HIGH COURT, ACCRA
DATE: 14 APRIL 1967
BEFORE: EDUSEI J.
CASES REFERRED TO
(1) Thomson v. Weems (1884) 9 App. Cas. 671, H.L.
(2) Yorkshire Insurance Co., Ltd. v. Campbell [1917] A.C. 218; 86 L.J.P.C. 85; 115 L.T. 664; 33
T.L.R. 18, P.C.
(3) Dawsons Ltd. v. Bonnin 1921 S.C. 517; on appeal, [1922] 2 A.C. 413; 91 L.J.P.C. 210; 128 L.T. 1; 38 T.L.R. 836, H.L.
(4) Carter v. Boehm (1766) 3 Burr. 1905; 1 Wm. Bl. 593;97 E.R. 1162.
(5) Greenhill v. Federal Insurance Co., Ltd. [1927] 1 K.B. 65; 95 L.J.K.B. 717; 135 L.T. 244; 70 S.J. 565; 17 Asp.M.L.C. 62; 31 Com. Cas. 289, C.A.
(6) Marcovitch v. Liverpool Victoria Friendly Society (1912) 28 T.L.R. 188, C.A.
NATURE OF PROCEEDINGS
ACTION to avoid a policy of insurance on the grounds inter alia of either non-disclosure of a material fact or a representation of fact which was false in a material particular.
COUNSEL
Pobee-Orleans for the plaintiffs.
Koi-Larbi for the defendants.
JUDGMENT OF EDUSEI J.
In this case both counsel, Messrs. Pobee-Orleans and Koi-Larbi agreed that the facts were not in dispute and that the whole case turned on legal arguments. On 26 February 1962, the defendants filled in a proposal form exhibit A with a view to insuring their Bedford lorry No. AD 9278 with the plaintiff insurance society. Prior to the filling in of the proposal form (exhibit A) the defendants had entered into a hire-purchase agreement with one A. K. Diaba ofnKajebi on 20 February 1962. This hire-purchase agreement was exhibit C.
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The plaintiffs instituted this action on 2 July 1963, to avoid the policy of insurance between themselves and the defendants on the ground that (a) the defendants, on entering into the hire-purchase agreement with A. K. Diaba, had no insurable interest and (b) the policy of insurance was obtained by the defendants by the non-disclosure of a material fact or in the alternative by a representation of fact which was false in a material particular.
It is necessary at this stage to determine whether the defendants had any insurable interest in the Bedford lorry No. AD 9278 to enable them to insure it. This question calls for a decision of the legal position ofthe defendants in respect of the hire-purchase agreement (exhibit C) and to determine such legal position of the defendants I have to consider the incidents of a hire-purchase agreement. In Dustan’s Law of Hire-Purchase (4th ed.) at p. 1 appears the definition of hire-purchase agreement: “A `Hire-Purchase agreement’ is a phrase used to denote a class of contracts the general characteristics of which are:- (1) the delivery of goods to the hirer who obtains possession thereof; (2) The property in the goods remains in the owner and (3) the hirer agrees to pay the purchase price thereof by instalments, and the owner agrees to transfer the property in the goods to the hirer on completion of the payment.”
For the owner of goods of a hire-purchase agreement to have an insurable interest the guiding principle has been that such interest must be an enforceable one: see Preston and Colinvaux on the Law of Insurance (2nd ed.) at p. 38. It follows therefore that the defendants, as owners of Bedford lorry No. AD 9278 on 26 February 1962, had an insurable interest in the said lorry. Ground (a) for avoiding the contract of insurance has been disposed of by my finding that the defendants at the time of filling in exhibit A, the proposal form, had an insurable interest in the lorry No. AD 9278. It becomes necessary for this court to consider whether or not there was a non-disclosure of material fact. In the proposal form (exhibit A) certain questions were answered by the assured and at the bottom of the form appear the following words, “We hereby declare the truth and correctness of the above statements and particulars and agree that this proposal and declaration shall be held to be promissory and the basis of the contract between us and the society.” Since the parties did decide to incorporate this into their contract it is my considered view that the answers given to the questions in exhibit A are material. Prima facie businessmen do not ask questions and invite answers which they make the basis of their contract unless they
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consider these to be material. Thus the famous Lord Blackburn had this to say in Thomson v. Weems (1884) 9 App.Cas. 671 at pp. 683-684, H.L. as to what particulars are material: “It is competent to the contracting parties, if both agree to it and sufficiently express their intention so to agree, to make the actual existence of anything a condition precedent to the inception of any contract; and if they do so the non-existence of that thing is a good defence. And it is not of any importance whether the existence of that thing was or was not material; the parties would not have made it a part of the contract if they had not thought it material, and they have a right to determine for themselves what they shall deem material.”
I am content for the present purpose to take the matter as it was put by Lord Sumner in delivering the opinion of the Privy Council in the case of Yorkshire Insurance Co., Ltd. v. Campbell [1917] A.C. 218 at p. 225, P.C., “. . . in any case, since the parties have imported this statement into their contract presumably they thought it material.” See also the Scottish case of Dawsons Ltd. v. Bonnin 1921 S.C. 517.
Having so decided that the answers to questions in the proposal form are material, I shall have now to turn my attention to the answers given to questions in exhibit A and to determine the consequences for non-disclosure of such material matters. In exhibit A questions (7)-(10) and part of question (6) have been cancelled. Counsel for the plaintiffs invited me to regard the cancellation, though he called it “dash,” of question (7) as meaning an answer “No” to the said question. Question (7) of exhibit A reads: “Is the vehicle subject to hire-purchase agreement?” There is no doubt that when the defendants filled in the proposal form on 26 February 1962 they had entered into a hire-purchase agreement with A. K. Diaba—(exhibit C)— in respect of Bedford lorry No. AD 9278 which was also the subject-matter for the insurance. It is to be observed that there is no sufficient material before me to determine who cancelled the questions (7)-(10) on exhibit A. There appears, however, from the argument of Mr. Koi-Larbi,counsel for the defendants, some indirect admission that the cancellation was made by his clients, the defendants.
The effect of non-disclosure of a material fact renders the contract voidable at the election of the aggrieved party, and in the instant case, exhibit B, the policy of insurance, ex facie would be voidable. But the matter does not rest there. There are no answers to questions 1 (b) and 6 on exhibit A. What is the purpose of the cancellation of question (7) by the defendants? I am of the view that
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it cannot be interpreted to mean “Yes” or “No” as they did with some other questions in the proposal form exhibit A. I hold therefore that the assured’s answer were obviously incomplete. This situation should have put the plaintiffs on their inquiry and invited specific answers to the questions from the defendants. The proposal form exhibit A was filled in on 26 February 1962 by the defendants and received by the plaintiffs on the same day. The fact that there were blanks and cancellations should have put the plaintiffs on their guard to make inquiries immediately, but they did nothing and went on to issue the policy of insurance, exhibit B, on 26 February 1962, the same day as exhibit A was filled in. Such failure on the part of the insurers, the plaintiffs, amounted to a waiver of their right to fuller and more precise information. This principle of waiver in insurance cases was enunciated by Lord Mansfield in the case of Carter v. Boehm (1766) 3 Burr. 1905 at p. 1910, and it subsequently received the blessing of Scrutton L.J. in Greenhill v. Federal Insurance Co., Ltd. [1927] 1 K.B. 65 at p. 85, C.A. Another example of such waiver was where the defendants left blanks in respect of questions 1 (b) and 6 on exhibit A and the plaintiffs failed to ask further questions about them: see Marcovitch v. Liverpool Victoria Friendly Society (1912) 28 T.L.R. 188, C.A. The upshot of all this is that the courts have not allowed insurers to bring the doctrine of non-disclosure to their aid. Mr. Koi-Larbi in the course of his arguments drew the attention of the court to the fact that the plaintiffs instituted this action after the Bedford lorry No. AD 9278 had been involved in an accident, and several claims were being made against the plaintiffs at the Ho High Court. I am tempted to say, nevertheless, with Professor Hanbury in his Modern Equity (4th ed.), p. 49 that, “if a plaintiff allows his opponent to lull himself into a state of security, he will not be allowed to subject him to a rude awakening. His claim will be defeated by his own laches and acquiescence.” As a result, I dismiss the plaintiffs’ action with N¢100 costs.
DECISION
Action dismissed.
S.Y.B.B.
