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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
APPELATE JURISDICTION
CIVIL APPEAL NO. ABU 4 of 2012
(High Court HBC 41 of 20005L)
BETWEEN:
THE NEW INDIA ASSURANCE COMPANY LIMITED
Appellant
AND :
AMIRA FURNISHING COMPANY LIMITED
Respondent
Coram : Eric Basnayake JA
Almeida Guneratne JA
David Alfred JA
Counsel : Mr. A. K. Narayan and Mr. A. K. Narayan Jnr.
for the Appellant
Ms. M. Vanua for the Respondent
Date of Hearing : 15 September 2015
Date of Judgment : 2 October 2015
JUDGMENT
Basnayake JA
[1] I agree with the reasons and the conclusions arrived at by Almeida Guneratne JA.
Almeida Guneratne JA
Background Facts
[2] The plaintiff/respondent (hereinafter referred to as the Respondent) instituted an action in the High Court at Lautoka against the defendant appellant (hereinafter referred to as the Appellant) under two fire and perils insurance policies. One was in respect of the Appellant's furniture workshop and the other was over its stock, machinery and equipment.
[3] After the trial of the action, the learned High Court Judge gave Judgment for the Respondent on both policies together with damages and costs.
[4] This appeal is against that Judgment.
Grounds of Appeal
[5] The Appellant's grounds of appeal are contained in the Notice of Appeal dated 20 April, 2012 the gist of which is that, the learned trial Judge erred and/or misdirected herself in fact and in law in allowing the Respondent's claim, in as much as, the Respondent had, in support of the said claim.
(a) made false statements
(b) acted fraudulently and/or had made a fraudulent exaggeration of the losses
(c) failed to co-operate with the Appellant in providing the requisite information.
[6] The additional grounds of appeal only elaborate on the aforesaid grounds of appeal. At the outset it would be pertinent to make two observations viz: firstly, that, although in the grounds of appeal, the Appellant had contented the damages were in any event, excessive which the Appellant had elaborated upon in the written submission dated 8 June 2015, this issue was not even tokenly touched on during the oral submission. Secondly, although arson had been pleaded as a defence before the High Court, this was abandoned at the trial itself. (see: p.382 of the Record of the High Court) (RHC). Thus, I will not consider any submission made in this Appeal that are seen to be connected to that defence.
Consideration of the Grounds of Appeal
[7] I now proceed to deal, seriatim, with the matters urged upon this Court in the Appeal.
That the Respondent had made false statements
[8] The matters averred as constituting false statements are contained in Paragraph 3.3 – 1 to 5 of the Appellant's written submission, which learned Counsel elaborated, upon in his oral submission. He submitted that there was a deliberate misrepresentation in regard to its financial status as at the time of the fire in 2002 and further had made an exaggerated claim in regard to the loss suffered and/or caused to its plant and equipment which had led the learned trial Judge herself to deduct a sum of $12,500.00 from the said exaggerated claim of $118,043.30.
[9] In that regard, Counsel stressed inter-alia that, the Respondent had claimed that it acquired machinery from John Grey Designs for $40,000.00 of which it had paid $20,000.00 before the fire and/or that the Respondent had acquired machinery from John Grey Designs for $60,000.00, which were contradictory statements in themselves.
[10] Consequently, Counsel argued that, the learned trial Judge's findings in not allowing the defence of false statements were based on irrelevant considerations and/or were based on a failure to appreciate relevant considerations.
[11] Do the matters so raised constitute false statements that might defeat a claim? What is the law on the matter?
Applicable Principles of Law and Concepts
[12] The requirements of the duty to make a full and honest disclosure of the circumstances of the case and/or the duty to act in good faith are central to any claim made by an insured, based on an insurance policy.
Fraudulent as distinct from an exaggerated claim
[13] However, would every exaggerated claim be rendered a fraudulent claim? To put it in another form, would a mere exaggerated claim fail unless it is fraudulent? I find that the authorities relied upon by Mr. Narayan including the case of New Zealand Insurance Co. v. Forbes [1998] 5 ANZ Ins. Cases 60 do not assist him in that regard. I shall return to this later.
[14] How can inaccurate statements as to the financial status of a claimant affect the value of property lost owing to a fire? Likewise, what bearing do inaccurate statements regarding VAT payments and tax liabilities have on a claim made in regard to property destroyed by a fire?
[15] Viewing the matter from that perspective I cannot see how the interview given by Mr. Makki (PW3) to Mr. Garry Luff (DW1) or even the evidence of Mr. Makki and Mr. Robertson given in the High Court, whether taken individually or in combination with the aforesaid statements could have made a difference even assuming for one moment the said statements were false.
[16] A false statement or representation must have a bearing on the ultimate monetary claim in order to make it fraudulent and so defeat the claim.
[17] For the aforesaid reasons I hold that, the defence based on the aforesaid alleged false statements was not entitled to succeed.
[18] I do not see any misdirection and/or non direction on the part of the learned trial Judge in that regard and hereby express my agreement with her that "the financial position of the company seems insignificant" (see: p.13 of the Judgment, Vol. 1 of the RHC). To that, I would add the words "and/or irrelevant".
[19] However, the arguments based on "the exaggerated claim" and its connection to the loss of machinery, its ownership and purchases require consideration in some detail.
[20] In that regard I note there was an overlap in the factual content that grounded the defences of "false statements" and "fraud/fraudulent exaggeration".
[21] A letter had been sent from "Grey Project Designs" to the Appellant claiming loss and damage to its property during the fire on 22 November, 2002 under its own policy. Annexed to the letter were two schedules. One related to the damage sustained to its building and the other listed damage to its machinery. The total amount of damage to the machinery had come to $33,349.00. However, in the schedule it stated $30,000.00 of it was 'all transferred to Amira Furnishings Factory under a Sales and Purchase Agreement which to date, is still incomplete. These documents also exhibited the Grey Designs policy schedule. (see: p.367, RHC, Vol.2).
[22] At the trial, the Respondent had tendered a letter dated 20 December 2002 (p.478, RHC, Vol.2). Attached to it was a schedule of all equipment/machinery claimed under the policy and a letter from Grey Project Designs dated 3 December, 2002 supporting a claim for $60,000.00 (see: p.451, RHC, Vol.2).
[23] Having submitted that the letter which referred to $60,000.00 was false in itself in as much as a simple process of addition (see: p.451, ibid) shows that the amount was $55,000.00, Counsel further submitted that the learned trial Judge erred at paragraph 95 of the Judgment when she said "the plaintiff declared the value of the equipment as declared as $60,000.00 in exhibit A document 10 and document 13(xii)".
[24] The learned trial Judge had gone on to say at paragraph 99 of the Judgment:
"I am unable to determine whether the equipment declared by Grey Project Design and the plaintiff is identical. Whilst both counsel address the matter in their respective final submissions, it appears that the counsel have inconsistent opinion of the items declared even after trial. The defendant states they are identical and the plaintiff says except for Thicknesser Wodhim Bursgreen" (sic) valued at $10,000.00 the items listed in the Schedule under the heading 'Timber Wood Working Machines' (with the exception of one item) is not the same as the equipment claimed by the plaintiff."
[25] In regard to the above comments made by the learned trial Judge, Mr. Narayan referred this Court to paragraph 93 of the Judgment where Her Ladyship had earlier stated:
"It is also documented in the schedule that 'All transferred to Amira Furnishings Factory under Sales and Purchase Agreement which to date, is still incomplete' and declared the value as $30,000.00".
[26] At paragraph 102 of the Judgment the learned Judge had observed:
"[n]or do I have evidence before me explaining the inconsistency of values declared by Grey Project Designs and the Plaintiff. I do not have evidence before me whether Mclarens or the Defendant interviewed John Grey on the disparity of the value. Nor do I have any evidence to determine whether there is a nexus between the items declared by Grey Project Design and the Plaintiff."
[27] Analysing the aforesaid observations made by the learned trial Judge, Counsel for the Appellant submitted that, "those findings that she had no evidence that they were identical machinery is wrong because the schedule she quoted makes it clear that what Grey's had submitted for its loss was the same machinery the Respondent is claiming ..." (see: paragraph 5-17 at page 11 of the Appellant's written submission). Counsel reiterated that position during oral submission as well.
[28] But that analysis is seen to result in paralysis, when Counsel was heard to submit that individual itemisation of each machine was irrelevant. I think otherwise.
[29] Apart from that, I have carefully compared the documents relied upon by Counsel which I have recounted earlier.
[30] Even if the correct figure were $55,000.00, could it be seriously argued that, the Respondent was seeking to push a claim for $60,000.00 instead of $55,000.00 (a difference of $5,000.00) and thereby taking a risk of having its claim rejected? Would it not be a more realistic view to take that, at the most, it was a mistake made without accurate verification?
[31] The same applies, in my view, to the original claim made by the Respondent in the context of the machinery worth $12,500.00 that belonged to Pure Blue (Fiji) Limited that was found to be on the Respondent's premises for which reason the learned Judge had disallowed that component of the claim.
[32] I am also of the view that, the same reasoning would apply to the "incomplete Sales and Purchase Agreement" regarding the figure of $30,000.00.
[33] Could a claim erroneously and/or inaccurately made be regarded as a fraudulent claim?
What is fraud?
[34] A fraudulent claim is a breach of the duty of utmost good faith which may result in the forfeiture of benefits under the policy. (see: Engel v. South British Insurance Co. Ltd. [1983] 2 ANZ Insurances Cases, 60-516. See also Vero Insurance New Zealand Ltd. v. Posa [2009] 15 ANZ Insurance Cases, 61-791.
[35] As Lord Buckley said in R v. London and Globe Finance Corporation Ltd. [1903] UKLawRpCh 47; [1903] 1 Ch. 728, 732-733:
"to deceive is ... to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false."
Burden of Proof re: 'fraud' in Insurance Cases
[36] In so far as the onus of proof is concerned, it is the insurer who must show that the insured intended to deceive him by the false statement or omission in order to gain an advantage. (see: Tiep Thi To v. Australian Associated Motor Insurers Ltd. [2001] VSCA 48; [2001] 11 ANZ Insurance Cases, 61-490.
Is there a misdirection and/or Non direction and/or any error in the Judgment of the High Court?
[37] I agree with the Respondent's submission that, the issue is whether an insured believed the claim to be true, although erroneously. It is 'not' whether the insured honestly believed it to be true in the sense assigned to it by the Court or by an objective consideration of its truth or falsity, per Perry J in Awaroa Holdings Ltd. v. Commercial Securities and Finance Ltd. [1976] 1 NZLR 19 at p.32.
[38] Because the standard of proof of fraud, in a civil claim is the civil standard of balance of probabilities it does not follow that misleading or inaccurate statements will necessarily lead to an inference of fraud. The evidence on record certainly does not support an allegation of fraud.
The defence based on non-cooperation by the Respondent
[39] Here I found "the ghost" of the allegation of 'fraud' surfacing, linked as this defence is to the said allegation, which allegation I have already rejected both on the facts as well as on the law.
[40] The learned trial Judge has in paragraphs [40] to [52] of her judgment dealt with this at length. I do not therefore feel the need to add anything more except to say that, based on the learned trial Judge's reasoning, which I fully accept, the defence of "non-cooperation" is wholly lacking in merit though I will acknowledge the valiant effort made by Mr. Narayan on behalf of the Appellant.
[41] I do not think the case of Super Chem Products Limited v. American Life and General Insurance Co. Ltd & Ors. [2004] 2 All ER 358 assists the Appellant on that aspect having regard to the facts and circumstances of the instant case as dealt with by the learned trial Judge.
[42] In her well reasoned judgment, the learned trial Judge has given cogent reasons for rejecting the defences based on "false statements", "fraudulent exaggeration" and "non-cooperation" (as in paragraphs [24], [25], [60], [61], [89] to [98] and [104] in particular of her Judgment).
[43] I accept her excursus in toto and do not see any reason to interfere with her judgment except to say that in consequence of the rejection of the said defences it follows that there could not have been any breach of the policy conditions either.
Final Comments and Conclusion
[44] As I observed at the inception of this Judgment the issue of damages was not pursued in the oral submissions made on behalf of the Appellant although it had been dealt with in the written submissions. I will not comment on that issue nor consequently on concepts associated with it including that of 'betterment'.
[45] The same goes for the arguments based on the issues of Arbitration and Limitation of Action though pursued by the Appellant at the trial.
[46] Finally for all the aforesaid reasons I hold that the Appellant is not entitled to succeed in this appeal on the based on any of the grounds or additional grounds of appeal.
[47] I place on record the valuable assistance rendered to the Court by both Counsel particularly the useful authorities that were brought to the Court's attention.
Alfred JA
[48] I have read the Judgment, in draft of my brother Judge Almeida Guneratne JA and concur with it. I have only a few words to say with regard to that ground of appeal relating to limitation of time to file an action. I bring to the attention of insurers and their counsel that a clause in an insurance policy that purports to preclude an insured from making a claim in Court when he had not submitted his claim to arbitration within 12 months of the claim being declined by his insurer, cannot stand up in Court. This is because a contractual term cannot cut down a statutorily granted period of 6 years within which the insured can file a claim in Court. In other words where a right exists the remedy continues and the insured cannot be shut out from pursuing his claim.
Orders of the Court
..................................................
Hon. Justice Eric Basnayake
JUSTICE OF APPEAL
.........................................................
Hon. Justice Almeida Guneratne
JUSTICE OF APPEAL
............................................
Hon. Justice David Alfred
JUSTICE OF APPEAL
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