Royal Exchange Assurance (Nig) Ltd V. Nelson Chukwurah (1976)
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The respondent was, at the time of instituting the action, the owner of a volkswagen saloon motor-car comprehensively insured with the appellant. The policy of insurance covered damage to the car up to the sum of N2,000.00 less N100.00 compulsory excess.
The respondent paid a premium of N176.00 less N22.00 rebate insurance policy, Exhibit 8. The appellant’s agent had, however, before the issue of the insurance policy, issued a cover note to the respondent, dated December 18, 1971. It was stipulated in the cover note, Exhibit 2, that the respondent- “having proposed for insurance in respect of the motor vehicle described in the Schedule below the risk is hereby held covered in terms of the company’s usual form of comprehensive policy. On December 28, 1971, ten days after the issue of the cover note, the respondent’s car was involved in an accident and was badly damaged.
The respondent was driving the car when the accident occurred. He was then in possession of a valid driver’s licence which he had obtained only one month and two days before the accident. The respondent, having instituted an action claiming to be indemnified by the appellant in respect of the damage to his motor-car was, after a trial, given judgment for N1,850 and costs assessed at N150.00.
The appellant, being dissatisfied with the judgment of the court below, appealed to this court. The only ground of appeal on which any substantial argument was advanced by learned counsel for the appellant was the general ground that – “The judgment is against the weight of evidence.” Learned counsel for the appellant submitted, in respect of this ground, that in view of the breach by the respondent of his undertaking in the proposal form, Exhibit 9, that the motor car in question would not be driven by any person who to his knowledge had held by any person who to his knowledge had held for less than one year a full licence to drive such vehicles, the appellant had a good a valid defence to the action and the appeal should accordingly succeed. Learned counsel for the respondent argued, on the other hand, that if all the relevant questions and answers in and provisions of the proposal form, Exhibit 9, are considered together, the conclusion that the respondent himself was excluded from this undertaking was inevitable. The relevant portions of the proposal, Exhibit 9, read as follows
“(3) (a) Will the car be driven EXCLUSIVELY by (i) yourself (a)(i) Yes (ii) Paid driver (ii) one or more other persons? If so, state the name in full of each such other person and whether he/she is paid driver. (b) If the car will not be driven exclusively by you, state in respect of each person who to your knowledge will drive (i) his/her age (b)(i) 26 years (ii) how long he/she has been driving motor vehicles continuously.(ii)5 years (iii) whether he/she has had any motor vehicle accidents or losses during the last three years…(iii) No (4)(a)Do you, or does any person who to your knowledge will drive, suffer from defective vision or hearing or from any physical infirmity or disability? (b) If so, give full details (a) No (b) (5)(a) Have you, or has any person who to your knowledge will drive, (i) ever had a licence for driving motor vehicles suspended? (a) (i) No (b) N/A (ii) been convicted during the last FIVE YEARS of any offence in connection with any motor vehicle or is any prosecution pending? (a) (ii)No (b)N/A (b) If so, give full details (6)(a)How long have you been driving motor vehicles continuously? (a) Learner (b)Do you, or does any person who to your knowledge will drive, hold a provisional or learner’s driving licence? (b) Yes (c)Will the motor car be driven by any person who to your knowledge has held for less than 1 year a full licence to drive such vehicles? (c) No The proposal also contains the following stipulations –
“I/We hereby declare that the above statements and particulars (including the particulars overleaf) are true, and I/We agree that this proposal and declaration shall be the basis of a contract of insurance between me/us and the company named overleaf, such contract to be expressed in the form of a policy. I am/We are willing to accept a policy subject to the terms, exceptions and conditions prescribed by the company therein. I/We undertake that the vehicle (s) to be insured shall not be driven by any person who to my/our knowledge has been refused any motor vehicle insurance or continuance thereof.”
Further, the policy, Exhibit 8, contains the following preamble or recital – “Whereas the insured by a proposal and declaration dated as stated in the Schedule which shall be the basis of this contract and is deemed to be incorporated herein has applied to the company for the insurance hereinafter contained and has paid or agreed to pay the premium as consideration for such insurance in respect of accident loss or damage occurring during the period of insurance.” Both the appellant and the respondent accepted the proposal and the policy as valid documents governing and regulating the legal relationship between them and constituting a contract of insurance. This appeal therefore turns on the interpretation to be placed on the combined effect of the proposal and the policy which was issued on the basis of the questions and answers contained in the proposal. The appellant pleaded in his Statement of Defence, paragraph 13, that “the plaintiff drove the said vehicle LT2075 when he had just obtained his driving licence barely a month before the alleged accident contrary to the undertaking given by the plaintiff in the proposal form completed and signed by him. The plaintiff’s letter dated 14th April, 1972 will be founded upon.”
There was evidence, which the learned trial Judge accepted, in support of this averment, emanating from the respondent himself, who stated in his letter dated 14th April, 1972, Exhibit 13, that he had held a valid driving licence since November 26, 1971, that is, just one month and two days before the accident. The respondent, when he answered ‘No’ to question 6(c) in the proposal form, was, in effect, making a statement undertaking that the motor-car in question would not be driven by any person who to his knowledge had held for less than one year a full licence to drive such vehicles. A fair and reasonable construction must be put upon the language of the question which is asked, and the answer given will be similarly construed: see Halsbury’s Laws of England, Third Edition, Vol.22, page 200, para.380(1).
In our opinion, the words “any person” in paragraph 6(c) of the proposal form must be given their natural and ordinary meaning and therefore include the “person” making the proposal, that is, the respondent himself, who must obviously know at any given time, and at the material time whether or not he has held for less than one year a full licence to drive a motor vehicle. The purpose of the question, in the context of the contract of insurance, could only be to elicit an accurate answer and information as to whether or not a driver of more than one year’s experience, including the proposer himself, would in fact be driving the motor-car, so as to enable the appellant to be in a better position to assess the risk involved and the appropriate premium to be paid commensurate with the risk. We are therefore unable to agree with the contention of learned counsel for the respondent that the proposer himself is to be regarded as being excluded from his own undertaking. Further, we hold that the opinion of the learned trial Judge that –
“Paragraph 6(c) of Exhibit 9 cannot possibly refer to the plaintiff, otherwise the words ‘to your knowledge’ used therein would become ridiculous and meaningless,” to be altogether untenable. The appellant and the respondent both agreed that the proposal and declaration should be the “basis” of the contract of insurance between them. In Dawsons Ltd. v. Bonnin and Ors. (1922) 2 AC 413, the proposer for the insurance of a lorry against fire stated that it was kept at “46, Cadogan Street, Glasgow”. The proposal was made the “basis” of the contract.
The lorry was in fact garaged at a farm on the outskirts of the city. It was destroyed by fire. On appeal to the House of Lords, it was held that the insurers were entitled to repudiate liability because of the mis-statement by the proposer, even though, it was not a material one.
Viscount Haldane said, in his judgment, at page 425 – “Both on principle and in the light of authorities such as those which I have already cited, it appears to me that, when answers, including that in question, are declared to be the basis of the contract, this can only mean that their truth is made a condition exact fulfilment of which is rendered by stipulation foundational to its enforceability.” Consequently, where a proposal is made the “basis” of a contract of insurance, any mis-statement in
Other Citation: (1976) LCN/2232(SC)