ROYAL EXCHANGE ASSURANCE vs. TAILOR [1973] 1 GLR 226

CASES REFERRED TO

(1) Royal Exchange Assurance v. Sosu, Court of Appeal, 4 May 1970, unreported.

(2) Afriyie v. Guardian Assurance Co. [1964] G.L.R. 234.

(3) White Cross Insurance v. Northern Construction Co., Court of Appeal, 28 July 1969, unreported; digested in (1969) C.C. 146.

NATURE OF PROCEEDINGS

ACTION by the plaintiffs for a declaration that a policy of insurance effected on the defendant’s vehicle had become void and was no longer binding. The facts are fully stated in the judgment.

COUNSEL

Agyeman-Prempeh (James Quashie-Idun leading him) for the plaintiffs.

Ohene-Ampofo (Tabi with him) for the defendant.

JUDGMENT OF ABBAN J.

The plaintiffs are an insurance company, carrying on business in Ghana. In June 1962 they issued to the defendant, who is a transport owner, a third party policy No. CV 39736 in respect of a number of vehicles. Later, the plaintiffs agreed to extend the said policy to cover an Austin commercial vehicle No. GE 2844, also owned by the defendant.

On or about 29 August 1963, by a hire-purchase agreement, the defendant sold the said vehicle No. GE 2844, to one Kwasi Twum. The plaintiffs contending, that the sale was without their knowledge, brought the present action for a declaration that the policy No. CV 39736, so far as the vehicle No. GE 2844 was concerned, became void and of no effect after the said sale. The defendant in his statement of defence admitted that he had sold the vehicle under a hire-purchase agreement as alleged, but he averred that be did so with the consent of the plaintiffs, because the plaintiffs knew all the time that the defendant was running a transport business by selling, on hire-purchase, all those vehicles which were insured with the plaintiffs.

On 16 March 1972, both counsel agreed that the main issue in the case is one of law. That is whether the defendant after selling the vehicle No. GE 2844 to one Kwasi Twum still had an insurable interest

[p.228] of [1973] 1 GLR 226 in the said vehicle. It is obvious that if the defendant could not be said to have an insurable interest in the said vehicle, then of course, the said policy would have to be declared void and of no effect, so far as that particular vehicle is concerned.

Thus, by consent, that issue was set down for legal argument. The summary of the argument of learned counsel for the plaintiffs is that the defendant, having disposed of the vehicle to the said Kwasi Twum, has no more interest in the vehicle, because once the vehicle has been sold the defendant’s rights as the owner automatically ceased and the policy lapsed. Counsel submitted that it does not make any difference whether the sale was an outright one or on a hire-purchase. Learned counsel for the plaintiffs relied on certain cases which were referred to by the Court of Appeal in the case of Royal Exchange Assurance v. Sosu, Court of Appeal, 4 May 1970, unreported.

In his reply, learned counsel for the defendant argued that in spite of the sale by a hire-purchase agreement, the defendant still had an insurable interest. He submitted that the defendant would cease to have any interest in the vehicle only after the said Kwasi Twum had fully paid the purchase price of the vehicle. Until then, counsel submitted, Kwasi Twum had only possession and the policy was effective and binding. Learned counsel further contended that since the plaintiffs were aware that the defendant was engaged in selling all the vehicles which were insured with them, they are estopped from saying that they did not know of the transfer of possession of the vehicle to Kwasi Twum. Counsel relied on Halsbury’s Laws of England (3rd ed.), Vol. 22, p. 315, para. 638, and also on the case of Afriyie v. Guardian Assurance Company [1964] G.L.R. 234.

I think the whole case depends on what is meant by an “insurable interest.” It seems to me that in Royal Exchange Assurance v. Sosu (supra) the Court of Appeal held that if the person insured has disposed of his ownership in the property insured, he could no longer be said to have any insurable interest in the said property. The following passages appearing in the judgment of the court make this position clear:

“Counsel for the plaintiffs-respondents, after a lengthy but unconvincing argument on the issue that the property in the vehicle had not passed at the time of the injury, eventually conceded that with the payment of the total purchase price except £G10, the property in the vehicle had in fact passed to Ampofo the driver.

‘When once the car which is the subject of this policy is sold, the owner’s rights in respect of it cease and the policy so far as the car is concerned is at an end.’ Rogerson v. Scottish Automobile and General Insurance Co., Ltd. (1931) 146 L.T. 26 at p. 27, H.L.”

After reviewing the facts and referring to another authority the court continued:

“The learned trial judge failed to consider the fact that the owner’s rights ceased, once the vehicle, which was the subject-matter of the

[p.229] of [1973] 1 GLR 226 policy was sold. (Rogerson v. Scottish Automobile and General Insurance Co.) (supra). The policy in effect lapsed and no rights accrued to the policy-holder. The position therefore was that after the sale of the vehicle to Ampofo, Kwasi Addae ceased to have any rights and the policy was at an end.”

It is therefore certain that if the sale of the vehicle by the policy-holder is an outright one, then the policy-holder cannot have any “insurable interest” in the vehicle after the said sale, and the policy covering the vehicle will be at an end. The policy will be held to have lapsed even if the policy-holder has transferred or assigned it to the purchaser. See White Cross Insurance v. Northern Construction Company, Court of Appeal, 28 July 1969, unreported; digested in (1969) C.C. 146.

In the present case, the plaintiffs agree that there was no outright sale. The sale in question was by a hire-purchase agreement: see paragraph (5) of the statement of claim. By that hire-purchase agreement, the defendant parted with his possession only. It was not pleaded, neither was it contended by learned counsel for the plaintiffs, that even though the sale was by a hire-purchase agreement, the purchaser, Kwasi Twum, at the time the present writ was issued, had finished paying the total purchase price, as was found in Sosu’s case (supra), and that the property in the said vehicle had, in fact, passed to Kwasi Twum. In this respect it can be said that Sosu’s case is distinguishable from the present case.

However, on the pleadings, it is apparent that, at least, at the time the action was instituted, the defendant had not disposed of his entire interest in the vehicle to the said Kwasi Twum. What he had then disposed of was his right to immediate possession. But he still retained the ownership therein until full payment of the purchase price was made by the said Kwasi Twum.

In the circumstances, I am of the view that until the purchase price agreed upon by the defendant and the said Kwasi Twum was paid, or until the property in the vehicle could be said to have passed to Kwasi Twum, the defendant still had an interest in the safety and the preservation of the said vehicle. That interest, definitely, amounts to an “insurable interest.” As has been defined in Stroud’s Judicial Dictionary (3rd ed.), Vol. 2, p. 1484,para. 15:

“An insurable ‘interest’ in goods ‘does not, necessarily imply a right to the whole, or a part, of a thing, nor, necessarily and exclusively, that which may be the subject of privation, but the having some relation to, or concern in, the subject of the insurance, which relation or concern, by the happening of perils insured against, may be so affected as to produce a damage, detriment, or prejudice, to the person insuring; and where a man is so circumstanced with respect to matters exposed to certain risks or dangers as to have a moral certainty of advantage or benefit but for those risks or [p.230] of [1973] 1 GLR 226 dangers, he may be said to be INTERESTED IN the safety of the thing. To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from its existence – prejudice from its destruction (per Lawrence, J., Lucena v. Craufurd, 2 B. & P.N.S. 302).”

Since the ownership in the vehicle remained in the defendant until the purchase price was paid, the mere fact that the defendant parted with possession for the time being, under the said hire-purchase agreement, could not deprive the defendant of his insurable interest. For, the defendant still had relation to, or concern in the vehicle, the subject – matter of the insurance, and which concern or relation, “by happening of perils insured against, may be so affected as to produce a damage, detriment or prejudice” to him.

Consequently, I declare that the defendant had an insurable interest in the said vehicle No. GE 2844 and that the insurance policy No. CV 39736 issued by the plaintiffs to the defendant in respect of the said vehicle was still valid and of full effect. In the circumstances, the action will be dismissed and judgment entered in favour of the defendant.

Costs to the defendant assessed at ¢200.00.

DECISION

Judgment for the defendant.

S. Y. B.- B.