Northern Assurance Company Ltd V Stephen Idugboe (1966) LLJR-SC

Northern Assurance Company Ltd V Stephen Idugboe (1966)

LawGlobal-Hub Lead Judgment Report

ONYEAMA, J.S.C. 

The plaintiff/respondent commenced an action against the defendant Company, who are the appellants, (hereinafter referred to as the Company) in the High Court of Western Nigeria on the 9th of December, 1963, claiming £1,200 under an alleged policy of insurance. His case was that on the 17th of September, 1963, he paid £98 as premium for a comprehensive insurance cover in respect of a Citroen saloon car registered as WW3 1 1 1 and valued at £1,200 by the plaintiff to an agent of the company. The plaintiff filled up a proposal form which was handed to this agent who then issued a “cover note” to the plaintiff. On the, day following the issue of this cover note the car insured was involved in an accident and became a total loss.

The plaintiff then made a claim to the Company who repudiated liability on a number of grounds of which the most important and relevant for the purpose of this appeal was that there was a material non-disclosure of fact on the proposal form which formed the basis of the contract. The issue of non-disclosure was squarely before the trial court, for the plaintiff in paragraphs 6 and 7 of the Statement of Claim pleaded:

“6. At the time the proposal form was being completed plaintiff made it known to the agent, (Mr Y. Aika) that he could not write or read but that he could sign his name; wherefore Mr Aika requested plaintiffs clerk, Mr Pullen Ugheneze to complete the form while he (Mr Y Aika) was dictating to him what he should put down.

“7. Whilst the form was being filled the plaintiff made it known to Mr Aika that he had taken out a third party insurance policy on the car, but Mr Aika told plaintiff that it did not matter. Plaintiff also disclosed to the agent that he had insured other vehicles with the defendant Company, and other insurance companies before.”

The Company answered as follows:

“3. Paragraphs (6, 7, 9 and 10 of the Statement of Claim are denied. “

“4. (Not relevant)

“5. The defendants aver that the plaintiff induced the issue to the said cover note referred to in paragraph 5 of the Statement of Claim by reason of non-disclosure of facts material to be made known by the said plaintiff and by representations of fact which were false in material particulars.

PARTICULARS OF NON-DISCLOSURE

“The plaintiff failed to disclose that prior to the issue of the said cover note that the said car No. WW3 111 was already insured with Provincial Insurance Company Limited from 10th May, 1963 to 9th May, 1964 inclusive under cover note No. 36109 of 10th May, 1963 and policy No. 603839. The plaintiff failed to disclose that the West African Provincial Insurance Co. Ltd. refused to grant him a comprehensive cover.”

The Company also alleged that the cover note issued by the agent Yesufu Aika was procured by fraud as it was backdated to cover a risk which had already resulted in a loss before it was issued. This allegation was negatived by the finding of the trial judge and there is no need to consider it further.

The material portion of the judgment appealed from which deals with the non-disclosure complained of is in the following terms:

“It is clear that Mr Yesufu Aika was the defendant’s agent. Each of the particulars of non-disclosure relied on by the defendants was disclosed to him by the plaintiff as he, the plaintiff and the plaintiffs clerk Pullen Ugheneze have told this court. He knew that the plaintiff was an illiterate man who could only write his name. He and the plaintiffs clerk who had never filled a proposal form before filled the form on the information supplied by the plaintiff.

It was held in Bawden versus London, Edinburgh and Glasgow Assurance Co. [1892] 2 Q.B. 534 that knowledge of the defendants’ agent as to facts supplied to him by the insured, is knowledge of the principal even though the agent failed to communicate such knowledge to him. As I have stated each of the non-disclosures complained of by the defendants was in fact disclosed to Mr Yesufu Aika their agent. It was also held in Golding versus Royal London Auxiliary Insurance Co. Ltd. (1914) 30 T.L.R. 350 that it is the duty of the agent to convey to the Company the correct answers given to him by the insured and if he fails to do so the Company are not entitled to refuse to pay a claim under the cover note on the ground that there was mis-statement in answer to the questions on the proposal form.”

The learned trial judge then entered judgment for the plaintiff.

The evidence on this issue of non-disclosure was given by the plaintiff, his clerk and Yesufu Aika, and was to the effect that the plaintiff did not set out in the proposal form all the insurance companies with which he insured motor vehicles but had only written down one of them; namely, South British Insurance. He had also answered on the proposal form that no insurers had ever declined his proposal when, in truth, the West African Provincial Insurance Company Limited had declined comprehensive cover for the vehicle concerned in this case.

The plaintiff stated in evidence that he disclosed these facts to Yesufu Aika who, the judge held, was the Company’s agent, and that it was Aika who dictated some of the answers on the proposal form. It is to be noted that although there is evidence that Aika instructed the plaintiffs’ clerk to write down ‘South British Insurance’ only, and not all the insurance companies with which the plaintiff had insured his motor vehicles, there is no evidence or suggestion that it was Aika who dictated the untruthful answer to the question whether any insurers had ever declined the plaintiffs’ proposal.

Mr Sofola for the appellant Company has attacked the judgment on two main grounds, viz: (1) that Yesufu Aika was no more than a canvassing agent and was not the Company’s general agent; (2) that Yesufu Aika had no authority to conspire with the plaintiff to give false answers to material questions and thereafter enter into a contract on behalf of the Company on the basis of those answers; he submitted that in filling up the proposal form for the plaintiff, or assisting him and his clerk to fill it up, Yesufu Aika was not the agent of the Company.

He submitted that Bawden v. London, Edinburgh and Glasgow Assurance Co. [1892] 2 Q.B. 534 ought not to be followed any longer in view of the decision in Newsholnre Brothers v. Road Transport & Co. Ltd. [ 1929] 2 K.B. 356 and that the case of Golding v. Royal London Auxiliary Insurance Co. Ltd. (1914) 30 T.L.R. 350 was distinguishable from the present.

In Bawden’s case the assured effected an insurance with the defendant company through their agent against accidental injury; in a statement in the proposal form the assured said he had no physical infirmity although he had then lost the sight of one eye. The fact that the assured had lost one eye was known to the agent but he did not communicate it to the defendant company. The answers to the questions and the statements in the proposal form were dictated by the assured who was illiterate, and written down by the agent. During the currency of the policy the assured lost the sight of the other eye and became permanently blind. At the trial the company gave no evidence as to the extent of the agent’s authority. The Court of Appeal held that “in the particular circumstances” of the case the knowledge of the agent was to be imputed to the company.

That case can be distinguished from the present on the ground that in that case there was no evidence as to the extent of the agent’s authority and the company held him out on the proposal form as their agent for the Whitehaven area. In the case under consideration there is evidence that Yesufu Aika was a commission agent whose duty was to canvass for customers. It was not his duty to investigate facts in the proposal forms or to negotiate proposals. The learned trial judge did not say he disbelieved this evidence.

In Newsholme’s case the proposal form was filled up by the agent of the insurance company and contained untrue answers in material respects, although the agent was told the true facts; it did not appear why the agent had not written down the correct answers as told to him; the agent was appointed in writing by the insurance company and supplied with proposal forms; his duties were to procure persons to take out insurance policies with the company and to obtain from them duly filled in and signed proposal forms; he was authorised to receive premiums but not to give a cover note or enter into any policy of insurance. On these facts it was held that in filling up the proposal the agent was the agent of the assured and not of the insurance company. This view was upheld in the Court of Appeal where Scrutton L.J. said:

“I find considerable difficulty in seeing how a person who fills up the proposal can be the agent of the person to whom the proposal is made. A man cannot contract with himself. A. makes a proposal to B. by signing it, and communicating it to B. If A. gets some one-C.-to fill up the form for him before he signs it, it seems to me that C. in doing so must be the agent of A. who has to make the proposal, not of B. who has to consider whether he will accept it. If C. is also the agent of B. to procure proposals, and induces A. to make a proposal by representing that a certain form of proposal contains the particulars that B. wants to know, when it does not, the remedy seems to be to rescind the written contract procured by misrepresentation, not to alter the written contract and claim the benefit of it as altered.”

He went on to hold-

“that although ‘he may have been an agent to put the answers in form, the agent of an insurance company cannot be treated as their agent to invent the answers to the questions in the proposal form; and that, if he is allowed by the proposer to invent the answers, and to send them as the answers of the proposer, the agent is, to that extent, the agent, not of the insurance company, but of the proposer.”

Finally, his Lordship concluded-

“In my view the decision in Bawden’s case is not applicable to a case where the agent himself, at the request of the proposer, fills up the answers in purported conformity with information supplied by the proposer. If the answers are untrue and he knows it, he is committing a fraud which prevents his knowledge being the knowledge of the insurance company. If the answers are untrue, but he does not know it, I do not understand how he has any knowledge which can be imputed to the insurance company. In any case, I have great difficulty in understanding how a man who has signed, without reading it, a document which he knows to be a proposal for insurance, and which contains statements in fact untrue, and a promise that they are true, and the basis of the contract, can escape from the consequences of his negligence by saying that the person he asked to fill it up for him is the agent of the person to whom the proposal is addressed.”

In the present case we do not think that anything turns on the fact that Yesufu Aika had authority to give cover notes.

The plaintiff is illiterate and some of the expressions used by Scrutton, L.J., such as the reference to allowing the agent to invent the answers, and signing a document without reading it, are not applicable without qualification to every illiterate proposer, but there is no suggestion here that the answers given were not in accordance with the plaintiffs wishes, and we need not consider a hypothetical case.

In this instance the plaintiffs illiteracy is no ground for not following Newsholme’s case.

The plain fact of the matter is that Yesufu Aika and the plaintiffs clerk wrote down untrue answers in the proposal form, and we hold that in filling up the form they were the agents of the person making the proposal, that is, the plaintiff.

The learned trial judge was, therefore, in error when he held that Yesufu Aika’s knowledge was to be imputed to the Company, and this error was fundamental and falsified the entire judgment. It is unfortunate that Newsholme’s case was not cited to the learned trial judge.

We are of the view that this appeal must be allowed. It is ordered that the judgment of the High Court of the Warri Judicial Division in Suit W/85/1963-Stephen Idugboe v. Northern Assurance Company Ltd. (By their Agents, Marina Agencies Ltd., Benin City) be and is hereby set aside, and that the claim be dismissed with costs in the court below assessed at 54 guineas and in this Court assessed at 60 guineas.

Other Citation: (1966) LCN/1336(SC)