GUARDIAN ASSURANCE CO., LTD. v. KHAYAT TRADING STORE [1972] 2 GLR 48
COURT OF APPEAL
Date: 20 MARCH 1972
BEFORE: AZU CRABBE J.S.C., AMISSAH AND ARCHER JJ.A.
CASES REFERRED TO
(1) Biggar v. Rock Life Assurance Co. [1902] 1 K.B. 516; 71 L.J.K.B. 79; 85 L.T. 636; 18 T.L.R. 119;
49 S.J. 105.
(2) New York Life Insurance Co. v. Fletcher 117 U.S. (29 L.ed.) 934.
(3) Bawden v. London, Edinburgh and Glasgow Assurance Co. [1892] 2 Q.B. 534; 61 L.J.Q.B. 792; 57
J.P. 116; 8 T.L.R. 566; 36 S.J. 502, C.A.
[p.50] of [1972] 2 GLR 48
(4) Newsholme Brothers v. Road Transport and General Insurance Co., Ltd. [1929] 2 K.B. 356; 98
L.J.K.B. 751; 141 L.T. 570; 45 T.L.R. 573; 73 S.J. 465; 34 Com.Cas. 330, C.A.
(5) McMillan v. Accident Insurance Co. [1907] S.C. 484.
(6) Yule’s Case (1904) 6 F. 437.
(7) Taylor v. Yorkshire Insurance Co. [1913] 2 I.R. 1.
(8) Thomson v. Weems (1889) 9 App.Cas. 671, H.L.
(9) Australian Widows’ Fund Life Assurance Society Ltd. v. National Mutual Life Association of
Australasia Ltd. [1914] A.C. 634; 83 L.J.P.C. 289; 111 L.T. 353, P.C.
(10) Condogianis v. Guardian Assurance Co. [1921] 2 A.C. 125; 90 L.J.P.C. 168; 125 L.T. 610; 37
T.L.R. 685, P.C.
(11) 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.
(12) Golding v. Royal London Auxiliary Insurance Co. (1914) 30 T.L.R. 350.
(13) Keeling v. Pearl Assurance Co., Ltd. [1923] All E.R. Rep. 307; 129 L.T. 573.
NATURE OF PROCEEDINGS
APPEAL from a judgment of Anterkyi J. awarding the respondents N¢18,000 for claims made under a fire and burglary policy.
COUNSEL
James Quashie-Idun for the appellants.
I. Amoo-Lamptey (with him C. E. Quist) for the respondents.
JUDGMENT OF AMISSAH J.A.
This is an appeal from a judgment of Anterkyi J. which awarded Messrs. Khayat Trading Store (hereafter described as the respondents) the sum of ¢18,000 plus costs of ¢1,800 on their claim for the loss of goods from their store through theft. The thieves apparently broke into that store on 21 September 1967, and removed therefrom a quantity of textiles and other goods including the furniture in it. Two days earlier, that is on 19 September 1967, the respondents had insured the goods in the store with Messrs. Guardian Assurance Co., Ltd., the appellants, for N¢20,000. The appellants’ liability, if any, therefore arises from the insurance policy.
By a letter dated 26 September 1967, the appellants wrote to the respondents telling them that the policy was void because the respondents had made material misrepresentations in the proposals for the insurance cover, and at the trial the appellants resisted the claim on this ground. The trial judge, however, found against them and awarded the amounts mentioned earlier to the respondents.
The appellants now appeal to us against this judgment on the following grounds:
“(1) The judgment cannot be supported having regard to the evidence led at the trial.
[p.51] of [1972] 2 GLR 48 (2) The learned trial judge failed to give any or any adequate consideration to facts relied upon by the defendants in their defence and admitted by the plaintiffs under cross-examination.
(3) The learned trial judge was wrong in law in holding that the plaintiffs had proved their loss.
(4) The costs awarded are unreasonable and excessive.”
Grounds (1) and (2) were taken together in the argument of the appeal. The complaint therein was in
respect of the appellants’ allegation that the respondents had misrepre- sented material facts in the
proposal form which entitled them, that is the appellants, to avoid the policy. At the trial, the learned
judge had taken the view that there had been no misrepresentation. He believed the respondents’ principal witness, a partner in the firm, who had said that he made a full and frank disclosure on the questions asked on the proposal form to the appellants’ agent, one Zwennes, and that it was Zwennes who wrote or caused the answers to be written down. Any misrepresentation therefore was the handiwork not of the respondents but of the appellants’ agent for whom the appellants should be held fully responsible. In attacking the trial judge’s conclusion, the appellants argued that he failed to take into account the inconsistency between the respondents’ pleadings and the evidence led in proof of their case and that if the judge had done so, he would have regarded the respondents’ evidence as an afterthought and rejected it.
The two substantial misrepresentations which the appellants pointed out arose from answers given to the questions which dealt with the total value of the stock held in the store and whether or not thieves had ever before broken into the store. As to the statement of the total value of the stock the respondents’ answer was “¢20,000.00. The policy is subject to average.” And the respondents proposed to insure their goods for ¢20,000.00. Further down the proposal form the following questions were asked:
“(a) Have you ever made a claim under any burglary or fire insurance policy?
(b) Have burglars ever entered or attempted to enter your premises at this or any other address?”
To both these questions the respondents’ answer appearing on the form was “No.” It was the case of the appellants that the answers to these questions were material, for they were answers which should
influence a reasonably prudent insurer in deciding whether or not to take on the insurance and if so what premium to charge. If the appellants’ case on this is right, then it disposes of the appeal. For it would mean that the appellants properly avoided the policy. The question of erroneous calculation of the loss suffered by the respondents and to a lesser degree of the costs would assume some importance only if it were to be held that the appellants’ action was wrongful. I therefore begin, as I think one properly should, with a consideration of the issue of misrepresentation.
[p.52] of [1972] 2 GLR 48
It will be recalled that the appellants’ case was that the answers referred to earlier were incorrect, that they had been given by the respondents, and that up till the time that the respondents filed their claim, they were prepared to defend those answers. According to this argument it was only when the case was being heard that the respondents adopted a different tack, saying that they gave the answers to the appellants’ agent who put them down in the form found in the proposal form. To substantiate the complaint about the inconsistency in the respondents’ pleadings and proof, the appellants pointed out that after they had alleged in their statement of defence that the respondents had misrepresented material facts in their proposal form “by failing to state correctly the value of their stock in house No. D.891/3, Pagan Road.
The amount was stated to be ¢20,000.00 whereas in fact the value was in the region of ¢30,000.00.” The respondents in their reply to this stated that “they considered the sum of ¢20,000.00 as reasonable for the taking out of the policy and that amount was indeed about the actual value of the goods in the store.” But the evidence of Ali Sai Khayat, the partner in the respondent firm who gave evidence in the case, on the point was as follows:
“The questions I have already told the court that Zwennes [the insurance agent] asked me when he came to the store are all the questions he did ask me. I do not remember his asking me how long I had been in that store, but I admit he asked me the value of the stock I had in the premises. I did not tell him the value was ¢20,000.00 but I said I had more than ¢30,000.00 stock of goods, but I wanted to insure for ¢20,000.00. I deny that I gave the value of the stock as ¢20,000.00 in order to reduce the premium—I told him that the value of the stock fluctuated between ¢30,000.00 and lower. On 19 September when I was insuring I had more than ¢30,000.00 worth of goods in the store because I had opened the store as a new one, and I had plenty of things in it.”
Obviously both statements cannot be correct. If that which appears on the reply is true then the
appellants’ case that there had been a misrepresentation is destroyed. But that was not the case proved in court. The case which the respondents sought to establish was the latter and if the latter is true then consideration has to be given to whether an incorrect statement in the proposal form under the signature of the respondents’ partner whether the form was filled in by the appellants’ agent or not amounted to such misrepresentation as would confer upon the appellants the right to repudiate the policy issued as a result of it.
I must say with all due respect to the learned trial judge that it seems to me that his treatment of the
evidence gives cause for complaint. Part of his concern was over how the appellants arrived at the
conclusion that the value of the goods in the store was ¢30,000.00 and over, on 19 September 1967, the day on which the proposal form was completed. The onus of satisfying the court on this was placed on the appellantsn [p.53] of [1972] 2 GLR 48 and the conclusion seems to have been drawn that because the appellants presented no facts or figures on this, they failed to discharge that onus. Having regard to the admission of Ali Khayat in his evidence quoted above, and also to the fact that some- where else in the judgment the judge had noted that Khayat’s evidence on this point was uncontroverted, I find this conclusion difficult to justify.
Before proceeding further, I think it should be stated that on the proposal form was the following declaration which was signed by Khayat for the respondents:
“I/We do hereby declare that the above answers are true, that I/we have withheld no information whatever that might tend in any way to increase the company’s risk, or to influence the decision of the directors regarding the proposal; and I/we undertake to exercise all ordinary and reasonable precaution for the safety of the said property. I/We agree that this declaration, and the answers above given shall be the basis of the contract between me/us and the company; and further, if the proposal is accepted, I/we agree to accept a policy, subject to the usual conditions prescribed by the company as set forth in the policy. I/We understand that this proposal constitutes a continuing warranty.”
But the main thrust of the judge’s thinking on this matter seems to have been directed towards
determining whether the signatory to the proposals, who was the same partner who gave evidence for the respondents, was ad idem on the answer entered in the form with Zwennes, the agent of the appellants, who was at least present when the proposal form was filled in. There was apparently an alteration initialled by both Khayat and Zwennes of an original figure of ¢14,000.00 to ¢20,000.00. This alteration was taken by the judge as supplying support for the respondents’ case that they had informed Zwennes that the value of the goods in the store was over ¢30,000.00 but the average stock was ¢20,000.00 so that that was the average of goods held. I do not know at this stage why the figure ¢14,000.00 ever appeared on the proposal form. It was taken against the appellants that Zwennes did not, in his evidence, explain the alteration. But neither did Khayat. As between the two persons involved it is Khayat who is more likely to have suggested the figures on the value of his goods. But because Zwennes had in the course of his evidence stated that during the process of completing the proposal he had to clarify some of the questions for Khayat, he was deemed to have clarified the import of the “very 9 (a) question as regards the value of the stock to be stated, and to have explained that it was the statement of the average value that was required for the period the policy was to run and that was what that question 9 (a) meant.” I am unable to agree that this conclusion necessarily flows from Zwennes’ evidence. Indeed it seems to me that quite a number of the findings leading to the ultimate finding that the figure ¢20,000.00 was intended by both parties to be of the average value of stocks held in the store [p.54] of [1972] 2 GLR 48 were speculative in nature. One might very well ask what average the parties were dealing with when out of Khayat’s own mouth fell the words that on 19 September, only two days before the shop was broken into, he had ¢30,000.00 worth of goods in the store because he had newly opened the store, and had plenty of things in it. Without any evidence of any sort from the respondents to show what sales they made either on any particular day or over any period of time, the learned judge concluded that:
“On the basis ‘that the plaintiffs’ first witness’s appraisal of their stock was about ¢30,000.00 was
uncontroverted and that on exhibit I (the proposal dated 19 September 1967) there is the undeniable evidence that, in respect of the value of the stock, for which insurance was taken, ‘¢14,000’ was first written and later cancelled and substituted for by the writing ‘¢20,000,’ and on the basis that if goods of that value was then in stock it is not intrinsically improbable that sales amounting to over ¢10,000 could have been made from the time exhibit I was completed on 19 September 1967 to the time the plaintiffs’ first witness closed his shop on 20 September 1967, I do come to the conclusion that, on the balance of probabilities, as a result of the burglary which admittedly did occur during the night between 20 and 21 September 1967, the loss sustained may be a little over ¢18,000 as stated by the plaintiffs’ first witness.”
It was not the respondents’ case that the goods they had in stock when they took the insurance cover had been diminished by sales to a quantity valued at the amount which they said they lost in the shop
breaking. On the contrary the respondents’ own witness, the police officer, gave evidence to the effect
that when he got to the shop after the theft he “found woollen materials and cotton prints scattered all over the room. Some shelves in the store were empty.” The shop was not swept clean by the thieves.
Some goods, though how much we cannot find from the evidence, were left. There was, therefore, no cause to speculate over whether or not ¢10,000 of the goods in the store on the date the cover was taken had gone by way of sales within the two days before the theft. Assuming that Khayat understood that it was the average stock held in the store that the demand to “state the total value of the stock” called for, if that average were sought by the court, it had to look at other and more positive evidence. None was suggested. And if the question at issue was as to the value of material lost through the theft, the answer lay not in speculation of this kind. This was not an isolated occasion. The plain fact of the matter is that there were at the time of completing the proposal form goods in the store of over ¢30,000 in value. The respondents knew it. And an answer showing the correct value of the stock in hand at the time was what on the face of it the proposal asked for. Whatever the expression “The policy is subject of average” in that answer was supposed to mean it does not appear to me that by qualifying the figure ¢20,000 by that it became an accurate statement of the value of stock then held. [p.55] of [1972] 2 GLR 48 The other complaint of the appellants, namely, that concerning the alleged misrepresentation of a prior breaking and entry and a claim for insurance, was also similarly dealt with by the judge. He began his examination of the evidence with the following pronouncement:
“As regards these two contentions by those averments I unhesitatingly rule also that there are no proved facts in support of the occurrence of the attempted burglary and its attendant claim as allegedly made to the Gresham company by the plaintiffs.
There must be documentary or oral evidence from the defendants through the Gresham in proof of the defendants’ contention regarding the alleged claim, and of the amount allegedly received or to be received by the plaintiffs’ first witness. A claim is a demand for an indemnity in a particular amount. But no such evidence was placed before the court to establish the alleged claim.
I cannot deduce that the alleged attempted burglary was effected, or that the consequential claim was made by the plaintiffs upon the bare evidence of the plaintiffs’ first witness himself in cross-examination.” The learned judge’s statement of the law is at fault. Evidence in favour of a party’s contention is, as far as I understand the law, no less favourable just because it comes from his opponent. If anything that evidence from the opponent is free from the possible self-serving stigma which the same statement from the party might have. It need hardly be said that as a result the evidence of the opponent, like the admission of Khayat in cross-examination that thieves had once broken into his store, should command if not greater respect at least the same as all the documentary or oral evidence which the appellants themselves could produce in proof of that allegation. The lengthy and equally speculative examination of the evidence which followed was to my mind wholly unnecessary. That there had once before been a breaking into the store is, from the evidence, not open to question. That an insurance company, Gresham, paid up compensation as a result of the loss occasioned by that act of breaking is equally unquestionable.
The learned judge called for proof of how much was so paid. That to me was irrelevant. No issue turned on it. From the question in the proposal form, the appellants as insurers were interested not in the amount of compensation previously paid but in whether the respondents had ever claimed such compensation. On this the evidence of Khayat was that although he made no claim, he was paid compensation. In view of his negative answer given in the proposal form it is open to question whether Khayat’s word on this point could be credited.
I have serious difficulties in accepting a story which accords divine inspiration to an insurance company. I cannot otherwise see, and the record does not help me on this, how the Gresham Insurance Company came to know of the previous burglary and to pay any money for it, however small, if no report together with a claim for compensation was [p.56] of [1972] 2 GLR 48
ever made to it by the assured. Khayat’s word on not making a claim for the previous shop breaking may be believed, or it may not; but however looked at, it is impossible to say that the negative answer to the question whether burglars had “ever entered or attempted to enter” the respondents’ premises at those particular premises or any other address can be accepted as true. On this the learned judge said that:
“Whether or not the taking away of the locks might be viewed as amounting to the offence of forcible entry, I am unable to say, in the absence of evidence from the Gresham Insurance Company, that their policy with the plaintiffs against ‘burglary’ did cover also the crime of house-breaking, and/or forcible entry within the meaning of the term ‘burglary’ for the policy.”
I find this quite unhelpful in the clarification of the issues for decision. The appellants’ case was that the respondents were guilty of material misrepresentations, one of which was that the respondents had denied that burglars had ever entered or attempted to enter their (respondents’) premises. And that the appellants were therefore entitled to cancel the insurance policy. On this particular point the respondents’ case was not that burglars had never entered or attempted to enter their premises. It was not that some person or persons had once committed an act in respect of their premises but that they dispute that what the person or persons did amounted to burglary, whether effected or attempted. Far from it. For the respondents fully appreciated the import of the question and admitted in evidence that there had been a previous breaking in. Khayat in his examination-in-chief said:
“When I was taking out the policy I told Zwennes that I had not made any claim against Gresham save as to some amount they gave me to buy a lock. I told him that thieves once broke into my store but that they carried nothing away, and that they only broke the lock of the store. I said this to Zwennes before I signed the paper.”
The respondents’ case was that they had made a frank statement of their position to Zwennes who had to put down what had been told him. It was Zwennes who in full possession of the facts wrote or caused to be written the answer “No” to the question whether burglars had ever broken or attempted to break into the respondents’ shop. And Zwennes, according to the respondents, was the agent of the appellants. This was the issue before the court.
It once more raises the question whether an employee of an insurance company filling or helping to fill in a proposal form which the proposer signs is the agent for that purpose of the insurance company or of the proposer. The point has been considered in several cases. In Biggar v. Rock Life Assurance Co. [1902] 1 K.B. 516, the local representative of the insurance company who filled in the proposal form for the proposer, put in false answers without the knowledge or authority of the proposer, who signed the form without reading it. The proposal contained a [p.57] of [1972] 2 GLR 48 declaration in which the proposer agreed that the statement in the proposal should form the basis of the policy, and the policy contained a proviso that it was agreed on the express condition of the truthfulness of the statements in the proposal. It was held that the policy issued was not binding on the insurance company. “The very basis of the policy,” said Wright J. at p. 525 “is the statements in the proposal. These statements are false in several material respects. How, then can the policy be binding on the company?”
Reliance was placed in that decision on the words of the United States Supreme Court in New York Life Insurance Co. v. Fletcher 117 U.S. (29 L. ed.) 934 (1886) which held in similar circumstances that the employee of an insurance company was the agent not of the company but of the proposer for the purpose of filling in a proposal form. It might appear, however. that these decisions were strongly influenced by the fact that the agent had invented the false answers in the proposal form and that the proposer had been guilty of negligence in signing without bothering to read it. And the courts in allocating responsibility for the fraud occasioned by the answers decided that the person with the greater power to prevent it ought to be held responsible for it. Thus Field J. at p. 939 speaking for the Supreme Court in the New York Life Insurance case, (supra) said, “she (i.e. the insured) says that she and her husband signed the application without reading it and without its being read to them. That of itself was inexcusable negligence. The application contained her agreements and representations in an important contract. When she signed it she was bound to know what she signed. The law requires that the insured shall not only, in good faith, answer all the interrogatories correctly, but shall use reasonable diligence to see that the answers are correctly written. It is for his interest to do so, and the insurer has the right to presume that he will do it. He has it in his power to prevent this species of fraud, and the insurer has not.”
That leaves room for argument that where there has been no such negligence, different considerations should apply. And it would appear that some support for this view could be derived from the case of Bawden v. London, Edinburgh and Glasgow Assurance Co. [1892] 2 Q.B. 534, C.A. where there was apparently no such negligence on the part of the proposer. The English Court of Appeal there held that the employee of the insurance company through whom the insurance was effected was acting as the agent of the company when he made out the proposal for a one-eyed man. The knowledge of the proposer’s physical disability which was not mentioned in the proposal form was attributed to the insurance company. The reasoning in Bawden’s case, however, seems to run counter to the reasoning in Biggar’s case. And as Scrutton L.J. pointed out in Newsholme Brothers v. Road Transport and General Insurance Co., Ltd. [1929] 2 K.B. 356 at p. 367, C.A. a judgment which,
[p.58] of [1972] 2 GLR 48 in my view, would repay study, courts in other jurisdictions have declined to follow Bawden’s case (see the Scottish courts in McMillan v. Accident Insurance Co., Ltd. [1907] S.C. 484 and Yule’s Case (1904) 6 F. 437 and the Irish courts in Taylor v. Yorkshire Insurance Co. [1913] 2 I.R. 1). The Newsholme Brothers case (supra) is in many respects similar to the facts that the respondents in the present case sought to establish. The proposal form, which was for the insurance of a motor-bus, a fact which makes no difference, was signed by the person wishing to effect the insurance but the answers to the questions therein, which were warranted to be true and to form the basis of the contract, were filled in by the insurance company’s agent. Although told the true fact, the agent for some unexplained reason, wrote answers which were untrue in a material respect. The agent’s duties were to procure persons to effect insurances and to see, as far as he could, that the proposal forms were correctly filled up. It was held that the agent in filling up the proposal form was merely the amanuensis of the proposer, that the knowledge of the true facts by the agent could not be imputed to the company. Scrutton L.J. in considering the judgments of the learned Lord Justices in Bawden’s case (supra) stated the position in the News- holme Brothers’ case (supra) with great simplicity. He said at p. 369:
“I find considerable difficulty in seeing how a person who fills up the proposal can be the agent of the person to whom the proposal is made. A man cannot contract with himself. A. makes a proposal to B. by signing it, and communicating it to B. If A. gets some one— C— to fill up the form for him before he signs it, it seems to me that C. in doing so must be the agent of A. who has to make the proposal, not of B. who has to consider whether he will accept it. If C. is also the agent of B. to procure proposals, and induces A. to make a proposal by representing that a certain form of proposal contains the particulars that B. wants to know, when it does not, the remedy seems to be to rescind the written contract procured by misrepresentation, not to alter the written contract and claim the benefit of it as altered.” This is the kernel of the matter. It is a view I am quite content to adopt. With reference to the case before us, Zwennes was obviously an agent of the appellants to solicit custo- mers without the power to issue a policy or a cover note or in any way to bind the appellants. It comes out from the evidence that a cover note was later issued not by him but by the appellants. Even if he himself had filled in the proposal form inaccurately after the respondents had given him the correct information, he would, for the purpose, have been acting as the agent of the respondents, not of the appellants. It is true he admitted being anxious that the respondents should take the policy so as to enable him earn his commission. But that does not alter the legal position. The agent is no less an agent of the proposer when filling in the proposal form just because he is personally interested in earning his commission. For even if he “wrote [p.59] of [1972] 2 GLR 48
down untrue facts to earn his commission” he still remained the agent of the proposer. If I may be
permitted to borrow once more from the judgment of Scrutton L.J. in the Newsholme Brothers case
(supra) at p. 373: “In my view, the important question for the decision of this case is whether the knowledge of the agent, acquired in filling up the proposal for the assured, is to be taken as the knowledge of the company. If the person having authority to bind the company by making a contract in fact knows of the untruth of the statements and yet takes the premium, the question may be different. Even then I see great difficulty in avoiding the effect of the writing signed by the proposer that the truth of the statements is the basis of the contract. But where the person contracting for the company has no actual knowledge, but only constructive notice, the difficulties of the proposer are greater. In commercial matters, the doctrine of constructive notice is not favoured: see the explanation by Lindley L.J. in Manchester Trust v. Furness [1895] 2 Q.B. 539, 545.”
Even if the respondents are right on the facts, responsibility for the inaccuracies in the proposal form may be fixed on the appellants only if the knowledge of Zwennes could be imputed to them. I think, in the circumstances, it cannot. I have no doubt that there were incorrect statements in the proposal. I further have no doubt that these incorrect statements are the statements of the respondents and that the appellants cannot be taken to have had notice of them.
Now the respondents declared as has been pointed out earlier that the answers supplied in the proposal form were true and further agreed that their declaration and the answers given should be the basis of the contract between them and the appellants. The cover note issued to the respondents stated that they “having effected a proposal for insurance in respect of the [identified property], the risk is hereby held covered in terms of the company’s usual form of fire & burglary policy applicable thereto . . .” And the usual policy of the appellants made the proposal and declaration of the insured the basis of the contract.
The authorities are overwhelmingly of the view that where the policy contains such a recital, the truth of the statements contained in the proposal is thereby made a condition of the liability of the insurers and any inaccurate answer will entitle the insurers to repudiate liability apart from any question of materiality.
(See, for example, Thomson v. Weems (1889) 9 App.Cas. 671, H.L., Australian Widows’ Fund Life
Assurance Society Ltd. v. National Mutual Life Association of Australasia Ltd. [1914] A.C. 634, P.C .;
Condogianis v. Guardian Assurance Co. [1921] 2 A.C. 125, P.C. and Dawsons Ltd. v. Bonnin [1922] 2
A.C. 413, H.L.). Thus though the appellants argued their case on the basis of the materiality of the
misrepresentations, and I agree that the misrepresentations here identified were material, I think they have in this a better case than they argued. The answers having been made the basis of the contract, their materiality became irrelevant. [p.60] of [1972] 2 GLR 48 This review of the cases has been undertaken on the footing that the respondents’ case, namely, that they made correct answers to the appellants’ agent who entered or caused to be entered the incorrect answers found in the proposal form, was accepted. And I take this view in spite of the cases of Golding v. Royal London Auxiliary Insurance Co. (1914) 30 T.L.R. 350 and Keeling v. Pearl Assurance Co. Ltd. (1923)
129 L.T. 573 pressed on us by counsel for the respondents. Both cases are earlier than the Newsholme Brothers case (supra). Although Golding v. Royal London Auxiliary Insurance Co. (supra) was referred to in the course of argument in the latter case, it apparently did not merit mention in either the judgment of Scrutton or Greer L.JJ., the only reasoned judgments given in the case. Keeling’s case (supra) was noticed neither in argument nor in judgment. Suffice it to say that they both followed the English Court of Appeal’s decision in Bawden’s case (supra) and as I mentioned earlier, that case was the subject of detailed scrutiny in the Newsholme Brothers case (supra). I think, in the circumstances, the appellants were entitled to avoid and properly avoided the policy.
That disposes of the appeal. Two other grounds were argued, namely, that the learned trial judge erred in holding that the respondents had proved their loss and that the costs awarded them were unreasonable and excessive. Having regard to the view I have taken, the argument on the proof of loss need not be dealt with and I do not propose to do so. A brief word, however, on the question of costs. The award to the respondents was for ¢18,000.00 and the costs were ¢1,800.00. I am aware that costs are within the discretion of the judge but it seems to me that this discretion should be exercised reasonably. It appears from a glance at the record that the only yardstick applied was that the costs should be ten per cent of the damages. If so, I must say that there is a danger that applying such a yardstick to this question may cause grave injustice to the party adversely affected. Only two witnesses appeared on either side. The evidence of neither of them could be described as lengthy. No unnecessary adjournments were asked for or granted to the appellants. In the circumstances I find the award of ¢1,800.00 unjustifiable. Costs should normally bear a relationship to the trial and its incidents, not to the measure of damages awarded. I would allow the appeal.
JUDGMENT OF AZU CRABBE J.S.C.
I agree.
JUDGMENT OF ARCHER J.A.
I concur.
DECISION
Appeal allowed.
