Yatulau Co Ltd v Sun Insurance Co Ltd [2001] FJLawRp 54; [2001] 1 FLR 221 (22 July 2001)

YATULAU CO.LTD. v SUN INSURANCE CO.LTD.

High Court Civil Jurisdiction

2 October, 30 November, 27 December 2000, 22 July, 2001

HBC0380/00

Insurance – renewal note for fire policy – whether Arcade destroyed as a result of riot or civil commotion – no specific reference to cover for riot and civil commotion – whether actions of a rampaging mob a riot or civil commotion - Insurance Law Reform Act 1996 s29

Statutory interpretation - meanings of riot and civil commotion, citizen – Insurance Law Reform Act 1996 s29

The Plaintiff renewed a fire and perils policy with the Defendant over Yatulau Arcade for $3m. On 19 May, 2000, a march through Suva degenerated into a riot and looters rampaging through Suva destroyed the Arcade. The Plaintiff claimed the damage was caused by actions of citizens rioting or engaging in civil commotion and sought a declaration that it was entitled to be indemnified for loss and damage after the Defendant rejected its claim. The Defendant claimed the renewal constituted a new policy which made no specific reference to cover for riot or civil commotion resulting in fire. The Defendant submitted the proper construction of the policy did not provide cover in respect of fire arising from or caused by a riot unless there had been an extension expressed in the schedule to include that risk. The Court rejected that submission by looking at the whole of the policy. The trial Judge found that the only exclusions were cyclone and flood. He took issue with persons responsible for damage to property on the 19th of May claiming to have full rights as citizens of Fiji.

Held – A condition in a schedule subjecting the policy to additional perils as printed on the policy or added is wide enough to cover to cover damage caused by fire or riots. What occurred on 19th of May constituted a riot and civil commotion within the meaning of the common law. The renewal notice containing the words "Cover - As Per Policy" put beyond any doubt the liability of the Defendant to the Plaintiff in common law. The Defendant is also liable to the Plaintiff by application of the Insurance Law Reform Act 1996 section 29.

Meaning of riot – 5 necessary elements: 1) not less than three persons; 2) a common purpose; 3) execution or inception of the common purpose; 4) an intent on the part of the persons to help one another, by force if necessary, against any person who may oppose them in the execution of the common purpose; 5) force or violence, not merely used in and about the common purpose, but displayed in such a manner as to alarm at least one person of reasonable firmness and courage. The irresponsible actions of a mob on a rampage in Suva on 19 May 2000 causing violence and behaving in such a manner as to alarm any person of reasonable firmness and courage constituted a riot.

Field and Others v The Receiver of Metropolitan Police [1907] UKLawRpKQB 145; (1907) 2 KB 853 appl.

Meaning of civil commotion - an insurrection of the people for general purposes, though it may not amount to a rebellion, where there is usurped power, involved public disturbance or tumult accompanied by violence or intention to commit violence together with evidence of assemblage.

London Manchester Plate Glass Co. Ltd. v Heath [1913] UKLawRpKQB 109; (1913) 3 KB 411 appl.

Obiter dictum – looters, by their irresponsible actions rampaging through Suva, could be said to have forfeited full rights as citizens in Fiji, either by birth or by gaining such rights. To say that the individuals responsible had full rights in Fiji is a misuse of language and palpably false.

Other cases referred in Judgment
Anderson v Fitzgerald [1853] EngR 872; (1853) 4 H.L. Cas. 484
Benjamin Developments Ltd. v Robt Jones (Pacific) Ltd (1994) 3 NZLR 189
Cehave N.V. v Bremer m.b.H. (1976) 1 QB 44
Langdale v Mason in 2 Park on Insurance at 968
Maye v Colonial Mutual Life Assurance Society Ltd [1924] HCA 26; (1924) 35 CLR 14
Pine Top Insurance Co. Ltd. v Unione Italiana Anglo-Saxon Reinsurance Co. Ltd (1987) 1 Lloyd's Rep. 476

Gyneshwar.P. Lala for the Plaintiff
Anil Tikaram for the Defendant

22 July, 2001

JUDGMENT

Byrne, J

The Plaintiff entered into a policy of insurance with the Defendant on or about 5 February 1998. A copy of the original cover note (issued by NMBF Insurance (Fiji) Company Limited) is annexure "A" to the affidavit of Solomone Makasiale sworn 9 September 2000. A fire policy was issued after the cover note with policy number 98G00065FI. The fire policy provided cover from 12 February 1998 to 4.00 p.m. on 12 February 1999 and the schedule to the fire policy contains the following conditions:

"The policy is subject to the following Warranties, Endorsements, Clauses and Additional Perils as printed on the policy or added thereto.

ALL TERMS, CONDITIONS, EXCLUSIONS AND DEDUCTIBLES AS PER THE COMPANY'S STANDARD FIRE POLICY AND AS PER THE AGREED QUOTATION"

The standard fire policy contains the following provision:

"THE COMPANY AGREES (subject to the Conditions contained herein or endorsed or otherwise expressed hereon which Condition so far as the nature of them respectively will permit be deemed to be Conditions precedent to the right on the insured to recover hereunder), that if the Property is insured described in the said Schedule, or any part of such property be destroyed or damaged by

(1) Fire (whether resulting from explosion or otherwise) not occasioned by or happening through

• (a) Its own spontaneous fermentation or heating or its undergoing any process involving the application of heat.
  
• (b) Earthquake, Subterranean Fire, Riot, Civil Commotion, War, Invasion, Act of Foreign enemy, Hostilities (whether War be declared or not), Civil War, Rebellion, Revolution, Insurrection of Military or Usurped Power;

....

at any time before 4 o'clock in the afternoon of the last day of the period of insurance named in the said Schedule or of any subsequent period in respect of which the Insured shall have paid that the Company shall have accepted the premium required for the renewal of this Policy, the Company will pay to the Insured the value of the Property at the time of the happening of its destruction or the amount of such damage or at its option reinstate or replace such Property or any part thereof."

The property described in the Schedule was the Yatulau Arcade which was insured for the sum of $3,000,000.00.

Appendix "A" to the policy is entitled "Extraneous Perils" and the preamble is in the following terms:

"Provided always that the Provisions and Conditions of the Policy shall apply as if they had been incorporated herein and for the purpose hereof any destruction or damage aforesaid shall be deemed destruction or damage by fire."

Within Appendix "A" are definitions of various of the contemplated perils and include:

"5. RIOTS, STRIKES, MALICIOUS DAMAGE - directly caused by acts of

(i) persons taking part in RIOTS OR CIVIL COMMOTION or strikers or locked-out workers or persons taking part in labour disturbances or malicious persons acting on behalf of or in connection with any political organisation but excluding destruction or caused directly by total or partial cessation of work or the retarding or interruption or cessation of any process or operation.

(ii) other malicious persons not being tenants provided that:

• (a) the insured shall bear the $500.00 of each and every claim and/or series or claims arising out of one event.
  

And

(b) the Police are immediately informed of any malicious damage.

(c) destruction or damage arising out of or in the course of burglary, house breaking, theft, larceny or any attempt thereat are excluded.

(iii) any lawfully constituted authority in connection with the acts referred to in this sub-clause 5.

For the purpose only of sub-clause 5(i) (ii) and (iii) destruction of or damage to the property insured shall include the physical loss of the property insured."

Whilst the schedule to the fire policy does not contain a reference to "additional perils", the Defendant, through its predecessor in title, NMBF Insurance (Fiji) Company Ltd, nominated the "cover" in an offer of renewal dated 4 February 1999 in the following terms:

"c) cover: Fire, Earthquake, Impact, Riots, Strikes, Malicious Damage, Flood, Explosion, Water and other liquids as per the Company policy terms, conditions and exclusions."

The evidence confirms that the policy referred to in the letter dated 4 February 1999 was renewed by the Plaintiff. At some stage prior to 3 February 2000, the Defendant forwarded to the Plaintiff a fire and perils policy renewal notice for policy number 98G00065FI for a total premium of $9,300.00 for the same level of cover referred to in the earlier policies. The period of coverage was from 12 February 2000 to 12 February 2001. The Plaintiff paid the premium and a fire and perils policy renewal certificate was issued on behalf of the predecessor of the Defendant. The cover in the renewal certificate was described as being "as per policy".

EVENTS OF 19TH MAY 2000

On the 19th of May 2000 there was a march through the city of Suva by legal supporters of a movement known as the "Taukei Movement" and the Nationalist Vanua Tako Lavu Party which the Plaintiff claims degenerated into a riot with wide- spread looting as a result of which a fire occurred in the insured premises of the Plaintiff causing damage to them. In the written submissions of the Plaintiff it is said "the fire which occurred on 19 May 2000 was caused by the actions of a number of the citizens of the Republic of Fiji rioting or engaging in civil commotion". Later in this judgment I shall consider the meaning of the words riot and civil commotion but here, without wishing to be pedantic, I am constrained to say that I disagree with the description of those responsible for the destruction and looting of a number of properties in Suva as "citizens of Fiji". One of the meanings of the word citizen given in the Oxford Dictionary is "a person who has full rights in a State, either by birth or by gaining such rights". In my view to say that the individuals responsible had full rights in Fiji is a misuse of language and palpably false. I fail to understand how the persons responsible for the damage to property on the 19th of May could be said to have full rights in this country. By their actions surely they forfeited any such rights they may have had before they engaged in their rampage through Suva which has been fully documented in the media and in television footage taken at the time.

That said I pass now to the events which followed the damage to the Plaintiff's building. Correspondence took place between the Plaintiff and the Defendant among which was a letter of May the 30th 2000 in which the Plaintiff thanked the Chairman of the Board of Directors of the Plaintiff for "Your affirmative assurance that Sun Insurance would honour its obligation under the Fire Policy Cover". The Defendant replied to this letter on the 1st of June stating that the Insurance Underwriting Council was still considering whether insurance companies should admit liability for the damage done to all properties "as a result of the civilian unrest". It also sent with the letter a notice to all policy holders warning them that most policies contained a General Exclusion Clause exempting the insurer from liability for loss or damage directly or indirectly caused by War, Invasion, Acts of Foreign Enemy, War-like Operations, Civil Wars, Mutiny, Rebellion, Revolution, Insurrection or Military or Usurped Power.

On 23rd June 2000 the Plaintiff submitted a formal claim for damage to the Defendant and this was rejected. Following that the Plaintiff issued a Summons now before this Court seeking the determination of the Court on this question:

"A declaration that upon the true construction of the policy by NMBF Insurance (Fiji) Company Limited, Policy No. 98G00065FI, in respect of premises at Rodwell Road, Suva and known as the Yatulau Arcade the Defendant is liable to indemnify the Plaintiff for the loss or damage caused by fire arising out of the riot and civil commotion that occurred on 19 May 2000."

I have received full and helpful submissions from the parties which I now consider. I begin with some general statements on the law governing this matter with first the statement by Roskill L.J. in Cehave N.V. v Bremer m.b.H. in (1976) 1 QB 44 at p.71:

"In principle it is not easy to see why the law relating to contracts for the sale of goods should be different from the law relating to the performance of other contractual obligations, whether charterparties or other types of contract. Sale of goods law is but one branch of the general law of contract. It is desirable that the same legal principles should apply to the law of contract as a whole and that different legal principles should not apply to different branches of that law."

In Benjamin Developments Ltd. v Robt Jones (Pacific) Ltd (1994) 3 NZLR 189 at p.207 Gallen J. said:

"In my view where words or a clause or indeed a contract as a whole, have a clear objectively ascertainable meaning on the face of the document, then that is the meaning which the parties will be held to have intended and to which they will be bound. If a contract refers to apples, then it will not be open to parties to aver that the real intention was to refer to pears."

In Maye v Colonial Mutual Life Assurance Society Ltd [1924] HCA 26; (1924) 35 CLR 14 at pp 22-23 Isaacs ACJ. listed five canons of construction for Contracts of Insurance as follows:

"1. A contract is to be construed as a whole, and in interpreting particular words these cannot be read without reference to what comes before and after;

2. Where a policy incorporates by reference other documents, all must be read and construed together in order to arrive at the true contract;

3. If the terms ascertained from the whole of the documents are unambiguous in themselves and independently consistent with each other, effect must be given to each according to its verbal tenor, as severally construed;

4. If by reason of its own language in relation to the matter, or by reason of the context or of conflicting or differing provisions elsewhere, a term when fairly read is doubtful or ambiguous and reasonably susceptible of two constructions, that construction should be adopted which is the more favourable to the assured, because that is of the two the more reasonable in the circumstances;

5. If one of the documents is ambiguous in its terms but another is clear, then force is to be given to the one the terms of which are clear, so as to interpret the one containing ambiguous terms."

In Maye's case the policy recited that the proposal, declaration and personal statement by the proponent were incorporated in the policy and were the basis of the
contract, and it was held that all four documents had to be looked at to ascertain the precise contract that had been made.

The Defendant submits that on a proper construction of the policy it does not provide cover in respect of fire arising from or caused by a riot unless there has been an extension expressed in the schedule to include that risk. The Defendant says that the schedule to the policy does not mention an External Perils Extension which is true strictly speaking but which in my opinion cannot be supported when one looks at the policy as a whole. In the schedule it is stated under the heading Conditions:

"The Policy is subject to the following Warranties, Endorsements, Clauses and Additional Perils as printed on the policy or added thereto."

In my judgment this clause is wide enough and was intended by the parties to cover damage caused by fire or riots and, provided that what occurred on the 19th of May can be said to have been a riot, I must find the Defendant liable to the Plaintiff.

On the 4th of February 1999 the NMBf Insurance (Fiji) Company Limited wrote to the Plaintiff in the following terms so far as relevant:

"Re: YATULAU COMPANY LIMITED

FIRE & PERILS POLICY - DUE 12TH FEBRUARY 1999

We are pleased to advise that the renewal terms and premiums are detailed herewith for your approval and confirmation to continue covering the risks:

(a) Shell House situated at 29th Rona Street, Walu Bay

Sum Insured	-	$594,600.00
Basic Premium	-	$ 1,487.00
Stamp Duty	-	$ 297.30
Fire Levy	-	$ 365.70
Total	-	$ 2,150.00

(b) Yatulau Arcade situated at Rodwell Road, Suva

Sum Insured	-	$3,000,000.00
Basic Premium	-	$ 6,000.00
Stamp Duty	-	$ 1,500.00
Fire Levy	-	$ 1,800.00
Total	-	$ 9,300.00

(c) Cover : Fire, Earthquake, Impact, riots, Strikes, Malicious Damage, Flood, Explosion, Water and other liquids as per the Company policy terms, conditions and exclusions

Looking forward to receiving your approval.

Yours faithfully,

NMBf Insurance (Fiji) Company Limited"

RIOT AND CIVIL COMMOTION

I pass now to the term "riot" which has been considered in numerous cases in various jurisdictions.

In Field and Others v The Receiver of Metropolitan Police [1907] UKLawRpKQB 145; (1907) 2 KB 853 the Court of Appeal held that in order to constitute a riot five elements are necessary:

1. A number of persons not less than three;
   
2. A common purpose;
   
3. Execution or inception of the common purpose;
   
4. An intent on the part of the number of persons to help one another, by force if necessary, against any person who may oppose them in the execution of the common purpose;
   
5. Force or violence, not merely used in and about the common purpose, but displayed in such a manner as to alarm at least one person of reasonable firmness and courage.
   

The Defendant denies that the march degenerated into a riot but in an affidavit by Ahmad Zabidi the General Manager of the Defendant sworn on the 16th of October 2000, in the same paragraph as he denies a riot occurred he says, "My own observations reveal that following the taking of hostages of the Coalition Members of Parliament by armed rebels on that day, thereafter looting and burning took place in Suva city by some of the marchers who were joined by women and children" and in paragraph (e) of his affidavit Mr. Zabidi says, "News of the armed takeover spread like wild fire and shops and businesses in Suva city became a free for all; wide spread looting took place and the Plaintiff's building was destroyed in a fire".

In those words and based on film footage and photographs of the events in question I have no doubt that the Plaintiff's premises were damaged by fire caused by the irresponsible actions of a mob on a rampage. With due respect to Mr. Zabidi I consider one would be taking a most unrealistic view of the actions of the mob on the 19th of May in the Suva city not to describe them as a riot. Surely it cannot be suggested with any seriousness that this mob was not violent and did not behave in such a manner as to not alarm any person of reasonable firmness and courage. I am therefore satisfied that the actions of this mob constituted a riot within the meaning of the law and that accordingly, unless other considerations apply, the Defendant is liable under the Policy to the Plaintiff. But that is not the end of the matter for the Defendant because the policy also covers civil commotion. The meaning of this term was considered by the Court of Appeal in London Manchester Plate Glass Co. Ltd. v Heath [1913] UKLawRpKQB 109; (1913) 3 KB 411. This case concerned damage to Plate Glass caused by a large number of women in different parts of London who simultaneously broke windows with hammers. The Plaintiff was insured against "damage to Plate Glass caused directly by or arising from civil commotion or rioting".

The Court held that there was no evidence that the damage was caused directly by civil commotion or rioting and that consequently the Defendant was liable on the policy.

Vaughan Williams L.J. accepted the meaning of civil commotion given by Lord Mansfield in Langdale v Mason in 2 Park on Insurance at 968 when he said:

"I think a civil commotion is this; an insurrection of the people for general purposes, though it may not amount to a rebellion, where there is usurped power."

In his judgment Buckley L.J. stated that civil commotion involved public disturbance or tumult accompanied by violence or intention to commit violence together with evidence of assemblage.

I accept this statement and once again ask, "How can it be seriously contended that these elements were not present when the mob cut loose and set fire to the Plaintiff's premises?"

The answer in my opinion is obvious: It cannot be. Accordingly I find also that the Plaintiff's premises were damaged by a fire caused by civil commotion and unless the Defendant can satisfy me as a matter of law it is not liable under the policy I must find against it.

One of the main arguments of the Defendant is that when the policy was renewed on the 3rd of February 2000 it constituted a new policy in which there was no specific reference to cover for riot or civil commotion resulting in fire. I cannot accept this argument. In the renewal notice the same policy number is given namely 98G00065FI and the Plaintiff is told "Please be advised that your policy is now due for renewal." In my judgment those words can refer only to the original policy and I am reinforced in this view by the fact that the only exclusions named in the renewal covering the period 12th February 2000 to 12th February 2001 are Cyclone and Flood.

The next sentence reads "Cover - As Per Policy". In my judgment those words put beyond any doubt the liability of the Defendant to the Plaintiff. There is nothing unusual about this construction. The incorporation of terms of the underlying insurance is a common feature of re-insurance contracts. In Pine Top Insurance Co. Ltd. v Unione Italiana Anglo-Saxon Reinsurance Co. Ltd (1987) 1 Lloyd's Rep. 476 the words used were "all terms, clauses and conditions as original". But there is no prescribed form of words to make and give a renewed policy the same force and effect as the original. It is the intention of the parties as evidenced by their agreement which governs the matter.

So far I have referred to the ordinary principles of construction of documents of the common law but the construction of insurance policies in Fiji has now been covered by statute in the Insurance Law Reform Act 1996.

Section 29 of the Act sets out the rules of construction which are to be observed in the interpretation of any proposal for insurance or any policy of insurance or endorsement on a policy of insurance. Because of their importance in this case I set them out in full:

"(a) the intention of the parties, ascertained from the face of the documents, documents incorporated therewith and surrounding circumstances, shall prevail;

(b) the whole of a document shall be looked at and not a particular clause;

(c) written words shall ordinarily be given more effect than printed words;

(d) wherever possible, the grammatical construction shall be adopted, but the intention of the parties shall be of paramount consideration;

(e) words shall be construed in their plain, ordinary, popular, commonsense and natural meaning except that terms of art or technical words shall be understood in their strict, technical and proper sense unless the context controls or alters the meaning;

(f) the meaning of a word is to be ascertained with reference to its context and may be restricted or modified thereby, and where, from the context it appears that the parties intended to use the word in a special and peculiar sense, and not in a meaning which it might otherwise bear, the word shall be construed in accordance with their intention;

(g) subject to the precise terms, subject matter and context of a clause, where specifications of particular things belonging to the same genus precede a word of general signification, the latter word of general signification, shall be confined in its meaning to things belonging to the same genus and shall not include things belonging to a different genus;

(h) where a word of general signification is followed by words of limitation or definition, which introduce words of narrower signification, the first word shall not be taken in its full sense but shall be construed as limited by and applying only to the particulars specified;

(i) words shall be construed to mean what they say, unless there is some strong ground for placing a different construction on the words from what they naturally import;

(j) words shall be construed liberally so as to give effect to the real intention of the parties and the document shall not be so construed as to defeat the object of the transaction or as to render it illusory;

(k) in any case of ambiguity, where words are capable of more than one construction, the reasonable construction shall be taken to represent the intention of the parties;

(l) the language of a document shall not be strained in favour of or against any party but if there is any ambiguity, the ambiguity shall be resolved in favour of the person insured;

(m) every effort shall be made to reconcile inconsistencies, but where there is an inconsistency between the wording of a policy and that in the proposal or any earlier document, the policy shall be regarded as expressing the true intention of the parties in the absence of sufficient evidence to the contrary;

(n) an express term shall override any implied term inconsistent with it."

Applying those rules to the policy in question here I am satisfied that the Defendant is also liable by statute.

Sub-paragraph (k) incorporates the common law doctrine of contra proferentem. That doctrine enunciated by Lord St Leonards in Anderson v Fitzgerald [1853] EngR 872; (1853) 4 H.L. Cas. 484 at 510-11 simply means that an insurer who frames the documents which constitute the contract is bound to make their meaning as clear as possible in order to prevent people being misled into the belief that they are to receive benefits to which in fact they are not entitled. If there is any ambiguity in the insurance policy here (and by "policy" I mean the words used in the renewal forms) then that ambiguity must as a matter of law be resolved in favour of the Plaintiff. However as I have stated I find no ambiguity in the documents constituting this policy which, I reiterate must be read as a whole.

Accordingly I make the declaration sought in the Summons and I order the Defendant to pay the Plaintiff's costs which I fix at $650.00. There will be orders in these terms.

Declaration granted.

Marie Chan