Dennis Browne v Nagico Insurance Company Ltd

• Jurisdiction: Saint Kitts and Nevis
• Judge: Webster JA
• Judgment Date: 08 December 2017
• Judgment citation (vLex): [2017] ECSC J1208-1
• Court: Court of Appeal (Saint Kitts and Nevis)
• Docket Number: SKBHCVAP2014/0001
• Date: 08 December 2017

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mr. Davidson Kelvin Baptiste Justice of Appeal

The Hon. Mde. Gertel Thom Justice of Appeal

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

SKBHCVAP2014/0001

Between:

Dennis Browne

Appellant

and

Nagico Insurance Company Limited

Respondent

Appearances:

Mrs. Teshari John-Sargeant for the Appellant

Mr. Sylvester Anthony for the Respondent

Civil appeal — — Whether facts stated by appellant in proposal for insurance misrepresented — Whether failure by appellant to disclose modification of truck material non-disclosure — Whether expert evidence of materiality necessary to enable the Court to find that nondisclosure was material — Whether insurance company entitled to avoid insurance policy on ground of material non-disclosure

In 2008, the appellant purchased a 1997 Ford dump truck. He insured it under a comprehensive policy of insurance with the respondent. In March 2010, during the subsistence of the policy, the truck was destroyed when it overturned due to a failure of the brakes while coming down a hill. The appellant filed a claim with the respondent seeking to be indemnified in respect of loss of the truck. The respondent denied the claim. The letter denying the claim stated that the independent engineer contracted to inspect the truck had identified a problem with the brakes which probably should have been rectified during regular maintenance of the truck. The appellant filed a claim in the High Court alleging that the respondent wrongfully denied his claim. The respondent filed a defence denying liability on the ground of non-disclosure and/or misrepresentation by the appellant rendering the contract voidable.

It emerged that the truck purchased by the appellant and described in the proposal form as a “Ford dump truck” was not a Ford dump truck but a Ford “truck tractor”. This information was stated on the manufacturer's metallic plate containing the vehicle identification number, popularly known as the “VIN”. The plate with the VIN was located in the engine of the truck. The appellant admitted in cross-examination that he personally serviced the truck which included going under the bonnet to inspect the engine. Further, that he had seen the metallic plate with the VIN describing the truck as a truck tractor on different occasions, both before and after completing the proposal form. Notwithstanding this clear admission that he had seen the description of the truck as a truck tractor, the appellant maintained that it was a dump truck. He did so on the basis that from the time when he first saw the truck it was a dump truck, and he bought it and used it as a dump truck.

The truck was manufactured as a truck tractor and was modified by installing a 12 yard dump which necessitated a change to the springs of the truck to accommodate the size and weight of having a 12 yard dump.

The learned judge found that the appellant had committed a material misrepresentation by describing the truck as a dump truck in the proposal form and had not disclosed that it was a converted truck tractor. He therefore upheld the respondent's defence that it was entitled to avoid the contract, dismissed the claim and ordered the appellant to pay the respondent's prescribed costs.

The appellant, being dissatisfied with the findings of the learned trial judge, appealed. The appellant argued, inter alia, that (1) the learned judge erred in finding that the appellant failed to make reasonable enquiries as to the exact make and body type of the truck and was therefore presumed to have known that the truck was a truck tractor and not a dump truck; (2) the learned judge erred in finding that the truck was what the manufacturer said it was on the VIN plate, namely, a truck tractor, when that description does not include the truck; (3) the learned judge erred in accepting the evidence of the respondent so as to find that there was material non-disclosure; and (4) the judge erred in finding that the lack of expert evidence on materiality was not fatal to the respondent's defence.

Held: dismissing the appeal and awarding costs to the respondent, if not agreed within 14 days, to be assessed at two-thirds of the costs awarded to the respondent in the lower court, that:

• 1. The law relating to misrepresentation and non-disclosure in the context of insurance contracts is well settled. It is that the contract of insurance is a contract of the utmost good faith and because the facts relating to the assessment of the risk involved are generally known by the insured, he or she is under an obligation to disclose all material facts to the insurer. The learned judge found that the appellant saw the identification plate on several occasions and that the import of the plate is that the truck is a “truck tractor”. Further, the appellant's attempt to describe it otherwise cannot alter the fact of what the manufacturer endorsed on the plate. If a vehicle is manufactured as a truck tractor to pull loads and is converted and used as a dump truck, the conversion does not alter the fact that it is a truck tractor. It follows that the appellant was incorrect in describing the truck in two places on the proposal for as a “dump truck”.

  MacGillivray on Insurance Law 12^th Edition considered; Halsbury's Laws of England, Volume 60 (2011) paras. 43 and 46 considered.

• 2. The findings of fact by the learned judge that the appellant either knew that the truck was a truck tractor or failed to make reasonable enquiries to determine the body type of the truck are based on the judge's assessment of the oral and written evidence of the witnesses and there is no basis on which this Court should interfere with these findings.

• 3. The finding of materiality is ultimately a question of mixed fact and law for the trial judge based on his findings of fact in the case. The authorities do not support the appellant's position that the allegation of materiality has to be proved by expert evidence. The burden of proving materiality rests squarely on the insurer to prove on a balance of probabilities that the undisclosed information influenced the decision to accept the risk and to do so on the terms in the policy. The learned judge in this case carried out a full assessment of the evidence relating to materiality and concluded that there was misrepresentation and non-disclosure that was material to a prudent or reasonable insurer that entitled the Insurer to avoid the contract.

Somati Ali v Hand-in-Hand Mutual Fire and Life Insurance Ltd (2001) 65 WIR 186 considered; Glicksman v Lancashire and General Assurance Co. Ltd [1925] 2 KB 593 considered; AC Ward & Son Ltd v Catlin (Fire) Ltd and Others [2008] EWHC 3122 (Comm) considered; MacGillivray on Insurance Law 12^th Edition considered. Somati Ali v Hand-in-Hand Mutual Fire and Life Insurance Ltd (2001) 71 WIR 227 considered.

JUDGMENT

[1] Webster JA[AG.]: This is an appeal against the judgment of the learned judge dismissing the appellant's claim against the respondent for damages for breach of an insurance contract by the respondent by failing to indemnify the appellant for the loss of his motor vehicle.

Background

[2] In 2008, the appellant purchased a 1997 Ford dump truck from Mr. Alston Williams. He insured it under a comprehensive policy of insurance with the respondent, Nagico Insurance Company Ltd. (“the Insurer”). In March 2010, during the subsistence of the policy, the truck was destroyed when it overturned due to a failure of the brakes while coming down a hill. The appellant filed a claim with the Insurer seeking to be indemnified in respect of loss of the truck. The Insurer denied the claim. The letter denying the claim stated that the independent engineer contracted to inspect the truck had identified that there was indeed a problem with the brakes which probably should have been rectified during regular maintenance of the truck. The letter also referred to condition 3 of the policy which states that The insured shall take all reasonable steps to safeguard the motor vehicle from loss or damage and to maintain the motor vehicle in efficient condition.' As a result of the appellant's failure to maintain the truck, in breach of condition 3 of the policy, the Insurer denied the claim on the ground of neglect in not properly maintaining the truck.

[3] The appellant filed a claim in the High Court alleging that the Insurer wrongfully denied the claim. The Insurer filed a defence denying liability on the basis of nondisclosure and/or misrepresentation on the part of the appellant rendering the contract voidable at the instance of the Insurer. Paragraphs 4 and 5 of the defence read:

“4. The proposal for Motor Vehicle Insurance submitted by the Claimant was not true in every respect and contained false statements and/or misrepresentations.

Particulars

a. “The Claimant stated that the make of the vehicle was a Ford Dump Truck. The same was not true. The make of the vehicle is a Ford Truck Tractor which was modified to operate as a dump truck.”

5. Further, in breach of the duty to disclose all material facts, the claimant did not give notice to the defendant of any modification to the said vehicle.”

[4] There is no mention in the defence of the allegation that the appellant did not maintain the truck properly. The Insurer's defence was presented on the sole ground of material misrepresentation and non-disclosure inducing the insurance contract.

[5] In the events that followed, it emerged that the truck purchased by the appellant and described in the proposal form as a “Ford dump truck” was not a Ford dump truck but a Ford “truck tractor”. This information was stated on the manufacturer's metallic plate containing the vehicle identification number, popularly known as the VIN. The plate with the VIN was located in the engine of the truck. The appellant admitted in cross-examination that he personally...