IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
ACCRA - A.D 2018
NANA NKANSAH BOADU AYEBOAFO - (Plaintiff)
STATE INSURANCE COMPANY LTD - (Defendant)
DATE: 12 TH JULY 2018
SUIT NO: CM/TINS/00009/16
JUDGES: JUSTICE JENNIFER A. DODOO (MRS) JUSTICE OF THE HIGH COURT
RALPH POKU-ADUSEI FOR PLAINTIFF
KWAMI ADORBOR FOR DEFENDANT
The Plaintiff claimed against the Defendant the following reliefs:
1. The recovery of the sum of GH¢850,000.00 being the sum insured under an insurance policy contract number P/101/20/2002/15 duly entered into between the Plaintiff and the Defendant sometime in February 2012.
2. Interest on the said sum at the current commercial rate from October 2013 to the date of final payment.
3. Damages for breach of contract.
4. Costs, inclusive of Solicitor’s fees assessed at 15% of the sum insured.
The Plaintiff in his Statement of Claim contended that in February 2012, he had insured his 6 storey building situate, lying and being at Achimota with the Defendant. The sum insured was GH¢850,000.00 with a premium of GH¢4,355.00. According to the Plaintiff, the Defendant had issued him with policy number P/101/20/2002.2012/15 in respect of the said building. It was the Plaintiff’s case that sometime on 7th November 2012, the risk insured occurred when the property insured collapsed. However, when he made a claim on the Defendant to make good on the insurance claim, the Defendant in turn demanded the tenancy agreement on the building, a valuation report and a copy of the Government report on the incident.
Out of the 3 documents requested, he could only provide the tenancy agreement. Without the rest of the documents, the Defendant refused to settle the claim. The Defendant resisted the claim stating that Plaintiff filled in a proposal form in respect of the six storey building but did not pay any premium. While admitting that the sum insured was GH¢850,000.00 with a premium of GH¢4,355.00, the Defendant averred that the said premium was not paid until after the collapse of the building on 7th November 2012. It was its case that its liability to pay up the claim would only result after the premium had been paid in full before the occurrence of the risk. It contended that the Plaintiff only rushed to pay the premium after the building had already collapsed. The Defendant contended further that its officers overlooked the non-payment of premium and offered to settle the claim subject to the condition that the Plaintiff provided proof of the value of the collapsed building either by producing a valuation report or bills of quantities. The Plaintiff had till date failed to do so.
The issues set down for trial were:
1. Whether or not the Defendant issued an insurance policy in favour of the Plaintiff based on an insured sum and an assessed premium?
2. Whether or not the Defendant had a policy in which premiums were paid by installments?
3. Whether or not the Plaintiff paid up the agreed premium by installments and timeously?
4. Whether or not the Defendant cashed the cheques delivered to it by the Plaintiff in payment of the premiums in good time?
5. Whether or not premiums were received after the collapse of the building on 7th November, 2012?
6. Whether or not the Government Report on the Melcom disaster is a condition precedent and/or requirement for the payment of the insured sum by the Defendant?
7. Whether or not it is reasonable for the Defendant to request a valuation report or bill of quantities on a totally collapsed building?
8. Whether or not it is reasonably possible to request for documents which were destroyed during the collapse of the building?
9. Whether or not the Defendant’s liability under the policy would arise only upon payment of the premium before the occurrence of the loss?
10. Whether or not the Plaintiff’s claim was subject to proof by bills of quantities or valuation report?
11. Any other issues arising from the pleadings.
After the Plaintiff had closed its case, the Defendant made a further amendment to its defence in which it raised 2 other defences. It submitted that the Plaintiff constructed the building illegally without the requisite building permit and that the insurance of the illegal structure was unenforceable as the Plaintiff had failed to disclose that he had built illegally and without the requisite building permit. Thereafter, it averred that the Plaintiff had brought the action after the agreed 12 months limitation under the policy. In his Reply, the Plaintiff denied the contention that his building had been constructed illegally. He stated that the Defendant had inspected the insured building and accepted all the requisite documents before it issued the insurance policy. He also averred that that the Defendant had received his premiums long before the building collapsed. It was his case that he was not caught by limitation as he had commenced the application for the claim in January 2013 immediately after the collapse of the building.
The Court would first tackle the issue of:
Whether or not the Defendant issued an insurance policy in favour of the Plaintiff based on an insured sum and an assessed premium?
In paragraphs 3, 4 and 5 of his Statement of Claim the Plaintiff deposed as follows:
3) Sometime in February 2012, the Plaintiff insured with the Defendant, his six storey building situate, lying and being at Achimota opposite the Neoplan Manufacturing Plant.
4) The sum insured was GH¢850,000.00 with a premium of GH¢4,355.00
5) Upon the successful completion of the contract of insurance, the Defendant issued policy number P/101/20/2002/2012/15.
In paragraph 3 of his witness statement, the Plaintiff averred:
The upshot of my case is that, sometime in February 2012, I insured with the Defendant, my six storey building situate, lying and being at Achimota opposite the Neoplan Manufacturing Plant. The said building used to house Melcom superstores, a retail giant in the country. The sum insured was GH¢850,000.00 with a premium of GH¢4,335.00. In pursuance of the contract of insurance, the Defendant issued me with the Insurance Policy with No. P/101/20/2002/2012/15.
The Defendant in its Further Amended Statement of Defence stated in paragraphs 3 and 4:
3) The Defendant admits that in February 2012, the Plaintiff filled in a proposal form covering the said six storey building but did not pay any premium. The proposal form filled was made the basis of the contract.
4) The Defendant admits that the sum insured was GH¢850,000.00 with a premium of GH¢4,355.00 but says further that the said premium was not paid until after the collapse of the building on 7th November 2012.
The Defendant in paragraphs 4 and 5 of its representative’s witness statement also made the following disclosures:
4) It came to my notice that sometime in February 2012 the Plaintiff applied to the Defendant for industrial fire policy (The “Policy”) to cover his six storey building situate at Achimota. The Defendant insured the building for GH¢850,000.00 based on the Plaintiff’s assessment. Collapse of the building was endorsed on the policy.
5) In the event the Defendant issued the Plaintiff with Policy No. P/101/20/2002/2012/15; the policy constituted insurance contract between the Plaintiff and Defendant. The contract of insurance was for one year and took effect from 24th February 2012 and was so stated in the proposal form.
It is not in dispute that the Plaintiff took out an Industrial Fire Policy with the Defendant. There was no controversy about this fact warranting same to be set down as an issue for trial. In Asante v. Bogyabi and Others (1966) GLR 232 @240 the court held:
Where admissions relevant to matters in issue between parties to a case are made by one side, supporting the other, as appears to be so in the instant case on appeal, then it seems to me right to say that that side in whose favour the admissions are made, is entitled to succeed and not the other, unless there is good reason apparent on the record for holding the contrary view.
What has been admitted needs no other evidence and is answered in the affirmative and in Plaintiff’s favour.
Issues 2 and 3 deal with premiums and are:
Whether or not the Defendant had a policy in which premiums were paid by installments?
Whether or not the Plaintiff paid up the agreed premium by installments and timeously?
In the book Understanding Insurance Law, 5th edition by Robert H. Jerry II and Douglas R.
Richmond, at p. 555, the learned authors stated:
An insurance premium is what the insured pays the insurer to assume the risk. The premium is the consideration the insured provides in return for the insurers promise to indemnify the insured for a loss or to pay proceeds upon the occurrence of some specified event. Premiums are typically paid periodically; the frequency of payment varies depending upon the agreement of the insurer and insured at the time the policy is issued.
It was the Plaintiff’s case that he had a longstanding arrangement over the years with the Defendant in which he paid the premiums on all his policies in installments. In the instant policy, he had paid the premiums in 3 installments by issuing 3 separate post-dated cheques. Exhibits 4, 5 and 6 attached to the Defendant’s witness statement show the Receipts View for cheques dated 20th October 2012, 20th November 2012 and 20th December 2012. The date on these receipts view was 31st May 2012. The following information was elicited from the Plaintiff in cross-examination on 26th July 2017:
Q: You presented cheques dated 20th October 2012, 20th November 2012 and 20th December 2012. Not so?
A: It is true. I presented cheques to pay the premium, but as at now I cannot remember the dates on these cheques and I pay premium to Defendant Company by issuing cheques and we would come to a consensus before the cheque would be issued. I have been working with them and every time I pay them the cheque.
Q: Your Exhibit A says that the Defendant would only be liable to you if the event you insured happened before you paid the premium. Take a look at paragraph 2 of Exhibit A.
A: My Lord, as I have already indicated, I have worked for Defendant Company for a long time and I always pay them by issuing cheques. And it was at no point in time that the Defendant Company told me unless the cheque is cleared before they would be liable to me in the event of the building collapsing. And as I have been working with them, every cheque I have issued to them has been honoured.
Q: Exhibit A, that you are relying on, paragraph 2 thereof states that the Defendant would be liable to you if you pay the premium before the risk, in this case the collapse occurred. Is that not so?
A: My Lord that is not the case.
Q: I suggest to you that paragraph 2 of the policy which you so rely upon is categorical that the Defendant would be liable to you only if you have paid the premium before the risk or in this case before the collapse.
A: My Lord, this is not correct. The reason why I am saying it is not correct is that I have already indicated to the court that I have been working with the Defendant company for a very long time and I always pay them with cheques and we came to an agreement before the policy was issued to me. And as we sit here all the cheques that I issued to Defendant’s company, my bankers have made me aware that those cheques have been honoured a long time ago.
Q: This agreement you are referring to, can you make it available to the court?
A: My Lord it was a verbal agreement. I sat down with the Defendant Company representative and we came to an agreement before cheques were issued and it was based on this agreement that the Defendant Company gave me the insurance policy.
On the other hand, the Defendant’s version of events in paragraph 6 of its witness statement was as follows:
By the terms of the policy, the Plaintiff agreed to pay premium in the sum of GH¢4,355.00 by the 24th February 2012.
In cross-examination on 9th October 2017, this was elicited from the Defendant’s representative:
Q: In the Defendant’s set up, who is responsible for the issuance of the insurance policy?
A: The Underwriting Department.
Q: Are you part of the Underwriting Department?
A: Yes and No with explanation. “No” because I handle claims and “Yes” because I get to know of the underwriting details when there is a claim.
Q: So do you want this court to believe that you are part of the Underwriting Department?
A: Underwriting as a department, no.
Q: So can I say that you were not involved at the issuing stages of the Plaintiff’s policy?
A: That is correct.
Q: And it follows does it not, that any discussions, agreements, negotiations, prior to the issuance of the Plaintiff’s policy, you were not part of it?
A: Yes. My Lord.
Q: So the discussions relating to payments under the premium, you were also not part of it. Not so?
A: Even though I may not be part of the discussion, whatever agreements that are reached are put on file, so I get to know when there is a claim.
Q: So until there is a claim you will not know anything.
A: No. My Lord.
So under what circumstances did the Defendant issue the policy to the Plaintiff without the premium being paid in full? What really transpired? According to Cheshire & Fifoot’s, Law of Contract 11th edition at p. 27, an agreement is said to be not a mental state, but an act and as an act is a matter of inference from conduct. The parties are to be judged by not what is in their minds but what they have written, said or done. For as Chief Justice Brian proclaimed “the devil himself knows not the intent of a man.” The evidence shows that the policy had been issued to the Plaintiff. Yet, according to the Defendant, he had not paid the premium in full. From the evidence, he had paid his premium in 3 installments by issuing 3 separate post-dated cheques. These 3 post-dated cheques were accepted by the Defendant which proceeded to issue receipts for these payments without insisting on payment in full. The Plaintiff’s evidence that the parties had come to an agreement to the payment of premium by installments has been further corroborated by the Defendant’s conduct of accepting 3 post-dated cheques after issuing the Policy i.e. Exhibit A (which is the same document tendered as Exhibit 2). Section 7(1) of the Evidence Act, 1975 NRCD 323 has it thus:
“Corroboration consists of evidence from which a reasonable inference can be drawn which confirms in a material particular the evidence to be corroborated and connects the relevant person with the crime, claim or defence.”
In the case of Nyame v. Tarzan Transport (1973) 1 GLR 8 CA, the court held:
“There is a distinction between pure conjecture and reasonable inference. A conjecture may be plausible but it is of no legal value for its essence is that it is a mere guess. An inference in the legal sense on the other hand, is a deduction from the evidence and if it is a reasonable deduction, it may have the validity of legal proof. The attribution is always a matter of inference.”
It could be inferred from the Defendant’s conduct in accepting the post-dated cheques that there must have been a prior agreement between the parties that though the written policy did not expressly state that payment of premium was to be made in installments, this mode of payment by cheque was acceptable. In the case of McCutcheon v. David MacBrayne Ltd (1964) 1 WLR 125 the court stated:
“The judicial task is not to discover the actual intentions of each party it was to decide what each was reasonably entitled to conclude from the attitude of the other.”
Furthermore, Section 26 of the Evidence Act, 1975, NRCD 323 states:
Except as otherwise provided by law, including a rule of equity, when a party has by his own statement, act or omission intentionally and deliberately caused or permitted another to believe a thing to be true and to act upon such belief, the truth of that thing shall be conclusively presumed against that or his successors in interest in any proceedings between that party or his successors in interest and such relying person or his successors in interest.
See also Mr. Maxwell Opoku Agyemang’s book, Law of Evidence in Ghana (2nd Edition) at p. 252 where the learned author illustrated estoppel by conduct by reference to the South African case of Garlic v. Phillips (1949) SA 121. In that case the Plaintiff applied for an ejection order against the Defendant from certain premises on the ground that the Defendant had failed to pay the rent on the due date in advance on the first day of each month as agreed in the lease. The Defendant contended that in the past he had never been required to pay rent on the due date and that all late payments were received without protest. The court gave judgment for the Defendant. The Plaintiff appealed. On appeal the appellate court confirmed the trial court’s decision stating:
So long as the appellant’s attitude remained one of indifference towards the late payment of the rent, there was of course no necessity to speak. But when the Appellant’s state of mind changed from one of indifference to take ado of late payment of rent in order to obtain a judgment, then I think a duty arose to make that changed attitude known to the Respondent. A reasonable man in Appellant’s position would have known that a long continued receipt by him of the late payment of rent without protest such as occurred in this case will lead the Respondent into the belief that he had no objection to late payment and would not without notice do so in the future. A duty therefore rested on the Appellant, if he intended to treat late payment of rent in the future as breaches of contract and to take ado of them to inform the Respondent of that change of mind.
The written insurance policy did not expressly provide for installmental payment of premiums. However, after its conduct in accepting the post-dated cheques issued by the Plaintiff in consideration for the insurance policy, the Defendant cannot now be heard to be resiling from its position. If it had no agreement with the Plaintiff to accept payment of the premium in installments, then it should never have taken the post-dated cheques from him and proceeded to debit his account. It should also never have issued the policy to the Plaintiff in the first place. By the parties’ conduct, there was a tacit agreement to pay and to accept the premium payments in installments and although the policy was issued to cover February 2012 to February 2013, the premiums were paid on 31st May 2012 in 3 post-dated cheques dated 20th October, 20th November and 20th December 2012.
Section 72 of the Bills of Exchange Act 1961, Act 55 defines a cheque as:
“…. a bill of exchange drawn on a banker payable on demand.”
A bill of exchange is itself defined in Section 1(1) of Act 55 as:
“…. an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum of money to or to the order of a specified person or to bearer.”
In Section 11 of Act 55, a bill is not invalid because it is ante-dated or post-dated or that it bears date on a Sunday.
As a result, the Defendant’s liability under the policy would arise only upon payment of the premium before the occurrence of the loss and as these cheques were paid on 31st May 2012, they were in the Defendant’s possession before the risk occurred on 7th November 2012. The Defendant would be deemed to have received payment in full when it proceeded to debit the Plaintiff’s account and to issue receipts. The National Insurance Commission itself had occasion to give a directive stating that with effect from 1st April 2014 there should be strict observance of the “No Premium, No Cover” Regime. Significantly, this directive post-dated the incident involving the Plaintiff’s building. The Market Conduct Rules on Insurance Premium Collection states in its preamble as follows:
As a result of the growing challenges arising from huge levels of outstanding premiums reported in the financial statements of Insurance Companies, the National Insurance Commission has carried out a detailed review of the subject. Our findings show that:
a. Insurance Companies have continued to report huge amounts of outstanding premiums while at the same time making equally large amounts of provision for bad debts without significant subsequent recoveries.
b. There are wide disparities between what insurers claim are due from (debtors), policyholders and brokers and what debtors agree are actually due to insurers.
c. There are several cases of significant amount of premiums that had been paid over to insurers but due to lack of appropriate record keeping these could not be matched against relevant debts.
d. The huge outstanding premiums have had a significant knock on effect on Reinsurers.
It is stated at Clause 3:
All insurance covers shall now be provided on a strict “No Premium, No Cover” basis. Consequently, only covers for which the premium has been received, directly by the Insurance Company shall be recognizable as income in the books of the Insurer. Any insurer who grants cover without having received premium, shall be liable to a penalty of 10 times the amount of premium involved.
Before 1st April 2014, it seemed policies were issued before premiums were paid. It would appear that in this particular case, the policy was issued in consideration for the post-dated cheques. In NTHC v. Yaa Antwi (2009) SCGLR 117, Date-Bah JSC defined a valid offer and acceptance in the following words:
Basically, an offer is an indication by words or by conduct by an offeror that he or she is prepared to be bound by a contract in the terms expressed in the offer, if the offeree communicates to the offeror his or her acceptance of these terms. Accordingly, the offer has to be definite and final and must not leave significant terms open for negotiation. By significant, we here mean terms that are essential to the bargain contemplated. It is important to emphasize the proposition that the mere acceptance of an offer is sufficient to turn the offer into a contract, if there is consideration for it, together with an intention to create legal relations.
The preamble to Exhibit A states:
THIS POLICY OF INSURANCE WITNESSETH that in consideration of the Insured designated in the Schedule within having paid to the SIC Insurance Company (hereinafter called The Company) the premium mentioned in the Schedule for insuring against loss or damage by fire and or lightning the property described in the Schedule.
In Roberts v. Security Company Ltd (1896) 1 QB 111 the Court held: @ p. 114
…there is an existing policy and all we have to do is to construe it. It is a contract to insure the Plaintiff against loss of the property insured by burglary or housebreaking from December 14, 1895 to January 1 1897, and it recites that the assured has paid the premium for that insurance. It was said that that recital was incorrect and that the premium so stated to have been paid never was in fact paid. I do not think that the Defendants are for the present purpose at liberty to shew that in contradiction of the terms of their own deed. They have treated the premium as paid, and if it has not been paid, I think they have thereby waived the previous payment as a condition of the existence of an insurance. …
Similarly, in the instant case, a valid contract of insurance had been made between the parties when the Defendant issued the insurance policy. It is not at liberty to state that it did so without awaiting the payment in full of the insurance premium.
This brings the court to the issues of:
Whether or not the Defendant cashed the cheques delivered to it by the Plaintiff in payment of the premiums in good time?
Whether or not premiums were received after the collapse of the building on 7th November, 2012?
It was the Plaintiff’s case that he issued 3 cheques as premium payments before the policy was issued to him. Exhibits 4, 5 and 6 indicated that these cheques had been issued by the Plaintiff, received by the Defendant and reflected in the Plaintiff’s account with the Defendant. It was the Defendant’s case that no premium had been paid before the occurrence of the collapse. Paragraphs 9, 10, 11and 12 of the Defendant’s Witness Statement state as follows:
9) Until the collapse of the building no premium was paid contrary to the terms of the policy. This is confirmation that the Defendant was not liable under the policy. Curiously, a cheque dated 20th October 2012 in the sum of GH¢1.592.00 drawn on the Plaintiff was paid to a cashier of the Defendant on the Plaintiff’s behalf. The value of the cheque represented 1/3 of the premium. The Defendant’s acknowledgment of payment and the cheque are exhibited as “4” and “4A”. Obviously the cashier who received the cheque was unaware of the collapse.
10) Long after the collapse of the building on 7th November 2012, a second installment in the sum of GH¢1,592.00 was paid on the Plaintiff’s behalf. The cheque was dated 20th November 2012. Further on 20th December 2012, a third cheque dated 20th December 2012 in the sum of GH¢1,592.00 was paid, to the Defendant. Defendant’s acknowledgment of the purported second and third cheques is exhibited as “5” and “6”.
11) The Defendant was off risk at the time of the purported payments. The Defendant’s liability under the policy extinguished before the occurrence of the loss, on account of the Plaintiff’s failure to pay the premium before the collapse of the building as specified in the policy in paragraph 7 above.
12) Clearly the Plaintiff failed to pay the premium as agreed and it would be wrong for him to benefit from his wrongful conduct. Rushing to pay the premium which was wrongfully received after the loss had occurred did not restore any entitlements under the policy to the Plaintiff.
The following ensued in cross-examination of the Plaintiff on 26th July 2017:
Q: You presented cheques dated 20th October 2012, 20th November 2012 and 20th December 2012. Not so?
A: It is true. I presented cheques to pay the premium, but as at now I cannot remember the date on those cheques and I pay the premium to Defendant Company by issuing cheque and we would come to a consensus before the cheque would be issued. I have been working with them and every time I pay them the cheque.
Q: At the time of the collapse, of three cheques you issued, only one was due for payment and therefore under the policy, you are not entitled to your claim.
A: My Lord, I have already indicated to the Court that it wasn’t the first time arrangement I was doing with Defendant Company. The little I know is that if you issue a cheque to someone and the payee is not able to clear the cheque, the said payee can sue you and you can even go to jail and all what I know is that I have paid them by issuing the cheque to them and the same cheques have been cleared from my account. ….
Q: You are only telling the Court that the cheque had been cleared but you are not putting any evidence before the Court.
This is also what ensued in cross-examination of Defendant’s representative on 30th October 2017:
Q: Have you received the sum of GH¢4,335.00 from the Plaintiff or not?
A: Yes, SIC received 3 different cheques.
Q: And as of today that we stand here, you have cashed in all the cheques. Not so?
A: I cannot speak to that. I don’t have records to that. I know that the cheques have been issued but I don’t know if they went through or not.
The Plaintiff never provided evidence that any of the cheques had been honoured at the time of the insured property was destroyed. He could have provided his bank statements to show that the cheques had been honoured. On the other hand, the Defendant could also have provided the cheques if they were still in its custody at the time the building collapsed or if any of them had been returned unpaid. The only cheque which could have been cashed before the risk occurred on 7th November 2012 was Exhibit 4 as this bore the date 20th October 2012 and pre-dated the collapse. The other 2 cheques post-dated the risk. The Defendant’s contentions that the cheques were paid to it after the building had collapsed is not borne out by the evidence. Exhibits 4, 5 and 6 indicate that the cheques had all been received in the Defendant’s office on the same date. These cheques were in the Defendant’s custody as it had debited the Plaintiff’s account with same on 31st May 2012.
In the age old case of Mojolagbe v. Larbi and others (1959) GLR 190, the court had this to say:
“Where a party makes an averment capable of proof in some positive way e.g. by producing documents, description of things, reference to other facts, instances or circumstances and his averment is denied, he does not prove it by merely going into the witness box and repeating this averment on oath or having it repeated on oath by his witnesses. He proves it by producing other evidence of facts and circumstances from which the court can be satisfied that what he avers is true.”
The court continued by saying:
“Proof in law is the establishment of facts by proper legal means i.e. the establishment of an averment by admissible evidence. When a party makes an averment… he is unlikely to be held by the court to have sufficiently proved that averment by merely going into the witness box and repeating that averment on oath if he does not adduce that corroborative evidence which if his averment is true is bound to exist.”
The Court is unable to tell from the evidence at its disposal whether or not the cheques were cashed in good time or were cashed at all. However, the cheques had been received by the Defendant at the time the loss occurred. The policy under reference had also been issued. In Thompson v. Adams (1889) 23 QBD 361, the court held that as soon as the contract was agreed the assured became liable to pay the premium, but his failure to pay it did not absolve the insurers from their liability under the contract unless there was a provision in the contract to that effect. In Cullota v. Kemper 397 N.E. 2d 1372 (Ill. 1979) the question before the court was when the contract of insurance was formed. The court had to decide whether there was a contract when the insurance company received the insured’s cheque for $218.50 or whether the contract was conditional on the cheque being honoured upon presentation for payment. The court held that the insured’s cheque was accepted by the insurer as payment of the premium due and the insured was therefore covered under the policy. See also Phoenix Indemnity Insurance Company v. Bell (896) P2d 32 (Utah Court of Appeal, 1995) where the court held a cheque may be considered proper consideration for an insurance contract even though subsequently dishonoured by the payee bank.
In the instant case, since the premium had already been paid, albeit in post-dated cheques, the Defendant could not repudiate liability. The Defendant is bound by Exhibit A or 2 i.e. the policy it entered into with the Plaintiff especially in the preamble where it is stated:
THE COMPANY HEREBY AGREES with the Insured … that if the property insured described in the Schedule, or any part thereof, shall be destroyed or damaged by FIRE AND/OR LIGHTENING, after payment of the premium, at any time during the period of insurance stated in the schedule, or before four o’clock in the afternoon of the last day of any subsequent period in respect of which the Insured shall pay to the Company and it shall accept the sum required …the Company will pay or make good all such loss or damage to an amount not exceeding in the whole the total sum insured mentioned therein, not exceeding in any case the amount of the insurable interest therein of the Insured at the time of the happening of such fire.
The following events happened as between the parties:
i. The Defendant issued to the Plaintiff an insurance policy.
ii. The Defendant accepted 3 post-dated cheques from the Plaintiff.
iii. The Defendant issued receipts dated 31st May 2012 to cover the 3 post-dated cheque payments.
iv. The Defendant failed to make the honouring of the 3 cheques a condition precedent to insurance coverage.
v. One of the post-dated cheques matured before the occurrence of the risk.
vi. Though the 2nd and 3rd post-dated cheques matured after the risk, there was no evidence these had been returned to the Plaintiff.
vii. The Plaintiff put in a claim and the Defendant in response asked for the tenancy agreement, valuation report and Government report on the incident in order for the claim to be processed.
In view of the fact that the Defendant had not made the honouring of the cheques as a condition precedent for the insurance contract, it would be bound by its act of issuing the policy to the Plaintiff.
The other issues border on proof of the loss. These are:
Whether or not the Government Report on the Melcom disaster is a condition precedent and/or requirement for the payment of the insured sum by the Defendant?
Whether or not it is reasonable for the Defendant to request a valuation report or bill of quantities on a totally collapsed building?
Whether or not the Plaintiff’s claim was subject to proof by bills of quantities or valuation report?
Whether or not it is reasonably possible to request for documents which were destroyed during the collapse of the building?
The Defendant in paragraph 7 of its further amended Defence filed on 15th January 2018, averred:
The Defendants in response to the averments in paragraphs 7 to 14 of the Statement of Claim says that its officers in overlooking the non-payment of the premium before the loss sought to settle the claim subject to the satisfaction by the Plaintiff of the condition that imposes a mandatory obligation on the Plaintiff to provide proof of the value of the collapsed building either by bills of quantities or a valuation report at the expense of the Plaintiff. In correspondence between the parties the Defendant had indicated that settlement or payment of the Plaintiff’s claim could not take place without proof of the value of the collapsed building. The Defendant repeats paragraph 5 of its Statement of Defence and also says that in the alternative the Plaintiff’s failure to provide proof in the form of bills of quantities or valuation report is a serious breach of a condition under the policy. On this ground pleaded in the alternative the Plaintiff’s claim must fail.
In cross-examination of the Defendant’s representative on 30th October 2017 the following was elicited:
Q: At the point of the insurance, it was agreed that the building was GH¢850,000.00 which formed the policy amount. Not so?
A: The insured quoted the value of the building.
Q: And that value was agreed and accepted. Yes or No?
A: SIC does not agree or disagree on values. The insured quotes what he has and we accept it because he knows what he has so based on utmost good faith we accept the value.
So upon what basis did the Defendant accept the premium from the Plaintiff in respect of the 6-storey building which housed Melcom Supermarket? In Halsbury’s Laws of England (4th edition) Vol. 25 p. 263 the learned author puts it thus:
The amount of premium appropriate to the risk involved is essentially a matter for the insurers as experts in the business to assess. Hence the amount charged for the premium is of assistance to show the scope of the policy. See also the case of Re: George & Goldsmiths v. General Burglary Insurance Association Ltd (1899) 1 QB 595.
In Understanding Insurance Law, 5th edition by Robert H. Jerry II and Douglas R. Richmond,(op.cit) at p. 582, the learned authors stated:
Property insurance policies usually require the insured to produce some information to support the claim that proceeds should be paid. The information is typically presented to the insurer in a written document called a proof of loss or sworn statement of loss which the policy usually specifies must be filed within a specified number of days after the insurer requests it. The proof of loss must describe in detail and otherwise document the circumstances and nature of the insured’s loss.
Exhibit B required the Plaintiff to provide the Defendant with the following:
1. Tenancy Agreement on the building
2. Valuation Report on the building
3. Copy of the Government Report on the incident
The Defendant also asked for the cause of the collapse.
The Plaintiff replied to Exhibit B by writing Exhibit C in which he said he had not received any report from the Government. He did not have any valuation report on the collapsed building and did not know the cause of the collapse. He however produced a copy of the tenancy agreement the Defendant had requested for. When his claim was not being processed as expected, the Plaintiff caused his Solicitors to write Exhibit D dated 6th September 2013 demanding that the claim be processed expeditiously. The Defendant responded in Exhibit E which stated in paragraphs 2, 3 and 4 thus:
We have requested of your client in our letter of 30th January 2013 to provide us with the valuation report on the building and a copy of the Government Report on the incident for our further action on the claim. In our mutual client’s response dated 26/02/2013, he indicated that he could not provide them. Please note that under the terms of the contract, the onus of proof of loss with documentary evidence is with the insured. In any case, we are also making efforts at getting a copy of the Government’s report to enable us process the claim further.
In this court’s view, the Defendant accepted the value of the building as GH¢850,000.00 before determining the amount of premium to be paid. It would therefore now not be reasonable in the circumstances to now ask for a valuation report or bills of quantities to determine the value of the building now that it has collapsed. If it was minded to find out the true value of the insured property, it should have requested for the valuation report or bills of quantities before entering into the contract of indemnity with its insured in the first place. The inference is the Defendant was satisfied with the value of the building provided by its insured enabling it to arrive at the premium which it eventually charged.
In Exhibit A/Exhibit 2, the policy at Clause 11 required the following on loss of property:
The Insured shall also at all times at his own expense produce and give to the Company all such further particulars, plans, specifications, books, vouchers, invoices, duplicates or copies thereof, documents, proofs and information with respect to the claim and the origin and cause of the fire and circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonably required by or on behalf of the Company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith.
As already stated, the Defendant had asked for the Tenancy Agreement on the building, the Valuation Report on the building and a copy of the Government Report on the incident. Out of the 3 required documents, the Plaintiff could only provide the tenancy agreement. He informed the Defendant he did not have copies of the valuation report and the government report on the incident. On the proof of loss, Halsbury’s Laws of England (op.cit) states at p. 282-283 under the heading
Particulars and Proofs of Loss as follows:
The assured is usually required by a stipulation in the policy to make a formal claim upon the insurers, containing full particulars of the loss, and to deliver proofs supporting it. In practice the claim is made on a printed form supplied by the insurers and indicating the nature of the particulars required. The giving of proper particulars and proofs is usually made a condition precedent to any right of recovery for the loss. (See Welch v. Royal Exchange Assurance (1939) 1 KB 294. The particulars required necessarily may vary according to the nature of the insurance. They must be furnished with such details as are reasonably practicable. Whether the details given are sufficient or not is a question of degree, depending partly upon the materials available which, especially in the case of a fire, may be scanty, and partly upon the time within which, especially they have to be furnished. In any case, the assured has not performed his duty adequately unless he has furnished the best particulars which the circumstances permit. Proofs of loss are necessarily documentary proofs; the loss may be proved by any satisfactory evidence. In requiring proofs or in deciding as to their sufficiency, the insurers must not act capriciously; they must be satisfied with such proofs as would satisfy reasonable men. …. The insurers may appoint a loss adjuster to assist them in dealing with the assured’s claim.
In Greenough v. Farm Bureau Mutual Insurance Company 130 P 3d 1127 (Idaho, 2006), the court in making a determination as to whether the Plaintiff had provided sufficient proof of loss had this to say:
As defined by this Court, a submitted proof of loss is sufficient when the insured provides the insurer with enough information to allow the insurer a reasonable opportunity to investigate and determine its liability. … The amount of information that should be provided is “proportional to the amount reasonably available to the insured.” … When enough information is provided, the insurer is obligated to “investigate and/or determine its rights and liabilities” in a fair and accurate manner. An analysis to determine when a proof of loss is sufficient is a question of fact.
In Welch v. Royal Exchange Assurance (1939) 1 KB 294 the information the insured had was in his possession and readily available. These were bank account details. In the instant case, were the documents the Defendant required from the Plaintiff readily available? What documentary proof did the Plaintiff proffer to the Defendant in this matter? It is on record that the Plaintiff did make a claim on the Defendant. (See Exhibit B). Exhibit B acknowledges that the Plaintiff did submit a completed claim form. The Plaintiff also submitted a tenancy agreement. The Plaintiff said he had not received a copy of the Government’s report on the incident. The Defendant itself in Exhibit E had stated that it was also making efforts to get a copy of the Government’s report. It is worthy of note that the Defendant itself did not have a copy of the report which it had stated it was making efforts to get. Its representative told the court that it was for the insured to prove its loss but they also made an effort to get the report. Since the Defendant itself made efforts and could not get the report, should the Plaintiff be precluded from making a claim because it could not have access to the same report that the Defendant itself was not successful in obtaining? One would have imagined that it would have been easier for the Defendant as an insurer to obtain copies of the Government report than it would have been for the Plaintiff. In this court’s view, the production of the report should not be a condition precedent to the payment of the Plaintiff’s claim.
So what else could the Defendant have required from the Plaintiff as proof of loss? The general principle in contracts of indemnity is that the insured must prove its loss. The collapse of the Plaintiff’s premises was such a matter of public knowledge that judicial notice could be taken of it. Exhibit 3 a newspaper publication with the caption Melcom disaster survivors need counseling was tendered in evidence by the Defendant itself. What other further proof did it require seeing that this was a disaster which had caught the headlines? In Winicofsky v. Army and Navy General Assurance Association (1919) TLR 283, the court held that a statement or condition in the policy as to the method of proving a loss did not preclude the insured from proving the loss by another method. Proof of loss could be provided by any satisfactory evidence. The Defendant has stated that their engineers proceeded to the scene but were denied access to the Plaintiff’s premises. Who denied them access? The Defendant did not say.
The defendant admitted it had been informed through its engineers that the entire property had collapsed. This Court is of the view that there was proof that the Plaintiff’s building had collapsed. This proof was even produced by the Defendant as Exhibit 3. In Manu v. Nsiah (2005/2006) SCGLR 25 the court stated that the well established rule was that where the evidence of a party on a point in a suit is corroborated by witnesses of his opponent, whilst that of his opponent on the same issue stands uncorroborated even by his own witnesses, a court ought not to accept the uncorroborated version in preference to the corroborated one unless for some good and apparent reason the court finds the corroborated version incredible impossible or unacceptable. Exhibit 3 tendered by the Defendant corroborates the Plaintiff’s case and bore mute testimony to the fact that the Plaintiff’s building housing the Melcom Shopping Mall located at Achimota, a suburb of Accra, had collapsed. Moreover, on 30th October 2017 the following information was elicited from the Defendant during cross-examination:
Q: Have you paid a visit to the site since the incident personally?
A: No. My Lord.
Q: From the file, can you tell this Court, whether or not there has been a visit to the premises after the incident?
A: Our engineers went there but were denied access.
Q: So do you know the content of their report when they visited if any?
A: They did not write a report. They just came back to inform us.
Q: So they came and informed you that the entire property has collapsed. Not so?
A: Yes. My Lord.
Q: So you demanded a valuation report from the Plaintiff. Not so?
A: Yes. We did.
Q: And this was after your engineers had updated you on the state of affairs. Not so?
A: Yes. My Lord.
From the evidence, the Plaintiff has been able to prove that his property had been destroyed. For a fact so notorious, the Defendant was unreasonable in making the production of the Government report on the disaster as a condition precedent for honouring its obligations under the insurance contract. Counsel for the Plaintiff has argued that the documents requested for had been in the collapsed building. This was however not pleaded and therefore no evidence was led to establish that fact.
Any other issues arising from the pleadings
The further amended defence has raised the issue of the claim being out of time. In paragraph 7A of its further amended Defence, the Defendant stated:
The Plaintiff’s action is in default of section 19 of the conditions of the policy having been commenced after 12 months of the collapse of the building.
The Defence has relied on section 19 of Exhibit A which states:
In no case whatever shall the Company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration.
When did the loss occur? From the evidence, it occurred on 7th November 2012 (See Exhibit B which gives the date of the loss as 7th November 2012). Exhibit 3 a Daily Graphic newspaper article also corroborates the date when it states:
On Wednesday, November 7, 2012, a five-storey building housing the Melcom Shopping Mall located at Achimota, a suburb of Accra, collapsed around 9.45 am, killing 14 people while 67 others were rescued from the rubble.
When was the claim made? On 30th January 2013, the Defendant wrote a letter acknowledging receipt of the completed Fire Claim Form in respect of the collapse of the insured premises. (See Exhibit B). This letter did not make reference to the date on which the claim was made. But the claim must have been made before Exhibit B was written in response to it. Even if the claim was made in January 2013, this would have been 2 months after the risk had occurred and it was well within the 12 months from the happening of the loss or damage. Thereafter, the Plaintiff wrote Exhibit C to the Defendant in which he told the Defendant he could only provide one out of the 3 documents the Defendant had requested for. Exhibit C is dated 26th February 2013. The Defendant did not respond to Exhibit C. Then the Plaintiff’s Solicitors wrote to the Defendant on 6th September 2013 asking for an update on the claim. (See Exhibit D). It was only then that the Defendant responded by issuing Exhibit D dated 6th September 2013. The Defendant has taken the view that the suit should have been instituted within 12 months of the occurrence of the risk.
It is in this Court’s considered opinion that the limitation of actions only refers to a lapse in time before a claim is made on the insurer. The matter was neither in court nor before an arbitrator when the Plaintiff made its claim. The claim was made within time as it was made within 12 months of the loss. The suit was instituted on January 2014. Had the Defendant settled the claim when it was made in January 2013, the Plaintiff would not have had to issue his writ. Section 19 would not apply to this matter as time did not begin to run until the Defendant refused to process the Plaintiff’s claim. The Defendant should not be allowed to drag its feet and eventually refuse to honour a claim and when suit is instituted, pray in aid the statute of limitation to avoid the contest in court. The Defendant contends that the Plaintiff constructed the building illegally as it was without the requisite building permit. He also failed to disclose this fact to the Defendant. Counsel for the Defendant referred to Section 64 of the Local Government Act (Act 462) which was in force at the time this suit was instituted. It states:
Every person shall, before constructing a building or other structure or undertaking any work, obtain a building permit from the District Planning Authority which shall contain such conditions as the District Planning Authority may consider necessary.
The Plaintiff denied that it had built without the requisite building permit. A subpoenaed witness from the Physical Planning Department of the Accra Metropolitan Assembly who gave evidence as DW1 told the court her office was responsible for the issuance of building permits. It had no records of the building permit for the Plaintiff’s building at Achimota. The Plaintiff while denying that he had built illegally did not produce the building permit for the collapsed building. What is the significance of this? The significance was that once the Defendant had called evidence and its witness had stated that there was no such building permit in its office, it was up to the Plaintiff to lead evidence in proof of its denials that it had built without the requisite permit. The Defendant capitalized on this to assert that the Plaintiff had failed to disclose this fact.
In Yeboah v. Krah (1968) GLR 1137 the court held that insurance contracts are of such a character that the utmost disclosure ought to be made by the proposer to the insurer. In Carter v. Boehm (1558-1774) AER 83 the court said:
Insurance is a contract upon speculation. The special facts on which the contingent chance is to be computed must be commonly in the knowledge of the assured. The insurer trusts to his representation and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the insurer into the belief that the circumstance does not exist and to induce him to estimate the risk as if it did not exist.
Also see the case of West African Examinations Council v. State Insurance Corporation (1977) 2 GLR 467 @ 478 where the court said:
The contract is said to be a contract uberrimae fidei contract, that is the utmost good faith must be observed by both the insurer and the insured, a fundamental principle … which requires that when completing the proposal form the insured has to make a full and true disclosure of material facts which would guide a prudent insurer in determining whether to assume and take the risks and if so at what premium and on what condition….
The Defence has urged the court not to assist the Plaintiff benefit from its illegal act of putting up the building without a permit. The illegality or otherwise of the building is not a matter before the court. What is of relevance to this court is whether or not in the proposal form, the Defendant had asked the question about the building permit and whether the Plaintiff had failed to answer correctly. In London General Omnibus Co. v. Holloway (1912) 2 KB 72 @ 85 the court held that the law implies that all material facts shall be disclosed. What is a material fact? See Stebbing v. Liverpool & London Globe Insurance Company (1917) 2 KB 427:
If a statement is made which is material which induced one of the parties to enter into a contract and which is untrue, the party so induced may repudiate the contract.
In Glicksman v. Lancashire General Assurance Co. Ltd (1925) 2 KB 593 the proposer answered the question has any company declined to accept or renew your burglary insurance in the negative when he had in fact made a proposal and had had it declined. The Court held that when there is suppression of a material fact the insurance contract can be invalidated. Also in Condograins v. Guardian Assurance (1921) 2 AC 125 the Appellant was asked if he had ever been a claimant on fire insurance. He answered in the affirmative and gave the date as 1917. He had also claimed against Liverpool & London Globe Company in 1912 in respect of the burning of a motor vehicle but failed to disclose this fact. The court held that there had been a misrepresentation as to material facts. So did the Defendant ask the Plaintiff in its proposal form about the building permit and did the Plaintiff give a false answer? In Halsbury’s Laws of England (4th edition) (op.cit) p. 218 it is stated as follows:
The most common express provision is therefore one which extends the duty of the proposer by making the validity of the contract depend upon the accuracy of all statements made by the proposer during the course of the negotiations. Where there is such a provision it is unnecessary to consider whether an inaccurate statement was made fraudulently or innocently. If the truth of the statement has been made warranted or made a condition precedent to the contract or the basis of the contract, the contract has been breached if it is in fact untrue and the stipulated consequences follow.
See also the case of Ga. Farm Bureau Mutual Insurance Co. v. First Fed & C Association 152 Ga. App. 16 262 S. E. 2d 147 (1979) where the insurer attempted to repudiate a policy and to deny fire protection coverage citing the failure of the insured to inform the insurer that he had defaulted on his mortgage. The court found no duty to disclose even if the information was material. The court found also that an insurance company could not assert that a factor was material to the risk about which it has made neither inquiry not apprised its prospective insured.
In Ackah v. Pergah Transport Ltd (2010) SCGLR 728 @ 736, the court held:
It is a basic principle of the law on evidence that a party who bears the burden of proof is to produce the required evidence of the facts in issue that has the quality of credibility short of which his claim may fail. The method of producing evidence is varied and includes the testimonies of the party and material witnesses, admissible hearsay, documentary and things (often described as real evidence) without which the party might not succeed to establish the requisite degree of credibility concerning a fact in the mind of the court or tribunal of fact such as a jury. It is trite law that matters that are capable of proof must be proved by producing sufficient evidence so that on all the evidence a reasonable mind could conclude that the existence of the fact is more reasonable than its non-existence.
It was for the Defendant to prove that the issue of the building permit was one upon which the contract of insurance was contingent. It was for the Defendant to prove also that the Plaintiff had intimated that he had a building permit and that had induced it to enter into the contract and to issue a policy. It did not prove that this condition featured in the policy under reference. There being no evidence on record that the Defendant had made inquiries about the existence of a building permit and had received an untrue answer to its inquiries, this defence would not avail the Defendant. The burden of persuasion and the obligation to adduce evidence are defined in Sections 10(1) and 11(1) of the Evidence Act, 1975 (NRCD 323).
For the purposes of this Act, the burden of persuasion means the obligation of a party to establish a requisite degree of belief concerning a fact in the mind of the tribunal of fact or the court.
For the purposes of this Act, the burden of producing evidence means the obligation of a party to introduce sufficient evidence to avoid a ruling against him on the issue.
This duty or obligation on the Plaintiff is further amplified in Section 11(4) of NRCD 323 which reads:
In other circumstances the burden of producing evidence requires a party to produce sufficient evidence which on the totality of the evidence leads a reasonable mind to conclude that the existence of the fact was more probable than its non-existence.
See also Sarkodie v. F. K. A. Company Ltd (2009) SCGLR 65.
In the case of Takoradi Flour Mills v. Samir Faris (2005/2006) SCGLR 882 at 900 the court said:
in assessing the balance of probabilities, all the evidence, be it that of the Plaintiff or the Defendant, must be considered and the party in whose favour the balance tilts is the person whose case is the more probable of the rival versions and is deserving of a favourable verdict.
The Plaintiff has been able to prove that he had entered into a contract of indemnity with the Defendant. He has been able to prove the property insured had collapsed. He has also been able to prove that he had paid premium based on the value of the property which the Defendant had accordingly insured. On the other hand the Defence’s evidence was subtly layered with all sorts of distortions and embroidery all in a bid to escape liability. It first put up the defence of non- payment of premiums after accepting post-dated cheques and issuing the policy. Then it prayed in aid the insufficiency of proof of damage presented by the Plaintiff as well as uncertainty in the value of the insured property. Thereafter, it sought to repudiate the claim on the basis of limitation and then on the failure of disclosure on the part of the Plaintiff of a material fact, being that the Plaintiff had insured a building put up without authorization. It has twisted and turned and come up with all manner of reasons not to pay up on the claim thus repudiating the contract of indemnity. In spite of all its efforts, its defence has not succeeded. The Defendant is ordered to pay to the Plaintiff GH¢850,000.00 together with interest on the said sum at the current commercial rate from 31st October 2013 when the Plaintiff’s Solicitor made its final demand, to date of final payment.
The Plaintiff has also sued for damages for breach of contract. However, he has already been awarded interest at the current bank rate. That amount should restore him to his position but for the Defendant’s default. See the unreported Supreme Court Case of Kama Health Services Ltd v. Unilever Ghana Limited Civil Appeal No. J4/24/2013 where the court held that interest payment follows failure of a contract under which payment has been made as a form of damages for breach of contract. Costs of GH¢20,000.00 is awarded against Defendant.
JENNIFER A. DODOO (MRS)
JUSTICE OF THE HIGH COURT