Helu v National Pacific Insurance [2004] TOLawRp 48; [2004] Tonga LR 319 (28 September 2004)

IN THE SUPREME COURT OF TONGA

Helu anors

v

National Pacific Insurance

Supreme Court, Nuku'alofa
Ford J
CV 669/2001

26 March and 20 September 2004; 28 September 2004

Insurance – questioned validity of licence – rejected defence – claim allowed

The plaintiffs claimed damages against the defendant Insurance Company that arose out of a motor vehicle accident. The statement of claim alleged that the motor vehicle was written off in an accident on 26 October 1996. The motor vehicle, a van used as a taxi, was insured for a maximum amount of $10,200 and the plaintiffs claimed that sum by way of relief together with other items of damages totalling $6,600 and various claims for interest. The defendant Insurance Company rejected the plaintiffs' claim on the basis that the driver of the insured's vehicle did not have any valid driving licence to drive a taxi class of vehicle. The defendant claimed that the Traffic Department had no authority to extend the licence to include the driving of taxis.

Held:

1. At the time of the accident the van was being driven for private purposes and not as a taxi therefore the legalities of the licence were irrelevant. The motor policy proposal form described the purposes for which the vehicle could be used as "taxi + private use".

2. The Court found that even had the status of the driver's taxi driving licence been an issue the extended taxi licence issued to her by the Traffic authorities in Nuku'alofa on 21 August 1996 complied with the Traffic Act.

3. The driver pleaded guilty to a charge of careless driving but there was no evidence that she had been driving in a "reckless/dangerous manner" and the circumstances of the collision itself were insufficient to satisfy the Court that she was driving in such a manner. The defence on that ground was, therefore, rejected.

4. A pleading was not evidence. If a party pleaded a specific matter of fact which he alleged made any claim or defence of his opponent not maintainable then he still needed to go on and prove that pleaded fact in the usual way. If at trial no mention was made of the matter then the Court was entitled to assume that it had been abandoned. That was the Court's conclusion.

5. The best evidence before the Court of the motor vehicle's pre-accident value was the figure stated in the Renewal Certificate that had been issued by the defendant Insurance Company shortly before the accident. The Renewal Certificate noted that the sum insured was $8,200 and the excess $600. The accident occurred only 28 hours before the Renewal Certificate was due to take effect.

6. Judgment was entered for the plaintiffs in the sum of $7,600 together with interest at 10% from 8 November 1996 down to the date of payment. The plaintiffs were also entitled to costs to be agreed or taxed.

Cases considered:

Lickiss v Milestone [1966] 2 All ER 972

Maamakalafi anor v Finau [2004] Tonga LR 218 (CA)

Marek v C.G.A. Fire & Accident Insurance Co Ltd (1985) 3 ANZ Ins Cas 60-665

Statutes considered:

Traffic Act (Cap 156)

Counsel for plaintiffs: Mr Fifita
Counsel for defendant: Mr 'Etika

Judgment

The Proceedings

In this civil proceeding, the plaintiffs claim damages against the defendant Insurance Company arising out of a motor vehicle accident. The statement of claim alleges that the motor vehicle in question was written off in an accident on 26 October 2002. The date is obviously a typographical error. The evidence established that the accident, in fact, occurred on 26 October 1996. The motor vehicle, a van, was insured for a maximum amount of $10,200 and the plaintiffs claim that sum by way of relief together with other items of damages totalling $6,600 and various claims for interest.

The Claim

In 1995 the first plaintiff, Viliami Helu, purchased a 1990 Daihatsu van for use as a taxi. He told the court that he took out a loan with the Tonga Development Bank for $10,200.00, which was the total purchase price of the vehicle. Although no documentation was produced in relation to the bank loan, the second and third plaintiffs apparently acted as guarantors. They, together with the first plaintiff, are the registered owners of the van. Because, however, the second and third plaintiffs took no part whatsoever in the proceedings, for ease of reference, I sometimes in this judgment simply refer to "the plaintiff" as being a reference to Viliami.

The Tonga Development Bank required the van to be fully insured and a bank officer drew up the insurance proposal form for Viliami to take out motor vehicle cover with the defendant, National Pacific Insurance Ltd. The proposal form was duly signed by Viliami. It is dated, for some reason, 27 October 1996. Counsel agree however, that the date should be shown as 27 October 1995. The maximum amount of cover is shown at $10,200. The authorised use of the vehicle is stated as "taxi + private use". The policy provided for an excess of $600. The premium of $663.00 was duly paid. The insurance period is shown as "from 27 October 1995 to 27 October 1996."

Almost one year to the day later, on Saturday 26 October 1996, the plaintiff's wife, Lose, had an accident and wrote the van off. She had taken a bundle of clothing and other goods down to a "flea market" at 5:30 a.m. that day and was returning to her home at approximately 10 a.m. when the van left the road and collided with a power pole. Lose's description of the accident in the insurance claim form reads as follows:

"I went to the market and drop (sic) off some goods to be sold there. When I was on my way back home I slept and woke up when I hit the post. I was only about 200 metres before I reached home. I was just very tired because I drove all day on Saturday." ("Saturday" was obviously meant to be a reference to "Friday").

The first plaintiff completed a Motor Vehicle Accident Claim Form and the claim was lodged with the defendant company on 29 October 1996.

The Response

The defendant Insurance Company rejected the plaintiffs' claim. The claims supervisor 'Inoke Kalauta, sent a letter to the Tonga Development Bank dated 8 November 1996 setting out the reasons for declining the claim as follows:

"We therefore deny any liability due to the driver of the insured's vehicle not having any valid driving licence to drive such class of vehicle."

A copy of the letter was sent to the plaintiff together with a copy of a legal opinion the insurance company had obtained from a local firm of solicitors, Stevenson Nelson Mitchell & Foliaki.

Driver's licence

Lose Helu gave evidence as to the position regarding her driver's licence. She told the court that at the time of the accident she, in fact, held a valid driver's licence to drive the van both for private use and as a taxi. The licence had been issued at Ha'apai on 30 May 1996 for private motor vehicle use only and on 21 August 1996 it had been extended by the Traffic Department in Nuku'alofa to include taxis. The licence in question was produced in evidence.

The Defence

The case for the defence, essentially, is that the Nuku'alofa Traffic Department had no authority to extend the licence to include the driving of taxis. Reliance, in this regard, was placed on section 15 (4) of the Traffic Act (Cap 156) which provides that no person shall be granted a driver's licence to drive a taxi unless he or she "had or has already had" an ordinary driver's licence for a period of not less than 6 months and has passed a re-test by an Examining Officer.

The insurance company contended that as Lose's driver's licence had only been issued in Ha'apai on 30 May 1996, the 6 months did not expire until 30 November 1996. Hence, the Traffic Department in Nuku'alofa had no authority to extend the licence to cover taxis.

The Evidence for the Plaintiff

The plaintiff called evidence from Ului Taulua, the Examining Officer at Nuku'alofa who had extended Lose's licence to include taxis. Mr Taulua told the court that he had retired from the Ministry of Police in July 2003 after some 28 years of service with the Traffic Department. His recollection of Lose's application was impressive. He said that he recalled when she came to his office in 1996 to obtain the extension to her licence to cover taxis. At that time, he held the position of deputy inspector. He said that when he looked at the licence Lose had obtained from Ha'apai he could see that she had not held it for the required six-month period and so he asked her about it. Lose explained to him that she had obtained an earlier licence from Ha'apai back in the 1980s and that she had lost that sometime later when she and her husband moved to live in New Zealand.

Mr Taulua told the court, in evidence which I accept, that he then instructed one of his staff, Sergeant Siosiua Vea, to make contact with the Ha'apai police to check out what Lose had told him. The Sergeant did so and reported back to the inspector that Lose had obtained a driver's licence in Ha'apai in 1985. The former deputy inspector said that, upon receiving this confirmation, he was satisfied with Lose's explanation and so he proceeded to carry out the re-test required under section 15 (4) (ii) of the Traffic Act. He explained that the re-test was an oral theoretical examination with some 20 questions designed to assess the applicant's knowledge of the traffic laws. The witness said that Lose had been able to satisfactorily answer all the questions and so he instructed Sergeant Vea to issue an extension to her driver's licence to include taxis.

For her part, Lose told the court that she and her husband moved to New Zealand in 1986 and did not return to Tonga until 1993. In New Zealand they had lived in South Auckland and during that period Lose had obtained a New Zealand driver's licence. After the couple returned to Tonga they lived in Tongatapu. Viliami purchased the van for use as a taxi in 1995 but Lose did not drive the vehicle until after she had her licence extended in August 1996.

Lose told the court that in May 1996 she had travelled to Ha'apai to attend a church conference and while there she had decided to arrange to renew her lost driver's licence. Her original licence had been issued in Ha'apai in 1985. She said that the Officer in charge at the police station explained to her that if she had the old licence renewed then she would have to pay the annual renewal fee each year from 1986. The Officer suggested that a cheaper alternative would be for her simply to apply for a new licence and that is what she did. Lose said that the Officer, who she could only remember by the name of Sailosi, took her for a test drive and required her to undergo a written test also before issuing her with the new licence. She then paid the appropriate fee.

Lose confirmed that in August 1996 she had approached the Traffic Department in Nuku'alofa to obtain the extension to her licence to cover the driving of taxis. After explaining the background situation, she had been told to leave her licence with the Traffic Department and return the following day to pick it up with the extension. In cross-examination she was asked by Mr 'Etika if she had been required to carry out a written test. She replied that she could not recall. I am satisfied, however, from Mr Taulua's evidence that Lose did, in fact, undergo the required re-test.

The plaintiffs also subpoenaed but, for some reason, did not call evidence from Sailosi Fonua. As he was present at court, however, he was called as a witness by Mr 'Etika on behalf of the defendants. Fifty seven-year-old Sailosi told the court that he had been the Officer in Charge at the Ha'apai Police Station in May 1996 when Lose had called to renew her driver's licence. He confirmed Lose's account of how she had taken the alternative option of obtaining a new licence rather than paying the annual renewal fees in respect of the lost licence. Sailosi said that he had been with the Police Department in Ha'apai since March 1969 and it was he who had issued Lose with her first driver's licence back in 1985.

Findings in Relation to the Principal Defence

It is clear on any reading of the facts, as I have found them to be, that the reasons put forward by the insurance company for rejecting the plaintiff's claim simply do not measure up.

First, even had Lose not obtained the extension to her driver's licence to cover taxi work, the basic licence she had obtained in Ha'apai on 30 May 1996, which covered "Private Motor Vehicle" use, would have been all that was required for driving the van to and from the market on the Saturday morning of the accident. The question to be asked is what was the essential character or primary purpose of the journey. The evidence is clear. At the time of the accident the van was being used for social or private purposes only, not as a taxi. That proposition, it seems to me, must be a complete answer to the defendant's case. The motor policy proposal form described the purposes for which the vehicle could be used as "taxi + private use". It is difficult to understand the insurance company's preoccupation with the legality of Lose's taxi driver's licence when the van was not being used as a taxi at the time of the accident.

Secondly, even had the status of Lose's taxi driving licence been an issue, I have no doubt that the extended taxi licence issued to her by the Traffic authorities in Nuku'alofa on 21 August 1996 complied with the Traffic Act. The evidence clearly established that Lose had originally been issued with a driver's licence back in 1985 when she was living in Ha'apai and that was sufficient to satisfy the requirements of section 15(4) of the Traffic Act . The words "had or has already had" in subsection (4)(ii) are sufficiently broad to include a previous licence that, for some reason or other, is no longer operative.

In any event, an infringement of a statutory provision regulating the performance of an official act does not necessarily spell invalidity. As the Court of Appeal noted in the recent case of Maamakalafi v Finau [2004] Tonga LR 218 (CA), in each case it depends upon the true construction of the Act. No authorities or submissions were made to me on this aspect of the case and it is unnecessary for me to take the matter any further but it does appear to have been a basic fallacy of the defendant's case that if it could establish some infringement of the Traffic Act then such a finding would of necessity invalidate the insurance cover.

Findings in Relation to Other Defences

There were two further defences advanced by the insurance company in its statement of defence although neither was mentioned in the initial letter the plaintiffs received from the claims manager declining their claim. It is alleged that Lose was driving in a "reckless/dangerous manner" which is one of the exclusion provisions in the policy. It is also alleged that the delay of almost five years on the plaintiffs' part in issuing proceedings caused the defendant to alter its position "believing that the plaintiffs have been satisfied with the refusal of their claim."

Reckless/Dangerous Driving

Lose pleaded guilty to a charge of careless driving contrary to section 25(1) of the Traffic Act but there is no evidence that she had been driving in a "reckless/dangerous manner" and the circumstances of the collision itself are insufficient to satisfy me that she was driving in such a manner. The defence on that ground is, therefore, rejected.

The Delay Defence

This defence is pleaded in the following terms:

"12. That since November 1996 when the last correspondence from the defendant to the plaintiffs were made with regards to this matter the plaintiffs had kept quiet and done nothing to it while the defendant has led to believe from this conduct of the plaintiffs that they were satisfied with the refusal of their claim then.

13. The defendant relying on the above believe from the conduct of the plaintiffs in not pursuing their claim for almost five years have altered his positions believing that the plaintiffs have been satisfied with the refusal of their claim (sic)."

It is a fact that the proceeding was not commenced until 6 November 2001. There is an affidavit on the court file from the first plaintiff in connection with an interlocutory matter explaining how he had wrongly been led to believe by his then solicitor (who 240 was not his present counsel) that proceedings had been filed much earlier and the reason for the ongoing delay was a hold-up in obtaining a fixture from the court. The first plaintiff also gave evidence about these matters, which I accept and he was not cross-examined on that evidence.

It is not clear from the wording in paragraph 13 of the statement of defence, quoted above, exactly what legal basis the defendant is relying upon when it states that it believed the plaintiffs were satisfied "with the refusal of their claim."

The "CONDITIONS" section of the policy states:

"Under this heading are the rules by which the Policy operates. If these rules as they apply are not observed, we may refuse to meet a claim."

Condition (3) is headed "Claims Procedure" and paragraph (g) provides:

"Should we decline to meet any claim which you make under this Policy or refuse you any other benefit and you wish to challenge the decision you must commence your action in Court within twelve months from the date of your (sic) advice to you of our decision."

Observations on Delay Defence

There are several observations, which can be made in relation to what, for ease of reference, I have referred to as the "delay defence". First, as already noted, the pleading in paragraphs 12 and 13 does not specify the legal basis for the defence. Secondly, if it was intended by the pleading to raise condition 3 (g) of the Policy Conditions as a defence then, in order to avoid a waiver situation, that fact should have been clearly stated in the statement of defence.

In Lickiss v Milestone [1966] 2 All ER 972, 975 Denning MR described the concept of "waiver" as follows:

"The principle of waiver is simply this: that if one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him so to do."

The issue of delay was obviously a factor that the defendant had focused upon, as is apparent from paragraph 13 of its statement of defence. Without having had the advantage of hearing submissions on the issue, it seems to me that the principle of waiver described in the above passage would be applicable to the defendant's pleadings in the present case. The failure to specifically plead condition 3 (g), in my view, amounts to a waiver of that particular requirement.

I should add that even had condition 3 (g) being specifically pleaded, I would have expected to have heard argument as to its legal effect. The plaintiff could well contend, for example, that such a condition was void in so far as it appears to be an attempt to oust the jurisdiction of the court -- see, in this regard, the observations in Marek v CGA Fire & Accident Insurance Co Ltd (1985) 3 ANZ Ins Cas 60-665.

Thirdly, no evidence was given by any witness on behalf of the defendant in relation to the defence pleaded in paragraphs 12 and 13 of the statement of defence; there was no cross-examination of the plaintiff on the subject and neither counsel referred to that part of the pleadings in the course of their submissions.

The reason for the six-month break in the hearing dates was to enable the defendant to call evidence from a former officer of the company who now apparently lives in New Zealand. When the hearing then resumed on the 20th of this month, however, the court was told that neither the witness from New Zealand or any other person would be giving evidence on behalf of the defendant. The only witness called by the defence, therefore, was Sailosi Fonua, the witness from Ha'apai who had only been present in Court because he had been subpoenaed, but not called, by the plaintiff.

A pleading is not evidence. If a party pleads a specific matter of fact which he alleges makes any claim or defence of his opponent not maintainable then he still needs to go on and prove that pleaded fact in the usual way. If at trial no mention is made of the matter then the court is entitled to assume that, for whatever reason, it has been abandoned. That is my conclusion in the present case. In all events, the defence has certainly not been established to my satisfaction.

Damages

Finally, I turn to the question of damages. Again, an unfortunate feature of the case was the complete absence of evidence on this important aspect of the claim. No expert evidence was called from either side on motor vehicle valuations and not one question was put to the plaintiff either in examination-in-chief or cross-examination in relation to the damages aspect of his claim.

The motor vehicle was purchased from Si'i Kae Ola Motors in October 1995 for $10,200. That firm had provided a written valuation report at the time and had valued the vehicle at that figure. The valuation report was obviously relied upon by the Tonga Development Bank when it made its decision to grant a loan to the plaintiffs for the full amount so as to allow the purchase to proceed.

The insurance policy provided that, in the event of any loss or damage to the vehicle, the Insurance Company had the option of either repairing the vehicle or paying out the amount of the loss not exceeding the vehicle's market valuation at the time of the loss and, in any event, not exceeding the insured sum of $10,200.

As is common practice in civil cases, the discoverable documentation of both parties was produced at the hearing by consent. The bundle of documents provided included a letter from the Ministry of Works Motor Vehicle Inspecting Officer dated 320 28/10/96 confirming that he had inspected the vehicle after the accident and in his opinion it was a complete write off. The letter, however, contained no estimate of the vehicle's pre-accident value. There is another letter from Asco Motors addressed to the Tonga Development Bank also dated 28 Oct 1996, which simply reads:

"Dear Sir,

ESTIMATE TO REPAIR ACCIDENT DAMAGE TO DAIHATSU T2473 BELONGING TO VILIAMI T HELU.

We have been examined (sic) the above vehicle and we found it is beyond economical repair and should be written off.

Pre-accident $4000

Salvage value $300

If any further information required, please feel free to contact us. We will be happy to assist.

Yours faithfully

BPT (TONGA) LTD

VILIAMI KULU

(SERVICE MANAGER)"

It is not clear why the Bank did not seek a report from Si 'i kae Ola Motors which was the firm that had carried out the original valuation assessment on its behalf one year previously.

As I have already observed, no evidence was called from either the Vehicle Inspecting Officer at the Ministry of Works or the valuer from Asco Motors and no other evidence was given on the valuation issue. I am not prepared to place any reliance upon the estimates provided in the Asco Motors letter. If either party had wanted the court to accept those figures then they should have called evidence from the individual who actually carried out the vehicle inspection. In the absence of such evidence, I can only conclude that neither party was seeking to contend that the Asco Motors figure was an appropriate pre-accident value.

In fairness, it was clear from Mr 'Etika's submissions that he accepted that the pre-accident valuation figure would have been something higher than $4000. As counsel put it, "the market value would have been a little higher than $4,000 but not as high as $10,200." That still leaves a significant range of options.

At one point in his submissions, Mr Fifita referred to 10% as being the generally accepted appropriate depreciation figure in Tonga. That would give a pre-accident value of $9,180. The problem again, however, is that no evidence was provided in support of that submission and Mr 'Etika did not concede that such an approach was appropriate in the present case.

In the absence of any other evidence on the subject, it seems to me that the best evidence before the court of the motor vehicle's pre-accident value is the figure stated in the Renewal Certificate that had been issued by the defendant Insurance Company shortly before the accident. The Renewal Certificate noted that the policy was due to expire at 4 p.m. on 27/10/96 but it would be renewed automatically until 4 p.m. on 27/10/97 with the sum insured being $8,200 and the excess $600. The accident, of course, occurred only 28 hours before the Renewal Certificate was due to take effect.

Award

Under the first head of claim, therefore, I award the plaintiffs $8,200 less the excess of $600. The plaintiffs also claim $3000 for "injured feelings" and $3000 for "damage to reputation". No evidence or submissions were presented in support of either claim, however, and they are both, therefore, rejected. Likewise, there are additional claims for certain amounts of interest together with legal costs of $600 allegedly arising out of the defendant's rejection of the claim but, again, no evidence or submissions were presented in support and those claims are also rejected.

If a plaintiff seeks to recover damages under different heads of claim then he must do more than list the items in his prayer for relief. He must be prepared to prove all his claim entitlements in the usual way failing which they will be rejected.

Finally, the plaintiffs seek interest on the principal award at the rate of 13%. I accept that they have been wrongly deprived of the proceeds of their insurance claim and that they are entitled to interest. Judgment is, therefore, entered for the plaintiffs in the sum of $7,600 together with interest at 10% from 8 November 1996 down to the date of payment. The plaintiffs are also entitled to costs to be agreed or taxed.