IN THE COURT OF APPEAL OF
THE REPUBLIC OF VANUATU
APPEAL CASE No 1 of 1995
 
IN THE MATTER OF:
THE ESTATE OF FRANCESCO PICCHI deceased
AND:
ANZ BANK (VANUATU) LIMITED AND
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
Appellants
AND:
LUCIANA PICCHI
First Respondent
AND:
QBE INSURANCE (VANUATU) LIMITED
Second Respondent
 
Coram: Acting Chief Justice Lunabek
Mr Justice Bruce Robertson
Mr Justice John von Doussa
Mr Justice Oliver Saksak
Counsel: Mr Mark Hurley for the appellant
Mr Juris Ozols for the first respondent
Mr Silas Hakwa for the Estate of F Picchi deceased
REASONS FOR DECISION
This is an appeal from a decision of Downing J in which directions were given as to the distribution of the proceeds of an insurance policy. The proceedings had been brought in the Probate jurisdiction of the Court.
The policy of insurance had been issued at Port Vila on 25 August 1994. Cover operated from 16 February 1994, that being the day on which an "application" for insurance was received by the insurer, QBE Insurance (Vanuatu) Limited. A cover note was issued on 25 March 1994. The formal policy document was issued later. The risks covered included Medical Repatriation, Travel, and Personal Accident including death. The death cover was in respect of the life of Francesco Picchi.
Francesco Picchi was killed by persons unknown on 29 November 1994. QBE Insurance (Vanuatu) Limited admitted liability under the policy, and by direction of the Court, the proceeds of the death cover were paid into Court to await directions as to the distribution thereof as there was argument over who was the "Insured" entitled to the money.
The deceased left a number of creditors, some of whom appeared at the trial to argue that the proceeds should be paid to the deceased’s estate. Their appearance was "effectively pursuant to Order 17 r 21 of the High Court Rules", to use the words of the primary judge. Other claimants were the deceased’s widow Luciana Picchi (referred to in the policy both as "Mari Luciana" and "Mrs M. Picchi") and the deceased’s son Mario Fransesco Picchi (incorrectly referred to in parts of the policy as "Mrs F.M. Picchi"). At trial, the Attorney-General appeared as amicus curiae, and presented an argument on the construction of the policy.
The insured sum in issue was Vt25,000,000. The arguments at trial suggested three possible constructions of the meaning of "Insured" in the policy: (1) that the Insured entitled to the proceeds was the estate of the deceased, (2) that the Insured comprised the deceased, his wife and his son, so that the proceeds would be distributed in three equal shares between them, and (3) that as the deceased was dead, the proceeds should go to the deceased’s wife and son in equal shares.
The policy is a confusing document that has obviously been compiled by taking terms from a number of different precedents, probably with the aid of a word-processor, and putting them together. In the process little if any regard has been paid to the order of the resulting clauses, and there are a number of textual inconsistencies. The trial judge was critical of these, as the composite policy document did not clearly indicate who was the "Insured" entitled to the proceeds. After discussing the arguments presented by counsel, his Honour accepted the second of the constructions suggested. In the result, a direction was given that the proceeds be divided three ways.
Two of the creditors who appeared in the Court below now appeal and contend that the whole of the proceeds belong to the estate of the deceased. Counsel for Mrs Picchi and her son resist the appeal contending that the decision below is correct, or alternatively that the proceeds should go only to Mrs Picchi and her son, either as a matter of construction of the policy, or pursuant to s 11 of The Married Women’s Property Act 1882 (UK).The Attorney-General did not appear on the appeal. Counsel for the deceased’s estate indicated that the estate supported the decision under appeal. In substance, counsel repeated the arguments that are recorded in the judgement below and it is not necessary for us to repeat them.
As we understand his Honour’s Reasons, his conclusion rested on the wording of clauses 5 and 9 in a "Certificate" which appears as the first page of the policy document issued on 25 August 1994. The Certificate states the Name and address for Policy as Mr F. Picchi & Family. Clause 5 reads:
5. THE INSURED
Mr F. Picchi & Family (as stated below)
Clauses 6,7 and 8 state the period of cover, that it is world-wide and that the OCCUPATION... is that of Builder including Family. Clause 9 then states:
9. DESCRIPTION OF RISK &/ INTEREST COVERED/POLICY AMENDMENT
Covering: Mr F. Picchi
Mrs M. Picchi
Mrs F.M. Picchi
1) Limit of covers as per attached Part 1, Level 4 - Medical cover
2) Personal Accident on Mr Picchi with (sic) Limits - as per Attached
The attachment referred to in paragraph 2 is on the following page, and relevantly provides:
PART 2 - PERSONAL ACCIDENT
On the life of Mr F. Picchi only.
Death and Permanent Disability VT 25,000,000 (Principal Sum)
Weekly Accident VT 100,000 per week
(7 day waiting period)
Weekly Sickness NIL
The primary Judge relied on that part of cl 5 which says "The insured...Mr F. Picchi & Family (as stated below)" and the words in cl 9 "Covering: Mr F. Picchi Mrs M. Picchi Mrs F.M. Picchi".
We are unable to agree with the conclusion of the primary judge. In our opinion the "Insured" means the deceased alone.
We are of the view that important parts of the policy documents were overlooked at trial, and insufficient regard was given the fact that it was the deceased alone who proposed for the insurance. As the proposer, the deceased was the offeror whose offer was accepted when a cover note was issued on 25 March 1994 agreeing to give cover for one year from 16 February 1994 to 16 February 1995.
The initial application is important. It constitutes the only proposal document that was submitted for the insurance. By clause 3 of the declaration at the foot of the document, the usual provision in a proposal is stipulated: "this application and declaration shall be the basis of the policy and considered being incorporated therein". This document must therefor be looked at in order to ascertain the meaning of the contract of insurance: see Joske and Brooking "Insurance Law in Australia and New Zealand", 1975, p 21-22.
The application names the "applicant" as "Picchi Francesco" only. Question 2 in the application form asks Dependants To Be Insured, and the following information is given:
Spouse Mari Luciana Date of birth 20-8-66
Child Picchi Francesco Mario Date of birth 21-10-90
In the body of the policy itself, the expressions "Insured" and "Insured Person" are used on many occasions. Plainly they have different meanings. The Insured is the owner of the policy to whom payment is to be made by the insurer in the event of a claim: see e.g. cl 1.2 and cl 9.4. The Insured Person is defined in cl 2.1 to mean a person whose name has been advised to QBE who is eligible for and covered by the insurance provided under the policy. The names of the deceased’s wife and son had been provided by him in the application for insurance when he specified his dependants. Thus under the sections of the policy that give Medical Repatriation Insurance and Travel Insurance, where the cover is in respect of an Insured Person, the cover extends to injury or loss suffered by any one of the deceased, his wife or his son. But the payment of the benefit of the policy is to be made to the Insured.
The policy may be referred to as a "composite policy", covering several discrete risks each of which could have been insured under a separate contract or policy of insurance. However, to use this description does not point to the conclusion that there are three separate contracts of insurance in this case. There is only one contract. There was one proposal, one cover note, one policy document, and one premium (although paid in four instalments). The policy documents must be read as a whole. The word "Insured" has the same meaning throughout the policy. It is not open to interpret "Insured" as having one meaning in respect of one Section of the policy, and as having a different meaning in another Section.
The fact that the proposal for insurance is made by one only of the parties whose losses are said to be covered does not necessarily lead to the conclusion that the Insured is only the proponent. It is well recognised that one party may propose for a policy, and pay the premium for it, although the policy will give cover to other people as well. The case of General Accident, Fire & Life Insurance Company Limited v Midland Bank Ltd [1940] 2  KB 388 which was referred to in argument and by the primary Judge is an example. Contractors’ All Risk policies and Marine Insurance policies are other types of policy that often insure a number of different parties even though the policy is taken out by only one of them. However in these cases the insurance of each of the parties is for their respective interests in the subject matter of the insurance, e.g. as owner and as financier respectively. Where separate rights and interests are insured each of the separate interest holders is entitled to be paid their own losses in the event that an insured contingency occurs.
The wording of the policy will usually make the situation plain, but sometimes, as in this case, the policy wording is not clear whether separate rights and interests are insured for the benefit of each interest holder individually. Where the policy is not clear, it is permissible to look not only at the policy but to the background facts which provide the context in which the insurance was effected: Halsbury’s Laws of England, 4 Ed, vol 25, para 416. Those facts might provide an indication of the intention of the parties. In the present case we have the head of the family taking out insurance for the kinds of loss that would fall to his pocket if they were not insured, namely the cover for Medical Repatriation, and for Travel. This suggests that the insurance was his to save him from this expense. It does not seem realistic to suggest that he was intending to contract on behalf of his 3 year old son to whom payment would become due in the event of an illness being suffered by him. Moreover, the infant could not give the insurer a valid receipt, and it would be difficult for an insurer to make payment to him.
In the case of the Personal Accident Section the only Insured Person was the deceased: see Part 2 of the attachment set out above. The conditions of the policy relating to Part 2 provide that the Principal Sum will be paid not only in the event of death, but also if one of a number of major injuries lead to Permanent Disability. For example the Principal Sum is payable on the loss of one or more limbs, or on the loss of sight in one or both eyes. Portion of the Principal Sum is payable on the happening of other less severe permanent injuries. We think that the provision of weekly benefits for illness, and the other benefits just referred to, are a strong indication that the intended Insured is the deceased alone. It would be very odd if the deceased intended when he proposed for the insurance that if he lost both legs in an accident that his 3 year old son would be paid one third of the Principal Sum. If that were intended, the law would require that the money be held in trust for the infant until he turned 18. That would raise further problems as to who would act under the law as trustee, and whether any of the money could be used for his maintenance and advancement before he turned 18.
In the present case, the primary judge observed that the insurance was not in respect of the separate rights and interests of the deceased, his wife and son. We agree with that conclusion when regard is had to the facts and to the nature of the insurance. That is so even though in the cover note where the Insured is described as "Mr F. Picchi, Mrs M. Picchi and one child" there is a printed note on the form that was used stating "For their respective rights and interests". That notation was not appropriate in the circumstances. In any event even if the policy insured separate rights and interests, that would point to the conclusion that the death cover under the Personal Accident section of the policy was owned solely by the deceased.
It is against this background that clauses 5 and 9 of the Certificate must be construed. With the above considerations in mind, and treating the concluding words of cl.9 -"Personal Accident on Mr Picchi wiht (sic) Limits as per attached" as a significant part of cl.9, we have come to the conclusion that the Insured means Mr F Picchi and, on his death, his estate.
We do not consider that s 11 of The Married Woman’s Property Act assists the respondent. That section was in force as an Act of general application in England on The date of Independence, and still is. It relevantly provides:
"A policy of assurance effected by any man on his own life, and expressed to be for the benefit.....of his wife and children.....shall create a trust in favour of the objects therein named, and the moneys payable under any such policy shall not, so long as any object of the trust remains unperformed, form part of the estate of the insured, or be subject to his or her debts....."
There must be considerable doubt whether this section could have any application to a policy of the kind here in question. In 1882 the expression "A policy of assurance effected by any man on his own life" would have been understood as referring to a traditional life insurance or endowment policy where the insured contingency (death or attaining a specified age) was bound to happen, and in the meantime the policy would be accruing a surrender value.
A personal accident policy, even where an accidental death cover is included, is a different kind of policy, as the insured contingency may never happen. It is, however, unnecessary to consider how far the concepts of 1882 embodied in s 11 apply to insurance products of the 1990’s as we consider that the terms of the section could not apply here. The section, by its terms, applies where the policy is effected by the husband as the owner of the policy (the Insured), but the policy is expressed to be for the benefit of his wife and child. In other words, the policy is expressed to be for the benefit of others. The insured in this situation is the named legal owner of the policy, and he holds it on the express trust created by the terms of the policy for the named beneficiaries.
In the present case, the policy by its terms is for the benefit of the Insured. The problem, as a matter of construction, is to identify the Insured. Once the Insured is identified, there is nothing in the policy wording that expresses that the Insured holds the benefit of it for others. On the contrary, cl 1.2 and cl 9.4 require that the proceeds be paid to the Insured without qualification.
The appeal is allowed, and the directions given by the primary Judge are set aside. The following orders and directions are made:
1.(a) that the costs of the appellants’ in the court below and on the appeal (including all reserved costs) be taxed on a party and party basis and paid out of the proceeds of QBE Insurance (Vanuatu) Limited Policy No 34684 and interest thereon;
(b) that the costs of the first respondent (the deceased’s widow) and of the deceased’s Estate be taxed on a solicitor and client basis and paid out of the proceeds of the said Policy;
(c) that the above costs be paid in priority to any other claim upon the said proceeds.
2. that the balance of the said proceeds remaining after compliance with paragraph 1 hereof shall be paid to the Estate of Francesco Picchi deceased.
Dated 21 October 1997.
Lunabek ACJ.
Robertson J.
von Doussa J.
Saksak J.