HIGH COURT, ACCRA
DATE: 7 FEBRUARY 1967
BEFORE: EDUSEI J.
CASE REFERRED TO
Dawsons Ltd. v. Bonnin [1922] 2 A.C. 413; 91 L.J.P.C. 210; 128 L.T. 1; 38 T.L.R. 836, H.L.
NATURE OF PROCEEDINGS
ACTION to have an insurance policy declared null and void for non-disclosure of material facts. The facts are fully stated in the judgment.
COUNSEL
Akiwumi for the plaintiff company.
Defendant absent.
JUDGMENT OF EDUSEI J.
The plaintiff company are an insurance company carrying on business in Ghana and by a proposal formdated 21 March 1966 and signed by the defendant a policy of insurance bearing No. KU/751037 was issued by the plaintiffs to the defendant, Kwame Appiah, covering a Chevrolet commercial truck No. CP 7808. The
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said proposal form which is exhibit A contains certain questions which were answered by the defendant, and the answers, so argue the plaintiffs, form the basis of the contract of insurance entered into between the plaintiffs and the defendant. In exhibit A the following questions and answers appear: “(i) Is the vehicle used for (a) carriage of fare-paying passengers?” The defendant stated; No” “(b) Carriage of goods ?” The defendant stated “Yes.” (ii) When asked to state all types of goods carried, the defendant stated “General goods.”
There is evidence that vehicle No. CP 7808 was licensed on 13 June 1966 as a private car whereas the defendant did state in exhibit A that the said vehicle was licensed to carry cargo only. There is further evidence as disclosed in exhibit A that the defendant answered “No” to the question whether the vehicle which was to be insured had been altered or adapted from the original design in any way whatsoever. In actual fact the vehicle No. CP 7808 had been adapted to carry fare-paying passengers and this fact emerged from inquiries made by the plaintiffs as a result of an accident involving the said vehicle.
The plaintiffs are contending therefore that failure by the defendant to disclose such material facts as are stated on exhibit A gives them the right to recoil from the contract and are seeking a declaration or this court to avoid the insurance policy No. KU/751037 dated 21 March 1966. This court before coming to any rational decision must examine what facts are considered material in such circumstances.
In Preston and Colinvaux on The Law of Insurance (2nd ed.), the following passage appears at p. 102 “Everything is material which will guide a prudent insurer in determining whether he will take the risk, and, if so, at what premium and on what conditions.” Thus Mr. John Commodore, claims superintendent, who represented the plaintiffs stated in evidence that: “On the strength of these answers thus given the plaintiffs would decide whether or not to accept the risk of insurance. These questions in exhibit A were answered by the defendant and on the strength of the answers so given in exhibit A the plaintiff company agreed to enter into a contract of insurance with the defendant.” It is significant to note the statement of Viscount Haldane in Dawsons Ltd. v. Bonnin [1922] 2 A.C. 413, H.L. that not every fact which increases the risk is a material one: there must be a probability that the insurers would attach some importance to it in assessing the
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premium. It was therefore held to be immaterial that a lorry was garaged in a wooden shed which had been used to store hay, the insurance being a comprehensive motor vehicle one, and the percentage of the premium allocated to the fire risk being very exiguous. But it might have been held otherwise had the insurance been against fire only knowing fully well the combustibility of a mixture of hay and petrol. The question of materiality is a pure question of fact and this fact must be disclosed before the contract is entered into. There can be no dispute that vehicle No. CP 7808 was insured to carry cargo only but it was used after adaptation for carrying fare-paying passengers when the defendant had categorically stated in exhibit A that it would not be used for this latter purpose, and that it had not been altered or adapted from the original design which was a private car. Misrepresentation even if innocently made by the assured which misled the insurers might give the right to avoid the contract of insurance. Finally in exhibit A appears the following declaration:
“I hereby agree that the proposal form and declaration shall be the basis of any cover note to be issued to meand of the contract between me and the Guardian Assurance Co., Ltd. and shall be considered as incorporated in the said cover note and the policy to be issued hereunder which in the form issued by the above-named company I agree to accept subject to the terms, exceptions and conditions prescribed.”
In view of the obvious untruths that have emerged and which have been referred to earlier on, and bearing in mind the principles underlying the contract of insurance which demands the utmost good faith, uberrima fides, I am satisfied on the evidence of the plaintiffs before me, which evidence stands uncontroverted, that the plaintiffs were misled into the formation of the contract by non-disclosure of material facts and they are entitled to the declaration sought. I declare therefore the policy No. KU/751037 dated 21 March 1966 to be void. The plaintiffs will have their costs in this action which are assessed at ¢120.
DECISION
Judgment for the plaintiffs.
S.O.
