Lowing v QBE Insurance (Fiji) Ltd [2015] FJHC 951; HBC127.2012 (4 December 2015)

IN THE HIGH COURT OF FIJI
WESTERN DIVISION
AT LAUTOKA

CIVIL JURISDICTION

CIVIL ACTION NO. HBC 127 of 2012

BETWEEN:

PETER ALLAN LOWING of 1404 Hilton Hotel, Denarau Island, Fiji
PLAINTIFF

AND:

QBE INSURANCE (FIJI) LTDof QBE Centre, Victoria Parade, Suva
DEFENDANT

(Ms.) Salote Seru Tabuadua for the Plaintiff
Mr. Lawrence Wing Fung for the Defendant

Date of Hearing: - 21stAugust 2015
Date of Ruling : - 04th December 2015

RULING

(A) INTRODUCTION

(1) The matter before me stems from the Defendant's Summons dated 14th May 2015, made pursuant to Order 20, rule 5 of the High Court Rules, 1988 and the inherent jurisdiction of the Court seeking leave to further amend the amended Statement of Defence.

(2) The Summons is supported by an Affidavit sworn by "Kamlesh Narayan", the Claims Manager, in the employment of QBE Insurance (Fiji) Limited, the Defendant.

(3) The Summons is strongly resisted by the Plaintiff.

(4) The Plaintiff filed an Affidavit in Opposition opposing the Summons followed by an Affidavit in reply thereto.

(5) The Plaintiff and the Defendant were heard on the Summons. They made oral submissions to Court. In addition to oral submissions, the Plaintiff and the Defendant filed a careful and comprehensive written submission, for which I am most grateful.

(B) THE FACTUAL BACKGROUND

(1) What are the circumstances that give rise to the present application?

(2) To give the whole picture of the action, I can do no better than set out hereunder the averments/assertions of the pleadings.

(3) The Plaintiff in his amended Statement of Claim pleads inter alia;

Para 1. The Plaintiff is a Barrister and Solicitor practicing in Fiji. At all material times the Plaintiff was the owner of the motor vessel "The Office" (the vessel).

2. The defendant is a company incorporated in Fiji and is an insurance underwriter and it is capable of being sued on its own behalf and in that capacity.

3. The Plaintiff purchased the vessel on or around August 2010 for $65,000.00

4. By a placement slip issued by the Plaintiffs broker and a policy of marine insurance number FJ110000588PLS dated about the 12 May 2010 on the terms set out there in (the First Policy) the defendant agreed to insure the vessel valued at $85,000.00

Particulars

(a) A copy of the placement slip and policy is attached.

5. Between August 2010 and 12 May 2011, the Plaintiff spent about $35,000.00 on vessel refitting and repairing same. Accordingly the value of the vessel increased from $65,000.00 to about $100,000.00.

6. On or around 12 May 2011, the defendant agreed to renew and extend the First Policy for another 12 months and increased the insurance amount to $100,000.00. The vessel was insured against the perils set out in the policy including, but not limited to, perils of the seas, for a period of 12 months beginning on 12 May 2011 and ending 12 May 2012 (the Second Policy).

7. The placement slip and the policy to which the defendant will refer for its full terms, meaning and affect, provides, inter alia, as follows:

Sum insured being the value of the vessel $100,000.00

Relevant conditions loss or damage to the insured vessel as per the following principal Marine clauses

Institute Yacht clauses 1-1185 CL 328 – amended as follows:-

delete clause 5 and related exclusion 10.2

delete clause 19

delete clause exclusion 10.1

delete exclusion 10.6 and 10.7

delete exclusion 10.10

delete exclusion 11.6.3 and 11.6.4

Institute Radioactive Contamination Exclusion Clause 1-10-90 CL 356

Institute Yacht Clauses Machinery Damage Extensions

Institute Yacht Clause Transit Clause

Institute War and Strikes Clause Hulls Time (1-11-95)

Asbestos exclusion

Terrorism Exclusion Clause

Sabotage Exclusion

8. Clause 9.1 of the policy provided that "subject always to the exclusions in this insurance this insurance covers loss of or damage to the subject matter insured caused by

9.1.1 perils of the seas, rivers, lakes or other navigable waters".

9. The Plaintiff was at all material times fully interested in the policy.

10. On or about the 30 March 2012 whilst insured under the policy, the vessel encountered a storm of exceptional violence and sank on or adjacent to its mooring adjacent to Denarau Island (the Incident).

Particulars

Fiji and specifically Denarau Island was subjected to extraordinary rain and wind at the time the vessel sunk.

11. Accordingly the vessel suffered extensive partial loss by the perils of the seas.

Particulars

At all material times the vessel tipped over and sunk due to the perils of the sea being:

(a) Extremely heavy rain
(b) Winds of a cyclonic nature and degree
(c) Extreme wave motion caused by the cyclonic winds
(d) As a result of particulars (a) to (c) (inclusive) the vessel sunk

12. On or about 3 April 2012 the Plaintiff reported the sinking to the defendant and a written claim under the Second Policy was made on or about 15 April 2012.

13. On or about 7 June, the defendants representative denied the Plaintiff indemnity under the Second policy.

14. Wrongfully and in breach of the Second Policy the defendant continually refused to indemnify the Plaintiff in the amount of $100,000.00 or any amount.

15. After numerous exchanges of correspondence with the defendant, the plaintiff on or around August 2012 sold the vessel for around $35,000.00 to a third party being a, much lesser amount than its value before the storm such value being the amount for which it was insured.

16. Accordingly the Plaintiff suffered loss and damages of about 65% of the agreed value of the vessel namely $100,000.00 less the deductible of $1,000.00 together with associated costs due to the happening of the incident.

Particulars

The value of the vessel being $100,000.00 and the costs of salvage and cleaning.

17. As a result of the matters set out above the defendant is liable to indemnify the Plaintiff for the insured loss of the vessel namely $65,000.00 less the deductible of $1,000.00.

18. Further the Plaintiff is entitled to claim interest at 10% in accordance with Regulation 2 (1) of the Insurance Law Reform (Interest Rates) Regulation 2004 from the date of the loss to date of payment at a daily rate of $27.40.

19. On the 30 May 2012 by letter to the Defendant the Plaintiff made an offer in the nature a "Calderbank offer" which the defendant did not accept.

(4) The Plaintiff claims the following;

Para 1. Proportional indemnity of $65,000.00 (plus the salvage costs and all other associated costs),

2. Alternatively damages.

3. Interest as set out in paragraph 13 herein; and

4. Costs on an indemnity basis.

(C) THE CHRONOLOGY

The following is a summary of the long and unhappy history of the proceedings;

❖ The action was instituted by the Plaintiff on 12th June 2012 by way of Writ of Summons and Statement of Claim.

❖ The Defendant filed the Acknowledgement of Service on 26^th June 2012.

❖ The Plaintiff filed an amended Writ of Summons and Statement of Claim on 06th August 2012.

❖ Thereafter, the Plaintiff did not take any active steps in the matter.

❖ On July 2013 the High Court registry issued a Notice pursuant to Order 25 Rule 9 of the High Court Rules asking the Plaintiff to show cause why the matter should not be struck out.

❖ After deliberation, the Court on 17th October 2013 allowed the Plaintiff to continue and directed;

• (a) The Plaintiff to file and serve his Amended Statement of Claim with 14 days, if need be;
  
• (b) The Defendant to file and serve the Amended Statement of Defence within 7 days thereafter, if need be;
  
• (c) Failure to comply with these directions will lead their respective pleadings to be struck out; and
  
• (d) Cost of these proceedings shall be cost in the cause.
  

❖ On 31st October2013, the Plaintiff effected a second amendment to his pleading. He filed an Amended Statement of Claim making further corrections to his earlier Amended Claim.

❖ On 8th November 2013 the Defendant filed its Amended Statement of Defence and Counter-Claim.

❖ The Plaintiff's Reply to Defence and Defence to Counterclaim was filed on 21st December 2013. The matter then progressed to discovery stage.

❖ The Defendant's affidavit verifying list of documents was filed on 10th March 2014.

❖ On 16th April 2014 the Plaintiff filed its Affidavit verifying list of documents.

❖ On 17th June 2014 the Plaintiff filed a second Affidavit through Suzie Cheer and annexing the Affidavit verifying supplementary list of documents as sworn by the Plaintiff himself.

❖ On 18th July 2014 the Plaintiff filed the original Affidavit verifying supplementary list of documents sworn by Peter Allan Lowing on 16th June 2014.

❖ On 1st September 2014 the defendant filed a second Affidavit verifying supplementary list of documents.

❖ On 4th September 2014, the defendant filed a Summons seeking leave to further amend its amended Statement of Defence ("The First Summons")

❖ On 1st May 2015 the defendant withdrew its First Summons subject to costs of $300.00. The Court directed that a fresh summons is to be filed within fourteen (14) days.

❖ On 14th May 2015 the defendant filed a fresh summons seeking leave to further amend the amended Statement of Defence ("The Second Summons").

(D) THE LAW

(1) Against this factual background, it is necessary to turn to the applicable law and the judicial thinking in relation to the principles governing amendment of pleadings.

(2) Rather than refer in detail to the various authorities, I propose to set out important citations, which I take to be principles of the play.

(3) This is the Defendant's application to further amend its amended Statement of Defence pursuant to Order 20, rule 5 of the High Court Rules, 1988. The law relating to grant of leave to amend pleadings is set out under Order 20, rule 5 of the High Court Rules, 1988.

Order 20, Rule 5 of the High Court Rules provides:

"5-(1) Subject to Order 15, Rule 6, 8 and 9 and the following provisions of this rule,the Court may at any stage of the proceedings allow the Plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may bejust and in such manner (if any) as it may direct."

(4) Under Order 20/8/6 of the Supreme Court Practice of 1999 under the heading 'General principles for grant of leave to amend' at page 379 it is stated that:

"General principles for grant of leave to amend (rr5, 7 and 8)-It is a guiding principle of cardinal importance on the question of amendment that, generally speaking, all such amendments ought to be made "for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defects or errors in any proceedings." (seeper Jenkins L. J. in R. L. Baker Ltd v Medway Building & Supplies Ltd [1958] 1 W.L.R. 1216; [1958] 3 All E.R. 540. P. 546)."

(Emphasis added)

It is a well-established principle that the object of the court is to decide rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or grace. It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected if it can be done without injustice, as anything else in the case is a matter of right" (per Bowen L.J. in Cropper v. Smith [1884] UKLawRpCh 91; (1883) 26 Ch. D. 700, pp. 710 – 711, with which observations A.L. Smith L.J., expressed "emphatic agreement" in Shoe Machinery Co. v. Cultam (1896) 1 Ch. 108. P. 112)."

(5) Under Order 20/8/6 of the Supreme Court Practice of 1999 under the heading 'General principles for grant of leave to amend' at page 379 further stated as follows:

"In Tildesley v. Harper [1878] UKLawRpCh 284; (1878) 10 Ch. D. 393, pp 396, 397, Bramwell L.J. said:

"My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by this blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise." "However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs" (per Brett M.R. Clarapede v. Commercial UnionAssociation (1883) 32 WR 262, p263; Weldon v. Neal [1887] UKLawRpKQB 161; (1887) 19 QBD 394 p. 396. Australian Steam Navigation Co. v. Smith [1889] UKLawRpAC 12; (1889) 14 App. Cas. 318 p 320; Hunt v. Rice & Sons (1837) 53 TLR 931, C.A and see the remarks of Lindley L.J. Indigo Co. v. Ogilvy (1891) 2 Ch. 39; and of Pollock B. Steward v. North Metropolitan Tramways Co. (1886) 16 QBD.178, P. 180, and per Esher M.R. p.558, c.a.).An amendment ought to be allowed if thereby "the real substantial question canbe raised between the parties," andmultiplicity of legal proceedings avoided (Kurtz v. Spence (1888) 36 Ch, D. 774; The Alert (1895) 72 L.T. 124).

On the other hand it should be remembered that there is a clear difference between allowing amendments to clarify the issues in dispute and those that provide a distinct defence or claim to be raised for the first time (see, per Lord Griffiths in Kettma v Hansel Properties Ltd [1987] A.C. 189 at 220).

Leave to amend will be given to enable the defendant to raise a defence arising from a change in the law since the commencement of the proceedings affecting the rights of the parties or the relief or remedy claimed by the plaintiff, even though this might lead to additional delay and expense and a much longer trial, e.g. that the plaintiffs have acted in contravention of Art. 85 (alleging undue restriction of competition) and Article 86 (alleging abuse of dominant market position) of the treaty establishing the European Economic Community (the "Treaty of Rome") which became part of the law of the United Kingdom by the European Communities Act 1972, so as to become disentitled to their claim for an injunction (Application des GazSA v Falks Veritas Ltd [1974] Ch. 381; [1974]3 All E.R. 51 CA). In a copyright action, leave may be given to amend the statement of claim to include allegations of similar fact evidence of the defendant having copied the products of other persons (Perrin v Drennan [1991] F.S.R. 81).

Where a proposed amendment is founded upon material obtained on discovery from the defendant and the plaintiff also intends to use if for some purpose ulterior to the pursuit of the action (e.g. to provide such information to third parties so that they could bring an action), the plaintiff should not be allowed to amend a statement of claim endorsed on the writ and so it the public domain but instead the amendment should be made as a statement of claim separate from the writ and thus not available for public inspection (Mialano Assicuraniona Spa v Walbrook Insurance Co Ltd [1994] 1 W.L.R 977 see too Omar v Omar [1995] 1 W.L.R. 1428,) use of documents disclosed in relation to Mareva relief permitted to amend claim and at trial.

The Court is entitled to have regard to the merits of the case in an application to amend if the merits are readily apparent and are so apparent without prolonged investigation into the merits of the case (King's Quality Ltd v A.J. Paints Ltd [1997] 3 All E.R. 267)."

(6) Hon. Madam Justice Wickramasinghe stated in Colonial National Bank v Naicker, [2011] FJHC 250; HBC 294. 2003 (6 May 2011) by direct reference to the Supreme Court Practice 1988 (White Book) as set out under Order 20/5-8/6 as:

"It is a guiding principle of cardinal importance on the question of amendment that generally speaking, all such amendments ought to be made" for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defects or error in any proceedings." (see per Jenkins L.J. in R.L Baker Ltd v Medway Building &Supplies Ltd [1958] 1 W.L.P 1216, p 1231; [1958] 3 All E.R 540, p. 546)."

(7) Hon. Justice Pathik in Rokobau v Marine Pacific Ltd, HbC0503d.93s,said:

"We must act on the settled rule of practice, which is that amendments are not admissible when they prejudice the rights of the opposite party as existing at the date of such amendments. If an amendment were allowed setting up a cause of action, which, if the writ were issued in respect thereof at the date of the amendment, would be barred by the Statute of Limitations, it would be allowing the plaintiff to take advantage of her former writ to defeat the statute and taking away an existing right from the defendant, a proceeding which, as a general rule, would be in my opinion, improper and unjust. Under very peculiar circumstances the Court might perhaps have power to allow such an amendment, but certainly as a general rule it will not do so."

(8) Lord Keith of Kinkel in Ketteman and others v Hansel Properties Ltd, (1988) 1 All ER 38 observed that;

"whether or not a proposed amendment should be allowed is a matter within the discretion of the judge dealing with the application, but the discretion is one that falls to be exercised in accordance with well-settled principles. In his interlocutory judgment of 10 December 1982, allowing the proposed amendment, Judge Hayman set out and quoted at some length from the classical authorities on this topic. The rule is that amendment should be allowed if necessary to enable the true issues in controversy between the parties to be resolved, and if allowance would not result in injustice to the other party not capable of being compensated by an award of costs. In Clarapade & Co v Commercial Union (1883) 32 WR 262 a 263 Brett MR said:

The rule of conduct of the court in such a case is that, however negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by cost: but if the amendment will put them into such a position that they must be injured it ought not to be made".

(9) Lord Keith of Kinkel in Ketteman v Hansel Properties (supra) states further that;

"The effect of these authorities can, I think, be summarised in the following four propositions. First, all such amendments should be made as a necessary to enable the real questions in controversy between the parties to be decided. Secondly, amendments should not be refused solely because they have been made necessary by the honest fault or mistake of the party applying for leave to make them: it is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights. Thirdly, however blameworthy (short of bad faith) may have been a party's failure to plead the subject matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been the application should, in general, be allowed, provided that allowing it will not prejudice the other party. Fourthly, there is no injustice to the other party if he can be compensated by appropriate orders as to costs."

(10) Speight J. in Reddy Construction Company Ltd v Pacific Gas Company Limited (1980) 26 FLR 121 held;

"The primary rule is that leave may be granted at any time to amend on terms if it can be done without prejudice to the other side."

(E) ANALYSIS

(1) Before passing to the substance of the application, let me record that the Counsel for the Plaintiff and the Defendant in their written submissions has done a fairly exhaustive study of the judicial decisions and other authorities which they considered to be applicable.

I interpose to mention that I have given my mind to the oral submissions made by the Counsel as well as to the written submissions and the judicial authorities referred to there in.

(2) I ask myself, what is the question in these proceedings?

The Defendant issued Summons pursuant to Order 20, rule 05 of the High Court Rules, seeking leave to further amend the amended Statement of Defence.

(3) As I apprehend, the amendment seeks the introduction of eight (8) new paragraphs to the existing amended Statement of Defence.

The crux of the amendments premised on three (03) issues viz;

(A) Whether the Plaintiff had an insurable interest in the vessel at the material time?

(B) Whether the Plaintiff failed to disclose certain material circumstances as to the ownership of the vessel at the material time?

(C) Whether the Plaintiff made false representations to the Defendant as to the ownership of the vessel?

(4) I traversed the Affidavit in Opposition. The Plaintiff resisted the proposed amendments.

The Plaintiff raises two points.

First; the proposed amendments are not necessary to enable the real questions in controversy between the parties to be decided.

Secondly; the proposed amendments will delay the trial.

The Counsel for the Plaintiff's argument runs essentially as follows; [Counsel in her submission writes...]

Para 53. The Plaintiff submits that the Defendant's Proposed Amendments do not assist in determining the real issue in controversy between the parties.

54. The Defendant's Proposed Amendments are an attempt by the defendant to add new issues and defences to the proceedings including but not limited the following allegations:

(i) that the Plaintiff did not have insurable interest in the vessel;

(ii) that the Plaintiff failed to disclose certain material circumstances to the defendant; and

(iii) that the Plaintiff made false representations to the defendant

55. The Plaintiff submits that the crux of the Defendant's Proposed Amendments is the "ownership" of the Vessel which is not necessary to determine the real issues in controversy between the parties.

56. The real issue in controversy between the parties is whether the defendant is liable to indemnify and compensate the Plaintiff for the sinking of the insured vessel. The Defendant's Proposed Amendments do not assist in determining this issue because the defendant denied liability of the Plaintiff's claim on or about 7 June 2012 (as stated in the Extant Claim) on the basis of an allegation that the vessel sank due to ingress of rainwater and its lack of seaworthiness (see Extant Defence and document 28 (letter dated 17 May 2012) defendant's list of documents dated 7 March 2014 and document 9 of the Plaintiff's supplementary list of documents dated 16 June 2014 (letter dated 11 May 2012 from the defendant outlining the reasons for the refusal of the Loss Claim)).

61. The Plaintiff further asserts that Defendant's Proposed Amendments are not a result of the honest fault or mistake of the defendant (mistake is not the reasons made out by the defendant for the proposed amendments sought) but rather an attempt by the defendant to add new issues arising out of alleged facts that were not material to the inception of the Policy, the payment of the premiums thereunder and the denial of the Loss Claim.

64. The Plaintiff submits that the Defendant's Proposed Amendments are intended to overreach or strays too far off the real issues in controversy. The Defendant's Proposed Amendments are designed to be, and can be characterized as, a "catch all defence" when in fact, the defendant did not do any due diligence or "extensive research" prior to the Plaintiff entering into the Policy and refused the Plaintiff's Loss Claim based upon the alleged state of the Vessel.

In "adverso", the Counsel for the Defendant forcefully submitted; [Counsel in his submission writes....]

Para 37. The Defendant submits that the proposed amendments are necessary to determine the rights of the parties and are not seriously prejudicial to the Plaintiff or prejudicial at all.

38. The amendments were borne out of the documents disclosed by the Plaintiff during the discovery following which the Defendant carried out its own investigations. This resulted in additional evidence. Of which the Defendant was not previously aware, being identified by the Defendant.

39. The discovery of these additional documents brought to the Defendant's attention specific defences on which it is entitled to rely. Accordingly it is necessary for the Defendant to amend its Defence and Counterclaim in order to plead these specific defences. The defences are set out in paragraphs 21 to 35 of the proposed Amended Statement of Defence and Counter-claim annexed as "KN 3" to the Narayan affidavit.

40. The other proposed amendments are simply tidying up the Defence and Counter claim.

41. These proposed amendments require the Plaintiff to establish that he is the registered owner of the vessel and that he has an insurable interest. These are issues which the Plaintiff will need to establish in any event. Clearly these issues are relevant to determining the "real controversy" between the parties.

42. Furthermore if the amendment is allowed the Plaintiff will also be given an opportunity to prepare and provide answers to the Court by way of reply to Defence and Defence to Counter Claim and evidence in relation to the defences that the Defendant intends to raise. The Plaintiff will not be prejudiced in anyway. The amendment will expressly record, for the benefit of the parties and the trial judge, the issues in controversy between the parties.

43. The case authorities state that if any prejudice is caused, the objecting party could be compensated adequately by the Court for the amendment and appropriate costs could be awarded.

44. It is submitted that the interests of justice favours the granting of leave to file the proposed amendment.

(5) What concerns me is whether the Defendant should be allowed to further amend the amended Statement of Defence?

The Court is here to administer justice. It is essential to bear in mind that the concept of justice is not confined to the interests of particular litigants; it embraces and extends to the protection of the public weal.

"Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear on the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore, to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.

Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall on their own heads rather than by allowing an amendment at a very late stage of the proceedings." (Per Lord Keithof Kinkel in "Ketteman v Hansel properties Ltd",supra)

What is the rule of conduct of this court in an application such as this?

"With regard to the principles on which the discretion to allow or refuse the applications to amend should be exercised, the judge referred to the notes to RSC Ord 20, r 5 in the Supreme Court Practice 1982 and to the authorities there cited. The effect of these authorities can, I think, be summarised in the following four propositions.

First, all such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided.

Second, amendments should not be refused solely applying for leave to make them: it is not the function of the Court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights.

Third, however blameworthy (short of bad faith) may have been a party's failure to plead the subject matter of a proposed amendments earlier, and however late the application for leave to make such amendments may have been, the application should, in general, be allowed, provided that allowing it will not prejudice the other party.

Fourth, there is no injustice to the other party if he can be compensated by appropriate orders as to costs. the Plaintiff to continue with the matter and also directed:

(Per Lord Keithof Kinkel in "Ketteman v Hansel properties Ltd", supra)

(6) I now turn back to the present case bearing the aforementioned principles uppermost in my mind.

(7) As I see it, the proposed amendments require the Plaintiff to establish that he is the registered owner of the vessel and that he has an insurable interest.

It is essential to bear in mind that the aforesaid are not the initial basis upon which the Defendant denied the loss claim.

It is worth remarking that the Defendant initially denied liability of the Plaintiff's claim on 07th June 2012 on the basis of an allegation that the vessel sank due to ingress of rainwater and its lack of sea worthiness.

Leave that aside for a moment.

As I apprehend, the real question in this case is whether the Defendant is liable to indemnify and compensate the Plaintiff for the sinking of the insured vessel?

I ask myself, is this proposed amendment viz; "the Plaintiff's ownership and the insurable interest in the vessel", necessary for this Court to determine the real issue before the Court?

I am of course mindful that an application seeking leave toamend a Statement of Defence will be refused if it is clear that the proposed amendment has no prospect of success. See;

❖ Oil & Minerals Development Corporation v Saijad

03.12.2001, unreported, QBD

❖ Groveholt Ltd v Hughes (2010) EWCA

❖ Civ Group Inc. vT & N Ltd

19.12.2001, unreported, QBD

The Court is entitled to take the real prospect of success in the proposed amendments into account in the exercise of its discretion. Of course, the Court should not conduct a prolonged investigation into the merits of the proposed amendments. The Court is entitled to form a rough and ready view of the merits of the proposed amendments.

"The Court is entitled to have regard to the merits of the case in an application to amend if the merits are readily apparent and are so apparent without prolonged investigation into the merits of the case" see Kings Quality Ltd v A.J. Paints Ltd (1997) 3 A.E.R. 267.

What is meant by the phrase "Insurable interest"?

MacGillivary & Parkington, on "Insurance Law", Sixth Edition, writes at page 03;

"Insurable interest may be defined as the assured's pecuniary interest in the subject-matter of the insurance. There is no general rule of contract law which requires such an interest, since any contract is prima facie enforceable at Common Law so long as it is not illegal, immoral or contrary to public policy."

(Emphasis Added)

See; * Fender v Mildmay

(1938) A.C. 1

* Williams v Baltic Ins. of London

(1924) 2. K.B. 282

* Craufurd v Hunter

(1798) 8 T.T. 13

The Marine Insurance Act [Cap 218],defines "insurable interest" as follows:

"6.-(1) Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure.

(2) In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof."

The Marine Insurance Act further says that the interest must attach at the time of the loss as follows:

"7. –(1) The assured must be interested in the subject-matter insured at the time of the loss though he need not be interested when the insurance is affected.

Provided that where the subject-matter is insured "lost or not lost", the assured may recover although he may not have acquired his interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss, and the insurer was not.

(2) Where the assured has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware of the loss."

(Emphasis Added)

MacGillivray & Parkinston, on "Insurance Law", (supra), writes on "Insurable Interest in Property", Para 114, Page 112 that;

"The mere possession of property is probably sufficient to give the person in possession an insurable interest in it."

And at page 107, para 109, writes further that .............

INSURABLE INTEREST IN PROPERTY

(a) Generally

"Insurable interest in property is not confined to absolute legal ownership. Generally, any person who is so situated that he will suffer loss as the proximate of damage to or destruction of the property has an insurable interest in it. There must be some direct relationship to the property itself, for otherwise the interest is too remote and therefore not insurable. In Lucena v. Craufurd Lord Eldon said, "I am unable to point out what is an interest unless it be a right in the property or a right derivable out of some contract about the property," and if we add to this, "or some legal liability to make good the loss," we get a substantially accurate definition of insurable interest in property.

The Courts in certain American jurisdictions recognise a wider category of insurable interest in property. Thus some cases hold that a person has an insurable interest in property if in fact he benefits from its existence or would suffer a loss by its destruction, even though he has no legally enforceable claim or right in respect of it. Moreover, it has also been held in American Courts that a person may insure against the loss of a future benefit which has only an expectation of possessing, and to which he has no legal claim, so long as there is a substantial probability of that expectation being realized."

(Emphasis added)

The law as I understand from the aforesaid passage is this; a person in possession of property has an insurable interest. The proof of possession is sufficient to establish an insurable interest. Insurable interest in property is not confined to absolute legal ownership. Any person who is so situated that he will suffer as the proximate result of damage to or destruction of the property has an insurable interest in it.

What authority there is on this point?

See; * Lucena v Crawford
[1802] EngR 21; (1806) 2 B & P.N.R. 269

* Dobson v Sotheby
(1827) Moo & M. 90, 93.

* Liverpool and London and Globe v Bulling
10.S.E. 2d.578

* Womble v Dubugre Fire and Marine Insurance Co.
37 N.E. 2d 263

* North British and Mercantile Insurance Co. v Sciandria
54 SO.2d.764

I must confess that, in the context of the present case, I am much inclined to be further guided by the rule of Law enunciated by "Brett", M.R. in Stock v Inglis, [1884] UKLawRpKQB 56; (1884),12 Q.B.D. 564.

"In my opinion it is the duty of a Court always to lean in favour of an insurable interest, if possible, for it seems to me that after underwriters have received the premium, the objection that there was no insurable interest is often, as nearly as possible, a technical objection, and one which has no real merit, certainly not as between the assured and the insurer. Of course we must not assume facts which do not exist, nor stretch the law beyond its proper limits, but we ought, I think, to consider the question with a mind, if the facts and the law will allow it, to find in favour of an insurable interest."

(Emphasis added)

In Nandan v Queensland Insurance Co Ltd, [1992] FJCA 37; [1992] 38 FLR 220 (27 November 1992) the Fiji Court of Appeal held that the Appellant (assured), although not the legal owner of the property insured, had insurable interest in it. The appellant had declared himself as owner of the property and the insurance policy over the property was held in his name. The Appellant was held to be entitled to be compensated under the insurance policy. The Court of Appeal held in favour of the Appellant (assured) in that the "honest misrepresentation and non-disclosure of ownership" was not necessarily material to the risk the respondent would have undertaken and in fact undertook.

Turning back to the present case, what is clear and I think undisputed is that the Plaintiff (assured)was in possession of the vessel at all material times.

On the strength of the authority in the aforementioned legal Text book and judicial decisions, I venture to say beyond a per adventure that the Plaintiff has an insurable interest in the vessel since he was in possession of the vessel at all material times. Moreover, he benefited from its existence and he suffered a loss by its destruction. He had a direct relationship to the property.

Therefore, it is wrong to say that the Plaintiff has no insurable interest in the vessel in the absence of "ownership" of the vessel.

I am therefore of the view that the proposed amendments to the Defence viz, "the ownership of the vessel", is not necessary for this Court to determine the real issue before the Court. I should add that the propose amendment has no real prospect of success. The proposed amendment does not advance the Defence.

I am not persuaded that the alleged misrepresentation and non-disclosure as to the ownership of the vessel are necessarily material to the risk the Defendant (insurer) has undertaken. It is worth remarking that no evidence was adduced by the Defendant to demonstrate that the risk would have been different or that the premium would have been more or less. I must confess that I cannot conceive of any different risk to the Defendant and I have not been shown any.At this moment, I cannot resist in saying that the proposition advanced by the Defendant viz; "the Plaintiff's ownership and insurable interest in the property is relevant to determine the real controversy between the parties",is a far cry from the provisions of the Marine Insurance Act (Cap 218) and it flies on the face of the rule of law enunciated in Nandan v Queensland Insurance Co Ltd, [1992] FJCA 37,Stock v Inglis, [1884] UKLawRpKQB 56; (1884),12 Q.B.D. 564, Lucena v Crawford (1806) 2 B & P.N.R. 26, Dobson v Sotheby (1827) Moo & M. 90, 93.

(8) At the oral hearing before the Court, the Plaintiff alleged that the Defendant was acting malafide.

It is pertinent to note that the Plaintiff never raised this in his Affidavit in Opposition.

I cannot accept that it would be any way proper to entertain such a bald submission which effectively sprung on the Defendant and the Court at the eleventh hour. I get the distinct impression that the Counsel for the Plaintiff's argument in relation to malafide was formulated and perhaps conceived as the proceedings for amendment of the Defence developed.

Leave that aside for a moment.

Let me examine whether the Defendant was acting malafide in regard to the proposed amendment to the Statement of Defence.

First, let me consider what authority there is on bad faith and malafide.

In, Biumaiwasa v Prasad [2012] FJHC 850; HBC 237. 2010 (1 February 2012): the Court held;

"10. The White Book (Supreme Court Rules 1999) states under Order 20/8/10 at p.382 under the heading "Before the trial or hearing" state as follows.

"Before the trial or hearing (rr5, 7 and 8)- Leave is readily granted, on payment of the costs occasioned, unless the opponent will be placed in a worse position than he would have been if the amended pleading had been served in the first instance (Steward v North metropolitan Tramways Co (1885) 16 Q.B.D. 178) or some injury caused to him for which he cannot be compensated by payment of costs B (See "Costs no remedy", para 20/8/20)...however under the same heading "Before the trial or hearing" it further state at p.382

"There will be difficulty however, where there is ground for believing that the application is not made in good faith. Thus, if either party seeks to amend his pleading, by introducing for the first time allegations of fraud, or misrepresentation or other such serious allegation, the Court will ask why this new case was not presented originally; and may require to be satisfied as to the truth and substantially of the proposed amendment (Lawrence v Norreys [1888] UKLawRpCh 116; (1890) 39 Ch. D. 213; see judgment of Stirling J. P.221, and of Bowen L.J. p. 235).

Though the Plaintiff is accused of bad faith there is no evidence of bad faith in regard to the proposed amendment. Prima facie the statement of claim filled on ....is verbose and contains evidence as opposed to the emphasis on the claim and needs to be corrected, though it would have been realized much earlier as there were two rulings before this summons for the amendment was made."

The Court of Appeal has held that malafide can be inferred from the conduct of the parties: In,National Bank of Fiji v Naicker [2013] FJCA 106; ABU0034.2011 (8 October 2013): the Court held,

"[41] Whether the intention of the party making the application to amend is 'fraudulent or intended to overreach' has to be determine from the conduct of the said party. If the affidavit in support of the amendment contains only a selective few communications whereas more direct and relevant communications were ignored or suppressed, the intention of the said party can be inferred as mala fide. Though the delay alone is not a sufficient ground for refusal, it can be a factor that reinforce mala fide if the affidavit in support ignored or suppressed material facts. The lack of clear reason for delay is another factor that reinforces bad faith. In the exercise of discretion the court can infer bad faith in seeking amendment, considering the conduct of the party making the application for amendment.

[42] Under Order 20/8/6 of the Supreme Court Practice of 1999 under the heading "General principles for grant of leave to amend' at page 379 further stated as follows:

"In Tildesley v. Harper (1876(10 Ch. D. 393, pp 396, Bramwell L.J. said

"My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise." "However negligent or careless may have been the first omission and however late the proposed amendment, the amendment should be allowed it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs" (per Brett M.R. Clarapede v. Commercial Union Association (1883) 32 WR 262, p263;

Weldon v. Neal (1887)19 QBD 394 p.396.Australian Steam Navigation Co. v. Smith [1889] UKLawRpAC 12; (1889) 14 App. Cas. 318 p. 320; Hunt v. Rice & Sons (1937) 53 TLR 931. C.A and see the remarks of Lindley L.J. Indigo Co. v. Ogilvy (1891) 2 Ch. 39; and of Pollock B. Steward v. North Metropolitan Tramways Co. (1886) 16 QBD.178, p.180, and per Esher M.R. p.558, C.A.). An Amendment ought to be allowed if thereby "the real substantial question can be raised between the parties", and multiplicity of legal proceedings avoided (Kurtz v. Spence (1888) 36 Ch. D. 774; The Alert (1895) 72 L.T. 124)."

Returning back to the present case, the proposed amendments require the Plaintiff to establish that he is the registered owner of the vessel and that he has an insurable interest.

It is essential to bear in mind that initially the Defendant denied liability of the Plaintiff's loss claim on the basis of an allegation that the vessel sank due to ingress of rain water and its lack of sea worthiness.

Therefore, it is manifest that the proposed amendments were not material to the commencement of the insurance, the payment of the premiums thereunder and the denial of the loss claim.

It is absurd to say that the proposed amendments are based on discovery of documents from the Plaintiff when such documents were in the Defendants power to possess at the commencement of the insurance.

I see no reasons, obvious or otherwise, as to how the alleged misrepresentation and non- disclosure by the Plaintiff in relation to the "ownership" of the vessel are material to the risk the Defendant in fact undertook.

No evidence was adduced by the Defendant to demonstrate that the risk would have been different or that the premium would have been more or less.

I must confess that I cannot conceive of any different risk to the Defendant.

The Plaintiff has a legitimate expectation that he would be able to recover all monies he expended on the vessel from the policy since at the commencement of the insurance, the Defendant (insurer) has undertaken to indemnify the Plaintiff (assured) against pecuniary loss caused by or arising from particular risks.

It would be unreasonable to allow the Defendant to include the proposed defences that did not in fact influence the Defendant's initial decision to refuse the Plaintiff's loss claim.

I am therefore of the view that the Defendant was acting malafide in relation to the proposed amendments. It is not hard to spell malafide from the proposed amendments.

(9) To sum up; in view of the foregoing analysis, I venture to say beyond a per adventure that the proposed amendments to the amended Statement of Defence are not necessary to enable the true issues in controversy between the parties to be resolved.

The proposed amendments to theamended Statement of Defence have no real prospect of success. Moreover, I am of the view that the Defendant was acting malafide with regard to the proposed amendments. Accordingly, I do not allow the proposed amendments to theamended Statement of Defence. I could see nothing to change my decision even on the basis of exhaustive work contained in,

❖ "Commentary on Litigation", by Cokes
❖ "A practical approach to Civil Procedure", by Stuart Simen, Thirteenth Edition
❖ "Pleadings and Practice" by Ogers, 13th Edition
❖ "Precedents of Pleadings" by Bullean and Lecke

(10) In the result, i certainly agree with the sentiments which are expressed inferentially in the Plaintiff's submissions. I must confess that I am not in the least impressed by the proposition advanced by the Defendant.

(11) In view of the approach I have adopted, I do not think that it is necessary for me to express my views on the issue of prospect of prejudice.It will be at best a matter of academic interest only or at worst an exercise in futility to discuss the merits of the Plaintiff's argument relating to prospect of prejudice.

(F) FINAL ORDERS

(1) The Defendant's application seeking leave to further amend the amended Statement of Defence is refused.

(2) The Defendant is ordered to pay costs of $1000.00 (summarily assessed) to the Plaintiff which is to be paid within 14 days from the date hereof.

Jude Nanayakkara
Acting Master of the High Court

At Lautoka
04th December 2015