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Wati v Colonial Fiji Life Ltd [2005] FJHC 181; HBC0220j.2004s (15 July 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. 220 OF 2004

Between:

KAMLA WATI f/n Ram Samujh
as Administratrix in the Estate of
Ashok Kumar f/n Shiu Lal
Plaintiff

and

COLONIAL FIJI LIFE LIMITED
Defendant

Mr. R.P. Singh for the Plaintiff
Mr. H. Nagin for the Defendant

Date of Judgment: 15 July 2005

JUDGMENT

By originating summons the ‘plaintiff’ Kamla Wati f/n Ram Samujh, (the ‘plaintiff’) the Administratrix in the Estate of Ashok Kumar f/n Shiu Lal seeks a declaration that the deceased’s insurers the Colonial Fiji Life Limited (the ‘Colonial’) pay to the estate the sum of $75,000 being the amount allegedly due under Policy Number 8025090 (the ‘Policy’).

The deceased Ashok Kumar died on 1 January 2000 and Letters of Administration was granted to the plaintiff as administratrix on 6 September 2002.

The deceased was insured with ‘Colonial’ (the ‘defendant’) for $75,000.00 under the Policy.

Plaintiff’s submission

The plaintiff says that there was a contract between the deceased and Colonial for the latter to pay a certain sum of money on the death of the deceased. Although there was a nomination in favour of one Suresh Sani f/n Shiu Mangal as the beneficiary, it was declared null and void by the High Court in Civil Action No. 419/02.

The learned counsel for the plaintiff submits that the policy owner is the deceased and the Policy stated that the benefit is payable on the death of the life insured.

It is further submitted that the criminal act of murder by Suresh Sani does not in any way affect the contract between the deceased or deceased’s estate and Colonial but that it only affects the nomination in favour of Sani which as I have stated has been held to be null and void.

Counsel submits that there is privity of contract between the Colonial and the deceased but not with the said nominee Suresh Sani.

Counsel referred the Court to Hals. 4th Ed. Vol. 25 para. 578 where it is stated that the life insured is that of the assured himself, the person entitled to the payment is the owner of the legal chose in action, that is, the assured’s personal representative.

It is further submitted that according to Halsbury (ibid) para 579 the third party in such case is prima facie merely the agent for the time being of the legal owner and has his authority to receive the policy money and to give a good discharge but he generally has no right to sue for the insurance in his own name.

Mr. Singh submits that a person committing the crime cannot benefit from his criminal act and therefore the insurance money is payable to the estate of the deceased.

He concludes by saying that the personal representative of the estate of the deceased is entitled to the benefit of the insurance money. The defendant should not be allowed to dishonour its obligation under the contract to the plaintiff for the criminal acts of the third party.

Defendant’s submission

On 1 January 2000, a month after Suresh Sani nominated the deceased as beneficiary, the deceased was murdered by Sani.

Counsel for the defendant/Colonial submits that under s152 of the Fiji Insurance Act 1998 ‘only the beneficiary nominated is entitled to benefit unless the nominee predeceases the life insured’. He says that there are no other circumstances in which the estate can benefit. There is no way that that can be circumvented’.

Counsel submits that Colonial was no longer a party to Civil Action No. 419/02 as a discontinuance was filed against it leaving Sani as a party/defendant. Therefore the plaintiff ‘could have got any type of default judgment against Sani, but those judgments do not in anyway bind Colonial in this action.’

Counsel submits that under s152 of the Insurance Act 1998 the ‘nomination is still there. The claim of the nominee is fraudulent and no payments can be made to him. How can payment be made to anyone else unless they come within section 152 of Insurance Act.’

Counsel referred at length to s152 and also to the Fiji Court of Appeal case of Colonial Mutual Life Assurance Society Limited v Prabha Shandil FCA ABU0056.1996 and the High Court case of Colonial Fiji Life Ltd v Aseri Waqa & Ors. HBC0335.2000 where counsel submits, it is established that where there is a nomination, the insurance moneys do not form part of the deceased’s estate and the plaintiff therefore has no claim whatsoever in this case.

Consideration of the issue

I have before me the written submissions from both counsel. The last of the submissions was filed on 6 October 2004. Because of my hearsay commitments, my own long leave and legal vacation it was not possible to deliver judgment any earlier.

Upon a careful consideration of the affidavit evidence filed herein and the submission of counsel, it is abundantly clear that despite criminal act of the said Sani in murdering the deceased the Policy is still valid and in existence and I find this as fact.

The sole question is: In whose favour is the policy now in the face of the nomination which has been declared null and void?

The nomination by the deceased in favour of Sani has been declared null and void by Jiten Singh J. For all intents and purposes it means that there is no ‘nomination’ in favour of anyone in existence or in force and hence any moneys payable upon the deceased’s death becomes due and payable to the estate.

I agree with counsel for the plaintiff that the contract of insurance was between the deceased and the defendant. The nomination does not affect the contract except that the benefit of insurance was agreed to be paid to the nominee. With the nomination having been declared null and void the contract remains intact resulting in the benefit being payable as stated in the Policy in the absence of any valid nomination in the present circumstances. The Policy states that:

‘2. Subject to the payment of premiums or instalments thereof as herein provided and to the terms and conditions contained in the Policy, Colonial will pay the Policy Benefits as set out in the Schedule to the Policy owner or to such other persons entitled to them.’

Here there was an assignment of interest to a third party the said Suresh Sani. On assignment of life policies Halsbury 3rd Ed. Vol 22 at p. 281. Para.558 states:

“The transfer of a policy of life insurance from the assured to another by manual delivery is effective, if so intended, to transfer the property in the document itself; but it does not of itself transfer the rights to receive payment under the policy. The right to receive payment is a chose in action, and, to entitle the transferee to payment, there must be a valid assignment of the chase in action.”

Whilst I bear in mind the words “ that there must be a valid assignment of the chose in action (Crossley v City of Glasgow Life Assurance Co. [1876] UKLawRpCh 369; (1876) 4 Ch.D. 421), as I stated above, the nomination herein was declared null and void by the Court.

The following passage from the Court of Appeal judgment in Shandil’s case (supra) on which the counsel for the defendant relies will not, in my view, apply when the nomination is null and void:

“It is clear that, in the present case, the physical holder of the policy at the time it became payable was the executor. Counsel for the respondent has suggested that the policy and the benefit under it forms part of the deceased’s estate. Had the policy holder made no nomination under the policy, that would have been the case but, in any case where a nomination has been made before the money becomes payable and, as here, the policy holder and the life insured is one and the same, the money becomes payable at the moment of the policy holder’s death. It is his death that activates the nominee’s entitlement to the money and it is never, therefore, part of the deceased’s property.”

However, in the case of Cleaver & Other v Mutual Reserve Fund Life Association [1892] 1 Q.B. 147 C.A. which is somewhat similar to the present case it was held:

“The executors of a person who has affected an insurance on his life for the benefit of his wife can maintain an action on the policy notwithstanding the fact that the death of the insured was caused by the felonious act of the wife. The trust created by the policy in favour of the wife under the Married Women’s Property Act, 1882, s.11, having become incapable of being performed by reason of her crime, the insurance money forms part of the estate of the insured; and as between his legal representatives and the insurers no question of public policy arises to afford a defence to the action. (emphasis mine)

There it is stated by Lord Esher M.R. at 153 that:

“If the Married Women’s Property Act had not been passed, or if the policy had made the money payable to some person other than the insured’s wife or children, I should say that, on the true construction of the policy, the only persons who could claim under it, and give a valid receipt for the money insured, were the executors of the insured; that as between them and the insurers the rule of public policy referred to could have no application, and, therefore, that the insurers must pay the money to the executors, and it would be for them to deal with it subject to the rules of public policy; but the insurers would have nothing to do with the application of the money after they had paid it. That would be a matter entirely between the executors and any person claiming the money under any will or settlement made by the insured.”

As Lord Esher M.R. said at 154 I would say that because of the crime committed herein, the ‘nomination’ became ‘incapable of performance’. He goes on to say that ‘it must, therefore, be treated as if it did not exist’.

On the issue in this case, and which by analogy could be applied here, is the Tasmanian Supreme Court case of Holmes & Anor. v. G.R.E. Insurance Ltd Tas. R 147, 1988 in which the headnote reads:

“A man and his wife were insured against fire for their respective rights and interests in a shop and residence which the man intentionally set afire. The wife had no knowledge of the husband’s arson. The insurer refused to pay.

Held, that the man could not recover because he must not profit from his own wrong, but the wife could because she was innocent of any wrongdoing and should not lose from his.”

Similarly, in the present case the deceased was the victim of the crime and an innocent party or ‘innocent of any wrongdoing’.

The following statement of Neasey J. in Holmes (supra) at 153 is also apt.

“It is the clear policy of the law in the interpretation of insurance contracts that an insured person who brings about a specified loss by his own unlawful act should not be permitted to recover, the public policy behind such a construction being the principle that a wrongdoer should be forbidden to take advantage of his own wrong – see e.g. P. Samuel and Co. Ltd. v. Damas [1924] A.C. 431.”

In short, all what I have said boils down to this as between the administratrix representing the estate of the insured and the defendant, their rights and liabilities must be governed by the contract; and that contract ‘does not make any exception in the case of the death of the insured being caused by the crime of any other person’. (Lord Esher M.R. 155 ibid).

In the outcome the plaintiff as administratrix is entitled to claim the insurance moneys under the Policy for her husband’s estate which take effect when by reason of the crime of the said Sani the ‘nomination’ in his favour becomes incapable of being performed. Therefore the nomination in Sani’s favour must then be regarded as struck out, and, that being so, the entitlement of insurance moneys in favour of the plaintiff’s husband’s estate arises which enables the administratrix to maintain this action as plaintiff without any taint derived from the crime committed by the said Sani.

For these reasons the plaintiff succeeds in her claim. It is therefore ordered that the Colonial Fiji Life Limited, the insurers of the deceased Ashok Kumar pay to the plaintiff as administratrix of the Estate of the deceased the sum of $75,000 being the amount payable under the Policy Number 802590 with costs the sum of $350.00.

D. Pathik
Judge

At Suva
15 July 2005