AKORTSU v. STATE INSURANCE CORPORATION [1972] 2 GLR 22
HIGH COURT, HO
Date: 29 FEBRUARY 1972
BEFORE: FRANCOIS J.
CASES REFERRED TO
(1) Hassett v. Legal & General Assurance Society Ltd. (1939) 63 L1.L.Rep. 278.
(2) Farrell v. Federated Employers Insurance Association Ltd. [1970] 1 W.L.R. 1400; [1970] 3 All
E.R. 632; [1970] 2 L1.L.Rep. 170, C.A.
(3) McCormick v. National Motor & Accident Insurance Union Ltd. (1934) 50 T.L.R. 528; 78 S.J.
633; 40 Com.Cas. 76; 49 L1.L.Rep. 361, C.A.
(4) Spraggon v. Dominion Insurance Co., Ltd. (1949) 69 L1.L.Rep. 1, C.A.
(5) Royal Exchange Assurance v. Sosu, Court of Appeal, 4 May 1970, unreported.
(6) State Insurance Corporation v. Mansah, Court of Appeal, 23 December 1968, unreported; digested
in (1969) C.C. 41.
(7) Gray v. Blackmore [1934] 1 K.B. 95, 103 L.J.K.B. 145; 150 L.T. 99; 50 T.L.R. 23; 77 S.J. 765;
[1933] All E.R. Rep. 520.
(8) Biddle v. Johnston [1965] 2 L1.L.Rep. 121; 109 S.J. 395, C.A.
(9) Guardian Assurance Co., Ltd. v. Sutherland [1939] 2 All E.R. 246; 55 T.L.R. 576; 83 S.J. 398.
(10) Manu v. Donko, Court of Appeal, 22 March 1965, unreported.
(11) Northern Counties of England Fire Insurance Co. v. Whipp (1884) 26 Ch.D. 482; 53 L.J.Ch. 629;
51 L.T. 806; 32 W.R. 626, C.A.
[p.24] of [1972] 2 GLR 22
(12) Clough v. London & North Western Ry. Co. (1871) L.R. 7 Exch. 26; 41 L.J.Ex. 17; 25 L.T. 708;
20 W.R. 189; [1861-1873] All E.R. Rep. 646.
(13) Lloyd v. Grace, Smith & Co. [1912] A.C. 716; 81 L.J.K.B. 1140; 107 L.T. 531; 28 T.L.R. 547; 56
S.J. 723, H.L.
(14) Whitechurch (George) Ltd. v. Cavanagh [1902] A.C. 117; 71 L.J.K.B. 400; 85 L.T. 349; 50 W.R.
218; 17 T.L.R. 746; 9 Mans. 351, H.L.
(15) Mercantile Credit Co., Ltd. v. Hamblin [1965] 2 Q.B. 242; [1964] 3 W.L.R. 798; 108 S.J. 674;
[1964] 3 All E.R. 592; [1965] C.L.J. 21, C.A.
(16) Monk v. Warbey [1935] 1 K.B. 75; [1934] All E.R. Rep. 373; 104 L.J.K.B. 153; 152 L.T. 194; 51
T.L.R. 77; 78 S.J. 783, C.A.
NATURE OF PROCEEDINGS
ACTION by the plaintiff against the defendants for satisfaction of the damages awarded in her favour in a running down case. The facts are sufficiently set out in the judgment.
COUNSEL
I. N. K. Wuaku for the plaintiff.
Nutsuga for Ackuako for the defendants.
JUDGMENT OF FRANCOIS J.
This action was instituted by the plaintiff against the defendants under section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), to recover damages awarded her in a running down action previously brought against the alleged assured of the defendants (hereinafter referred to as the tortfeasor). Though a number of issues were set down for trial, it was narrowed by consent to the single issue, namely, whether the policy or certificate allegedly issued by the defendants covered the tortfeasor and consequently made the defendants liable to the plaintiff to satisfy the damages awarded her.
The facts of this case are that the tortfeasor obtained a certificate of insurance through the plaintiff’s first witness, Isaac Newton Yaw Ayiku. The vehicle involved was ER 1354. The sum paid for insuring it was ¢120.00; and the certificate in respect of the vehicle was numbered 240296. The plaintiff’s first witness claimed that he was given nothing besides the certificate but was told that the policy would be subsequently posted to him. The receipt for the sum paid was however not produced; nor was it explained why the plaintiff’s first witness an illiterate, who had previously not conducted any business with the defendants, should have been selected to effect this transaction in preference to the tortfeasor herself or her driver. This witness also exposed his ignorance of insurance procedure when he claimed acquaintance with the methods adopted by the Royal Exchange Assurance which required no forms to be filled before a policy was issued. Apart from putting in exhibit A the certificate already referred to, exhibit B a judgment awarding damages against the tortfeasor, and [p.25] of [1972] 2 GLR 22 exhibit C a judgment of the magistrate’s court acquitting the tortfeasor’s driver on the charge of driving without a current certificate of insurance, the only other evidence proffered by the plaintiff was that of her second witness, a police officer, who had investigated the issuing of exhibit A. His evidence shows that the system of work of the defendants leaves much to be desired; but beside that, it does not advance the plaintiff’s case very far.
The defendants denied insuring vehicle No. ER 1354; and denied insuring Aurelia A. Akoto the
tortfeasor. The defendants also denied issuing certificate No. 240296 and claimed that the corresponding policy C.V. 257824 was issued to one Zacharia Musa on 31 October 1967. The certificate in respect of this policy was numbered 246529 for vehicle No. AT 8113 and the policy card was tendered as exhibit 11. The plaintiff could only succeed against the defendants if there was in existence an enforceable policy in respect of ER 1354 since the plaintiff’s rights are derived from the tortfeasor’s contract of indemnity with the defendants. See the judgment of Atkinson J. in Hassett v. Legal and General Assurance Society Ltd. (1939) 63 L1.L.Rep. 278 at p. 279 and the case of Farrell v. Federated Employers Insurance Association Ltd. [1970] 3 All E.R. 632, C.A. in which Lord Denning at p. 634 put it thus: “[the injured person] stands in the shoes of the insured. But the insurers can avail themselves, as against him, of all the defences which would have been available to them as against the insured. So in this case the insurers said that the policy was issued subject to conditions on which they relied as a defence.”The weakness of the plaintiff’s case is the absence of a policy of insurance in respect of the tortfeasor’s vehicle. There is a whole line of authority which has clearly laid down that it is the policy only which creates any liability on insurers. See the English case of McCormick v. National Motor & Accident Insurance Union Ltd. (1934) 49 L1.L.Rep. 361, C.A. and the leading case of Spraggon v. Dominion Insurance Co., Ltd. (1949) 69 L1.L.Rep. 1, C.A. The local decisions are of similar strain. Thus in Royal Exchange Assurance v. Sosu, Court of Appeal, 4 May 1970, unreported, it was held that, “Section 10 (1) applies only where there is a valid insurance policy.” See also State Insurance Corporation v. Mansah, Court of Appeal, 23 December 1968, unreported; digested in (1969) C.C. 41. If an insurance company is entitled to avoid a policy for a material breach and is not estopped by the existence of a certificate of insurance as happened in Gray v. Blackmore [1934] 1 K.B. 95 then a fortiori, a company may repudiate a spurious certificate not propped by any existing policy. Thus in the McCormick case (supra) Greer L.J. said at p. 370 that a certificate of insurance is: [p.26] of [1972] 2 GLR 22 “Only issued for the purpose of enabling the assured to produce that document when he is on the road, which will show that he has complied with the Act to the extent of getting a policy of insurance; but it is not intended to be a representation that the policy which he has got will in any event become a policy on which he will be entitled to recover in the event of an accident happening and damages resulting.”So also was it held in Biddle v. Johnston [1965] 2 L1.L.Rep. 121, C.A. that the policy overrides the certificate where there is inconsistency between the two; and in Guardian Assurance Co., Ltd. v. Sutherland [1939] 2 All E.R. 246 it was also held that a policy obtained by a false and material representation insured no one. In the light of the authorities therefore I have reluctantly come to the conclusion that no liability can attach to the defendants in the absence of a policy of insurance.
But the matter does not end there. My difficulty in this case arises because although no clear liability is created on a strict interpretation of the law against the defendants, the facts do not entirely exonerate them. It is clear that the defendants’ method of conducting their business was somewhat lackadaisical. I have however not much material to conclude that the defendants’ servants or agents were fraudulent in the issue of the certificate exhibit A. It is regrettable therefore that the plaintiff failed to tender the receipt for the moneys allegedly paid to insure the vehicle. This would have made a real difference. I must now turn to the method employed by the defendants in ensuring that insurance certificates do not fall into unauthorised hands. To particularise, I find the evidence of the defendants’ first witness Miss Podzogbey the weakest chink in the defence armour. She admitted that exhibit A was among the forms she received but she denied typing in the particulars on that form and could not account for its loss. Other certificates issued to her which got mislaid were 240295, 240296 and 240297. Counsel for the defendants was compelled to ask the pertinent question, “In the normal course of your work, if you collect say 20 certificates, is there nothing to show that you have returned the certificates?” She answered: “We used to enter the certificates in one note book. All six of us [typists] enter into the same book. As we all use the book I do not check to see whether all my certificates have been entered. That is why I find it difficult to detect whether exhibit A was stolen. As far as exhibit A is concerned, I admit I had taken custody of it for typing. I did not type the entries on it. ”This evidence is however starkly contradicted by the third defence witness Mr. Ebenezer Benjamin Haizel who disclosed the existence of control book, exhibit 2, showing the movement of all certificates such as exhibit A given out for the typing in of particulars. He stated that at the end of the day, unused certificates were returned. Exhibit 2 showed that certificates 295 to 297 were blank and unsigned indicating [p.27] of [1972] 2 GLR 22 that they were missing. The third defence witness concluded, “If a certificate was missing it would be known to both the typist and the stationery clerk at the close of the day.”There is also the further evidence of police sergeant Amoah the plaintiff’s second witness that Miss Podzogbey admitted that she did not know that exhibit A was missing until he had confronted her with it. The question that has agitated my mind is whether the first defence witness is only naive and inefficient or whether her posture conceals a far-reaching and ingeniously contrived fraud of which she was a party or had knowledge? I regret again that the paucity of evidence prevents me from coming to any firm conclusion on this aspect of the case; but that does not prevent me from roundly condemning the whole system as revealed in evidence before this court. The defendants have not attempted to exculpate themselves on the issuing of policy No. CV. 257824 on 31 October 1967 when exhibit A had been missing as far back as April 1967. The assurance given by the defendants’ representatives that reports had been made to the police in relation to thefts of certificates 240295–240297 was not substantiated though opportunity was given to the defendants to do so. The question therefore for a decision is whether the defendants were taking advantage of their own wrong for avoiding liability? The principle of law which determines the apportionment of blame where two innocent parties have to suffer for the fraud of a third party and places it on the one whose indiscretion contributed to it is now enshrined in the local authority of Manu v. Donko, Court of Appeal, 22 March 1965, unreported. In that case reference was made to Northern Counties of England Fire Insurance Co. v. Whipp (1884) 26 Ch.D. 482, C.A. where it was held that fraud which is neither connived at nor assisted in its establishment will not avail an innocent party. In other words mere carelessness or want of prudence can create no liability in such circumstances.
The facts in this case fall short of proof that after knowledge of fraud the defendants expressly or by
unequivocal acts perpetuated it. Had this happened I would not have hesitated to find the defendants
liable on the authority of Clough v. London & North Western Ry. Co. [1861-73] All E.R. Rep. 646. I was referred by both parties to the celebrated case of Lloyd v. Grace, Smith & Co. [1912] A.C. 716,
H.L., one party urging it as directly in support of his case, the other as exemplifying the exception to the rule. In that case a solicitor’s clerk perpetrated a fraud on a client for his own benefit but the solicitors were held liable. That case is authority for the proposition that where a servant has authority to do an act, he would fix liability on the master if he does his duty fraudulently even if he does it solely for his own interest. The salutory basis for the rule is that the master represents and holds out to the world at large that the servant has implicit authority to conduct certain business. Thus subsequent repudiation of his servant’s acts cannot be allowed. [p.28] of [1972] 2 GLR 22
This principle is however limited by the case of Whitechurch (George) Ltd. v. Cavanagh [1902] A.C. 117, H.L. where it was held that a company secretary could not fix liability on a company when he
fraudulently certified a transfer of shares though his duties included such a certification. Though this is a border line decision it was held that the secretary’s authority depended on the actual deposit of the certificate so he had no ostensible authority to certify the transfer where no certificate had been lodged. Relating this authority to the instant case, one sees at once its application. It would clearly be
commercially inconvenient and even suicidal if a mere typist who fills in blanks may without any
authority bind the defendants by any fraud. Thus it is that where a servant merely fills in blanks in a form but cannot proceed further with the document without confirmation no authority either actual or ostensible can be implied. See Mercantile Credit Co., Ltd. v. Hamblin [1965] 2 Q.B. 242, C.A.
The Whitechurch case can therefore be distinguished as indeed the transfer of securities in that case was an improper mode of performing an authorised act of dealing with the client’s property and within the scope of the servant’s engagement. Any welching there- fore would be at the employer’s risk. In this case the first defence witness had the limited authority of merely typing particulars in the insurance form exhibit A and nothing more. Again, exhibit 2 shows that the certificates including exhibit A, which got lost, did not get to an executive officer for signature to fix managerial responsibility on the defendants. Nothing was proved to demonstrate exhibit A.’s authenticity. Since a typist is on the lower rungs of the defendants’ staff and not part of the top management and nowhere near the nerve centre, she cannot fix responsibility on the defendants. I find therefore that no fraud which is a sine qua non for liability was proved against the defendants. To hold otherwise would amount to equating the criminal responsibility with civil responsibility, an innovation against which a caveat must issue. I would like to observe finally that the Motor Vehicles (Third Party Insurance) Act, 1958, is an edifice designed and constructed to protect victims of road accidents so as to ensure they do not go uncompensated. But does it accomplish this object? Great skill has been employed by the legislature in England to narrow the gap between success in a running down action and the actual recovery of the compensation awarded. This has been achieved by three methods:
(1) Third Party Compulsory Insurance contained in section 201 of the Road Traffic Act, 1960 (8 & 9
Eliz. 2, c. 16). (2) The application of the rule in Monk v. Warbey [1935] 1 K.B. 75, C.A. under which it is an actionable breach of statutory duty to permit a person to drive an uninsured vehicle on the roads. (3) The Motor Insurers Bureau which accepts liability where no insurance policy is in force.
[p.29] of [1972] 2 GLR 22 Thus in a largely illiterate country like Ghana, more legislation is clearly required if judgments in running down cases are not to be rendered nugatory by the impecuniosity of defaulting parties or by supervening technical difficulties in recovering from insurance companies. The admirable aim of the legislators of the Motor Vehicles (Third Party Insurance) Act, 1958, to protect the common citizen injured in car accidents will remain unrealised if supporting legislation or amendments to suit our particular circumstances are not embarked upon. Thus in State Insurance Corporation v. Mansah, Court of Appeal, 23 December 1968, unreported; digested in (1969) C.C. 41 it was conceded that: “Section 10 caters for a limited class of insurance claims. There may be policies which cover risks for which judgment may have been obtained against the assured but if those risks are outside the ambit of section 6 (1) (b) of the Act, then the party with the judgment in his favour has to find other means of getting at the insurance company. He can- not proceed under section 10 of the Act.”This is a clear invitation for legislative reform to fill in the hiatus if the Act is not to remain the will-o’-the wisp that it is to some unfortunate victims of road accidents. In this regard sight must not be lost of the other areas completely untouched by the Act, as exemplified by the instant case where no policy exists at all, a situation which is catered for in England by the Motor Insurer’s Bureau. I must now express regret that though I find the defendants morally blameworthy, I am not entitled in law to translate this culpability in terms of pecuniary damages. This is a conclusion I have reached with real reluctance. I must perforce dismiss the plaintiff’s claim; but I register my chagrin by making no order as to costs.
DECISION
Judgment for the defendants.
