Prasad v Dominion Insurance Ltd [2003] FJHC 23; Hbc0552j.2000s (22 October 2003)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 552 OF 2000S

Between:

JUGUN PRASAD
(f/n Ganga Prasad)
Plaintiff

and

DOMINION INSURANCE LIMITED
Defendant

D. Sharma for the Plaintiff
A.K. Narayan for the Defendant

JUDGMENT

In January 1998 the Plaintiff purchased a second hand lorry registration number CH 202. He paid $30,000 and the purchase was financed by a $25,000 leasing facility provided by the Fiji Development Bank. One of the conditions of the lease was that the lorry be insured and in due course an insurance policy was taken out with the Defendant. A copy of the policy is document P4 in the Plaintiff’s bundle of agreed documents. It is also Document D2 in an agreed bundle prepared by the Defendant.

On 3 April 2000 the lorry was involved in a single vehicle accident near Seaqaqa. According to a motor vehicle accident claim form (Document D5) completed and submitted by the Plaintiff and dated 7 April the Plaintiff was:

“ascending the Komosomo hill in No. 3 gear at approximate speed of 30 kmph and suddenly the 3^rd gear came off. I tried to reapply the gear but it could not engage. I applied the brakes but it was hard and ineffective.”

The lorry then ran off the road and sustained damage. The Plaintiff was also injured, although not seriously.

A few days after the accident the lorry was taken to the garage of Jack’s Motor Traders at Labasa. It arrived there on either the 7^th or 8^th of April.

According to the evidence of J.P. Singh, the manager of Jack’s, the lorry was inspected at about mid-day on Saturday morning the 8^th. Present at the inspection were the Plaintiff, Mr. Singh and Mrs. Anita Prakash, the manager of the Defendant’s Labasa branch to whom the Plaintiff has submitted his accident claim form. Mr. Singh told me:

“We looked at the damage [to the truck]. I lifted the cab up and checked the oil level with the dipstick. It was between high and low mark. I asked Anita to start up the engine. She got it started. It went on for a few minutes and then went off. It was running well. She tried to restart it but it would not fire. I told her that it looks as though it does not have enough fuel ..... the Plaintiff was there watching everything.”

Mr. Singh’s evidence was corroborated by Mrs. Anita Prakash who told me that after she had received the accident claim form and had arranged for Western Wreckers to tow the lorry from Seaqaqa to Jack’s she went to Jack’s on the 8^th and there inspected the damaged vehicle. Both Mr. Singh and the Plaintiff were present. Mrs. Prakash told me:

“We checked the oil level first. We saw it was above low and below high. I then opened the door. I had the key. I made sure the gear was not engaged. I switched on the ignition. I waited for it to heat up and then started the engine. It started first time and then after a while it went off. I tried to start it again. It was cranking but it did not fire. I asked [Mr. Singh] what might be the problem. He said there may not be enough fuel.”

Mrs. Prakash told me that she then inspected the vehicle and told the Plaintiff not to worry. The engine “seems OK” and the other damage was not severe: the insurer would take care of it. She told me that she then went back to her office.

The Plaintiff’s account of what happened when Mrs. Prakash went to start the engine was quite different. According to him Mrs. Prakash tried two or three times to get the engine started but while it would crank it would not fire. There was no question of it running for a few minutes:

“Anita did not manage to get the engine started. There was no discussion at all about why the engine did not start ...... The engine did not start at all.”

On 16 April the lorry was again inspected at Jack’s, this time by Shankar and Associates, Insurance Loss Investigators, Assessors and Adjustors. The final report by Shankar (Document D17) estimated the cost of repairing the vehicle at $6,883. This figure included $4,000 which represented the cost of supplying and fitting a new second hand engine.

On 18 May 2000 the Defendants wrote to the Plaintiff (Document D11) declining to pay for the cost of a replacement engine but offering to pay $1,883.00 for the balance of the repairs. On 19 May 2000 the Defendant again wrote to the Plaintiff cancelling the insurance policy altogether.

The central question in this case is whether the engine of CH 202 was damaged in the accident so as to require replacement or whether it was not. As a first step towards resolving this question the inconsistency between the evidence of the Plaintiff and the evidence of Mr. Singh and Mrs. Prakash must be resolved.

Mrs. Prakash was, as I found, an exceptional witness. Her evidence were clear, concise and palpably frank. It accorded precisely with what Mr. Singh had earlier told me. Mr. Singh’s recollection of the events was followed by a letter dated 17 May 2000 addressed to the Defendant (Document D9) which confirmed that the engine had started and had run before apparently running out of fuel.

Having heard the evidence and seen the witnesses I am satisfied that when CH 202 was inspected on or about 8 February the engine was in good running order. This finding, indeed, is consistent with evidence given by the Plaintiff himself who told me:

“On 7^th the truck was in the custody of Dominion. I was not concerned about the condition of the engine. I did not suspect that there was something wrong with the engine.”

If the engine was in good working order on the 7^th or 8^th February how then, on 14^th April was it found by Shankar and Associates to need replacement?

The Plaintiff offered no explanation but contented himself with denying the explanation given by Mr. Singh and by one of his garage boys Suspendra Kumar. According to these two witnesses what happened was that after Mrs. Prakash returned to her office the Plaintiff asked Mr. Singh for a gallon of Diesel fuel and the key of the truck. He also asked for the services of a garage boy. He was given the fuel and the keys. Suspendra was asked to help him. The Plaintiff and Suspendra then went to the truck.

Suspendra told me that after Mr. Singh asked him to help the Plaintiff with the vehicle he and the Plaintiff went over to it. The Plaintiff told him to drain the oil from the engine. When he had done this the Plaintiff then asked him to fetch 8 litres of new oil. Suspendra went away to the work shop to fetch the oil but when he returned with it he found that the Plaintiff had started the engine which he was revving hard. The Plaintiff switched off the engine when Suspendra was about to reach him. The fresh oil was then filled in to the engine and the Plaintiff tried to start it. The engine however “would not turn again”.

The Defendant’s case is that the Plaintiff, on his own admission a qualified mechanic, either deliberately or with gross or reckless negligence ran the engine after it had been drained of oil knowing full well that the inevitable result would be serious damage including in all probability engine seizure leading to the need for engine replacement.

Relying on Sections 1 and 2 A 4 of the Conditions of Contract (Document D2) namely fraud and failure to take reasonable steps to prevent further loss or damage to the vehicle the Defendant repudiated the contract.

In the first sentence of the third paragraph of his excellent closing submissions Mr. Sharma who, with admirable application took every point that possibly could have been taken in favour of the Plaintiff, wrote:

“At the end of the day it comes down to whom the Court believes.”

In my opinion there is no reason to doubt the evidence of Mrs. Prakash, of Mr. Singh and of Suspendra Kumar. I find that after Mrs. Prakash left Jack’s and returned to her office the Plaintiff started up the engine knowing full well that it had just been drained of oil, and as a consequence damaged it beyond repair. This action was at the very least grossly negligent and sufficient to avoid the contract. It is not necessary to make a finding of fraud for the Plaintiff’s action to fail. It is however clear beyond all doubt that the Plaintiff’s denial that he started the engine was dishonest. The claim is dismissed.

M.D. Scott
Judge

22 October 2003