counsel for the plaintiffs has contended, the defendants have not pleaded reliance on insurance or trade practice.
In the present case it is tolerably clear as appears on the certificate of insurance (exhibit B) that the period is from 1 April 1967 to 30 April 1968 (a period of thirteen months) but what is argued against this on behalf of the defendants is that the insured knew the expiry date to be 31 March 1968 because he signed the proposal form for twelve months and paid a premium. The principle is that in order to ascertain the terms of the contract, reference may be made not only to such documents as are incorporated in the policy such as the schedule, but also the proposal form which is not incorporated but which may be of assistance in showing what the contract between the parties really was. I must observe here that the proposal form alluded to by the defendants has not been tendered to help solve the problem which has arisen notwithstanding the principle that once the proposals or the negotiations have been written into the contract (i.e. the policy) it is the contract which the court has to look at for what is contained in it.
The law requires that the period of cover be inserted in the policy as well as in the certificate and when so inserted it becomes a condition precedent to liability under the policy and a term which goes to the root of and is fundamental to the whole contract. If, therefore, the defendants say the period of cover as stipulated in the policy is from 1 April 1967 to 31 March 1968 but not as inserted in the certificate then, as a general rule, they bear the onus to prove that the accident occurred outside the period of cover which is 1 April 1967 to 31 March 1968; the onus is not on the plaintiffs to prove compliance with that term of the policy which is that
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the accident occurred within the period as inserted in the certificate of insurance.
What the plaintiffs, in the exercise of their rights against the defendants, are required to show and which, in this action, has been shown is that they have obtained a judgment against the insured who at the time of the accident had possession of a certificate of insurance delivered to him by the defendants in respect of liability which is covered by the compulsory policy of insurance and the terms of the policy (see Preston and Colinvaux on Law of Insurance (2nd ed.), p. 344). The judgment and the certificate of insurance are tendered and marked as exhibits A and B respectively. It has not been disputed that the plaintiffs fall within the class of third parties whose bodily injuries were covered by the policy taken by Alhaji Yahaya.
If the requirement under the regulations L.N. 12 of 1959 is that the defendants should insert the date of expiry of the policy in the policy and the certificate the insured will have no doubt that the date of expiry appearing in the certificate as 30 April 1968 is the same as inserted in the policy, notwithstanding, as alleged by the defendants, his knowledge that the period of cover is twelve months. The insured Alhaji Yahaya, who is the witness for the plaintiffs, has said that the date 30 April 1968 is what was inserted in the policy but the original which was given him is lost because his search for it before and after the accident was in vain.
The defendants have not denied issuing the certificate of insurance exhibit B to the insured, Alhaji Yahaya, but what is pleaded in respect of the period of the currency of the policy stipulated therein is contained in paragraphs (4), (5) and (6) of the statement of defence thus:
“(4) The defendants say that even if the insurance road certificate bears 1 April 1967 to 30 April 1968 as the period of cover the same was a typographical error which does not override the policy issued in respect of the said vehicle No. AT 7431 and which policy bears 1 April 1967 to 31 March 1968 as the period of cover.
(5) Further in the alternative the defendants aver that even if the said typographical error on the face of the said insurance road certificate affects the policy (which is denied), they had commenced an action in the High Court, Accra, against the said Alhaji Yabaya to rectify the said error.
(6) Save that the defendants admit that the period of cover was wrongly typed as 1 April 1967 to 31 April 1968 on the certificate of insurance paragraph (2) of the statement of claim is denied.”
Although in the case of Biddle v. Johnston [1965] 2 Lloyd’s Rep. 121, D.C., the court held that the policy overrides the certificate where there is inconsistency between the two, I do think a reliance on the certificate in the absence of the policy for the expiry date as being that inserted in the policy cannot be ignored otherwise no problem of the kind as has presently arisen can be solved. The provision under section 6 (4) of the Act that a policy is of no effect unless and until there is issued a certificate of insurance creates a condition precedent to the validity of the policy. It therefore
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accords the certificate some significance because:
(1) it is proof of the subsistence of the insurance policy;
(2) it is issued in accordance with the form prescribed by the Act containing such particulars of any conditions subject to which the policy is issued. The period of the currency of the policy is one of such conditions and if this period is inserted in the certificate it cannot, in my opinion, be said that it is enlarging the period in the policy. The insured cannot be said to have done more than was required in the contract;
(3) as must be admitted, it is by virtue and on the basis of the certificate that the insured can put his vehicle on the road within the period therein inserted.
However, the fact that the insured could not produce the original policy given him does not prevent the defendants from proving 31 March 1968 as the date of expiry by the production of the copies of the policy, the certificate and the proposal form from their records.
The evidence offered on behalf of the defendants is only that of the motor manager representing the defendants. His evidence for the most part relates to the general procedure for the preparation and issue of the policy and the certificate of insurance in contracts of the kind such as between the defendants and the insured herein. Despite his evidence that a copy of the policy goes on the records of the defendants, such a copy has not been produced; but if by the copy of the policy, he means the copy of the schedule he tendered in evidence then I can ignore its weight for the reasons I shall give later. It has not been explained why, in the absence of the policy the proposal form pleaded in paragraph (3) of the statement of defence has not been tendered in evidence. That part of his evidence which is of some significance runs as follows:
“It is not necessary for the person who types the certificate to type the schedule too. After the preparation of the certificate someone in the office examines the certificate as against the policy papers. After examination, the substantive officer who must sign the certificate is the accident manager but some one may sign for him. In the present case it was signed for him. That responsible officer, before signing the certificate, must satisfy himself by examining the policy documents. The person who types the policy is not the person who examines the certificate or signs as or for the accident manager . . . That officer must be sure that the particulars in the certificate comply with form A.”
In proof of this alleged typographical error on the part of the defendants, an alleged copy schedule supposed to have come from their records has been tendered and marked as exhibit 3 through this manager who deals with motor claims. But quite frankly he has confessed his ignorance of how this contract of insurance came into existence and stated that he had nothing to do with either the certificate of insurance (exhibit B) or the policy in respect of which it was issued. According to him, he got to know of the existence of this policy and the certificate only after the institution of this action.
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If, as the defendants’ representative says, the schedule of the policy is interleaved with a carbon paper between that attached to the policy and the extra blank form and filled in, then obviously it is the carbon copy which is expected to be produced from their records and tendered in evidence. But as contended by counsel for the plaintiffs, and this was unresisted, that schedule exhibit B is an original and has not been established to be the duplicate. Despite the objection taken by counsel for the plaintiffs to the admission of the schedule in evidence on the ground of non-compliance with the High Court (Civil Procedure) Rules, 1954 (L.N. 140A), Order 37, rr. 60 and 63, counsel for the defendants, being content with his submission in reply that the rules do not apply to documents prepared on behalf of companies or corporations, rests the case for the defendants at the close of the evidence of the manager without considering the effect of the ruling I gave conditionally rejecting the objection. The effect of those rules under Order 37 of L.N. 140A is that if counsel seeks to put in evidences the copy of the schedule attached to the policy which is lost, he must prove it as a correct copy by calling the person who prepared or made it. It is for the reason that such proof has not been established that, as I have earlier said, I attach no weight to it. Also as an inadmissible document its admission, after its objection had been overruled, would not render it any more admissible. Granting that the schedule, exhibit B, is a copy, which is denied, Order 37, r. 69 of L.N. 140A provides that a copy shall not be received in evidence unless it be further proved that the copy has been examined with the original and is correct. Such proof has not been given by the person who examined the copy with the original.
In the absence of the original policy issued to the insured, it is contended on behalf of the plaintiffs that the certificate, which, as the law requires, contains the same particulars as in the schedule to the policy, is the best secondary evidence which can be offered. If, therefore, the defendants allege that the date of expiry inserted in the certificate was a typographical error, then it stands to reason that either the official who examined the certificate against the policy papers or the one who signed the certificate after the examination must be produced to testify as to how such an error could not have been detected and corrected before the delivery of the original policy and the certificate to the insured.
While I acknowledge the principle that it is the policy which creates any liability on insurers, I cannot overlook the fact that the certificate, although not a contract in itself, strongly supports the contention that at the time of the accident, a policy of insurance in respect of which it was issued and had not been declared void or voidable was subsisting: see Goodbarne v. Buck [1939] 4 All E.R. 107. I have not been left in any doubt and I find that in the absence of any evidence to the contrary, the expiry date in the certificate is the same as in the policy and that Alhaji Yahaya had no misgiving that he could and did put his motor vehicle on the road before that date. The statements of the particulars of the insurance were prepared by the defendants and if their defence is that they are not liable because the accident happened outside the period of cover stipulated in the policy which is inconsistent with that inserted in the certificate and
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that it could be rectified or avoided I have no doubt that they could have decided after the discovery of the error, within the period of cover as alleged by the defendants, to give notice to the insured as to when the policy would cease to be in force and effective. If they did not do so and allowed the insured to use his motor vehicle on the road resulting in the event that happened, they are precluded from relying on its lapse; it is not possible to say that there was not in existence a subsisting policy with respect to the said motor vehicle at the time of the accident and as was held in Goodbarne v. Buck (supra) at p. 107 until the policy was declared void by the court, there was for the purpose of this case a subsisting policy in respect of the vehicle.
On the submission by counsel for the defendants that there has been an action for rectification, the truth of which has not been established in evidence, this is what was said by Hilbery J. in the case of Goodbarne v. Buck, supra at pp. 110-111:
“The fact that the rights which were created by that contract of insurance were subsequently successfully avoided so far as the immediate parties to it were concerned, does not, it seems to me, prevent there having been a policy in force at the time of the user of the vehicle which is in question, when, as I have said, one remembers that, at that time, there had been no avoidance of it, and might never have been any avoidance at all if the insurance company had chosen to abide by it.”
But assuming, as submitted by counsel for the defendants, that the period of cover on the face of the certificate is an error, which is denied and the proof of which I do not find, this conduct on the part of the defendants which could be relied on and is presently pleaded as having induced the insured to believe that the contract was valid estops them from repudiating their liability to satisfy the judgment obtained against their insured.
No evidence has been established that there was an action at the High Court for a declaration for rectification of the alleged error and if there were, in fact, any such declaration proceedings, I find that it has not been established that the plaintiffs as third parties were given any notice of such proceedings so as to enable them to contest the defendants’ right to repudiate their liability.
The provision which imposes the duty on the insurers to satisfy judgments obtained against persons insured in respect of third party risks is section 10 (1) of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), which runs as follows:
“If after a certificate of insurance has been delivered under the provisions of subsection (4) of section 6 to the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy issued under the provisions of paragraph (b) of subsection (1) of section 6, being a liability covered by the terms of the policy, is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to
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avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of such judgment any sum payable thereunder in respect of the liability including any sum payable in respect of costs and any sums payable by virtue of any written law in respect of interest on that sum or judgment.”
The effect of the above provision per se in the light of the case of the defendants as submitted is that their possible defence is taken away or does not exist. In other words, the fact that they were entitled to rectify the error is no defence against the plaintiffs and they are bound to satisfy the judgment obtained.
On the evidence as a whole, I have not been satisfied that the expiry date inserted in the certificate of insurance is not the same as that in the policy. I find that the alleged error, if any, has not been proved. I find also that the alleged action for rectification has not been proved. In the light of these findings I do not find any justification for the contention that the defendants are not liable to satisfy the judgment obtained against Alhaji Yahaya, their insured. With no valuable evidence at the disposal of the defence, this action, in my view, should not have been contested at all. In the result the plaintiffs’ action succeeds and there will be judgment against the defendants for the sums as claimed in the writ or the statement of claim but not for the interest claimed because they have not established their entitlement to it. Agreed costs of 0200.00 for each plaintiff inclusive of counsel fees.
DECISION
Judgment for the plaintiffs. S. O.
