Devi v Queensland Insurance (Fiji) Ltd [2010] FJHC 318; HBC233.2004L (17 August 2010)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Action No: HBC 233 of 2004L

BETWEEN:

PRAMILA DEVI father's name Deo Raj
Plaintiff

AND:

QUEENSLAND INSURANCE (FIJI) LIMITED
1st Defendant

AND:

LAUTOKA CITY COUNCIL
2nd Defendant

AND:

THE ATTORNEY GENERAL OF FIJI
3rd Defendant

AND:

MUNENDRA SHARMA father's name not known to the Plaintiff
4th Defendant

AND:

RAGHWANAND SHAMA father's name not known to the Plaintiff
5th Defendant

FINAL JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Mr V Mishra for the Plaintiff
Mr F Haniff for the 1st, 4th & 5th Defendants
Mr A Patel for the 2nd Defendant
Mr R Green for the 3rd Defendant

Solicitors: Mishra Prakash & Assocs for the Plaintiff
Munro Leys for the 1st, 4th & 5th Defendants
S B Patel for the 2nd Defendant
Attorney General's Chambers for the 3rd Defendant

Date of Hearing: 21, 22 April 2010
Date of Judgment: 17 August 2010

INTRODUCTION

[1] The Plaintiff insured her house with the First Defendant, QI, for $100,000 indemnity cover for loss due to fire for one year from 5 February 2000. Fire completely destroyed her house on 23 April 2001. Unbeknown to her son-in-law, who was looking after her affairs and her agent, the policy had lapsed. So when he lodged his mother-in-law's claim the day after, QI rejected it. It was only then that he discovered that the house had no cover because the premium had not been paid when it was due on 5 February 2001.

[2] She brought this action on 31 July 2004 against QI and its agents, 4th and 5th Defendants. She alleged that QI and its agents undertook to hold cover whilst the premium was being reviewed and they reneged on their undertaking. She also sued the Lautoka City Council for not having enough water in the fire hydrants and the Public Works Department for not ensuring that the hydrants were visible to the firemen when they came to put out the fire.

CASE HISTORY

[3] The Writ of Summons and Statement of Claim, dated 31 July 2004, were issued out of this Court on 9 August 2004. Original Defences were filed by the Defendants but subsequently, the Plaintiff amended her Statement of Claim on 29 March 2007 so all Defendants filed Amended Defences. The Plaintiff filed further and better particulars in February 2006 at the request of Queensland Insurance and pleadings eventually closed in August 2007. PTC Minutes were eventually filed on 14 January 2008. The hearing was set for 18 and 19 November 2008 but could not proceed because of unavailability of court time. It was adjourned to 19 November 2009 and four more adjournments followed before I set the matter down for hearing on 21 and 22 April 2010.

THE PLEADINGS

The Statement of Claim

[4] The Original Statement of Claim states that the Plaintiff was the owner of a substantial residential dwelling on Lot 13 Ram Asre Road, Lautoka. The Plaintiff insured her residence with QI for $100,000 vide Policy Number 0038689 for a number of years, the last being for a period of 1 year commencing from 5 February 2000. Before the expiry of the policy, the Plaintiff through her agent and son in law, Dr Ganesh Chand, requested QI and its agents to consider a reduction in the annual premium. QI and its agents undertook to review and to keep the policy current pending their decision. The Plaintiff in reliance on the undertaking did not pay the premium. On 23 April 2001, her house caught fire and was completely destroyed and caused her loss. Her loss was significantly and substantially contributed to by the failure of the Fire Authority to locate the fire hydrant nearest her house and the low water pressure when the hoses were connected to the hydrant.

[5] The Amended Statement of Claim filed on 29 March 2007 added that the fire hydrant had been covered by soil during recent road work by the Council and/or the PWD which was in breach of s 40(1) of the National Fire Service Act, 1994. The Plaintiff also added that there was negligence in not ensuring that there was proper water pressure, without specifying whose negligence it was.

The Insurer's Defence

[6] QI admits that the Fourth Defendant was its insurance agent and that cover was held until 5 February 2001 on which date it "expired". But it denies giving any such undertakings as alleged by the Plaintiff. The premium was to be paid before the policy expired and in this case it was not so paid so cover "lapsed". It denies the Plaintiff's claim.

The Lautoka City Council's Defence

[7] The Council denies that it was under any duty "to ensure full utility services are provided to the ratepayers" as claimed by the Plaintiff. It says that the building caught fire due wholly or in part to the negligence of the Plaintiff and/or her tenants. The particulars of negligence were failure to properly inspect and maintain the electrical wiring system of the residence, failure to provide precautions against fire caused by electricity or gas and failure to ensure that her tenants took adequate steps to prevent fire.

The PWD's Defence

[8] The PWD says that any interrupted or uninterrupted water supply is not within the control of the Department and that maximum water supply could not be guaranteed in any case, including fire. It denies that its workers buried the fire hydrant. It says that the hydrants were in fact visible and accessible at all times.

[9] At the beginning of the hearing counsel for PWD sought to amend its defence, the only significant additions were that the hydrants were constructed and installed pursuant to s 7 of the Water Act and responsibility for maintaining them were transferred to the Fire Authority pursuant to s 11(m) of the National Fire Authority Act, 1994 and it also pleaded s 26 of the Act. I allowed the amendments, there being no objection to the application.

The Insurance Agents' Defence

[10] The Fourth Defendant admits that he was an agent of QI but denies that cover was held after 5 February 2001 and that he gave any undertakings as alleged by the Plaintiff.

[11] The Fifth Defendant who was the Manager West was not served so he did not participate in the case but his absence did not make any difference because QI accepted that he was an agent of the company.

The Plaintiff's Reply

[12] In reply, the Plaintiff says that the Fourth and the Fifth Defendants as agents of QI were responsible for placing her insurance cover with QI. She further says that QI is estopped from denying cover because of its agents' undertaking to review the premium and advise her.

THE HEARING

The Current Plaintiff

[13] The original Plaintiff was Kala Wati. She died in the course of these proceedings and is now represented by her daughter, Pramila Devi, who is the admistratrix of her estate.

The Agreed Facts

[14] The Pre Trial Conference Minutes recorded as agreed fact that the Plaintiff's premises at Lot 13 Ram Asre Road, Lautoka was destroyed by fire on 23 April 2001.

The Agreed Documents

[15] The parties all agreed on a bundle of documents to be used at the trial numbering Agreed Documents 1 to 7 with three more added to at the trial making a total of 10

PW1

[16] The first witness for the Plaintiff was Pramila Devi. Kala Wati was her mother who is now deceased. She is the administratrix of her mother's estate. She was not at her mother's house at the time of the fire because she was away in Labasa attending a funeral. But she went there later that evening. She saw the house was burnt. It was a single story, modern, 4 bedroom house, with good views and location when it burnt down. She bought the house from the Home Finance Company by tender in November 1996 for $20,000. It was rundown and vandalised. She hired a carpenter who redesigned the interior and renovated it at a cost of between $60,000 and $70,000. Her mother was living on her own with three children. She felt her mother was not secure so she and her husband agreed to transfer the house to her as hers. The house was rented to a tenant and was occupied by the tenant at the time of the fire. The house was two driveways away from the one that she and her husband were staying at.

[17] Pramila's mother was of limited education so it was agreed that her husband, Ganeshwar Chand, was to take care of Kala Wati's affairs concerning the house, including the renovation works.

[18] She saw the house after it was burnt. From the top she could see that the roof was "curved", it was a burnt blackish grey colour, the walls were still standing but the concrete was of a greenish black colour and the paint had peeled off.

[19] In cross examination by counsel for QI she said that the house is as it was after the fire. It is not occupied by anyone.

[20] To counsel for the Council, she said that she and her husband paid for the renovations. She was rather evasive when questioned about the structural damage to the house and the verandah even though she said she inspected the house before she bought it. It was her husband that was dealing with the carpenter.

PW2

[21] The second witness was Dr Ganeshwar Chand. He is the husband of Pramila Devi, the Plaintiff Kala Wati's daughter. He knew the 4th and 5th Defendants personally. The 5th Defendant was the manager and the 4th an employee in Lautoka.

[22] He confirmed that he managed the property on his mother-in-law's behalf. The house was purchased by his wife then after a few months she transferred it to her mother. The house was severely vandalised when she purchased it. All that remained were the walls and corrugated iron roof. There were no ceiling or partitions or electrical. He hired carpenters, plumbers, joiners and a number of labourers. They renovated the property completely and fully in about 3 months. The house was completely rewired by a licensed electrician and repainted. The verandah was repaired, and a new driveway and fence were built. It cost about $60,000.

[23] He was at the scene on the day of the fire, 23 April 2001. Just after lunch at around 2.00 pm, a neighbour came yelling that the house was on fire. Dr Chand ran out of his house which was only two driveways away and saw smoke. The tenant who was a fisherman was away at the time. The fire started with a lot of smoke before the ambers ignited. He called the Fire Brigade in Lautoka. The fire was intense. The Fire Brigade arrived and the firemen tried to douse the fire. They took the hose from the water tank on the fire truck to the fire. The tank had limited water. Some of the men were running around looking for the fire hydrant. They eventually found a fire hydrant near the shop some 300 meters away. He did not know how long it took for them to find the hydrant. When they connected the second hose to the hydrant, he could see that the pressure was lower than the pressure in the hose from the fire truck tank. The hose from the truck ran out of water in a few minutes. These hoses had numerous leaks. The Later on he came to know that there was a hydrant about 10 to 15 feet from the property. He had not seen it there before.

[24] He signed the insurance proposal for her mother-in-law for the year commencing 26 November 1996 and paid the premium. It was to insure the house for $70,000. The proposal included cover for fire damage or loss. That policy was renewed annually from 26 November 1997 to 26 November 1999. The period of cover was changed and renewed for the period from 5 February 2000 to 5 February 2001 and the certificate of insurance showed the insured sum was increased to $100,000. Dr Chand could not remember the exact premium but it was over $400. He negotiated with the 5th Defendant on the premium and cover dates because the property was free of mortgage and he had three other properties insured which all had different dates and it was more convenient if all of the policies had the same date of cover. He said he reminded Raghwanand at least three times. One was during the Christmas break when Raghwanand's relatives were at his office when Dr Chand went there and a second time in early February. The last time was about two months before the fire. He knew Raghwanand well; Raghwanand always said he would look at it; he was very persuasive.

[25] On 19 January 2001, QI sent a letter to Kala Wati headed "Renewal Invitation" advising her that the policy for her house needed renewal (the "renewal letter"). It was addressed to Dr Chand's post office box in Suva. He said he did not get this letter until towards the end of April. He also said that Raghwanand did not mention this letter in any of their conversations.

[26] Dr Chand made a claim after the fire. Raghwanand told him that he would have difficulty approving the claim and advised him to write a "passionate" letter to QI. He wrote that letter on 24 April 2001. In it he explained that he was one of the politicians that were held hostage in Parliament in Suva for 56 days on 19 May 2000. After his release he moved back to his home in Lautoka and stayed away from Suva as much as he could. For about three months he did not check his mail box until his return the week before he wrote his letter. That was when he found the QI renewal letter.

[27] He also explained the reasons for the non payment of the premium. He returned from Suva to Lautoka on Sunday 22 April and had planned to visit the Western Manager of QI on the next day, Monday 23 April. But on his way he went first to the Mayor's office to discuss some other business and took up the Mayor's offer of a cup of tea. He said in his letter that he now realised the extra half an hour he spent in the Mayor's chambers had proven dear to him.

[28] His plea was not accepted by QI. They replied to his letter on 25 April 2001. It was written by the General Manager, Mr John Hunt. The letter said that Munendra Sharma had reminded Dr Chand on two occasions to renew the policy. The letter also said that Raghwanand had spoken to Dr Chand "prior to the renewal date to review the pricing of various covers with QI but (Dr Chand) did not come back to see him". In those circumstances QI, with much regret, declined Dr Chand's request to reinstate the policy. He said in evidence that what the letter said was not true.

[29] When cross examined on other quotes he said he did not get any quotes from other insurers and could not recall telling Raghwanand that he was getting a quote from Tower Insurance. He disagreed when it was put to him that on the morning after the fire what he intended to do and did do was to go to Raghwanand and pay the premium then lodge his claim. He insisted that he understood all along that cover was still good and he went to lodge his claim on that understanding. Raghwanand told him when he went to lodge the claim that the premium had not been paid and he was to write the letter which he did on 24 April 2001.

[30] He was shocked when he received the response from Mr Hunt. These two employees had misrepresented the facts to Mr Hunt. He was so upset that he taped a conversation with Raghwanand that Raghwanand had agreed to look at the premium but did not do so. In that conversation, he said Raghwanand told him that QI said not to negotiate the premium. He had the tape but does not have it now. But he has a transcript of the conversation. He did not give the transcript to Mr Hunt. After he received the letter he called the 4th Defendant, Munendra Singh, and asked him on which two occasions did they meet. Munendra said once at the market and the second was when he told the tenant. Dr Chand could not recall meeting him at the market or being reminded by him that the policy had expired. He was not the person that Dr Chand was dealing with in any event.

[31] As to whether he obtained a permit from the Council for the renovations to the house Dr Chand said because there were no new additions and structural changes to the house no permit was required. Dr Chand hired an electrician who rewired the house, FEA inspected and gave the go ahead. Sewerage drains did not have to be changed so no approval was required from the sewerage authority.

[32] Dr Chand was the Minister responsible for water and fire authority prior to 2000. He wanted a report from the Fire Authority after the fire but was not provided one despite several requests.

The Defendants' case

[33] The Defendants did not want to call any witnesses.

[34] At the end of the hearing counsel asked for time to file written submissions which they all have, for which I am grateful, and I was to deliver my judgment on notice, which I now do.

THE CLAIM AGAINST THE FIRST DEFENDANT

[35] Having heard and seen Dr Ganesh Chand give evidence I would prefer his evidence to that of the insurer as contained in Mr Hunt's letter of 25 April 2001. I therefore do not accept that Munendra Sharma reminded Dr Chand of the need to renew the policy or that Raghwanand was waiting for Dr Chand to come back to him. I think it was the other way round. It does not make sense that it was Dr Chand who was to go back to Raghwanand when the latter was to review and reduce the premiums.

[36] I also find that Raghwanand did undertake or represent to Dr Ganesh Chand to hold the policy current whilst the premium was being reviewed by QI. One of the reasons for me so finding is that both of them were good friends. It is the sort of thing that a friend would say and do for a friend. Whether Raghwanand was actually authorised to give such an undertaking or make such a representation is a matter between him and QI. Raghwanand, as Manager West, in my view, certainly had ostensible authority to do that. The other reason was that the parties have conducted business in a similar manner before as far as adjustment of the cover period so that the policies commenced and ended at the same time.

[37] I find it surprising that Raghwanand or Munendra Sharma did not inform Dr Chand on the various occasions that they met that QI had sent him the renewal letter of 19 January 2001. Although it is the responsibility of the insured to ensure that correspondence to his mail box is cleared regularly, I think the circumstances of this are such that, I find, as a matter of fact, that Dr Chand and his mother-in-law were not in fact notified that the premium was due and that QI wanted her to pay the full premium, unadjusted, and that QI required her to renew the policy before it expired.

[38] I note Mr Haniff, counsel for QI, wrote in his submissions that QI had not attempted to contradict the alleged assurance claim by the Plaintiff. It simply relies on the fact that the assurance alleged by the Plaintiff is impossible as well as being implausible, as evidenced by the correspondence after the fire. That assurance by QI was that the policy would remain current while it considered the Plaintiff's request to reduce the premium.

[39] Neither Raghwanand nor Munendra Sharma were called to give evidence and their absence were not explained so I am entitled to presume that their evidence would not have helped QI despite what was said in Mr Hunt's letter: Land Transport Authority v Lal [2008] FJCA 79; ABU0053.2007S (7 November 2008)

[40] The Plaintiff's claim against QI will therefore succeed if the undertaking or representation as I have found above, or the assurance as Mr Haniff submitted, amounted to estoppel against QI or had becoming otherwise legally binding.

THE LAW

[41] The law in this area was decided in the landmark decision in Central London Property Trust Ltd v High Trees House Ltd [1946] EWHC KB 1; [1947] KB 130 and I quote from the judgment of Lord Denning, after referring to the old common law that a deed could not be varied by a agreement by parol (whether in writing or not) but only by deed, explained the law as follows at pp 133-4:

Equity, however stepped in, and said that if there has been a variation of a deed by a simple contract (which in the case of a lease required to be in writing would have to be evidenced by writing), the courts may give effect to it as is shown in Berry v Berry [1929] 2 KB 316. That equitable doctrine, however, could hardly apply in the present case because the variation here might be said to have been made without consideration. With regard to estoppel, the representation made in relation to reducing the rent, was not a representation of an existing fact. It was a representation, in effect, as to the future, namely, that payment of the rent would not be enforced at the full rate but only at the reduced rate. Such a representation would not give rise to an estoppel, because, as was said in Jorden v Money [1854] 5 HLC 185, a representation as to the future must be embodied as a contract or be nothing.

But what is the position in view of developments in the law in recent years? The law has not been standing still since Jorden v Money [1854] 5 HLC 185. There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel are not really such. They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on. In such cases the courts have said that the promise must be honoured. The cases to which I particularly desire to refer are: Fenner v Blake [1900] UKLawRpKQB 9; [1900] 1 QB 426, Re William Porter & Co Ltd [1937] 2 All E R 361 and Buttery v Pickard [1946] WN 25. As I have said, they are not cases of estoppel in the strict sense. They are really promises – promises intended to be binding, intended to be acted on, and in fact acted on. Jorden v Money can be distinguished, because there the promisor made it clear that she did not intend to be legally bound, where as in the cases to which I refer the proper inference was that the promisor did intend to be bound. In each case the court held the promise to be binding on the party making it, even though under the old common law it might be difficult to find any consideration for it. The courts have not gone so far as to give a cause of action in damages for the breach of such a promise, but they have refused to allow the party making it to act inconsistently with it. It is in that sense, and that sense only, that such a promise gives rise to an estoppel.

[42] I find that the undertaking or representation or assurance made in this case was intended to be legally binding, it was intended to be acted on, was acted on and is therefore binding on QI. That is to say, QI cannot now say that because it had not reviewed the premium and the premium was not paid up, the policy had lapsed at the time of the fire.

[43] One of the issues raised by Mr Haniff was the renewal letter. He referred to s 125 of the Insurance Act 1998 which required an insurer to notify the insured no later than 14 days before the cover expires that the insurer was prepared to negotiate to renew or extend the cover. He submitted that no such claim was pleaded so I am to ignore it. He cited Ram v Taito [2005] FJHC 248; HBA0020.2004 (4 May 2005) as authority. I think a close examination of that case would have revealed that Winter J would have come to a different conclusion if there was evidence of the issue despite it not being pleaded. The reason for that is if in the course of the trial evidence is given to support a particular claim or defence, an amendment would be granted, and the rules of court allow either by application or by the court's own motion, subject to prejudice from it being raised at a very late stage. The law is clearly not that if a claim or defence is not pleaded then the court cannot consider it. See Sitamma v Kumar [2010] FJCA 38; ABU006.2007 (19 July 2010) by which I am bound, is clear authority that I must consider the point in this case.

[44] Section 125 of the Act provides:

Notification of expiration of contracts of general insurance

125.—(1) in this section Renewable insurance cover means insurance cover that-

(a) is provided for a particular period of time; and

(b) is of the kind that it is usual to renew or for the renewal of which it is usual to negotiate.

(2) Not later than 14 days before the day on which renewable insurance cover provided under a contract of general insurance or under any prescribed class of insurance (in this section called the Original contract) expires, the insurer must give to the insured or to a person acting on behalf of the insured written notice of the day on which, and the time at which, the cover will expire and whether the insurer is prepared to negotiate to renew or extend the cover.

(3) if-

(a) an insurer fails to comply with subsection (2); and

(b) before the original contract expires the insured has not obtained insurance cover from some other insurer to replace that provided by the original contract,

there exists between the parties to the original contract a contract of insurance providing insurance cover as provided by the original contract, except that the cover provided-

(c) commences immediately after the insurance cover provided by the original contract expires; and

(d) expires, unless the contract is sooner cancelled, at-

(i) the expiration of a period equal to the period during which insurance cover was provided by the original contract; or

(ii) the time when the insured obtains from some other insurer, insurance cover to replace that provided by the original contract,

which ever is the earlier.

(4) where a contract of insurance is in force by virtue of subsection (3), the insurer may charge the insured a premium for the subsequent period, not exceeding the premium paid under the original contract.

[45] I do not accept Mr Haniff's submission that the onus of showing that due notice was not given is on the insured. The wording of s 125(2) is in mandatory terms. It is the insurer that must show that it has given notice. Secondly, it may be impossible for the insured to prove a negative: that he was not given a s 125(2) notice. I have found as a matter of fact that the insured in this case had not been notified by QI of the expiry of the policy and the need for its renewal until after the policy had expired. QI had therefore not complied with s 125(2) with the consequence that under s 125(3) the policy remained in place at the time of the fire because it had not been earlier cancelled.

[46] The cover was for $100,000. It is an indemnity policy as opposed to a replacement value one limited to that amount. I accept the evidence of Dr Chand and his wife that they had spent between $60,000 and $70,000 in renovations. His wife bought the badly rundown and vandalised house in 1996 for $20,000. The valuer was not called so I have not accepted his report into evidence. QI and the other Defendants did not call evidence to seriously challenge the Plaintiff's evidence that the loss was in fact $100,000 as insured for. However, I find that the Plaintiff has proven her loss only to the value of $70,000 and is entitled to be indemnified to this amount. Her loss may be more but in the absence of proper proof I cannot grant her claim to the full amount of the indemnity.

THE CLAIM AGAINST THE SECOND AND THIRD DEFENDANTS

[47] The evidence against the Council and the PWD fell far short of showing that the reduced water pressure, even if it were true, or the covering of the fire hydrant contributed significantly to the loss of the house. Such proof would have required expert evidence and none was adduced in this case. I therefore find that the facts do not support the Plaintiff's claims against the 2nd and 3rd Defendants. That being the case, I need not look at the statutory and other Defences raised by them. I will leave them for decision by another court in an appropriate case.

INTEREST

[48] I make no award for interest on the judgment sum because I think the Plaintiff has been slow in prosecuting her claim.

COSTS

[49] As between the Plaintiff and the First, Fourth and Fifth Defendants, the Plaintiff is entitled to her costs. As between her and the Second and Third Defendants she should pay their costs. Those claims were fraught with difficulties but I do not think that they were so hopeless that an award of indemnity costs would be justified. The hearing took two days and a substantial number of documents were filed and read. In these circumstances I think the First Defendant should pay the Second and Third Defendants' costs which I summarily assess at $2,000 each.

ORDERS

[50] The Orders are therefore as follows:

1. The First Defendant shall pay to the Plaintiff the sum of $70,000.
   
2. The First Defendant shall pay to the Second and Third Defendants their costs of $2,000 each within 28 days.
   

Sosefo Inoke
Judge