"There is one observation we feel obliged to make. Formal written contracts of insurance with their numerous conditions and endorsements are highly technical legal documents hardly comprehensible to a layman. Experience shows that the policies are normally received after agreement has been reached, premium paid and after the insurance has validly come into operation. Often, the insured do not trouble to read the actual policies when they eventually arrive. For this reason, it is necessary that the stronger of the contracting parties, i.e. the insurance companies should ensure that the actual policy conforms with what the insured was led to believe. Otherwise, these policies will be no more than pitfalls for the unwary"

To what extent is the above observation relevant to the facts of the case at hand? As the story unfolds, the court will make definitive findings of fact based on the evidence adduced, apply the law and appropriate principles of insurance and draw its conclusions.

The plaintiff describes itself as a limited liability company with branches in all the regions of Ghana. The plaintiff took a burglary policy with the defendant, a reputable insurance company in Ghana, in respect of five business premises in Accra and Kumasi. These policies were taken at the defendant's Kumasi office, renewed annually and all premiums were duly paid.

Its premises at Forico Shopping Mall, Osu, Accra was burgled about midnight, on or about 29/12/2013 and 30/12/2013 and numerous items as per the schedule attached to the writ of summons were stolen by the burglars. The plaintiff alleged that its night watchman was only absent from post for one night on grounds of ill-health without notice to the plaintiff company. The burglary occurred during that period, the defendant was duly notified as required under the policy and the total cost of goods stolen was assessed at approximately GH¢39, 232.00.

As to be expected, the defendant repudiated the claim on the ground that the plaintiff had violated clause (3) of the Burglary Insurance (Business Premises) policy. The defendant contended that by the said policy, a night watchman/caretaker was to be present on the premises continuously and at all times when the premises are closed against customers and/or callers for business; and /or outside business hours.

The Plaintiff has therefore instituted the instant action for an order compelling the defendant to pay for the sum of GH¢39,232.00 and interest thereon from 31/01/14 till date of payment.

The main issue to be determined is whether the plaintiff breached the terms and conditions of the insurance policy; and if so, whether the plaintiff is entitled to its claim?

As in all civil suits, it is the duty of a party whose positive assertions have been denied by his opponent to prove same. The required standard of proof is "proof by the preponderance of the probabilities " as stated under sections 11(4) and 12 of the Evidence Act, 1975, NRCD 323. This evidential requirement has been followed in cases such as Fosua v Dufie (deceased) & Adu-Poku Mensah (2009) SCGLR 316; Continental Plastics Ltd v IMC Industries (2009) SCGLR 298 at pages 306 to 307. On the basis of the principle just stated, it is not always the case that a plaintiff who has come to court must be the first to prove all facts which are in issue. Depending on the pleadings, both the evidential burden and the burden of persuasion could first rest on a defendant. So, in the case under consideration, the defendant company, the insurer, who is alleging that there has been a breach which entitles it to repudiate the claim must establish the same on the balance of probabilities. The defendant is therefore required to adduce concrete and positive evidence from which the court can infer that its case is more probable, than its non-existence. It is only when the defendant has been able to do so that the evidential burden will shift onto the plaintiff to introduce evidence to the contrary. In the event that the plaintiff fails to discharge this duty, the defendant will be deemed to have proved that fact and will be entitled to judgment in its favour. To quote the words of Lord Goddard C.J. in Bond Air Services Ltd v Hill ( 1955) 1 Q.B. 417 at 427:

"it is axiomatic in insurance law that , as it is always for an insurer to prove an exception, so it is for him to prove the breach of a condition which will relief him from liability for a particular loss."

The trial commenced with the evidence of the defendant's representative who introduced herself as a non-motor claims officer and gave her name as Abena Nhyira Amponsah. She did not dispute the fact that the plaintiff took a burglary policy over its Osu premises and at the time of the incident, the premium had been fully paid. She told the court that when the plaintiff reported the incident, and as part of the claims process, her outfit requested for some documents from the insured which the insured provided. The plaintiff's file was forwarded to a committee constituted by the defendant in Accra and after a careful study, it came out that there had been a breach of warranty, specifically, the watchman's warranty, and the insured was notified in writing. The defendant's representative tendered a copy of the burglary policy given to the plaintiff together with its attachment or endorsements as exhibit 1. She explained that the endorsements formed part of the policy and in this case, the first endorsement in exhibit 1 stated that “ a night watchman or caretaker must be continuously present when the premises are closed against customers and/or callers"

This, according to the witness, supersedes the general watchman clause contained in page 1 of exhibit 1 which requires that the premises shall not be left without a watchman or caretaker for a continuous period not exceeding four days in a year. Explaining further, the witness said in Insurance, general conditions, terms and exceptions are given. However, based on the policy being sold, and the risk being accepted, an endorsement is passed so as to minimize the extent of risk exposure; the warranty thus supersedes any other condition, terms or exception in the policy. Concluding, the witness re-emphasized that there is no liability on the part of the defendant company since the plaintiff in fact breached the watchman warranty as contained in the endorsement attached to exhibit 1.

Under cross-examination by counsel for the plaintiff, the witness conceded that exhibit 1 is signed and dated by the parties thereto, but the same cannot be said of the attachment. She reiterated her earlier testimony that the endorsement forms part of the policy; both were given to the insured and a copy kept on file. She rejected all suggestions by counsel that the attachment was not part of the copy of the policy given to the plaintiff. Counsel again raised issues with the differences in the policy number on exhibit 1 and that quoted on a letter with reference number SIC/KAO/CD/ANA dated 06/01/2014, written by the defendant to the plaintiff. To this line of questioning, the witness attributed the differences to changes in their IT systems i.e. from CIBAS to the current PREMIA.

The plaintiff's accountant by name Obeng Nyarko Emmanuel took his turn to testify on behalf of the plaintiff. In respect of the burglary insurance policy, he told the court that exhibit 1 seems a bit different from the policy given to the plaintiff company. This is exactly what he said of exhibit 1:

"exhibit 1 seems a bit different from the contract the plaintiff entered with the defendant. What we have, after the signature, there are no additional sheets. The attachments to exhibit 1 were not part of the contract plaintiff signed with the defendant. There is no signature or stamp of either the plaintiff or the defendant on the attachments to exhibit 1...".

As regards the differences in the policy number, the plaintiff 's representative said their company has not been notified about any changes in its policy number. He was candid with the court concerning the absence of their night watchmen at the time of the burglary. He then explained that the watchman actually reported to work but left the premises because of stomach challenges without notifying the defendant's operations manager and his absence was not continuous but just once. In his view, the plaintiff is entitled to be paid because it never breached any of the terms or conditions in exhibit 1 as per the policy document given to them and which they in turn gave to their lawyer. He added that officers from the defendant company visited the plaintiff after the defendant had been notified and promised to pay the claim.

During cross-examination, the burglary policy which the witness said was given to the plaintiff was tendered through him as exhibit 2 after he had produced it upon request by counsel for the defendant. He admitted that exhibit 2 has a watchman policy attached to it contrary to what he had said in his evidence-in-chief. Therefore in terms of section 80(2) of NRCD 323, his testimony that the plaintiff's copy of the burglary policy did not have any attachment is not credible and the same is rejected.

In his closing submissions, counsel for the defendant argued that just as the plaintiff's representative had explained, the differences in the policy numbers quoted in the endorsements to exhibits 1 and 2 was as a result of changes in its computer software. He explained that the policy number BB049990400010 on exhibit 1 and P/200/04/4006/1011/8 indicated on exhibit 2 refer to the same policy contrary to the suggestions made under cross-examination by counsel for the plaintiff.

A week after the date set for addresses to be filed, checks at the registry revealed that counsel for the plaintiff had not filed his closing submissions. I proceeded to write this judgment without having the benefit of his address.

The explanation given by the defendant's representative in respect of the differences in the policy number quoted on the endorsement to exhibits 1 and 2 is convincing and acceptable in view of the fact that technology keeps changing and businesses adapt new technological systems to make their processes more efficient. The said change did not in any way affect the substance of the policy and the endorsements in particular but it would have been desirable if the insurer had communicated the change to the insured herein. The failure to do so does not go to the root of the issue in controversy and it does not affect the obligations of the parties under the insurance policy in issue.

I have closely studied exhibits 1 and 2. Whereas exhibit 1 came from the custody of the defendant, exhibit 2 came from the custody of the plaintiff, being its copy of the burglary policy in issue. Despite the slight differences in the font size on the face of both exhibits, each of them contain the general watchman clause in clause "e", under the caption- " EXCEPTIONS". Again, both exhibits 1 and 2 are endorsed with a watchman warranty and with the same wording. It reads:

WATCHMAN'S WARRANTY

It is hereby declared and agreed that this policy is issued on the condition that a Night Watchman/Caretaker is continuously on the within mentioned premises at all times while the premises are closed against customers and/or callers."

To the extent that the wording of the watchman policy contained in the endorsements to exhibits 1 and 2 are the same; and having regard to the fact that the differences in the policy number have been explained away by the defendant's representative to the satisfaction of this court, I conclude that the distinction which counsel for the plaintiff sought to make under cross-examination is inconsequential. What is of the essence now is the legal effect of the watchman policy contained in the endorsement.

As rightly pointed out by the defendant's representative, the policy as in exhibit 1 made reference to endorsements attached to the policy and one such endorsement is the watchman warranty referred to above. The same can be said of exhibit 2 which was tendered through the plaintiff's representative.

At this point, it will be useful, and worth discussing the nature and effect of endorsements in insurance policies. In insurance, endorsements are a legally binding change(s) to a policy and should be kept with the original policy. Put differently, they are provisions added to an insurance policy to enhance, restrict or modify the coverage contained in the policy form. The endorsements could be in the form of warranties, conditions precedent, and the like. By the general principles of insurance, warranties must be incorporated into the body of the policy itself as was held in Thompson v Weems (1884) 9 App. Cas. 671. The incorporation is of the essence as mere attachment of document(s) to the policy is unacceptable. See Birds Modern Insurance Law (2007) 7th ed. page 151.

A close look at the body of the "watchman warranty" in issue reveals that the term "condition" has been used, to be specific, the policy was subject to a particular condition referred to under the "watchman warranty". There is a legal distinction between "conditions precedent " to a particular liability, and "warranties" in an insurance policy. First, I will comment on "conditions precedent".

A condition precedent refers to an event that must come to pass before a specific contract is considered in effect or any obligations are expected of either party. For example, under the UK insurance law, which is similar to the general insurance principles that pertain in our jurisdiction, conditions precedent can be categorized as follows: (i) Conditions precedent to the validity of the insurance contract: these conditions must be satisfied before any risk will transfer to the insurer e.g. payment of premiums and requirement to provide information. The policy does not come into existence until the relevant condition is complied with; (ii) conditions precedent to insurers' liability: these conditions must be satisfied before an insurer becomes liable to pay the claim. For instance, a claim notification requirement and an obligation to take reasonable precautions to minimize the risk of loss. The remedy of an insurer when a condition precedent to liability is breached will depend on the wording of the policy; where that is not clearly spelt out, common law principles apply and the insurer will be entitled to decline the claim entirely. However, the insurance contract remains intact and future claims are potentially payable, provided the conditions precedent to liability are met.

Second, I will discuss the nature of "warranties "when used in Insurance as opposed to General Contracts. General contract law distinguishes between conditions and warranties. Whereas conditions go to the heart of a general contract and a breach may give rise to rescission, warranties are terms whose breach may give rise to damages, not rescission. This distinction was made in Honkong Fir Shipping Co. v Kawasaki K.K. Ltd (1962) 2 QB 26, at pages 69-70. Unlike general contracts, "warranty" when used in insurance refers to a major term of the insurance contract. It may be express, implied or promissory. There is no particular form of words necessary to constitute an express or a promissory warranty. In other words, a term need not be described as a warranty to constitute one. The flip side of it is that the mere use of the word "warranty" is not conclusive of the true status of a particular term of a policy. Warranties are therefore construed strictly by reliance on the ordinary rules of interpretation bearing in mind the actual intentions of the parties. That is, the ordinary meaning of what the parties intended by the words used. But, where there is any ambiguity, it inures to the benefit of the insured through the application of the contra preferentem rule. In simple terms, it will be construed against the insurer who prepared the document.

In determining whether the words used constitute "warranties", the court will look out for words by which the insured: (i)undertakes that some particular thing shall or shall not be done e.g. concerning the use of premises for a particular type of activity;(ii) undertakes that some condition shall be fulfilled, e.g. the maintenance of security at a premises; or (iii) affirms or negatives the existence of a particular state of facts, e.g. the non-existence of a pre-existing medical condition or a terminal disease in a life insurance policy.

After establishing the existence of a "warranty", its legal effect must be determined. Generally, a warranty or warranties under an insurance policy must be exactly and literally complied with by the insured. Any departure from the exact requirements even for reasons of necessity constitutes a breach. It is the most fundamental term of an insurance policy and its breach will discharge the insurer from liability under the policy automatically, unless the insurer makes an unequivocal representation that it will no longer rely on its legal right. The legal effect generally is that the policy can be avoided by the insurer and more importantly, it will not have any liability towards the insured. It follows that an insured may lose cover and may be unaware of this until a claim is made under the policy.

A case in point is Beauchamp v National Mutual Indemnity Ins. Co. (1937) 3 All ER 19. It involved a builder who had not previously undertaken any demolition work but took out a policy of insurance to cover demolition of a mill. He was asked in the proposal form "are there any explosives used?" and he answered "no". He agreed that his answer should form the basis of the contract between himself and the insurer. There was a condition in the policy that 'the insured shall take reasonable precautions to prevent accidents." The plaintiff proceeded to demolish the mill and in the process used explosives. Three persons were killed; the plaintiff made a claim under the policy but the insurance company repudiated liability. Finlay J held as follows:

"(i) the denial of the use of explosives amounted to a warranty that they would not be used; (ii) even if it amounted to a mere description of the risk to be insured, the cause or contributing cause of the accident was the use of explosive and (iii) there had been a change in the risk, for the company insured a non-explosive demolition."

In arriving at that decision, Finlay J made reference to a short passage by Grose J. in Denison v Modigliani (1794) 5 Term Rep. 580; 29 Digest 155, 1105 (the judgment was given by Lord Kenyon C.J.) Briefly, the facts which led to that case are that a vessel was insured as a merchant vessel; and she took on board a letter of marque. The question which arose was whether that avoided the insurance. At page 582 of the report Grose J. said:

the question turns on the intention of the parties to the contract; and therefore it is material to consider what was intended to be insured. The risk of insuring a mere trading ship, is very different from that carrying letters of marque: the premium is certainly higher in the latter than in the former case"

Finlay J continued at page 23 and applied the language of Grose J. to the facts of the case before him and said:

"It appears to me to be certain that the risk of insuring a demolition where there is no explosion going on is entirely different from the risk of insuring a demolition where there is explosion..."

In both cases, the insurance contract was avoided on the ground that there had been a breach of "warranty" and judgment entered in favour of the insurance company. However, the case of Bank of Nova Scotia v Hellenic Mutual War Risk Association (Bermuda) Ltd, The Good Luck. (1991) 3 All ER 1; (1991) 2 WLR 1279 sought to water down this thin line between "warranties" and "conditions precedent" in an insurance policy. This decision marked a departure from the strict legal effect of breach of warranties as discussed above. Briefly put, the facts of that case are that the insured took marine insurance policies over several vessels and there was a proscription that the vessels could not sail to areas which were considered as high risk zones.

In terms of the Marine Insurance Act of 1906, this prohibition was deemed an implied promissory warranty in the sense that the insured was to notify the insurer if any vessel went to any of the prohibited areas. The insured took a loan from the plaintiff bank and mortgaged the vessel; by extension, it assigned its benefits under the policy to the bank. Subsequently, a chatterer used the ship to trade in a prohibited area; the insured cursorily informed the insurer but the bank was not made aware. This was at a time when the bank was rescheduling the loan for the vessel owner; and without knowledge of this risk, it went ahead to advance more monies to the insured. Eventually, the ship was lost, the insurer sought to avoid the policy alleging breach of an implied promissory warranty; and the bank sued the insurer for damages to the tune of USD 2,679,120.00 representing the monies loaned to the insured at the time the vessel was in the prohibited zone. The court of first instance and the Court of Appeal gave judgment in favour of the insurer on the basis that breach of that promissory warranty automatically discharged the insurer from liability right from the date of the breach. The bank appealed to the House of Lords and their Lordships held among other things as follows (page 2):

"in policies of marine insurance, it was settled that any statement of a fact bearing on the risk introduced into the policy was to be construed as a warranty and that compliance with that warranty was a condition precedent to the attaching of the risk. Accordingly, if a promissory warranty was not complied with the insurer was discharged from liability as from the date of breach of the warranty, because fulfillment of the warranty was a condition precedent to the liability or further liability of the insurer, which was a reflection of the fact that the rationale of warranties in insurance law was that the insurer only accepted the risk provided that the warranty was fulfilled..."

Continuing, the House of Lords held that even though breach of a promissory warranty discharged the insurer automatically from liability, " such a discharge did not have the effect of avoiding the contract ab initio nor did it have the effect of bringing the contract to an end because it was possible that certain obligations of the insured under the insurance contract, like the continuing liability to pay premium would survive the discharge. In the "Good Luck" case being discussed, even though their Lordships took the view that the vessel lost the insurance cover whilst in the prohibited zone, the insurer was required to inform the bank about that material fact, but it did not. That notwithstanding, their Lordships did not treat the entire contract as void ab initio as previously decided in other cases. Accordingly, the appeal by the bank was allowed.

In his closing submissions on the effect of warranties, counsel for the defendant herein also cited and relied on two Canadian cases, namely: (i) New Forty Four Mines Ltd v St. Paul Fire and Marine

Insurance Co. (1984( 34 Alta. L.R. (2d) 28 (Q.B.); (ii) Bell v Tinmouth 13 (1987), 39 D.L.R. (4th ) 595 (B.C.S.C.). The thinking of the Canadian Courts is no different from the decisions given by the English Courts prior to "The Good Luck". In both cases, the courts interpreted the "warranties" strictly as I have discussed above and the insurers were relieved of liability.

Counsel for the defendant herein then came to the conclusion that from the totality of the evidence, the plaintiff read only the policy document without reading the attachment which formed part of it. Counsel is right in so arguing because per exhibit 2, both the policy document and its attachments which had been incorporated into the main policy were given to the plaintiff. The question which remains unanswered by the plaintiff is whether its officer(s) read exhibit 2 in its entirety? If they did, there was no way the "watchman warranty" would have escaped their attention. And, if they did not, who is to be blamed for their failure to do so? That takes my mind back to the concern I raised at the beginning of this judgment relative to endorsements to insurance policies and the obvious fact that people do not pay any attention to them! Warranties can indeed be a "pitfall for the unwary"

It has become obvious from the foregoing analysis that the legal effect of a breach of "warranty" and breach of a "condition precedent to liability" is virtually the same, subsequent to "The Good Luck". In both situations, the contract cannot be avoided but the insurer is discharged from all liabilities.

On the face of the "watchman warranty" in the case before me, it will appear that the parties intended it to be a condition precedent to the validity of the burglary insurance policy and not a "warranty" in its strict sense. But, upon a closer look, it imposes a condition relative to the risk and it is clear that the liability of the insurer under the policy is dependent on the performance of that condition. After a careful evaluation , i will construe the "watchman warranty" in issue to be a condition precedent to liability, the breach of which reliefs the insurer from liability for a particular claim from the date of the breach. It is not a "warranty" properly so called. This finding is further supported by the plaintiffs own exhibit "J" in which the defendant repudiated the claim because of the breach complained of. In other words, the defendant did not avoid the policy, and could not have legally done so going by the plain meaning of the words used as well as the actual intention of the parties therein.

It is an undeniable fact that the burglary occurred outside business hours, i.e. about midnight and the presence of a night watchman or caretaker at the premises was mandatory under the policy and its endorsement. Also, the fact that no watchman was at post at the time the burglary occurred is not in dispute. The excuse that the night watchman had a health challenge and left his post without notice will not suffice. The absence of a caretaker/watchman substantially increases the risk exposure which the parties intended to avoid. It was the duty of the insured plaintiff to develop processes by which such emergencies could be communicated to them by their essential employees or workmen like the night watchman so as to preserve their benefits under the insurance policy.

The insured herein did not breach all the general terms and conditions in the policy; but it breached a condition precedent to liability contained in the endorsement to the policy document. As such, the repudiation of the claim by the defendant was within its legal rights. Tried as the plaintiff company did, it could not introduce any cogent evidence, be it oral or documentary to discredit the defendant's testimony. Perhaps, if the plaintiff had read the entire policy document and the endorsements closely, this unfortunate hardship could have been avoided. It is indeed disheartening to pay an insurance premium but be denied the benefits there under for technical reasons as in this case. But then, the defendant is entitled to rely on its legal right.

By reason of the breach of the "watchman warranty" contained in the endorsement to the insurance policy document given to the plaintiff company which I have construed to be a "condition precedent to liability", the defendant insurer is relieved from any liability arising from the burglary which occurred at about midnight, on or about 29/12/2013 and 30/12/2013. Accordingly, the plaintiff's action fails.

Before I end my judgment, I wish to once again comment on the legal effect of "warranties" under the current UK Insurance Act. The Insurance Bill of 2014 which received Royal Assent on 12/02/2015 to become the Insurance Act, 2015 seeks to update the statutory framework in line with best practices in the Modern UK Insurance Market. It is to be noted that the majority of its provisions will enter into force on 12/08/2016. This is to allow the market time to adjust its practices. One of the six major changes that the 2015 Act has introduced is in respect of warranties in an insurance policy. Specifically, sections 9 to 11 of the Act seeks to depart from the existing position that breach of a warranty in an insurance contract entitles the insurer to avoid all claims under the policy from the date of the breach. Now, the position is that breach of any warranty by an insured merely suspends the insurer's liability until the breach is remedied. Therefore, the insurer will have no liability for any claim arising during the period the policy is suspended. But, as soon as the breach has been remedied, the policy resumes in full force. Indeed, this 2015 Act seems to take into consideration the decision in "THE GOOD LUCK" where the House of Lords affirmed the position of the court of first instance that breach of a warranty in a marine policy automatically discharged the insurer from liability, but the insurer cannot avoid the entire policy.

It is recommended that our Insurance Companies be guided by these sound insurance principles which have found their way into the UK Insurance Act, 2015 so as to make insurance attractive to prospective customers. That way, insurers will find it difficult to avoid policies entirely when any warranty is breached.

There is no order as to cost as the same has been waived.