IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
ACCRA - A.D 2018
N. N. EST METALS COMPANY LTD - (Plaintiff)
HOLLARD INSURANCE CO. LTD - (Defendant)
DATE: 26 TH NOVEMBER, 2018
SUIT NO: CM/INS/0488/2016
JUDGES: HIS LORDSHIP, ERIC KYEI BAFFOUR, ESQ., JUSTICE OF THE HIGH COURT
Plaintiff claim against the Defendant in the writ of summons the following:
i. An order directed at the Defendant to pay to the Plaintiff the revised total sum insured for the policy No C/1001/1007/009999/11/25 being the total sum of Gh¢341.500.
ii. Special damages for the cost incurred by the Plaintiff on account of the breach of the said policy by the Defendant or alternatively general damages for breach of the policy.
iii. Interest on the said amounts in (i) and (ii) above from the 4th day of June, 2015 till date of final payment
iv. Costs of this legal action.
Plaintiff situate its claim based on an insurance policy for an all risk cover where it notes that in consideration of a premium of Gh¢882.22 paid from November 2014 till the 6th of November, 2015, insured with the Defendant all its items that might be damaged from accidental destruction. To Plaintiff the items insured and specified in the policy was revised to an amount of GH¢341,500 and so was the premium payable. That due to the notorious flooding of Accra on the 3rd of June, 2015, its properties were damaged in the said flooding and duly notified Defendant of the occurrence of the event which entitled it to claim indemnity whereupon Defendant dispatched its officers to the premises of Plaintiff to assess the extent of damage.
Defendant according to Plaintiff was further provided with documents on the damaged property but has not shown good faith by refusing to pay Plaintiff the insured value of the property damaged. Plaintiff avers that Defendant demanded for more documents when its lawyers wrote to Defendant and this to Plaintiff was a delay tactics adopted by Defendant from settling its debt. Plaintiff then proceeded to particularize its loss in terms of machinery that needed replacement and whose non replacement caused GH¢12,200 daily loss, payment of GH¢320,000 to its workers for no work done as the machines were not replaced and the payment of GH¢39,250 for replacement of furniture. And the issuance of a cheque with the value of GH¢27,000 was far below the value of what it expected.
And having breached the terms of the insurance contract seeks the reliefs stated on the endorsement on the writ. Defendant has denied being in breach of the terms of the insurance policy as the policy covered only specified items listed in the schedule to the policy. And to Defendant not all the insured property of the Plaintiff was damaged or affected by the flood as the machines that were damaged and covered by the insurance policy were a spectro machine and office furniture. To Defendant the offer of GH¢27,500 was the amount due Defendant as a result of the damage but same was rejected and contend that it is not liable for the claim of the Plaintiff. With the pre-trial conference unable to amicably resolve the matter the following five issues were agreed as the issues for trial:
1. Whether or not the assets all risks policy the Plaintiff with the Defendant covered all items that may be damaged as a result of accidental destruction.
2. Whether or not all the items alleged to have sustained rain damage on 3rd June, 2015 had been insured by the Defendant under the policy.
3. Whether or not the Defendant is in breach of its obligations to the Plaintiff per the insurance policy … when it failed to make the payment upon demand by the Plaintiff.
4. Whether or not the Plaintiff is entitled to payment from the Defendant under the policy the Plaintiff maintained with it above the GH¢27,000.00 [sic] already offered to it
5. Whether or not Plaintiff is entitled to its reliefs per the writ of summons.
Plaintiff testified through its representative, Felix Nyarko and tendered among others the insurance policy as Ex ‘A’ series, being Exhibits A, A1 and A2. A claim form of Defendant as Ex ‘B’. A series of pro forma invoices were admitted as Ex ‘C’ series. Email exchanges after the occurrence of the peril exchanged between Plaintiff and Defendant as Ex ‘D’ series. A hand written list of staff and stated payments made to them during the time Plaintiff claim they did not work due to the non-replacement of the damaged machines as Ex ‘E’ series. Defendant on the other hand testified through its Head of Claim, Iris Logan and also tendered the following documents into evidence. First was a summary of invoices admitted as Ex ‘1’. Then a letter to the Insurance brokers of Plaintiff of the offer of GH¢27,534.32 to Plaintiff as Ex 2’ series.
What is at the heart of this claim is a determination as to whether in an indemnity insurance cover, such as this one the occurrence of the peril automatically entitles the claimant to recover the full value of the insured amount. Plaintiff seeks to recover an amount of GH¢341.500 which is in effect the revised total sum insured based on an annual revised premium of GH¢882.22. I find it necessary to set out the law before delving into the evidence as the pleadings of the Plaintiff as well as the issues set down for trial makes some assumptions, which l will later point out, as misconceived under an indemnity insurance policy. By the principle of indemnity, an insurance contract is entered into on the part of the insured for the purpose of protection against unpredicted financial losses arising due to future uncertainties. Insurance contract entered into by the insured is not to make profit. In an insurance contract, just like the principle animating the assessment of damages that is ‘restitituo in integrum’, any compensation paid must be in proportion to the incurred losses.
The amount of compensation is limited to the amount assured or the actual losses, whichever is less. The compensation must not be less or more than the actual damage. Compensation is not paid if the specified loss does not occur during a specific time period. Thus, insurance is only for giving protection against losses and not for making profit. So that any action for breach of contract against an insurer is one that arises only upon the occurrence of the loss. Lord Goff in the case of what has come to be known as THE FANTI AND THE PADRE ISLAND  2 A.C 53 aptly captures this when he noted that in indemnity contracts of insurance it is nothing but a ‘promise to hold the indemnified person harmless against a specified loss or expense’. And the measure of the loss recoverable is limited only to the damage caused but not necessarily the upper ceiling of the value insured. See RE WILSON & SCOTTISH INSURANCE CORP. LTD  2 CH. 28.
Usually the basis for indemnity is the cost of repair, if the item is salvaged, less any amount by which the insured is better off than before the loss, which is called in the industry the principle of ‘betterment’. There are other insurance principles that may come up for discussion and analysis in the course of the judgment but for now this set the stage for evaluation of the evidence adduced before the court. First Plaintiff claim an order for the payment to it of the total amount insured of GH¢341,500 to him. What evidence did Plaintiff provide that it was entitled to the upper limit of the insured value in an indemnity contract such as this one? The items insured were all specifically listed in Ex ‘A1’ and until there is proof that all those items were damaged in the flood, which burden of proving same lies on Plaintiff, the claim of an entitlement to Gh¢341,500 will be totally wrong. The fact of a claim having been made does not automatically mean that the insurer must issue a cheque for payment. The insurer will have to audit the claim and verify same and apply the necessary depreciation principle to ensure that the insured is not made worse or better off.
Notwithstanding initial difficulty in communication as to email bouncing, the Defendant by Ex ‘D1’ on March, 8, 2016 asked for more and better particulars by demanding a report of the findings of the experts engaged by Plaintiff to ascertain the level of damage on some of the machines and also demanded the year of purchase and other details. On the 11th of March, 2016, Plaintiff wrote back to ask what Defendant needed exactly. There were subsequent mails where Defendant in April, 2016 still insisted that not all the necessary information had been provided them. Defendant also remonstrated about the stand of Plaintiff not to allow access into their premises by the staff of Defendant to do a follow up visit. Besides, Defendant demanded for the machines and furniture, if they needed replacement, which it stated then becomes their property. The responses from plaintiff at some point was uncharitable that the furniture had been thrown away.
The demand for the items that Plaintiff claim had to be replaced is purely in line with indemnity insurance, flowing from the principle of subrogation. When the insured is compensated for the losses due to damage to the insured property the ownership right of such property shifts to the insurer. This principle is applicable only when the damaged property has any value after the event causing the damage. As to whether there was any value in the property was for the Defendant to have been afforded the opportunity as it demanded to see and determine if it needed them but not for Plaintiff to just claim that they were valueless and had been disposed off as after all upon being paid the value of the items the insured will no longer be the owner of the property.
My answer to the first issue from the above is yes that the all risk insurance covers items that may be damaged during the occurrence of the risk. Were all the items alleged to have been damaged been insured with Defendant? The items alleged to have been damaged had been listed in paragraph 8 of the witness statement of Felix Nyarko whiles the specific item insured can be found in Ex ‘A1’. It is instructive to note that upon the occurrence of the flood Plaintiff itself furnished Ex ‘1’ to Defendant as the items damaged by the flood and the items listed as damaged then were only three being a scaling machine, spectro analysing machine and office furniture. And it was not until during the pre-trial conference that more items were added to the list such as cost of painting as reflected in the following cross examination of the Defendant’s representative:
“Q: By your own Ex 3A the pro forma invoice the Plaintiff did not delay in giving it to you. It was received on 2nd August, 2015.
A: I received those exhibits through an email in April, 2016. Even the date on the pro forma invoice is
September and not August, when the loss occurred on 3rd June, 2015… I indicated that the invoice for the painting was given to us during the pre-trial stage, sometime in 2017. The invoice date is 2015, so if the invoice date is something to go by why was it given to us in 2017”.
I need not say more with the apt answer provided by the witness and indeed the answer provided is borne out by the evidence on record. One more point on this, Plaintiff again claim that Defendant has failed to admit liability or pay for some of the items such as a Samson Shear bailer machine. This came to light when Iris Logan was cross examined on the 26th of October, 2018 in the following:
Q: Then also looking at the list in Ex ‘A1’ there was a Samson shear bailer machine also insured at an amount of GH¢123,750.
Q: And which Defendant failed to pay for although that one was also damaged
A: That is incorrect. It was never included in any list submitted by the insured that the Samson shear bailer machine was damaged. It was never part of the list of damaged items submitted to us. We did not formulate it, we did not determine what was damaged… the insured had the duty of furnishing us with the list of damaged items and the Samson shear bailer machine was not included and never came up during our discussion”.
In fact the more Iris Logan was questioned the more she exposed the hollowness of the claim of the Plaintiff. Plaintiff has laboured under the impression and which formed the basis of its claim that once a risk had occurred it was entitled to be paid the full amount of the items insured whether it had provided evidence as to whether the item insured was damaged or not. Even if an item had been damaged, the value is not determined at the time of purchase but the cost of what it will take to restore or repair it and if not the value at the time of the damage taking into consideration the necessary depreciation. It is therefore not correct for Miss Amihere to claim in her written address that the insured had applied an arbitrary self-imposed depreciation rate and that if the insured knew it will not pay all sums assured why did Defendant use a figure of Gh¢341,500?
It is the wrong appreciation of the indemnity insurance that made Plaintiff to think that an item which was insured and had not even been brought to the attention of Defendant as having been damaged was entitled to be replaced. Little wonder therefore that Plaintiff has virtually listed all the insured items including a safe as having been damaged without any shred of evidence of damage. Even Ex ‘C’ series produced is full of pro forma invoice for which Defendant had cause to demand actual invoices which most of them have not been produced by Plaintiff. Without intending to spill much more ink, I wish to comment on the claim of special damage in respect of air ticket and wages for staff as alleged by Plaintiff and I will rest this judgment. The claim of air ticket has featured right from the first invoice submitted by Plaintiff in Ex ‘1’.
The details are seen in Ex ‘C6’ and ‘C7’. It is curious to note that the flood took place on 3rd of June, 2015 but one of the tickets for Kais Rashwani shows that the date of booking was 2nd of June, 2015. Matilda Idun- Donkor exposed Plaintiff representative, Felix Nyarko during cross examination in the following:
“Q: Take a look at Ex ‘C7’ the second page titled ‘check my trip’. This is in respect of a booking dated 2nd June, 2015
Q: So you anticipated that the flood would cause damage of your property and you booked in advance.
A: As at 2nd June, we did not know there would be flood on the 3rd of June”.
Clearly if the Plaintiff was not a magician to have discerned to know that there will be flood on the 3rd of June, 2015 why would Plaintiff seek to recover the cost of air ticket purchased on a date before the
3rd of June, 2015 from Defendant? This shows that the said beneficiaries were on their way to Ghana for an entirely different purpose and the fact that they had to assess the machines after the flood would not make Defendant liable for the cost of their air tickets. And again it was not up to Plaintiff to decide to call in any expert from any part of the globe to work on the machines and seek to recover same from Defendant when Plaintiff had not discussed with Defendant as an insurer if it was going to bear the cost as an insurer. I find the claim of the recovery of any air ticket purchased on the above analysis to be frivolous and flippant and dismiss same.
The claim as contained in Ex ‘E’ being monies paid for workers not having worked cannot also be granted by the court. Defendant had requested for further and better particulars and Plaintiff had behaved as if just by notifying the Defendant its duty had been discharged with regard to the insurance contract and Defendant was ip so facto under a duty to issue a cheque for whatever claim Plaintiff was making. I find no inordinate delay on the part of Defendant and any payment made by Plaintiff to its workers is at its own cost. The figures proposed by Defendant as contained in paragraphs 16 and 17 by Defendant is charitable to Plaintiff and find same to be reasonable with the adjustment of the depreciation to 30% instead of 40%, the payment of the five computers that were purchased instead of ten where there is no evidence that it was ten that were replaced, payment of 60% cost of one air conditioner and bearing some of the cost of painting.
I find the analysis of Defendant to be perfectly in line with indemnity policy on insurance and there is no just cause for me to adjust the figures higher or lower than what Defendant has done. In the end I rule that Plaintiff is entitled to a compensation of GH¢42,529.03 only. Save for this amount awarded in favour of Plaintiff, I dismiss the entire claim of Plaintiff as unproved, porous, unsubstantiated and not holding water. Taking into consideration the guiding principles stated under Order 74 of the High Court (Civil Procedure) Rules, C. I 47 on the award cost, I exercise my discretion not to award cost in this action. Each party shall bear its own cost.