Court of Appeal of Samoa
National Provident Fund Board v Progressive Insurance Company Ltd [2012] WSCA 3

Case name: National Provident Fund Board v Progressive Insurance Company Ltd

Citation: [2012] WSCA 3

Decision date: 31 May 2012

Parties: 
NATIONAL PROVIDENT FUND BOARD a corporate body established under the National Provident Fund Act 1972 and carrying on business in Apia v PROGRESSIVE INSURANCE COMPANY LTD a duly incorporated company having its registered office at Apia, Samoa

Hearing date(s): 25 May 2012

File number(s): CA 13/11

Jurisdiction:  Civil

Place of delivery:  Mulinuu

Judge(s): 
Honourable Chief Justice Sapolu
Honourable Justice Baragwanath
Honourable Justice Fisher

On appeal from:

Order:

Representation: 
S L Petaia for Appellant
R Drake for Respondent

Catchwords: 

Words and phrases:

Legislation cited:

Cases cited:
Kelly v National Insurance Co of NZ [1995] 1 NZLR 641 at 645 (CA); 
Hepburn v A Tomlinson Haluers Ltd [1966] AC 451 (HL)

Summary of decision:

IN THE COURT OF APPEAL OF SAMOA
HELD AT MULINUU

C.A. 13/11

BETWEEN
SAMOA NATIONAL PROVIDENT FUND a corporate body established under the National Provident Fund Act 1972 and carrying on business in Apia
Appellant

AND:
PROGRESSIVE INSURANCE CO LTD a duly incorporated company having its registered office at Apia, Samoa
Respondent

Coram:
Honourable Chief Justice Sapolu
Honourable Justice Baragwanath
Honourable Justice Fisher

Counsel:
S L Petaia for Appellant
R Drake for Respondent

Hearing: 	25 May 2012

Judgment: 	31 May 2012

JUDGMENT OF THE COURT
Introduction
1.	The appellant (NPF) appeals against the Supreme Court’s dismissal of NPF’s claim against the respondent (Progressive) on 29 July 2011. NPF had sought an indemnity against its loss of $327,075 as the result of a burglary at its premises on 20 October 2008. 
Factual Background
2.	NPF pays pensions to senior citizens throughout Samoa. The pensions are distributed in cash over one distribution week each month. 
3.	On the Friday preceding each distribution week NPF employees would collect the cash from the ANZ Bank and take it to NPF’s premises. On the same day they would divide up the money into appropriate sums for each pensioner, place each pensioner’s sum into an individual envelope and place the envelopes into padlocked boxes. Each box was labelled for a particular district within Samoa.  
4.	Over the weekend the padlocked boxes would be kept in a locked filing room. The filing room formed part of a building the exterior door to which is also locked. 
5	In October 2008 NPF employees collected money from the ANZ in the usual way, sorted it into envelopes and boxes and left it in the locked filing room over the weekend.  Unfortunately an NPF employee and a thief had decided to steal the money. The employee gave the thief a key to the front door. Over the weekend the thief unlocked the front door and entered the building. He broke into the filing room, unscrewed the latches on the boxes and took the money. 
6.	The thief and the employee were apprehended, convicted and sentenced for burglary and theft. Some of the money was recovered but $327,075 was lost. 
The insurance cover
7.	NPF was insured with Progressive against loss of personal property from its premises. The policy relevantly provided:
Subject to the terms, conditions and exclusions hereinafter contained, this policy insures all real and/or personal property (including improvements and betterments) of the Insured or property of others in the care, custody or control of the Insured whilst on the premises of the Insured against DIRECT PHYSICAL LOSS OF DAMAGE occurring during the period of this Policy as stated in the Schedule attaching to and forming part therefore (hereinafter referred to as the “Schedule”). 
...
SUM INSURED
The Underwriters hereon shall not be liable for more than the sum insured stated in the Schedule in respect of each loss or series of losses arising out of one event. This shall be further limited in respect of losses caused by a peril which is subject to an annual aggregate limit as stated in the Schedule. 
...
PROPERTY EXCLUDED
THIS POLICY DOES NOT COVER:
...
2. Property in transit, except as may be provided by Extension hereto. 
...
[on an attached sheet treated as the Schedule]
...
SCOPE OF COVER: 	Fire, Cyclone, Earthquake & Tsunami (Refer Policy Document for Details)
...
SUM INSURED: 	Money	 	: $750,000
...
EXTENSION OF COVER:	Money – Upolu &Savai’i
SCOPE OF COVER:	Burglary accompanied by violence or threat of violence to persons or by violent and forcible entry to or exit from any enclosed building (as per policy)
LIMIT OF LIABILITY:Money in Locked Safe/Money in Transit: $750,000
...
8.	NPF claimed an indemnity from Progressive in reliance on the policy. Progressive declined cover on the ground that when lost, the money was neither in a locked safe nor in transit. NPF brought the current proceedings to enforce its claim. 
Supreme Court proceedings
9.	At a trial in the Supreme Court the facts were not in dispute. The sole question was whether they qualified for cover under the policy. 
10.	In his decision Vaai J covered a number of matters which are no longer in dispute. These included much of the history of insurance dealings between NPF and Progressive over the years, NPF’s move to new premises, the change from having a locked safe to locked boxes in a locked filing room, the role of employee dishonesty outside work hours, the way in which the policy had been extended to include money in transit and whether this constituted a burglary accompanied by violence.  
11.	Critically for the current appeal, the Judge came to two further conclusions. One was that “[in] respect of cash the liability of the Insurer was limited to money in locked safe or money in transit”. The other was that when the money was stolen it was neither in a locked safe not in transit. On that basis the Judge found for Progressive. 
The Appeal
12.	Before turning to the specific grounds of appeal it will be convenient to summarise the meaning which the critical words in the policy appear to bear on their face. The policy is, of course, to be read as a whole. Prima facie the words in the Schedule appear to serve four distinct functions that are relevant to this appeal. 
13.	The first was to extend the type of property to which the policy would respond. An extension was necessary because in the main body of the policy exclusion 1(b) expressly excluded “money”. The words “EXTENSION OF COVER: Money – Upolu & Savai’i” in the Schedule abrogated that exclusion by bringing “money” within the scope of the cover. 
14.	The second was to extend the causes of loss to be covered. The possible causes of loss are dealt with at various points in the main body of the policy. They were extended by the Schedule’s second reference to “SCOPE OF COVER”. The extension adds burglaries accompanied by violence. 
15.	The third function was to establish the maximum cover for any given loss or series of losses. The fact that the maximum would be stated in the Schedule had already been signalled in the main body of the policy. The maximum cover for loss of money was stated in the Schedule in the words “SUM INSURED: Money: $750,000.00”. So whenever the lost property was money, the insured would be covered only up to that figure.   
16.	The fourth function appears to have been to limit the circumstances in which loss of money would be covered. That appears to be function of the words “LIMIT OF LIABILITY: Money in Locked Safe/Money in Transit: $750,000.” On the face of it, the function of those words was to take one of the types of property to which the policy now extended (money) and to limit the circumstances in which its loss would attract cover. 
17.	NPF’s first ground of appeal was that the policy responded once there was a qualifying violent burglary in which money was taken. It was argued that once money was lost there was nothing else in the policy that would derogate from cover. As to the particular words “LIMIT OF LIABILITY: Money in Locked Safe/Money in Transit: $750,000” the argument was that this merely set a maximum cover for money in a locked safe or money in transit. It did not mean that money lost in other circumstances could not be the subject of a claim.
18.	We are unable to accept that submission. The maximum cover for loss of money had already been set earlier in the schedule where the words “SUM INSURED: Money: $750,000.00” appear. There would have been no point in selecting two sub-groups of “Money” and repeating the same maximum. Yet the words “LIMIT OF LIABILITY: Money in Locked Safe/Money in Transit: $750,000” must be given some role. The obvious role is to limit liability to particular ways in which the money might be lost, namely while in a locked safe or in transit. Because those were the only situations in which the policy would respond, any other ways in which money might be lost were not covered. 
19.	The second ground of appeal was that the Judge had failed to give any or proper reasons why the burglary which occurred was not covered by the policy. It is true that there is little discussion of the conclusion that “[in] respect of cash the liability of the Insurer was limited to money in locked safe or money in transit”. But that was doubtless because in the Judge’s view the words “LIMIT OF LIABILITY: Money in Locked Safe/Money in Transit: $750,000” speak for themselves. We agree. 
20.	The next substantive ground of appeal was that the money was in fact in transit at the time of the burglary. The argument was that when it was stolen the money was in transit between the ANZ Bank on the one hand and the pensioners on the other. 
21.	We accept that where goods are in the custody of carriers they are in transit from the time that they leave the customers’ premises to the time when they reach their destination. We further accept that this includes any temporary interruption of that journey: Kelly v National Insurance Co of NZ [1995] 1 NZLR 641 at 645 (CA); Hepburn v A Tomlinson Haluers Ltd [1966] AC 451 (HL). However transit from customer to destination with the same carrier is quite different from a situation in which a corporation withdraws cash from a bank for its own purposes, physically reorganises the cash in preparation for its delivery to the corporation’s own customers, and then delivery to those customers. In that sequence the bank’s only relationship is with NPF. Transit from the bank ended once the money arrived at NPF’s premises.  Any further transit would be an independent one.   
22.	The next substantive ground of appeal was based on the understanding of NPF personnel. Mr Petaia advised that those NPF personnel who were responsible for arranging its insurance understood that loss of the money would be covered from the time that it left the bank to the time that it reached the pensioners. The NPF personnel understood that for this purpose the money would be treated as “in transit” throughout. 
23.	What NPF personnel privately thought is, of course, legally irrelevant. We were referred to correspondence between NPF and Progressive on that subject. No adequate ground was established for preferring the correspondence to the words used in the actual insurance contract. But in any event the correspondence drew a clear distinction between “the storage of funds at your office”, on the one hand, and “the transit of funds while your office is out on the field for payout”, on the other.  From that correspondence it must have been apparent to NPF that if the money was not “in transit” it must be “in storage” at the NPF office. That returned the focus to any special steps that might be required to safeguard the funds while they were “in storage”. There is nothing in the correspondence to suggest that while “in storage” the funds would be held in anything other than a locked safe. 
24.	The remaining grounds of appeal were either reworded versions of those which we have already addressed or challenges to those aspects of the Judge’s reasoning which were not essential to the decision. 
Result
25.	The appeal is dismissed with costs to the respondent in the sum of $5,000. 

Honourable Chief Justice Sapolu
Honourable Justice Baragwanath
Honourable Justice Fisher