COURT OF APPEAL
DATE: 26 JUNE 1967
BEFORE: OLLENNU, APALOO AND LASSEY JJ.A.
CASES REFERRED TO
(1) West v. National Motor and Accident Insurance Union Ltd. [1955] 1 W.L.R. 343; [1955] 1 All E.R.
800; 99 S.J. 235; [1955] 1 Lloyd’s Rep. 207, C.A.
[p.443] of [1967] GLR 442
(2) Jureidini v. National British and Irish Millers Insurance Co., Ltd. [1915] A.C. 499; 84 L.J.K.B.
640; 112 L.T. 531; 31 T.L.R. 132; 59 S.J. 205, H.L.
(3) Stebbing v. Liverpool and London and Globe Insurance Co., Ltd. [1917] 2 K.B. 433; 86 L.J.K.B.
1155; 117 L.T. 247; 33 T.L.R. 395.
(4) Woodall v. Pearl Assurance Co., Ltd. [1919] 1 K.B. 593; 88 L.J.K.B. 706; 120 L.T. 556; 83 J.P.
125; 63 S.J. 352; 24 Com.Cas. 237, C.A.
NATURE OF PROCEEDINGSAPPEAL from a decision of Sowah J. reported in [1964] G.L.R. 377 in which the appellant’s action against the respondents to order them to honour a claim of insurance made by the appellant and repudiated by the respondents was dismissed.
COUNSEL
C. Hayfron-Benjamin for the appellant.
No appearance by or on behalf of the respondents.
JUDGMENT OF APALOO J.A.
Apaloo J.A. delivered the judgment of the court. After hearing argument on 2 May 1967, we dismissed the appeal in this suit and indicated that we would set out our reasons later on. This we now proceed to do.
The appellant, who described himself as a trader, was in January 1963, minded of insuring his stock-in-trade in his wholesale premises situate at ZE 1 and 2 Plot 7, South Zongo, Kumasi. Accordingly, on 9 January of that year, he filled a printed proposal form of the defendant corporation. The answers to the questions on the proposal form were stated to be the basis of the contract and were said to be incorporated in any contract eventually entered into between the appellant and the corporation. One of the questions to which the appellant gave an affirmative answer in the proposal form was, whether a night watchman would be employed at the premises sought to be insured. On the basis of the answers, the corporation issued in favour of the appellant, a policy of insurance and in consideration of the premium, insured the appellant’s stock-in-trade in the aforesaid wholesale against burglary in the sum of £G3,000. The appellant claimed that on 6 March 1963, the insured premises were broken into and goods valued £G2,117 odd were stolen. He therefore claimed to be indemnified in this sum by the corporation. The latter addressed to the appellant, a letter dated 6 May 1963 and repudiated the claim on the ground that the appellant committed breaches of two essential conditions of the policy. These were, first that no night watchman was employed at the premises and secondly, that the appellant’s books of account were not written up daily. The
[p.444] of [1967] GLR 442
appellant then invoked the arbitration clause in the policy and sought to have the difference between himself and the corporation resolved at an arbitration. The latter declined to submit to arbitration and the appellant being left with no alternative, on 13 November 1963, issued in the High Court, Kumasi, a writ claiming to be indemnified in the said sum of £G2,117.
At the trial (reported in [1964] G.L.R. 377), there was practically no dispute on the facts although the learned trial judge (Sowah J.), seemed somewhat sceptical about the genuineness of the burglary. On this, the judge, inter alia, observed at p. 378:
“The thieves must have been on the premises for several hours, and must have carried the goods away in a vehicle. It is of interest to note that no one on the premises heard anything of the burglary, though part of the premises were occupied by tenants and the police were not able to find any finger prints.” The learned judge however dealt with the case on the footing that a genuine burglary took place entitling the appellant to recover on the policy. He however found that some of the answers the appellant gave in reply to the questions on the proposal form were misstatements and further that although the appellant warranted that he would employ a watchman, he failed to do so and was in breach of that warranty.
Counsel for the appellant did not dispute that breach of warranty but put forward as a matter of law, theproposition that it was open to the corporation to repudiate the whole of the contract on the ground of misrepresentation or breach of warranty but that as the corporation did not seek to do so, they were not entitled to repudiate a claim under it. For this bold proposition, counsel cited to the court below, the case of West v. National Motor and Accident Insurance Union Ltd. [1955] 1 All E.R. 800, C.A. and strongly relied on it. The learned trial judge did not accede to this submission as he took the view that West’s case was distinguishable from the instant one. He said at p. 379:
“I am of the opinion that the West case (supra) was decided on general principles, namely, that where a person has been induced by a material misstatement into entering a contract, on discovery of that fact, he is entitled to repudiate the whole of the contract and if he does not do so he will be bound by the contract and cannot repudiate a claim under it.
The issue here is different. The corporation is not only relying on misstatements for which they were entitled to repudiate the policy (which they did not do) the corporation are also relying firstly on breaches of condition in the policy and secondly on breaches of warranties.”.
[p.445] of [1967] GLR 442
Having so delivered himself of the law, the learned judge concluded that the admitted breach of warranty by the appellant discharged the corporation from liability although the contract as such subsisted.
Accordingly, he proceeded to dismiss the action.
Against that judgment, the appellant appealed to this court and the only ground urged before us was the point of law which was unsuccessfully canvassed in the court below. Counsel for the appellant again submitted to us as was done in the High Court, that the corporation could not, as a matter of insurance law, repudiate a claim under a contract without at the same time repudiating the contract itself. Counsel again cited and relied on what appears to be his only trump card, that is, the case of West v. National Motor and Accident Insurance Union Ltd. (supra). The learned trial judge decided this matter on general principles and as his conclusion appeared to us to be right we asked counsel why an insurance company could not on general principles repudiate a contract for misrepresentation or disclaim liability under a subsisting contract for breach of condition or warranty. Counsel gave nothing like a satisfactory answer but pointed to the West case.
The case of West was decided on principles laid down in 1914 by the House of Lords in the suit entitled Jureidini v. National British and Irish Millers Insurance Co., Ltd. [1915] A.C. 499, H.L. In that case a claim was made for indemnity for the loss of goods by fire under a policy the conditions of which provided: (1) that if the claim were fraudulent or if the loss were occasioned by the wilful act or with the connivance of the insured all benefits under the policy should be forfeited; and (2) that if any difference arose as to the amount of any loss, such difference should independently of all other questions, be referred to arbitration, and that it should be a condition precedent to any right of action upon the policy that the award of the arbitrator or umpire of the amount of the loss, if disputed, should be first obtained. The insurance company having repudiated the claim in toto on the ground of fraud and arson, it was held by the House of Lords, reversing the decision of the Court of Appeal, that as the repudiation of the claim was made on a ground which went to the root of the contract, the company were precluded from pleading the arbitration clause in the contract as a bar to an action to enforce the claim.
Here the corporation did not seek to avoid the whole contract but merely sought to rely on one of its terms as a defence to the claim. This same situation arose in Stebbing v. Liverpool and London and Globe Insurance Co., Ltd. [1917] 2 K.B. 433. Viscount Reading C.J. held the insurance company entitled to rely on the terms of the policy as a defence to the claim without repudiating the whole [p.446] of [1967] GLR 442policy. This decision was considered and approved by the Court of Appeal in the later case of Woodall v. Pearl Assurance Co., Ltd. [1919] 1 K.B. 593, C.A. In the course of his judgment in that case, Bankes L.J. drew the distinction between the two types of cases and, inter alia, said at p. 604: “The next question is whether the case is governed by Jureidini’s Case. I am not able to agree with the learned judge upon this point. In considering this part of the case, it is necessary to draw a clear and sharp distinction between two separate classes of cases. One class is where the insurance company is repudiating a contract in the sense that they are disputing the existence of any binding contract at all. Jureidini’s Case falls within that class. The other is where the company is repudiating liability under the contract, but is accepting the existence of the contract as a binding contract. Stebbing v. Liverpool and London and Globe Insurance Co., is an instance of the latter class.”
Although the attention of the learned trial judge was not called to the decision considered in this judgment besides the West case, he dealt with the matter on general principles and drew the distinction between these two types of cases on his own motion. In holding that the corporation were entitled to repudiate the claim of the appellant for breach of warranty without avoiding the whole contract, he was, albeit unknowingly, following the decisions in Stebbing and Woodall and was entirely correct.
We thought therefore that his conclusion could not be disturbed on the wholly erroneous ground put forward by counsel for the appellant. It is for this reason that we dismissed the appeal and affirmed the decision of the court below.
DECISION
Appeal dismissed.
T.K.G
