GUARDIAN ASSURANCE CO., LTD. v. OSEI [1966] GLR 762

Division: HIGH COURT, ACCRA

Date: 25 NOVEMBER 1966

Before: EDUSEI J.

CASES REFERRED TO

(1) Looker v. Law Union and Rock Insurance Co., Ltd. [1928] 1 K.B. 554; 97 L.J.K.B. 23; 137 L.T. 648; 43 T.L.R. 691.

(2) Mackenzie v. Coulson (1869) L.R. 8 Eq. 368.

NATURE OF PROCEEDINGS

ACTION for declaration that an insurance policy was null and void for non-disclosure of a material fact.

COUNSEL

Pobee-Orleans for the plaintiffs.

No appearance by or on behalf of the defendant.

JUDGMENT OF EDUSEI J. The plaintiffs who are an insurance company carrying on business in Ghana took over the assets and liabilities of the Lion of Africa Insurance Co., Ltd. who also were formerly operating in this country. The present plaintiffs are asking for a declaration that the insurance policy No. KU/153,421 dated 21 February 1961 and issued by their predecessors, the Lion of Africa Insurance Co., Ltd. should be [p.763] of [1966] GLR 762 declared void on the ground that there was a non-disclosure of a material fact at the time the defendant was filling in the proposal form dated 9 February 1961.

The plaintiffs’ story is that on 9 February 1961 the defendant, Emmanuel Osei, approached the Lion of Africa Insurance Co., Ltd. to insure his own vehicle No. AN 293. In the proposal form which he filled he was asked the question whether he was the owner of the vehicle he was proposing to insure and he replied in the affirmative. The exact question and answer were these: “Are you the owner of the vehicle?” (referring to vehicle No. AN 293) and the defendant replied “Yes.” Some time in August 1964 it came to the knowledge of the plaintiffs that the vehicle No. AN 293 did not belong to the defendant but to one Kwasi Manu at the time the defendant was filling in the proposal form on 9 February 1961. The acquisition of this fact by the plaintiffs in August 1964 led to the institution of the instant action on 29 November 1964.

There is no dispute that at the time the defendant filled in the proposal form on 9 February 1961, he represented to the plaintiffs’ predecessors that he was the bona fide owner of the vehicle in question whereas in truth and in fact he was not. By exhibit A dated 27 August 1964 the defendant has himself admitted that he was not the owner of the vehicle at the time he filled in the proposal form, exhibit C1, but was acting as an agent for Kwasi Manu as regards the running of the vehicle. Again by exhibit B dated 2 June 1964 a Kwasi Manu claimed ownership of the vehicle No. AN 293 in 1961 and that he did not authorise Emmanuel Osei, the defendant, to take out the policy in his (the defendant’s) name. What I have to decide now is whether the non-disclosure of this fact by the defendant is so material as to enable the plaintiffs to avoid the policy of insurance No. KU/153,421 dated 21 February 1961. In Preston and Colinvaux on the Law of Insurance (1st ed.) at p. 102 it is stated thus: “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.” The plaintiffs’ first witness, Mr. Commodore, who gave evidence on behalf of the plaintiffs stated categorically thus:

“If Kwasi Manu had been known to my company that he was the true owner of vehicle No. AN 293 my company would have directed their inquiries in respect of him about his past claims with other insurance companies. The material fact has been hidden from my company.”

The duty of disclosure only applied to negotiations preceding the formation of the contract but full disclosure must be made up to

[p.764] of [1966] GLR 762 the moment when a binding contract is concluded: see Looker v. Law Union and Rock Insurance Co., Ltd.1 But there was no compliance with this requirement of the law by the defendant. There is no doubt that in a contract of this nature the assured who knows everything must disclose it to the insurer, and this is expressed by saying that it is a contract of the utmost good faith—uberrima fides. Thus in the case of Mackenzie v. Coulson,2 James V.C. had this to say in respect of contract of insurance: “There is no class of documents as to which the strictest good faith is more rigidly required in Courts of Law than policies of assurance.” In conclusion I have no hesitation whatsoever in finding as a fact that the defendant failed to disclose a material fact and this fraudulent statement by the defendant that he was the owner of vehicle No. AN 293, whereas in fact he was not, induced the plaintiffs’ predecessors to enter into the contract of insurance. Such a situation undoubtedly entitles the plaintiffs on becoming aware of the non-disclosure of the material fact to repudiate the contract of insurance and this they are asking the court to do. I grant therefore the declaration sought that the insurance policy No. KU/153,421 dated 21 February 1961 and issued by the Lion of Africa Insurance Co., Ltd. whose successors are the plaintiffs, is void and is of no effect whatsoever from the time of its issue. The plaintiffs having succeeded in their action are entitled to costs against the defendant, and having regard to the fraudulent nature of the misrepresentation and its likely effect on third parties, I think substantial costs must be awarded and I assess them at 200 guineas inclusive of counsel’s costs of 150 guineas.

DECISION

Declaration accordingly.