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Sun Insurance Company Ltd v Korotama [2011] FJHC 89; HBA24.2007L (23 February 2011)

IN THE HIGH COURT OF FIJI
AT LAUTOKA
CIVIL JURISDICTION

Civil Appeal No: HBA 24 of 2007L

BETWEEN:

SUN INSURANCE COMPANY LIMITED
Appellant

AND:

JOVECI KOROTAMA and SALOTE MATACURU
Respondents

FINAL JUDGMENT

Judgment of: Inoke J.

Counsel Appearing: Mr A Sudhakar for the Appellant
Mr S Ram for the Respondents

Solicitors: AK Lawyers for the Appellant
Samuel K Ram for the Respondents

Date of Hearing: 10 September 2010
Date of Judgment: 23 February 2011

INTRODUCTION

[1] The Respondents took out comprehensive insurance with the Appellant for their van. The van was involved in an accident so they lodged a claim with the Appellant insurer. The insurer refused to pay and the Respondents sued them in the Ba Magistrates. The learned Magistrate gave judgment on 2 July 2007 in favour of the Respondents for $14,701.00 for repairs and loss of use and costs of $800. This is the appeal against that judgment.

THE GROUNDS OF APPEAL

[2] The Grounds of Appeal were filed on 13 September 2007 but the appeal did not get to be heard by this Court until 10 September 2010 because the Magistrates Court file was not complete and available.

[3] There were 12 grounds of Appeal but counsel for the Appellant summarised them in his submissions as follows:

1. Whether the respondents breached the conditions of the policy by using their motor vehicle for hire or reward and/or commercial use.
   
2. Whether there was a policy of insurance in force in respect of the respondents vehicle while it was being used for hire and reward and/or commercial use when it was not insured for such use but commercial use.
   
3. Whether the respondents made material misrepresentation and/or no disclosure to the appellant in the insurance proposal.
   
4. Whether the respondents misrepresentation and non disclosure in the proposal made the policy void.
   
5. Whether the appellant was liable to indemnify the respondents for any loss or damage to the respondents motor vehicle up to the full sum insured.
   
6. Whether the respondents were entitled to recover for loss of use of their vehicle from the appellants when the policy did not provide cover for loss of use.
   
7. Whether the appellant was entitled to avoid the policy.
   

THE INSURANCE POLICY

[4] The proposal form had written in by hand that the vehicle was for private use and the box alongside the question "Is the vehicle ever used for business purposes?" was marked "No". The sum insured was $14,000. The Policy expressly excluded liability for loss or damage caused "whilst the motor vehicle is being used for the conveyance of passengers for hire, fare or reward".

THE MAGISTRATES COURT HEARING

[5] It was not in dispute that the vehicle was being hired for reward at the time of the accident. The first Respondent's evidence was that he bought the vehicle to be used for hire to supplement his wages income. The vehicle was registered for "commercial" usage and it was his understanding that the policy covered the vehicle. He signed the proposal form which was already filled out. It was not witnessed at the time of signing. In fact it was the only document signed by him. No one explained to him what the policy was or its terms. A copy of the policy was not given to him until after he went to lodge his claim. He understood the policy was to help him with accident repairs. In cross examination he said he signed the form assuming that the form had been filled in correctly. He signed it in good faith.

[6] The learned Magistrate's Ruling was brief. The basis for her Ruling appear in the following passages:

It is not disputed the motor vehicle is a private motor vehicle and the insurance policy is for a private motor vehicle.

.

.

The critical issue before this court is the fact that the Plaintiff had paid his insurance premium. It was correct. He suffered an accident due to another motor vehicle's fault. His vehicle number plate was a private motor vehicle. The Plaintiff consented to the person driving to drive on his behalf, as he was too tired to drive. An accident occurred. The payment of $50 by another to get to Lautoka does not detract from the fact that the Plaintiff's motor vehicle was a private motor vehicle and insured under the Private Motor Vehicle Policy.

I find that counsel for the Defendant has failed to put any defence before this court to show that Sun Insurance is not obliged under the insurance policy signed by the Plaintiff to cover for the loss caused by the accident suffered by the Plaintiff.

THE APPEAL

[7] Much of the Appellant's argument in this appeal centered on the use of the vehicle and the exclusion clause in the Policy. Whereas the Respondents submissions were directed at the failure of the insurer to comply with the provisions of the Insurance Law Reform Act 1996, namely ss 11, 12, 13 and 14.

[8] I think I need only refer to s 14 which puts the onus on the insurer to clearly inform the insured in writing before the contract of insurance is entered into of the general nature and effect of the duty of disclosure: s 14(1). And if the insurer fails to so explain then it cannot complain that the insured failed to make full and frank disclosure unless such failure was fraudulent: s 14(2).

[9] The evidence in this case fell far short of establishing fraud by the Respondents. The learned Magistrate accepted that the first Respondent acted in good faith. I also think it was open to her to also find that he was entitled to and did rely on the bank and the insurer to provide him with proper cover. This is not a case where the doctrine of non est factum applied. The obligations and requirements placed on the insurer are set by statute and must be complied with strictly according to the statute, namely, the insurer must prove fraud by the insured. Having failed to do so the insurer cannot deny both liability and quantum.

[10] This disposes of the appeal. Although I differ from the findings of the learned Magistrate in so far as the policy being one for private use and from her reasoning, she came to the right conclusion. There is no demonstrable error of fact or law. The appeal is dismissed.

[11] Strictly, there should be an adjustment of the premium for commercial use but there is no evidence before me to do that so accordingly I make no order in that regard.

COSTS

[12] The Respondents are entitled to their costs which I summarily assess at $1,500 to be paid within 21 days.

ORDERS

[13] The Orders are therefore as follows:

1. The Appeal is dismissed.
   
2. The Appellant shall pay the Respondents' costs of $1,500 within 21 days.
   

Sosefo Inoke
Judge