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Devi v Home Finance Co Ltd [2021] FJHC 359; HBC13.2012 (8 December 2021)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION


Civil Action No. 13 of 2012


BETWEEN:


GEETA DEVI & SHAKEEL CHAND MAHARAJ
1ST PLAINTIFFS


GEETA DEVI
2ND PLAINTIFF


AND:


HOME FINANCE COMPANY LIMITED
1ST DEFENDANT


FIJICARE INSURANCE LIMITED
2ND DEFENDANT


Before:


Hon. Chief Justice Kamal Kumar


Counsel:


Mr R. P. Singh for the Plaintiffs
Mr D. Sharma for the 1st Defendant
Mr R. Prakash and Ms P. Singh for the 2nd Defendant


Date of Judgment:
8 December 2021


JUDGMENT


Introduction


  1. On 16 January 2012, the Plaintiffs caused Writ of Summons to be issued with Statement of Claim claiming for payment of $79,202.02 with interest and costs allegedly arising out of Group Mortgage Protection Cover issued by the 2nd Defendant which Writ of Summons was amended on 2 March 2012, to correct the 2nd Defendant’s name.
  2. On 3 and 13 March 2012, 2nd and 1st Defendants filed their Statement of Defence respectively.
  3. On 2 November 2012, the Plaintiff filed Reply to Statement of Defence.
  4. On 26 November 2012, Plaintiff filed Summons for Directions and on 13 February 2013, being the returnable date of the Summons, Order in terms of the Summons was made.
  5. On 4 March 2013, 5 March 2013 and 4 April 2013, the 1st Defendant, Plaintiffs and 2nd Defendants filed Affidavit Verifying List of Documents respectively.
  6. On 30 August 2013, the Plaintiffs filed Minutes of PTC between all the parties.
  7. On 10 December 2013, the Plaintiffs filed Copy Pleadings and Order 34 Summons.
  8. This matter was listed for trial on 23 and 24 July 2014, which date was vacated and trial dates re-fixed for 24 and 25 February 2015.
  9. On 17 October 2014, the Plaintiffs filed Application to amend Claim which Application was granted on 18 November 2014.
  10. On 22 January 2015, the Plaintiffs filed another Application to Amend the Claim which application was granted on 6 February 2015, and as a result trial dates were vacated and this matter was adjourned to 1 March 2015, to fix trial date.
  11. On 9 February 2015, the Plaintiffs filed Amended Statement of Claim.
  12. On 19 February 2015 and 3 March 2015, the 1st and 2nd Defendants filed Statement of Defence to Amended Statement of Claim respectively.
  13. On 13 March 2015, the Plaintiffs filed Reply to Statement of Defence of both Defendants.
  14. On 1st May 2015, this matter was adjourned to 8 and 9 September 2015, for trial.

Background/Undisputed Facts

  1. Background/Undisputed facts are as follows:-

Documentary Evidence

  1. Parties by consent had documents subject to Agreed Bundle of Documents filed on 10 January 2014, and Supplementary Agreed Bundle of Documents tendered and marked as following:-

Issues for Determination

  1. Although thirteen (13) issues are set out in Part B of Minutes of Pre-Trial Conference this Court after hearing evidence and reading Submissions filed is of the view that issues for determination are as follows:-

Plaintiff’s Case

  1. Secondnamed First Plaintiff, Shakeel Chand Maharaj (hereinafter referred to as “SNFP”) during examination in chief gave evidence that:-
  2. During cross-examination by Counsel for 1st Defendant SNFP:-
  3. During cross-examination by Counsel for the 2nd Defendant SNFP:-
  4. During re-examination SNFP:-
  5. Geeta Devi Maharaj, the Firstnamed First Plaintiff and Second Plaintiff (hereinafter referred to as “FNFP”) during examination in chief gave evidence that:-
  6. During cross-examination by Counsel for the First Defendant FNFP:-
  7. During cross-examination by Counsel for the Second Defendant SNFP:-
  8. During re-examination FNFP:-
  9. First Defendant called Georgina Lasaqa of 43 Tacirua Heights, Tamavua, Insurance Officer (“1DW1”).
  10. 1DW1 during examination in chief gave evidence that:-
  11. In answering questions by the 2nd Defendant’s Counsel 1DW1:-
  12. During cross-examination 1DW1:-
  13. First Defendant called Rosie Fong of 1 Verea Street, Nausori, Bank Officer as its second witness (“1DW2”).
  14. 1DW2 during examination in chief gave evidence that:-
  15. During cross-examination 1DW2:-
  16. During re-examination 1DW2:-
  17. The Second Defendant called Jasmine Chand of Lot 17 Nakasi Road, 9 Miles, Nasinu, Claims Manager (“2DW”).
  18. 2DW during examination in chief gave evidence that:-
  19. In answering questions by Counsel for the 1st Defendant 2DW:-
  20. During cross-examination 2DW:-
  21. During re-examination 2DW:-

Whether the First Defendant acted as Agent of the Second Defendant at all material time

  1. This Court accepts the evidence of 1DW1 and 2DW that:-
  2. Hence, this Court has not hesitation in holding that at material times (Exhibits P5 and P6 were signed) the First Defendant was not acting as Second Defendant’s Agent.

Whether medical condition mentioned in e-mail dated 19 October 2006, from First Defendant to Secondnamed First Plaintiff meant pre-existing medical condition prior to 2003 or in 2006

  1. This Court after analyzing the Plaintiffs, 1DW1’s evidence and assessing the demeanour of witnesses makes following finding of facts:-
  2. This Court holds that the e-mail dated 19 October 2006 (Exhibit P10) did not in any way relate to Kamlesh Chand Maharaj’s medical condition prior to that e-mail and the “medical condition he (Kamlesh Chand Maharaj) has” relates to Kamlesh Chand Maharaj’s medical condition in 2006, and not prior to that.

Whether Kamlesh Chand Maharaj had a pre-existing condition in 2003

2003 - Housing Loan

  1. Medical Report dated 12 August 2005, from CWM Hospital (Exhibit D3) states as follows:-

“Re: MR. KAMLESH CHAND MAHARAJ

DOB: 22/7/56

NHN: 320129302


The above named patient was admitted on February 17-23, 2003 for acute anterior myocardial infarction and hypercholesterolemia. His hospital course was uneventful. He has been followed up in the clinic regularly from the time he was discharged from the hospital. However, hospital records showed that his last clinic visit was on 25 October 2004.

Alan Mamerto Garvez, MD

Consultant Physician”

  1. Whilst the medical report said he was admitted for “acute myocardial infarction and hyper-cholesterolemia” no evidence was led to establish that Kamlesh Chand Maharaj or his family was then told by the medical officer that Kamlesh Chand Maharaj had a medical condition.
  2. No evidence has also been led to suggest that after being discharged from hospital on 23 February 2003, Kamlesh Chand Maharaj had a medical condition.
  3. This Court fails to understand as to why the Registrar of CWM Hospital or any Medical Officer was not called to lead evidence of Kamlesh Chand Maharaj’s medical condition.
  4. Even if Kamlesh Chand Maharaj did have pre-existing medical condition did he:-
  5. After analyzing the evidence and demeanour of witnesses this Court finds that:-

2005 MPI Application Form (Exhibit P6)

  1. After analyzing the evidence and demeanour of witnesses this Court finds that:-
  2. This Court again in absence of evidence has doubt as to whether Kamlesh Chand Maharaj knew that he had a pre-existing medical condition in May 2005.
  3. Medical Report dated 12 August 2005 (Exhibit D3) which states that Kamlesh Chand Maharaj’s hospital course as uneventful and that Kamlesh Chand Maharaj’s last clinic visit was on 25 October 2004, more than seven (7) months before MPI Application Form was completed.
  4. Does this mean that Kamlesh Chand Maharaj had recovered and did not have any existing medical condition in 2005 or did he think he did not have one?
  5. Even though medical report dated 10 November 2010, after the death of Kamlesh Chand Maharaj states that he had been regularly followed up it does not produce any specific dates.
  6. This Court finds that when 2005 MPI Application Form was completed Kamlesh Chand Maharaj was not made aware that he had pre-existing meant condition and as such non-disclosure of any pre-existing medical condition was not fraudulent on his part.
  7. It is well established that a contract of insurance is a contract uberrimae fidei in that parties to the contract of insurance must act in utmost good faith when entering into the contract.
  8. It is apparent from submissions filed that both parties by their Counsel do not seem to differ from the law and principles governing the contract of insurance.
  9. In Pan Atlantic Insurance Co. Ltd v. Pine Top Insurance Co. Ltd [1995] 1 AC 538 the Court of Appeal stated as follows:-

“The duty of disclosure is distinct from the requirement not to misrepresent facts. It arises out of the fact that a contract of insurance is a contract uberrimae fidei. A person seeking to be insured must disclose to the intended insurer any facts within his or her knowledge that are material, that is to say which would affect the mind of a prudent insurer in deciding whether or not to provide cover (Mayne Nickless Ltd v. Pegler [1974] 1 NSWLR 228). Facts are material if the person seeking the insurance knows that the intended insurer regards them as so, even though he or she might otherwise not regard them as material (Glicksman v. Lancashire and General Insurance Co. Ltd. [1925] 2 KB 593). The manner in which a person seeking insurance generally finds out what the intended insurer regards as material is by reference to the questions which the intended insurer requires him to answer. Of course, some persons may have such knowledge by reason of their having worked in the insurance industry or in connection with it. Mr Stanton submitted that, because Dr. Dass was a medical practitioner, he would have had that knowledge. However, there was no evidence that he ever carried out medical examinations on behalf of an insurer or that he had any specialist qualifications relevant to the assessment of medical risks. In Condogianis v. Guardian Insurance Co. Ltd. [1921] 1 AC 125 the House of Lords held that, if upon the fair construction of a question which an insurer requires to be answered the person seeking to be insurer gives a truthful answer, the insurer cannot contend that it wanted more information”.

  1. Insured is therefore required to disclose:-
  2. The common law principles of good faith and duty of disclosure have been codified by Insurance Law Reform Act 1996 (“ILRA”).

Umesh Prasad v. Colonial Mutual Life Assurance Society Ltd Civil Action No. 56 of 2001 (Labasa) (19 June 2007).

  1. Relevant provision of the ILRA are sections 13, 20 and 23 which provide as follows:-

“13.-(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the relevant contract of insurance is entered into, every matter that is known to the insured, being a matter that;

(a) the insured knows to be a matter relevant to the decision of the insurer whether to accept the risk and, if so, on what terms; or

(b) a reasonable person in the circumstances could be expected to know to be a matter so relevant.

(2) The duty of disclosure does not require the disclosure of matter-

(a) that diminishes the risk;

(b) that is of common knowledge;

(c) that the insurer knows or in the ordinary course of his or her business as an insurer ought to know; or

(d) as to which compliance with the duty of disclosure is waived by the insurer.

(3) Where a person-

(a) failed to answer; or

(b) gave an obviously incomplete or irrelevant answer to.

a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter.

“20.-(1) This Section applies where the person who became the insured under a contract of general insurance upon the contract being entered into:-

(a) failed to comply with the duty of disclosure; or
(b) made a misrepresentation to the insurer before the contract was entered into, but does not apply where the insurer would have entered into the contract for the same premium and on the same terms and conditions even if the insured had not failed to comply with the duty of disclosure or had not made the misrepresentation before the contract was entered into.

(2) If the failure to comply with the duty of disclosure was fraudulent or the misrepresentation was made fraudulently, the insurer may avoid the contract.

(3) If the insurer is not entitled to avoid the contract or, being entitled to avoid the contract (whether under sub-section (2) or otherwise) has not done so, the liability of the insurer in respect of a claim is reduced to the amount that would place him or her in a position in which he or she would have been if the failure had not occurred or the misrepresentation had not been made.”

“23.-(1) In any proceedings by the insured in respect of a contract of insurance that has been avoided on the ground of fraudulent failure to comply with the duty of disclosure or fraudulent misrepresentation, the court may, if it would be harsh and unfair not to do so, but subject to this Section, disregard the avoidance, and if it does so, shall allow the insured to recover the whole, or such part as the court thinks just and equitable in the circumstances, of the amount that would have been payable if the contract had not been avoided.

(2) The power conferred by sub-section (1) may be exercised only where the court is of the opinion that, in respect of the loss that is the subject of the proceedings before the court, the insurer has not been prejudiced by the failure or misrepresentation or, if the insurer has been so prejudiced, the prejudice is minimal or insignificant.

(3) In exercising the power conferred by sub-section (1) the court-

(a) shall have regard to the need to deter fraudulent conduct in relation to insurance; and

(b) shall weigh the extent of the culpability of the insured in the fraudulent conduct against the magnitude of the loss that would be suffered by the insured if the avoidance were not disregarded, but may also have regard to any other relevant matter.

(4) The power conferred by sub-section (1) applies only in relation to the loss that is the subject of the proceedings before the court, and any disregard by the court of the avoidance does not otherwise operate to reinstate the contract.


Whether the 2nd Defendant’s refusal to pay the amount owing to the First Defendant by the borrowers was justified

  1. This Court accepts the First Plaintiff’s evidence that both the MPI Application Forms were signed by them without the Form being explained to them or any opportunity given to them to seek advice.
  2. This Court also accepts that copy of the Insurance Policy was not given to the borrowers or contents explained to them.
  3. Surely detailed explanation of the Application for MPI Cover or Part II Section D, Part V Sections C, M and N would have put the borrowers on notice that failure to disclose any pre-existing medical condition would result in their claim being declined.
  4. No evidence has been led to establish that the borrowers were explained the contents of the MPI Application Form or given an opportunity to seek advise from elsewhere.
  5. When the persons entering into security documents or mortgage protection insurance contract are not educated and are vulnerable because of their age or experience duty of good faith calls upon the insurer or the its Agent to exercise due care to ensure that the borrowers understand what they were entering and fairly comprehend the clauses pursuant to which their claim has a chance of being declined.
  6. This Court finds that the 2nd Defendant has failed to establish by tangible evidence that Kamlesh Chand Maharaj’s conduct in not disclosing any pre-existing condition was fraudulent.
  7. The 2nd Defendant’s decision to deny the claim was therefore unjustified.

Damages

  1. This Court finds that it is just and fair that the 2nd Defendant pay the amount owing by the Plaintiffs as borrowers as at 29 October 2020.
  2. Since, Plaintiffs as borrowers totally relied on the 1st Defendant and dealt with the 1st Defendant in completing the MPI Application Form the 1st Defendant it is only fair that the 1st Defendant be held responsible for its action.
  3. This Court is of the view that fairness dictates that the 1st Defendant refund all repayments made by Plaintiffs as borrowers and pay interest on that sum at the rate of 3% per annum.

Costs

  1. This Court takes into consideration that:-

Orders

  1. This Court Orders that:-

K. Kumar

Chief Justice


At Suva

8 December 2021


Solicitors:

Kohli and Singh for the Plaintiff

R. Patel Lawyers for the 1st Defendant

Mishra Prakash & Associates for the 2nd Defendant


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