Wight v National Pacific Insurance [2001] TOSC 38; C 1101 2000 (11 October 2001)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

C. NO.1101/00

BETWEEN:

HARRY WIGHT
Plaintiff

AND:

NATIONAL PACIFIC INSURANCE
Defendant

BEFORE THE HON. CHIEF JUSTICE WARD

COUNSEL: Mr S. Tu'utafaiva for Plaintiff
Mrs F. Vaihu for Defendant

Date Of Hearing: 27 and 28 September and 2 October 2001
Date of Judgment: 11 October 2001

JUDGMENT

This is an action for recovery of money allegedly paid wrongly by the plaintiff to the defendant under a policy of insurance. It falls within the jurisdiction of the Senior Police Magistrate but he was unable, for professional reasons, to hear the case and so I directed that it should be transferred to this Court for hearing.

The plaintiff's case is that, in early 1996, he bought an 18 feet boat and 150 hp outboard motor. In order to do so, he took out a loan with the Tonga Development Bank (the Bank). It was a condition of the loan that the boat and engine should be insured and the plaintiff was under the impression that, when he spoke to the Bank officer about the loan, the insurance had been effected by the Bank as agent of the defendant.

The meeting was in the bank on 6 March 1996 and the loan was agreed. The requirement of insurance was explained and the plaintiff then signed a pro forma letter addressed to the Managing Director of the Bank:

"Dear Sir,

Please arrange insurance as under and debit my account with the premiums as they fall due for payment. This order is without obligation on your part and automatically cancels when my loan with you is repaid."

It was signed by the plaintiff and countersigned by the bank officer.

At the same time a document headed "Explanation Regarding Insurance" was signed by them both. The evidence showed that this was a Bank document in which the general nature of the insurance was explained to the Bank's customers. Although it is nothing to do with the defendant company, it refers to "the Insurance Company (National Pacific Insurance)."

The document referred to the requirement that, if the boat was more than 28 feet in length, there would need to be an annual survey and that the decision to insure the boat will be based on that.

It then set out the excess payable in various circumstances. The last two entries read:

"Fishing boat insured against total loss or partly damaged $5,000.00

Fishing boat insured against total loss $1,000.00"

The document then goes on to explain the nature of excess and the procedure for a claim.

It is also clear that the bank officer filled in a proposal form for the insurance. He has dated it in such a way that it is not possible to say exactly when it was written but it is clear that the defendant received it on 13 March, 1996.

The following day, 14 March, the defendant wrote to the Bank returning the proposal and stating that the company required "your assistance in providing us with a Marine Survey Report ... before we can effect coverage".

It is not in dispute that, at that time, the defendant did not accept the proposal and no policy was issued.

On 15 April of the same year, the engine was damaged when it struck a coral outcrop. The damage was so great that a repair would have cost approximately the same as a new engine. The plaintiff filled in a claim accordingly on 19 April and passed it to the Bank.

Clearly the Bank passed it to the defendant company because it wrote to the Bank on 29 April 1996 acknowledging receipt of the claim but continuing:

"Referring to our letter dated 14^th of March 1996 ... Please be advised that we still have not received the required report as requested for immediate cover age. Therefore we could not effect coverage until the same is fulfilled."

There followed correspondence between the Manager, Legal and Insurance Unit of the Bank and the Manager of the defendant. Although the bank officer's letter of 17 May 1996 refers to the Bank issuing a cover note and being an agent of the Insurance Company, the letter is simply a request by the bank that the Insurance Company still consider the claim to help spread the effects of the Bank's failure properly to process the policy. The correspondence reveals that eventually the Insurance Company agreed to pay half of the claim leaving the Bank to pay the other half. However, the calculations are made after deduction of a policy excess of $3,000.00 which was to be paid by the plaintiff.

The sums agreed were paid and a new motor supplied to the plaintiff. The plaintiff queried the matter of the excess with the Manager of the Insurance Company. He told the Court that he expected to pay only $1,000.00 and, when they insisted on $3,000.00, he agreed to pay it only on the Company's agreement that he would then have the damaged engine for spares.

Some years later, the defendant sold the engine. The plaintiff claims this was in breach of their agreement and so he claims the $2,000.00 paid, he says, only because of that agreement.

I am not satisfied that the evidence reveals any contractual relationship between the plaintiff and the defendant to support this claim.

I am satisfied without any doubt that the Bank was not acting as an agent of the Insurance Company despite its reference in its letter of 17 May 1996 to such a relationship and the suggestion that it had issued a cover note. The document referred to as a cover note clearly is not. I am equally satisfied that the Insurance Company did not accept the insurance on that boat until well after the accident and then only on the terms it had agreed with the Bank over the claim for the engine. No premium was paid until after the accident either.

It is unclear how the sum of $3,000.00 excess was determined but I am satisfied that it was a term accepted by the plaintiff to ensure he received the new engine. That agreement was made by the plaintiff with the Insurance Company but I am satisfied that the defendant never agreed to give the damaged engine to the plaintiff in return for that agreement to pay the higher figure.

I accept the plaintiff made the suggestion to the Manager of the defendant. The plaintiff's case is that the Manager said he would draw up the agreement whilst the Manager says he told the plaintiff to do so. I prefer the evidence of the defendant on this in any event but the fact remains that, although the plaintiff made the offer and the manager expressed interest, there was never any such agreement. The payment by the plaintiff of the excess of $3,000.00 was part of, I am satisfied, a previous agreement entered into by him so he would receive the replacement engine

Whoever was to draw up an agreement over the damaged engine, there was never any such agreement yet over the next years the plaintiff removed various parts of the engine up to the time it was sold by the Insurance Company and the plaintiff brought this action.

The claim fails with costs to the defendant on the scale appropriate in the Senior Police Magistrate's Court.

NUKU'ALOFA: 12^th October, 2001

CHIEF JUSTICE