IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No: HBC 280 of 2010s

BETWEEN:

COURTS (FIJI) LIMITED
[Plaintiff]

AND:

THE NEW INDIA ASSURANCE COMPANY LIMITED
[Defendant]

Counsel: Mr. S. Singh & Mr. Newton for the Plaintiff.
Mr. F. Haniff for the Defendant.

Date of Judgment: 20th April, 2012

JUDGMENT

[1].	The applicant by its originating summons seeks inter alia the following relief:

(i)	A declaration that the compulsory termination of the service of civil servants at the age of 55 pursuant to section 15 of the State Services Decree 2009 and/or Regulation 14(1) of the Public Services Regulation is a redundancy or retrenchment within the meaning of those words in the exclusions to Section III of the Consumer Credit Insurance Policy issued by the defendant to the plaintiff on or about 28.07.2006;

(ii)	A declaration that the defendant as an insurer is obliged to effect payment as the insured in respect of claims made by the plaintiff for payment of credit installments due by the plaintiff.

[2].	The originating summons was supported by the affidavit of Rajesh Sharma, the Chief Executive Officer of the plaintiff-company sworn on 21.09.2010.

[3].	The plaintiff is a multi-store retailer specializing in the sale of household and leisure goods. Sale by hire purchase is one of its payment modes. In order to secure payments of the hire purchase sales, the plaintiff had obtained Indemnity Insurance from the defendant in terms of the policy of insurance No dated 28.07.2006.

[4].	In terms of the insurance policy the defendant undertook to indemnify the plaintiff, if the hirer becoming unemployed during the term of the insurance, subject to an exception, that the said undertaking will not be effective if the redundancy or retrenchment resulted from the retirement or early retirement of the hirer. 

[5].	At the time of execution of the agreement, the retirement age was 60 years. However, consequent to an amendment, the retirement age of all civil servants was reduced from 60 years to 55 years under section 15 of the State Services Decree read with Regulation 14 (1) of Public Service Regulations. Accordingly, civil servants who had executed hire purchase agreements ceased to be employed upon reaching the age of 55 years. 

[6].	The defendant denied liability on the basis that the retirement falls within the ambit of the exclusion clause. i.e., unemployment resulted due to retirement or early retirement. 

[7].	Central to the issue is thus, the interpretation of section (iii) of the insurance policy. 

[8].	I have carefully considered the legal submissions filed by both parties on the issue.

Principles of Law

[9].	Let me set out section iii of the policy, which is the operative clause to determine the issue before me.

(i)	Section iii of the policy reads:

In the event of the Hirer becoming unemployed during the term of the insurance, the insurer will pay any outstanding installments on the Hirer's Account falling due within the period of redundancy/retrenchment (excluding installments falling due within the first 6 months of the Agreement).

Exclusions to section III

In the event of Redundancy/Retrenchment the insurer shall not be liable if:-

i.	………...
ii.	………...
iii.	………...
iv.	Unemployment resulted from retirement or early retirement, voluntary resignation or disciplinary dismissal.

[10].	It is axiomatic that to qualify under clause III of the policy, the hirer must first become unemployed. A plain reading of the above clause appears to me that the parties had agreed that if redundancy or retrenchment occurred after 6 months of the effective date of the policy, the insurer would pay any outstanding installment on the hirer's account if the cause of such unemployment did not arise from retirement or early retirement (Emphasis added).

[11].	It will be convenient to start by considering the meaning of the words redundancy, retrenchment and retirement. I have looked at the definitions in Oxford Advanced Learners Dictionary in aid which reads as follows: 

•	Redundancy - 'The situation when somebody has to leave their job because there is no more work available for them'.

•	Redundant means a person without a job because there is no more work available for him.

•	Retrench: - to tell somebody that they cannot continue working for you.

•	Retire from job- stop doing a job especially because a person has reached a particular age or because he is ill.

[12].	Clause (iii) expressly excludes unemployment arising out of retirement. The plaintiff contended that clause (iii) is ambiguous thus the contra proferentum rule must be applied in construing the meaning of the exclusion clause. The contra proferentum rule has application only when a clause or provision in a document is truly ambiguous, in which case the interpretation should be made against the interests of the party who proffered the document.

[13].	The defendant's argument rests on the exclusion clause. Therefore, let me consider the exclusion clause and the law relating to the construction of exclusion clauses. 

[14].	A general rule in defining an exclusion clause is not to construct it, inconsistence with the main purpose of the policy, but upon considering the whole document. Trickett v. Queensland insurance Co. Ltd [1932] N.Z.L.R. 1727 at 1733 affirmed in [1936] A.C. 159

[15].	The main purpose of the policy is to recover the remaining installments in the event of the hirer becoming unemployed during the term of insurance. In other words, the insured is expected to be indemnified by the insurer in the event of the hirer becoming unemployed. 

[16].	In the present case, the exclusion clause reads: 'the insurer shall not be liable if unemployment resulted from retirement or early retirement, voluntary resignation or disciplinary dismissal'.

[17].	The exclusion thus specifically excludes any retirement or an early retirement. (Emphasis added).

[18].	It is plain and obvious that both at the retirement and an early retirement exempts the insurer from its liability. It is noteworthy, that the agreement does not contain a clause specifying the age of retirement. Evidently, an early retirement that occurred unexpectedly, would not impose a liability on the insurer. If only the word 'retirement' is contained in the exclusion clause then one could argue that an early retirement would not exempt the insurer from its liability or the exclusion clause is ambiguous. 

[19].	The insertion of the word 'early retirement' in my view has eliminated any ambiguity, if any, on the exclusion clause. Inclusion of the words 'early retirement' means that no liability is imposed on the insurer even if the insured are made to retire prematurely or unexpectedly.

[20].	The purpose of the policy is to recover any loss in the event of the hirer becoming unemployed during the term of the insurance. Under the first part of section III, the indemnity arises only if a hirer becomes unemployed, but in respect of any outstanding installments falling due within the period of the hirer's redundancy /retrenchment. It excludes any installment that falls during the first 6 months of the hirer's agreement.

[21].	The defendant submits that section III intended that predictable and more permanent forms of unemployment such as retirement should not be covered by the indemnity. In other words, events, which cannot reasonably be anticipated, would be covered by the insurance.

[22].	A careful analysis of the section III evinces that the risk assumed by the defendant under the policy was the risk of non-payment due to unexpected occurrence of unemployment namely, redundancy/retrenchment to hirers. 

[23].	It is plain and obvious that redundancy occurs unexpectedly, because, the meaning of redundancy itself shows that it could happen unexpectedly. 

[24].	However, a retirement in the ordinary sense is not something happens unexpectedly; unless somebody has to retire on medical grounds or on similar reasons.

[25].	The plaintiff contends that the decision by the executive branch of Government to lower the retirement age of civil servants, has brought about a state of redundancy upon those civil servants who were older than the new lowered retirement age, and will bring about redundancy to others upon reaching that age.

[26].	The plaintiff further submitted that the retirement consequent to the Decree would amount to a redundancy because there would no longer be work available for hirers. However, it must be noted that such an inference cannot be drawn in the present case, because there is no evidence to show that the retiring age was lowered due to non availability of work for the hirers. It is indeed a policy decision of the government. Therefore, it is illogical to say that the retirement of hirers at the age of 55 would amount to a redundancy or retrenchment.

[27].	Inclusion of the words retirement and early retirement does not in my view create any ambiguity nor does it manifest any inconsistency with the main objective of the policy. The retirement though occurred unexpectedly due to a policy decision of the government cannot be treated as a redundancy or retrenchment. 

[28].	The exclusion clause is, therefore, plain and obvious that at the time of issuing the insurance policy the parties agreed to exempt the insurer from any liability arising out of retirement or an early retirement of the plaintiff's employees. When the exclusion clause is clear and unambiguous, the necessity of applying the contra proferentum rule does not arise. 

[29].	The clause is as clear as crystal, which means that if a person becomes unemployed and failed to pay installments, the insured is protected. In my view, there is no ambiguity in the clause that warrants me reading the clause otherwise than in accordance with its express terms using the normal canons of statutory interpretations. 

[30].	Upon reading the exclusion clause of the policy, the only conclusion that can be arrived at in my view is that it exempts the insurer from any liability arising out of retirement or an early retirement of the plaintiff's employees. 

[31].	Upon considering the above, I am of the view that the arguments advanced by the plaintiff are unfounded and also devoid of any merits. On the above premise, I dismiss the plaintiff's summons.

[32].	Cost is summarily assessed in the sum of $ 500.00

Pradeep Hettiarachchi
JUDGE

At Suva
20th April, 2012