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High Court of Fiji |
IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION
Civil Action No: HBC 194 of 2008L
BETWEEN
ARUN KUMAR
Plaintiff
AND
SUN INSURANCE COMPANY LIMITED
Defendant
FINAL JUDGMENT
Judgment of: Inoke J.
Counsel Appearing: Mr H A Shah for the Plaintiff.
Mr A Sudhakar for the Defendant.
Solicitors: Haroon Ali Shat Esquire for the Plaintiff.
A K Lawyers for the Defendant.
Date of Hearing: 30 July 2010, 25 October 2010
Date of Judgment: 25 January 2011
INTRODUCTION
[1] On 26 April 2005, one of the Plaintiff’s employees was injured at work. The employee successfully sued the Plaintiff in this Court in Civil Action HBC 172 of 2006L for damages for personal injuries. The judgment was entered on 20 April 2007 for $111,713.01.
[2] The Plaintiff had taken out Workmen’s Compensation cover with the Defendant for the period in question for $100,000. He brings this action by Originating Summons seeking a declaration and consequential orders for indemnity by the Defendant insurer for his employee’s judgment.
CASE HISTORY
[3] The Originating Summons and the Plaintiff’s Affidavit in Support were filed on 29 September 2008. They were served on the Defendant on 3 October 2008 and the matter first called on 9 October 2008. Directions were given for the filing of affidavits and the matter set down for hearing on 7 November 2008. The Defendant did not file its affidavit in reply so the hearing could not proceed on 7 November 2008. The Defendant was given a further 14 days to file its affidavit and the hearing reset for 1 December 2008. The hearing proceeded on 1 December 2008 in the absence of counsel for the Defendant until he turned up 30 minutes later and asked for an adjournment and leave to file the Defendant’s outstanding affidavit. The adjournment was granted on terms that the Defendant pays the Plaintiff counsel’s costs of the day thrown away and the Defendant file its affidavit in reply by 4 December 2008 and hearing to proceed on 8 December 2008. On 8 December 2008, counsel for the Defendant argued that there were serious disputes of fact which could not be resolved on the affidavits. The learned Judge then hearing the application adjourned the matter under Order 28 Rules 2 and 3 of the High Court Rules 1988 and ordered that oral evidence be given by the parties on 9 February 2009. No further affidavits were to be filed and the deponents were to be present in Court for cross examination. The evidence was to include both oral testimony and affidavits. The matter was further adjourned by the Master on 9 February 2009 to 13 February and came before the Judge who set it down for hearing on 1 April 2009. Counsel for the Plaintiff was unavailable because of other court commitments and the hearing was adjourned to 24 April 2009 to fix another hearing date. Because of the closure of the courts in April 2009 the matter did not come back to Court until 26 June 2009 on which date I set it down for hearing on 29 September 2009. On that date, Mr Shah, counsel for the Plaintiff insisted that the hearing proceed despite Mr Narayan, counsel for the Defendant familiar with the matter, not being able to appear. I heard Mr Shah and reserved judgment. On 1 October 2009, solicitors for the Plaintiff filed a Summons for orders this Court does not proceed to deliver judgment and the matter be assigned a new date of hearing. That Summons was called on 6 October 2009 and by consent the Originating Summons was reset for hearing on 3 November 2009. It was further adjourned because of my Court of Appeal commitments in November and two further mentions followed, and on 11 December 2009 I set the matter down for hearing on 30 July 2010. After the hearing counsel requested a further date for oral submissions which I heard on 25 October 2010 and reserved my judgment which I now deliver.
THE ORIGINATING SUMMONS
[4] The Originating Summons seeks the following orders:
- A Declaration that the Defendant is liable to indemnify the Plaintiff in respect of Workers Compensation claim under Workers Compensation Policy No 18425.
- An Order that the Defendant do pay and/or settle the Judgment Claim against the Plaintiff in Lautoka High Court Civil Action No HBC 172 of 2006L between the Plaintiff and one Mohammed Riyaz son of Mohammed Hassan of Namosau, Ba, unemployed. And in particular the Judgment of His Lordship Justice John Connors delivered on Friday the 20th day of April 2007.
- A Declaration that the Defendant’s liability under Workers Compensation Policy No 18425 whilst limited to the sum of $100,000 for Common Law Liability does not exclude the consequential loss and interest on the award of his Lordship Justice John Connors by reason of the Defendant’s refusal and/or delay in settling the said claim Judgment.
- An order that the Defendant do pay the Plaintiff’s Costs on a full indemnity basis.
THE AFFIDAVITS
[5] According to the Plaintiff’s Affidavit in Support, he operated an engineering firm under the name of “Babu’s Engineering and Construction Company”. The firm was registered on 4 April 2005. The firm employed 15 workers in 2005 for whom he took out workmen’s compensation cover with the Defendant insurer. He annexed a copy of the cover note issued by the insurer which showed the period of cover was from 11 April 2005 to 11 April 2006. But he said he was never supplied with a copy of the policy. The cover note was addressed to “Babu’s Engineering” of Box 2242, Ba. The policy, number 18425, covered the “Insured’s liability under the Workmen’s Compensation Act 1975 for personal injury of death resulting from accident to any workman employed by the Insured”. Common Law liability was limited to $100,000.
[6] During the currency of the policy, one of his workmen, Mohammed Riyaz son of Mohammed Hassan, a welder, was injured at work. He filed a Writ of Summons against the Plaintiff in the Lautoka High Court in civil action HBC 172 of 2006L. The Plaintiff said that upon receipt of the Writ he gave it to the Defendant who assured him that they would handle the matter as they had their own lawyers and the Plaintiff need not consult a private lawyer. Based on the representation he did not engage any counsel and gave all papers received from the solicitors to the Defendant as and when he received them. He also received a copy of the order of Justice Connors of 20 April 2007 which he served on the Defendant. The claim has not been settled and Mr Riyaz’s solicitors have registered a charge against the Plaintiff’s property in Ba and have advertised the property for sale by tender to satisfy the judgment. He says that the Defendant had not ever told him that they would not indemnify him, and by its conduct, the Defendant should now be estopped from resiling from its policy obligations.
[7] The Defendants’ Affidavit in Reply was sworn by its Claims Executive on 2 December 2008 and filed on the next day. He admits that the Plaintiff ran an engineering firm called Babu’s Engineering and Construction Company and that a workmen’s compensation policy was issued to the firm with a limited common law liability. But he says that the policy was delivered to the Plaintiff’s employees named Nazreen by its agent in Ba. He also says that the Defendant was not liable because the 2006 action by Plaintiff’s employee and the subsequent judgment was obtained against “Arun Kumar trading as Babu’s Mechanical & Engineering Works”, a different entity all together from the insured under the policy. He further alleges that the Plaintiff did not comply with clause 2 of the policy which required him to notify any claims as soon as practicable which he did not do until the Writ was served on the Defendant on 21 July 2006, some 15 months after the accident. An investigation was carried out by the Defendant and the report received on 31 December 2006. He says the Defendant was denied an opportunity to fully investigate the accident and fully assess the claim and was thereby prejudiced. He explains it in his affidavit:
15. Since the plaintiff at no time prior to the writ being served on the defendant informed the defendant that there was an accident on its job site the defendant was deprived of the opportunity to immediately appoint an investigator or other experts to examine the site of the accident and any machinery, which it was entitled to do under Condition 7 of the Policy, and interview workers when the events would have been fresh in their minds. The defendant was unable to ascertain whether the plaintiff had complied with Condition 6 of the Policy of taking all reasonable precautions.
16. Some of the reasons why early notification of accidents is necessary include, but are not limited to, are that after considerable time has elapsed certain evidence of the accident, such as proper system of work, failure to take precautions, blood spots, hand prints etc, would inevitably be destroyed by nature or otherwise. The insurer loses the opportunity to raise any queries it may have had with the insured on whether they took all reasonable precautions to prevent injuries as required by condition 6 of the policy.
17. Had the defendant been informed in time they could have collected the necessary information the defendant may have explored early settlement option to save further expenses and not be burdened by its insured, the plaintiff, after a writ was issued or a judgment on the writ was obtained by the claimant.
18. The Defendant thereafter engaged an investigator to look into the matter as the writ was silent as to the date of the accident. An investigators report was only obtained on 31 December 2006, one year and eight months after the accident. It was found out that the accident happened on or about 26 April 2005. After such a long delay, as it was in this case, there is very little point in investigating a scene of accident as I have noticed from my experience in the insurance industry. Unless immediate investigation is done crucial evidence such as work conditions or the condition of the machines may not be able to be ascertained. The building works were completed in December 2005. When the investigator visited there were no scaffolds or platforms inside or around the building. The plaintiff from our investigations allegedly fell from a height of 10 feet. There was no way to ascertain whether if scaffold were there or if they had complied with the requirements of the law.
19. It has been alleged by the claimant that the plaintiff herein failed to provide him with a safe place or safe system of work. If same is true then the defendant could have invoked condition 6 of the policy and declined the claim which required the plaintiff to take all reasonable precautions to prevent injuries.. From the allegations of the injured employee in his writ it seems that the insured failed to comply with condition 6 of the policy. However, the defendant was not able to investigate early and ascertain if there was a breach and the extent thereof. The delay in notification made it impossible to ascertain any breaches by the plaintiff and/or whether the accident occurred due to unsafe system of work.
20. The system of work and the scene of the accident had altered significantly within the year and the hob had fi8nished before the insurance investigators could have a chance to look at it to ascertain if the insure was in fact in breach of condition 6 of the policy. The welding section foreman of the insured gave a statement to the investigator to say that the platform was made of tow 8” wide planks. There was no mention of handrails. This in itself shows non compliance of the law by the insured. I annex herewith a copy of the statement marked “TN-6”. [Note: the statement was not in fact annexed]
21. The defendant could have had the claimant examined by a doctor of its choice and explored settlement. It is important for the insurers to know the extent of injuries at the outset and not a year later so that the insurers can know exactly what injuries the injured employee suffered as a result of the accident. A year after the accident the injuries could have aggravated by other factors independent of the injury or some further injury could have been caused to the injured for which indemnity may then be sought from the defendant. The defendant in this case lost its chance to have the claimant examined by a doctor of its choice immediately after the accident and was not able to determine the above matters. For the above reasons I believe that the defendant has been prejudice.
[8] The insurance proposal and cover note number 18425 dated 11 April 2005 annexed to the affidavit showed the insured as Babus Engineering & Construction Company. That firm was registered on 4 April 2005.
[9] In response to the Defendant’s affidavit, Mr Kumar said in a further affidavit he only got the cover note and not the policy. He did notify the Defendant’s Ba office of the accident within a week of it happening and their response was “see us when there is a claim against you” and upon receipt of the claim he gave it to the Defendant’s officer who assured him that they would engage their own lawyer and they subsequently engaged Mishra Prakash & Associates in civil action HBC 172 of 2006. The Defendant did not at any time tell him that they were not going to defend the action.
THE ORAL EVIDENCE
[10] Mr Kumar gave evidence. He read and confirmed the contents of his Affidavit in Support as his evidence. He gave evidence that the accident happened in April 2005. He went to Sun Insurance in Ba on the next day and explained that his worker had been injured. He spoke to a Mr Sharma who told him not to worry about it. He was served with a copy of the Writ of Summons from Chaudhary Solicitors and he gave a copy of it to the Ba office and the other copy he couriered to Neil in the Defendant’s head office in Suva as Mr Sharma had told him to. They sent an assessor who asked him how the accident happened. He did not engage a lawyer because they told him not to worry. Mishra Prakash, the solicitors, appeared in the 2006 case. He did not instruct those solicitors.
[11] In cross examination, Mr Kumar said he was at the job site when the accident happened. He saw the ladder fall. He took his injured worker to the hospital between 5.30 and 6.30 pm. He went to the insurance agent to report the accident on the next day. The agent did not give him a claim form. He was adamant that Mr Sharma told him that if there was a claim then he would call him. He went to the agent with his clerk, Nasreen. He was not sure who filled the insurance form. The cover note was sent and picked up by him from his mailbox and not picked up by Nasreen from the agent. No policy document was sent to him. Babus Mechanical & Engineering was his company. There was another policy for it. The company is now closed. At the time of the accident, Mr Kumar was trading as Babus Engineering & Construction Company. The writ was served on him by a bailiff. He gave the original to the Ba office and he sent a photocopy to Neil in Suva. He disagreed when it was put to him that the only time he went and saw Mr Sharma was when he delivered the writ. He said he had seen Mr Sharma before that. Mr Kumar also said that there was scaffolding. The worker fell 8 to 10 feet from the Mezzanine floor.
[12] The Defendant’s insurance agent gave evidence for the Defendant. He knew the Plaintiff. He said Mr Kumar’s employee, Nazreen, took the insurance policy. It was she who came to see him and not Mr Kumar. He filled out the proposal form and issued the cover note after it was signed. The form was taken to Mr Kumar at his workshop and he signed it. The cover note was for one month temporary cover. He sent a copy of the cover note and the proposal to head office. Head office sent the policy to him and he gave it to Nazreen. He denied Mr Kumar ever coming to notify him of the accident. He said Mr Kumar only came to see him with the writ. He faxed a copy of the writ to head office and told them to engage a lawyer. Mr Kumar retained the original writ. Head office told him that they would work on it. He denied telling Mr Kumar that head office would take over the case from there.
[13] In cross examination, the insurance agent said that if there was a claim then a claim form had to be filled. He confirmed that if there was no claim, he would tell the insured to bring the claim to him when it is received. No one came to his office in April. He faxed a copy of the writ to Suva head office because they decide which lawyer from their panel of lawyers to engage. The insured would not get a lawyer of his choice. The policy is usually received two weeks after the cover note. He agreed that the insured had no idea what the conditions of the policy were. He also agreed that the nature of the business that was insured was building and construction and the insured was Arun Kumar.
[14] The Defendant’s Claims Executive gave evidence. He recalled receiving the writ faxed by their agent. There was no notice of an accident prior to him receiving the writ. Had he been notified he would have gotten a claim form in and an investigator to investigate it. He explained what normally happened. When an incident is notified, a claim form is given to the insured who filled it out. If no claim form is filled then there is no intention to seek indemnity. The form is to enable the insurer to lodge the claim into their system. The investigator was not appointed immediately after receiving the writ.
[15] According to the Executive, the writ in civil action HBC 172 of 2006 was issued against Babu Mechanical & Engineering Works and sealed on 26 June 2006. It was received in head office on 22 July 2006. He then advised the agent they would look into the matter and formally respond. When he checked the system, the name appeared but that policy had lapsed without being renewed. On 28 July 2006 they wrote a letter to the agent saying that there was no cover in place for Arun Kumar trading as Babus Mechanical & Engineering Works. They also sent out a letter to the solicitors Kohli & Singh, copied to Chaudhary & Associates, (solicitors for the injured employee), on 28 July 2006.
[16] On 20 November 2006, the Defendant received an assessment of damages. They appointed an investigator who reported back with statements from the Plaintiff and his workers. The report also said that scaffolding was provided but the worker fell when he was walking on a beam and fell off. The investigator could not view the scene and he had to get the information from witnesses which formed the basis of his report. They then sought an opinion from solicitors Mishra Prakash & Associates on liability.
[17] In cross examination the Executive denied receiving any claim form other than the writ. Solicitors Mishra Prakash & Associates were specifically appointed to furnish a legal opinion and not to act for the Plaintiff in the 2006 action.
[18] In re-examination, he said those solicitors did put in an appearance in Court in the 2006 action as one of the panel lawyers but the Defendant subsequently instructed its current solicitors instead.
[19] In response to my questioning, he said the first policy had been cancelled on 25 March 2004 for non payment of premium.
COSIDERATION OF THE EVIDENCE
What’s in a name?
[20] It is not in dispute that there was a current policy of insurance for the relevant period covering the Plaintiff’s business. What is in dispute is whether the policy covered the right insured. According to the Defendant’s documents, the policy was in the name Babus Engineering & Construction Company. The judgment in the 2006 action was against Babus Mechanical & Engineering Works. In either case, the owner of the business was the Plaintiff, Arun Kumar. That is not in dispute. It is also not in dispute that Arun Kumar carried out a building and construction business for which he employed the worker that was injured. The insurer’s complaint is simply that the business names are different.
[21] It seems to me that such a distinction is not material. As a matter of fact there is no difference because in either case, it is Arun Kumar that is the real person.
[22] Further, at the time the subject policy was taken out, the other policy had expired and non existent. At all relevant times, there was only one business in operation and only one policy in place.
Did the Plaintiff notify the insurer of the incident?
[23] I am of the opinion that Mr Kumar did notify the insurance agent of the incident. I also accept his evidence that he was told by the agent not to worry about it and to come back when a claim was lodged. His evidence is not inconsistent with the insurer’s normal procedure. In the normal case, say in a motor vehicle accident case, the insured would report the accident and will be given the claim form to fill out. In this particular case, the insured would not know whether there was going to be a claim by the injured worker or not, and even if there was going to be a claim, the insured would have no idea as to the nature and the extent of it. He would only become aware of that after the worker takes out the writ as Mohammed Riyaz did in this case or his solicitors write to the employer.
[24] I think it was just convenient at the time for the agent to send Mr Kumar away.
[25] I also think it quite reasonable for Mr Kumar to do nothing further until he received the writ.
Was the insurer prejudiced?
[26] Most of the reasons given as to why an incident is required to be notified soon is so general and not relevant to this case that I am not convinced that the insurer suffered any prejudice. I think the only arguable prejudice is that it was not able to decide whether the insured had taken reasonable precautions to prevent the accident. It is true that the investigator was not able to view the site, but he was able to obtain statements from witnesses including the insured to enable it to obtain a legal opinion. No evidence was given that the report was insufficient for that purpose. It is not the case that the investigator was not able to provide a report at all.
[27] Further, the evidence fell far short of establishing that the insured failed to take precautions. The report, which was not tendered into evidence, and the Defendant’s own evidence in my view clearly suggest that the accident happened not because of Mr Kumar’s failure to provide scaffolding or proper planks. So even if I accept the insurer’s evidence that it was not notified of the incident early enough to enable its investigator to conduct a proper investigation, it would not have made any difference to the outcome, that is to say, that Mr Kumar failed to take precautions to prevent injury to his worker.
THE INSURANCE POLICY
[28] The Defendant insurer’s standard policy for workers compensation insurance had the following terms and conditions:
Whereas by virtue of the Workers’ Compensation Act 1975 (herein after called the “Act”) it is provided that every employer shall obtain from a licensed Insurer within the meaning of the Insurance Act Chapter 217, a policy of insurance or indemnity for the full amount of his liability under the Act to workers employed by him and shall maintain such policy in force and Whereas the Employer described in the Schedule herein ... is carrying on the business as stated in the said Schedule and no other for the purpose of this indemnity ... and has made to SUN INSURANCE COMPANY LIMITED ... a written Proposal Declaration ... which it is hereby agreed shall be the basis of this contract and be considered as incorporated herein.
NOW THIS POLICY WITNESSETH that in consideration of the payment by the Employer to the Insurer of the premium ... if ... the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such Employer, THEN, and in every such case the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; the Insurer will also pay costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceedings in which liability is alleged.
PROVIDED that this Policy shall not extend to any business or occupation other than that described herein ... AND it is hereby further agreed that the above indemnity is made subject to the due and proper observance and fulfilment by the Employer of the conditions hereunder then the Insurer shall be (a) directly liable to any worker, ... , to pay the compensation which the Employer is liable and in respect of which the Employer is indemnified under this Policy and (b) bound by and subject to any order, decision or award made against he Employer under the provision of the Act.
PROVIDED lastly that this Policy shall be subject to the Act and the Rules and Regulations made thereunder, all of which shall be deemed to be incorporated in and form part of this Policy.
CONDITIONS
NOTICES
1. Every notice or communication to be given or made under this Policy shall be delivered in writing at the Office of the Insurer from which the Policy has been issued.
CLAIMS
2. The Employer shall give notice to the Insurer of any personal injury as soon as practicable after information as to the happening of the injury or as to any incapacity arising therefrom, comes to the knowledge of the Employer or of the Employer’s representative for the time being and shall forward to the Insurer forthwith after receipt thereof every written notice of claim or proceedings and all information as to any verbal notice of claim or proceedings.
EMPLOYER NOT TO MAKE ADMISSIONS
3. The Employer shall give not without the written authority of the Insurer, incur any expense of litigation or make any payment, settlement, or admission of liability in respect of any injury to or claim made by any worker.
.
.
PRECAUTIONS
6. The Employer shall take all reasonable precautions to prevent injuries.
CAN THE INSURER AVOID LIABILITY FOR THE INSURED’S FAILURE TO GIVE NOTICE?
[29] Although I have taken the view that the Plaintiff did notify the insurance agent of the incident, I think it is only fair to counsel for the Defendant that I consider the point, just in case I am wrong, and because he has made extensive submissions on the point.
[30] Before I do that I think I need to say something about clause 1 of the policy which required the notice to be given in writing. The issue was not argued because of the way the Defendant’s case was run so I make no comment in that regard other than that had it been raised I think it would have been met by a strong argument that the Defendant had waived the requirement or otherwise did not think it material or that it materially affected the way it would have acted and that ss 25 and 26 of the Insurance Law Reform Act, 1996 would have prevented the Defendant from avoiding liability.
[31] It is common ground, and I think that is correct, that the Act applied in this case. It provides is sections 25 and 26:
Certain exclusions forbidden
25. Where-
(a) the provisions of a contract of insurance the circumstances in which the insurer is bound to indemnify the insured against loss are so defined as to exclude or limit the liability of the insurer to indemnify the insured on the happening of certain events or on the existence of certain circumstances; and
(b) in the view of the court or arbitrator determining the claim of the insured the liability of the insurer has been so defined because of the happening of such events or the existence of such circumstances was in the view of the insurer likely to increase the risk of such loss occurring –
the insured shall not be disentitled to be indemnified by the insurer by reason only of such provisions of the contract of insurance if the insured proves on the balance of probability that the loss in respect of which the insured seeks to be indemnified was not caused or contributed to by the happening of such events or the existence of such circumstances.
Time limits on claims under contracts of insurance
26.-(1) A provision of a contract of insurance prescribing any manner in which or any limit of time within which notice of any claim by the insured under such contract must be given or prescribing any limit of time within which any suitor action by the insured must be brought shall-
(a) if that contract is embodied in a life policy and the claim, suit, or action relates to the death of the insured, not bind the insured; and
(b) in any other case, bind the insured only if in the opinion of the arbitrator or court determining the claim the insurer has in the particular circumstances been so prejudiced by the failure of the insured to comply with such provision that it would be inequitable if such provision were not to bind the insured.
(2) Where-
(a) the insured under any contract of insurance to which subsection (1)(b) of this Section applies fails to give notice of any claim in any manner or within any limit of time prescribed by the contract; and
(b) the cost of repairing, replacing, or reinstating any property when it falls to be met is greater than that which would have applied if the notice had been given in the manner or within the time so prescribed,
that greater cost shall not constitute prejudice to the insurer for the purposes of subsection (1) (b) of this Section, but the insurer shall not be obliged to apply or pay in repairing, replacing, or reinstating the property a greater sum than that for which he or she would have been liable if the notice of claim had been given in the manner or within the time so prescribed.
[32] Mr Sudhakar referred me to QBE Insurance Ltd v Moltoni Corporation Pty Ltd [2000] WASCA 82; (2000) 11 ANZ Insurance cases 61-468 (3 April 2000]. In that case, a clause similar to clause 2 of the policy in the present case requiring the insured to notify the insurer of the claim, was held to have been breached. The majority of the Court went further and found that the insurer had suffered prejudice under a provision similar to s 26 of our Insurance Law Reform Act, 1996, and allowed the insurer to avoided liability. The case was decided on its facts and is not helpful for the Defendant.
[33] Further, the equivalent provision in the Western Australian Act is different from ours in that it allowed the insurer’s liability to be “reduced by the amount that fairly represents the extent to which the insurer’s interests were prejudiced as a result of that act”, the act being the failure by the insured to give notice, whereas our provision required the court be satisfied that the insurer was prejudiced as well as being satisfied that “it would be inequitable if such provision were not to bind the insured”.
[34] Two further points need to be made about s 26(1)(b). Firstly, the onus of proof of prejudice and inequity rests on the insurer.
[35] Secondly, the standard of proof is the normal standard, that is to say, on the balance of probabilities. On this point, I respectfully disagree with the majority[1] view in QBE Insurance Ltd v Moltoni Corporation Pty Ltd (supra) because of the difference in the wording of our provision:
15 As mentioned, his Honour's task was to determine whether the appellant had suffered "prejudice" in the sense described. That prejudice was the loss of an opportunity to reduce the extent of the appellant's liability arising out of its obligation to indemnify the respondent against Mr Symons' claim.
16 The value of the opportunity lost by the appellant depended on the determination of past hypothetical facts. In this regard, Brennan and Dawson JJ in Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638 said at 639:
"Hypothetical situations of the past are analogous to future possibilities: in one case the court must form an estimate of the likelihood that the hypothetical situation would have occurred, in the other the court must form an estimate of the likelihood that the possibility will occur. Both are to be distinguished from events which are alleged to have actually occurred in the past. Lord Diplock said in Mallett v McMonagle [1970] AC 166 at 176:
'The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.'"
17 Mr Hancy, counsel for the respondent, sought to resist the consequences that appear to follow from the principles so enunciated (that is, that the value of the lost opportunity is not to be determined in accordance with the balance of probabilities) by relying on the following remarks of Mason CJ, Dawson, Toohey and Gaudron JJ in Sellars v Adelaide Petroleum NL (at 355):
"Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities."
See also per Brennan J at 362 and 368.
18 Mr Hancy submitted that it followed from these remarks that, while the value of the opportunity lost (and the prejudice) suffered by the appellant was to be ascertained by reference to the degree of possibilities involved, the onus was on the appellant to prove, firstly, on the balance of probabilities, that it sustained some prejudice. He submitted that proof that some prejudice was suffered depended upon proof, upon a balance of probabilities, that, had timely notice been given, the appellant would have carried out an investigation. As the learned trial Judge found against the appellant on this issue, it was submitted, the argument advanced on the appellant's behalf must fail.
19 In considering this issue, I accept the submission of Mr Odes that the appellant's loss of opportunity was analogous to the loss of a chance and, just as the loss of a chance is compensable, so is a value to be attributed to the opportunity that was lost. This is consistent with the view that "ordinary contractual principles" should be applied to situations where "a fair balance needs to be struck between insurer and insured": Insurance Contracts, Report No. 20 by the Australian Law Reform Commission referred to in Ferrcom Pty Ltd v Commercial Union Assurance Co of Australia Ltd (at 340).
20 In Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, Mason CJ, Dawson, Toohey and Gaudron JJ said (at 349):
"In the realm of contract law, the loss of a chance to win a prize in a competition resulting from breach of a contract to provide the chance is compensable, notwithstanding that, on the balance of probabilities, it is more likely than not that the plaintiff would not win the competition ... As the contract contained a promise to provide the chance, the breach of the contract resulted in the loss of the chance and that loss was for relevant purposes an actual loss, in the sense in which Dixon and McTiernan JJ used that expression in Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 at 143. And, where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages ... The damages will then be ascertained by reference to the degree of probabilities, or possibilities, inherent in the plaintiff's succeeding had the plaintiff been given the chance which the contract promised."
21 Their Honours went on to say:
"And there can be no doubt that a contract to provide a commercial advantage or opportunity, if breached, enables the innocent party to bring an action for damages for the loss of that advantage or opportunity."
22 Just as the contract discussed in Sellars v Adelaide Petroleum NL contained a promise to provide a chance, the contract of insurance in the present case contained a promise to provide an opportunity to the appellant to investigate a claim at an early stage (and, as part of that investigation, to refer the claimant to appropriate medical practitioners - and thereby to reduce the extent of the injuries and symptoms suffered). In my opinion, the loss of the opportunity was for relevant purposes an actual loss. Once it is accepted that the opportunity comprised both the opportunity to investigate and the opportunity to refer the claimant to an appropriate medical practitioner, it is self-evident that it had some value. That some value is ordinarily to be attributed to that opportunity is the reason why insurers invariably require provisions in the terms of condition 2 to be part of their indemnity policies. Accordingly, I do not accept that proof that some prejudice was suffered depended upon proof, upon a balance of probabilities, that, had timely notice been given, the appellant would have carried out an investigation. In the circumstances of this case, in my view, upon proof that condition 2 was breached, it was established that the appellant had sustained some prejudice. That prejudice was the loss of the opportunity afforded to the appellant to exercise the rights conferred upon it thereby. The very nature of that opportunity was such that its loss resulted in some prejudice being suffered.
[36] It should be noted that in QBE Insurance Ltd v Moltoni Corporation Pty Ltd (supra) the notification clause was expressly stated to be a condition precedent to the right to recover unlike the clause (condition 2) in this case.
[37] Mr Sudhakar also cited the decision of Williams J of the Supreme Court of South Australia in Vehlow v Ocean Foods Pty Ltd and MLC Fire & General Insurance Co Pty Ltd reported in Australian & Mew Zealand Insurance Reporter case [60-420]. The facts of that case are very similar to the present but the learned Judge came to the opposite decision that I have come to in this case, namely, that the insurer’s agent was in fact notified orally of the accident and therefore does not assist his case.
[38] Instead, I am persuaded to follow the decision of Connors J of this Court in Arula Investments Company Limited v Dominion Insurance Limited [2007] FJHC; HBC 296 of 2006L (20 July 2007) in which his Lordship held:
[16] In Sukhraj v Queensland Insurance Co Ltd – 9 FLR 34 the Supreme Court of Fiji, as it was, considered the provisions of an insurance policy in the following terms:
“Provided always that the above indemnities are granted subject to the due and proper observance and fulfilment by the insured ... conditions hereto ... which conditions shall be deemed to be of the essence of the contract and so far as they contain anything to be done by the insured, each of them shall be a condition precedent to the right to recover thereunder.”
[17] The Court relied upon Welch v Royal Exchange Assurance[2] and held that a breach of such a condition precedent was fatal to a claim under that policy of insurance.
[18] Similarly, in Brij Bushan v Queensland Insurance Co Ltd – 13 FLR 203 the Fiji Court of Appeal considered similar condition precedent clauses and held that the failure to comply with such clauses was fatal to a claim pursuant to the policy.
[19] There is nothing in the subject policy that specifically makes the conditions upon which the defendant relies to avoid the policy, a condition precedent to the acceptance of a claim pursuant to the policy.
[20] The defendant submits that section 26 of the Insurance Law Reform Act 1996 enables the defendant to avoid the policy as it has been prejudiced by the failure of the plaintiff to comply with the provisions of the policy.
[21] Section 26 of the Insurance Law Reform Act 1996 provides: ...
[22] In support of its reliance the defendant refers the Court to various decisions of the State Courts of Australia. These authorities are unhelpful with respect to the issue to be determined in this matter.
[23] The only evidence before the Court is there being any prejudice to the defendant is the alleged prejudice detailed in the affidavit of Vikash Kumar sworn on the 15th January 2007.
[24] There is nothing therein to suggest that the defendant was in fact prejudiced that the scene in any way been tampered with or the machinery destroyed. There is nothing to suggest that injured worker was interviewed and contended that the scene had in any way been tampered with or altered.
[25] It is difficult in the circumstances to conclude on the paucity of evidence that is before the Court that it would be inequitable if the provision contained clause 2 (a) (1) of the policy were not to bind the insured.
[26] On the basis of the authorities referred to, I am of the opinion that the defendant is unable to avoid the policy and that the plaintiff is entitled to the declaration and orders sought in the Originating Summons and I order accordingly.
[39] Further, on the issue of prejudice, it is clear to me that the refusal of the Defendant to defend and participate in the 2006 action was not because of its inability to view the scene and interview witnesses, or that it did not think its insured was not liable, but rather that the “wrong” company was insured.
[40] The Defendant had a report from its investigator. The fact that nothing was mentioned of the contents of the report and the report was not tendered into evidence makes it highly suspicious that the investigator concluded that the insured was not negligent or failed to make the workplace safe. Instead, the Defendant took the hard line that the claim was against a firm that it did not insure. As the Defendant’s Claims Executive said in his evidence, he did a search and the name appeared but that policy had long lapsed. But he conveniently ignored the existence of another policy for the same business that was current.
[41] There is another reason why I think it would be quite inequitable for the insurer to escape indemnity. And that is the Plaintiff’s argument that the Defendant by its conduct is now estopped from resiling from its obligations under the policy. I take the law as succinctly explained in Barry v Heider [1914] HCA 79; (1914) 19 CLR 197 (16 December 1914), per Isaacs J at p 217:
(3) ... the doctrine of estoppel in pais does not rest on the fraud or moral misconduct of the person estopped, but on the effects of his conduct upon the party claiming the estoppel. This is clearly and authoritatively brought out in a case I have on a former occasion referred to— Sarat Chunder Dey v. Gopal Chunder Laha LR 19 Ind. App., 203, 215. Lord Shand there says:—"The law of this country gives no countenance to the doctrine that in order to create estoppel the person whose acts or declarations induced another to act in a particular way must have been under no mistake himself, or must have acted with an intention to mislead or deceive. What the law and the Indian Statute mainly regard is the position of the person who was induced to act; and the principle on which the law and the Statute rest is, that it would be most inequitable and unjust to him that if another, by a representation made, or by conduct amounting to a representation, has induced him to act as he would not otherwise have done, the person who made the representation should be allowed to deny or repudiate the effect of his former statement, to the loss and injury of the person who acted on it. If the person who made the statement did so without full knowledge, or under error, sibi imputet. It may, in the result, be unfortunate for him, but it would be unjust, even though he acted under error, to throw the consequences on the person who believed his statement, and acted on it as it was intended he should do."
The Indian Evidence Act was under discussion and used the word "intentionally," and the Privy Council held that the word was introduced for the purpose of declaring the law in India to be precisely that of the law of England. Having so stated, their Lordships say (LR 19 Ind. App., 203, at p 219):—"A person who, by his declaration, act, or omission, had caused another to believe a thing to be true and to act on that belief, must be held to have done so intentionally, within the meaning of the Statute, if a reasonable man would take the representation to be true, and believe it was meant he should act upon it. And to this view effect was given in the case of Cornish v. Abington 14 H. & N., 549. and the later cases."
[42] Having come to the conclusion that Mr Kumar did notify the insurance agent of the accident and the agent having told him not to worry until the claim was lodged and Mr Kumar then leaving the matter at the hands of the insurer and its agent after giving them the writ, I therefore find that the Defendant insurer is now estopped from denying liability.
[43] Finally, the proposal and the policy limit the "liability at common law" to $100,000. Under the terms of the policy, the insurer is not obliged to pay the costs of the litigation unless it agrees. The point was not fully argued by both counsel and I am left with no option but to conclude that the total compensation payable including interest and costs is limited to $100,000.
CONCLUSIONS
[44] The Plaintiff did notify the Defendant of the accident. Even if I am wrong, section 26(1)(b) of the Insurance Law Reform Act, 1996 prevents the Defendant from denying liability either because the Defendant has not been prejudiced or it would be inequitable for the Defendant to deny it or both. Further, and alternatively, the Defendant is now estopped from denying liability.
[45] For these reasons I grant the orders sought in paragraphs 1 and 2 of the Originating Summons. Paragraph 2 is limited to $100,000.
[46] To avoid any doubt these orders are to operate as a stay of execution of the judgment in HBC 172 of 2006L with liberty to apply.
COSTS
[47] The Plaintiff is entitled to his costs. I have set out the case history above. Some of the costs have already been awarded. I have considered the award of costs on the bases of the affidavit and other material and submissions filed, the Plaintiff having made only oral submissions, and the duration of the hearing and assess costs at $1,500.
ORDERS
[48] The Orders are therefore as follows:
Sosefo Inoke
Judge
[1] Ipp and Wallwork JJ, Murray J. dissenting.
[2] (1938) 4 All E R page 289.
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