The Northern Assurance Co. Ltd. Vs A. Wuraola (1969)
LawGlobal-Hub Lead Judgment Report
Per Coker, J.S.C
In the High Court, Ibadan (Suit No. 1/150/65) the respondent, Ayinla Wuraola, as plaintiff sued the present appellants, The Northern Assurance Co. Ltd., for:-
(i) a declaration that the contract of insurance between the plaintiff and the defendants is not void or voidable and remains binding and subsisting between the parties thereto;
(ii) a declaration that the plaintiff is not bound by conditions 1 and 8 of the standard form contract used by the defendants in the course of their business;
(iii) the sum of £725.10s.0d. being judgment debt and costs awarded by the Ibadan High Court against the plaintiffs in respect of damages arising from one of the risks covered by the said insurance contract less £25 excess applicable to the said policy.
The action was tried by Fatayi Williams, J. (as he then was) and on the 16th March, 1966, he gave judgment in favour of the plaintiff against the defendants on all heads of his claim with costs. In deciding the case the learned trial judge took the view that a contract of insurance subsisted as between the parties but that the plaintiff was not bound by conditions appearing on the defendants’ usual form of policy as he did not in fact receive a copy of such policy.
In his judgment the learned trial judge stated, inter alia, as follows:- “In view of the averments in the pleadings, the evidence adduced by both parties and the various documents tendered in support, it cannot be disputed, and is in fact not disputed, that a contract of insurance was entered into by both parties and that the said contract was in force at the time of the accident on 7th March, 1965.”
To my mind, the points in dispute are:-
(a) What, in the said contract, were the terms as to user, whether these terms were known to the plaintiff or ought to have been known to him, and whether the terms had been broken, thus giving the defendants the right to repudiate the contract.
(b) Whether “condition (1)” applied to the contract and if so whether the plaintiff knew or ought to have known of this condition prior to the accident, thus again giving the Defendants the right to repudiate the contract.
(c) Whether or not condition “8” applied to the contract. And later on, and at the end of his judgment, he observed:- “
Having found on the three points as above, it seems to me that this action must succeed. The defendants, under the contract of insurance which still subsists, are liable to indemnify the plaintiff against the judgment debt and costs totalling £725.10s.Od awarded against him on 14th June, 1965. The plaintiff is therefore granted the declarations asked for in the first two legs of his claim. In addition, there will be judgment for him for the sum of 025. 10s. as claimed.”
The salient facts of the case are not unfamiliar. The plaintiff (or his agent) executed a proposal form with the defendants’ agents on the 14th September, 1964, for the purpose of insuring his car, a Datsun Bluebird saloon No. WAN 513, which was to be used as a taxi-cab. The proposal form was put in evidence as exhibit ‘L’. Thereafter a cover note or interim receipt, exhibit ‘A’, in a form to which motorists in this country are accustomed, was issued to him.
The cover note was expressed on its face to insure for a period of 30 days from the date of issue, i.e. the 14th September, 1964. After the expiration of the 30 days on the cover note a Certificate of Insurance, exhibit ‘B’, was given to the plaintiff by the defendants. It is needless to state that the certificate of insurance is of an equally familiar form. It shows, inter alia, that a contract of insurance was executed between the parties so as to provide an insurance cover for the plaintiff’s car from the 14th September, 1964, to the 13th September, 1965.
On the 7th March, 1965, the plaintiff’s car was involved in a road accident and as a result of injuries caused to third parties by it, or its driver, the High Court, Ibadan, adjudged that the plaintiff should pay third parties total damages of £725.10s.0d.
The plaintiff requested the defendants to pay this amount to the third parties concerned but as the defendants refused to pay on the grounds that the plaintiff was in breach of a condition precedent in the policy the plaintiff commenced the present proceedings In the High Court a number of issues of acts were raised and decided by the learned trial judge and before us on appeal it has not been successfully shown that those findings could not be reasonably supported by the evidence which the judge accepted. Some of the findings were:- that at the time of the accident the car was being driven by the plaintiff’s driver; and (ii) that the policy of insurance was never in fact delivered to the plaintiff.
We must observe, however, and this in view of what we propose to say hereinafter concerning the substance of the contract between the parties, that the plaintiff’s claims as expressed on his writ pre-suppose an acceptance by him that conditions 1 and 8 in the defendants’ usual form of policy, which was put in evidence as exhibit ‘N’, are or would have been part of the completed policy if in fact he had received the same. As put the second item of the plaintiff’s claims must and does accept that conditions 1 and 8 do occur in the defendants’ usual form of policy. Before us many grounds of appeal were filed and argued.
The argument fell within a narrow compass, i.e. is the plaintiff bound or to be regarded as bound by conditions appearing in a policy which he did not receive? On the strength of the facts found by the learned trial judge the issue before us is shrouded in considerable difficulty and it is surprisingly inconceivable that there should be such a dearth of clear legal authority on a point which admittedly is of so much practical utility. It is difficult to do any justice to the plaintiff’s case without first ascertaining and determining what is the “contract of insurance” between him and the defendants. His whole case rested on this contract and it must follow in our view that if he were to succeed it must be on the basis of that contract. Paragraphs 1, 2 and 3 of the plaintiff’s statement of claim read as follows:-
“1. By a contract of insurance made between the plaintiff and the defendant, the defendant in consideration of the premium of £121.16s. paid to them on behalf of the plaintiff, agreed from the 14th day of September, 1964, until the 13th day of September, 1965, to indemnify the plaintiff against sums which he might be legally liable to pay for dam-ages or compensation to any person and in respect of accidental bodily injury to any such person where such injury was caused by the driving of motor vehicle number WAN 513.
2. The contract of insurance was negotiated and concluded between the plaintiff of the one part and the Intra Motors (Nigeria) Ltd., Ibadan, as agents of the defendant on the other. 3. Some time after the conclusion of the said contract, and in furtherance thereof, the said Intra Motors (Nigeria) Ltd. handed to the plaintiff, the following documents:-
(i) A motor cover note No. 191132 dated 14th September, 1964; and
(ii) A certificate of insurance No. 8064. The plaintiff will rely on each of the said documents at the trial of this action.” On the other hand paragraphs 5, 11 and 13 of the defendant’s statement of defence state as follows:-
“5. The defendants admit paragraph 1 of the statement of claim but state that such liability under the policy is subject to the terms and conditions stipulated in the said policy. The defendants will refer in details to the said terms and conditions thereof. 11.
With further reference to paragraphs 3 of the statement of claim the defendants say that on completion of the proposal form by the plaintiff, he was duly issued with a cover note and thereafter he was given his policy of insurance which contains all the terms and conditions as agreed between the plaintiff and the defendants and that the said policy of insurance has been in the possession and custody of the plaintiff since the execution and delivery thereof. 13.
The plaintiff did not also notify the defendants when the driver was charged by Police and prosecuted. The driver did not intend to admit responsibility for the accident but was deceived to plead guilty to the said charge. WHEREOF the plaintiff is not entitled to claim as per writ of summons.”
It is obvious from the pleadings that at the trial the plaintiff relied on the cover note, exhibit ‘A’, and the certificate of insurance, exhibit ‘B’, as constituting or evidencing the only contract between him and the defendants whereas the defendants relied on these same documents as well as what they referred to as a “policy of insurance” as constituting “all the terms and conditions as agreed between the plaintiff and the defendants”.
Hence the point is whether or not the plaintiff in the events which had happened was bound by the policy and in actual fact by conditions 1 and 8 appearing on the policy. In Coleman’s Depositories Ltd. v. The Life and Health Assurance Association  2 K. B. 798, it was held that in the absence of evidence that the assured either knew of or had the opportunity of knowing of the existence of a condition precedent appearing in a policy at the date of the occurrence of the risk supposed to be covered, the condition was one with which it was impossible for the assured to comply.
In that case, the assured executed a proposal form for an insurance and received a cover note to which no conditions were attached. It was further held considering all the circumstances of that case that upon a true consideration of the policy the particular conditions were not conditions precedent. The case itself was a second appeal from an arbitrator’s award, the first appeal having been heard and dismissed by Bray, J.
The reasoning of the learned judge which was accepted and adopted by the Court of Appeal is best set out as in the words of Vaughan-Williams, L.J. (Buckley, L.J. concurring with him but Fletcher-Moulton, L.J. dissenting) at p. 804 of the report as follows:-
“In this judgment, I shall call the insurance company the association and Messrs. Coleman the employer. Bray J. decides this case mainly on the ground that he cannot construe the word `essence’ in clause 7 of the policy as being equivalent to condition precedent, and that it means only this – that it shall be the essence of the contract, that is to say, the employer shall be bound to do all those things within the time named or otherwise be liable for damages, if any have been incurred by the association. I do not differ from this conclusion of Bray J., although I have great doubts.
I prefer to base my judgment also on the other points raised by Mr. Cuthbert-Smith, notwithstanding that Bray J. says that he should be slow to decide this case on those two points alone. The association, as Bray J. says, `here chose to act as all companies do; they agreed that the risk shall be covered as from a certain date, that is, the date of the receipt of that proposal.
They chose to do it, and they do not send a copy of the policy; they do not say it shall be covered in accordance with or subject to the terms of the policy. They say it should be covered. How is the employer to know of these conditions unless they inform him’?” Learned counsel for the defendants drew our attention to this case and pointed out that it was decided on the basis as stated by Vaughan-Williams, L.J., that the insurers did “not say it was to be covered in accordance with or subject to the terms of the policy”.
That much is obvious and it was not contended before us that it was otherwise.
It is trite law that in the construction of documents the primary rule is that effect should be given to the literal contents in their ordinary way as they appear on the documents and that anything which does not appear ex facie on such documents should NOT be imported into them.
If, as indeed it was in Coleman’s case, the parties rested their cases on documents which do not import any more than appears on them it will be invidious for any court of law to import any extraneous matters into the consideration of their case. The principle or doctrine of incorporation by reference is one that is frequently applied in the construction of documents, including contracts of insurance where from the documents which were produced by both parties it was clear that some other evidence must have been in the contemplation of the parties.
In such cases the principle is that the documents put forward compel the court to look beyond them and ascertain precisely the other evidence which by necessary implication the parties must have had in their minds at the time of the contract. In Wyndham Rather Ltd. v. Eagle, Star & British Dominion Insurance Co. Ltd.  L1.L.R. 214 the point came up for decision as to whether the assured was bound by an arbitration clause appearing in an insurance policy which it was found had not been issued or delivered to him. In that case, the assured had paid the necessary premium and had been issued with a cover note on which a reference was made to the policy.
Delivering the judgment of the Court of Appeal in the case, Atkin, L.J. (as he then was) observed:-
“This is a case which is undoubtedly not very easy to decide, but I think that in the circumstances, the view taken by the Judge was right. We have not to consider the question of whether or not the insurance company are liable on some contract of insurance. The only question we have to determine is whether, on the contract of insurance, there was a submission to arbitration”.
In the course of his judgment in the same case Sargant, L.J. stated:-
“I am of the same opinion. The slip contains a clear reference to the proposal form, and the proposal form contains a clear incorporation of the usual conditions of the company’s policy. Looking at it from the broad business point of view, it appears that just as Mr Justice Mathew held that a slip must be deemed to constitute a contract, and that it could not be properly held that the assured was left unprotected in the interval between the slip and the preparation of the policy, so in a case of this kind it cannot be properly supposed that the insurers are giving the assured in that interval a protection upon greater or other conditions than those which are to be embodied in the ultimate policy”.
Wyndham’s case clearly shows that the doctrine of incorporation by reference is employed in the construction of insurance contracts but it must be conceded that the law is not at rest in this area and there is a welter of authorities which are not easy to reconcile and/in which the divergencies in the opinions or dicta of judges have helped considerably to make the confusion worse confounded.
See Macleod Ross & Co. Ltd. v. Compagnie d’Assurances, etc.  1 All. E. R. 331; Koskas v. Standard Marine Insurance Co. Ltd. (1927) 137 L. T. R. 165; Thomson v. Weems (1884) A. C. 671; Izzard v. Universal Insurance Co.  A. C. 773; Wheelton v. Hardisty (1857) 8 E.1. & B.1. 232; Heath & Ors. v. Durant (1844) 12 M. & W. 438. It is difficult to elicit from the authorities any principle of universal application but it seems clear that regard must be had in any given case to the peculiar facts of that case and the nature and contents of the documents which the court is called upon to construe.
In the present case the whole exercise started with a proposal form which was executed by or on behalf of the plaintiff. As stated before the form is not unusual but it contains a signed declaration at the end to the following effect:- “I…., being desirous of effecting an Insurance, as above described, do hereby declare that the particulars of this proposal are true, ….I further agree to accept a policy subject to the terms, provisions and conditions of the Company”. Pursuant to the execution of this form and on the same day the cover note, exhibit ‘A’, was issued to the plaintiff by the defendants. The cover note contains, inter alia, the following statement:-
“The undermentioned having proposed for insurance in respect of the Motor Vehicle described in the Schedule below and having paid the sum indicated the risk is hereby held covered in the terms of the Company’s usual form of Policy as described hereunder for a period of thirty days…..” The cover note or interim receipt, exhibit ‘A’, was delivered to and held by the plaintiff for the period stated therein during or after which the document described as “certificate of insurance” was delivered to him by the defend-ants. The document was put in evidence as exhibit ‘B’.
The document shows on the face of it that it is a certificate No. 8064 in respect of policy No. M. B. 1011775/1 pertaining to vehicle WAN 513 covered in the name of Ayinla Wuraola, i.e. the plaintiff, for the period of 14th September, 1964, to 13th September, 1965. At the bottom of it is a certificate in these words:- “I/We hereby certify that the Policy to which this Certificate relates is issued in accordance with the provisions of the Motor Vehicles (Third Party Insurance) Ordinance, 1945 (Nigeria)….”. The certificate was thereafter signed by the General Manager of the defendant company.
The question to ask and be answered is whether the documents exhibits ‘A’, ‘B’ and ‘L’ (proposal form) do not so much refer to the company’s usual form of contract as to compel a court to hold that policy is incorporated by reference in the contract of the parties. Counsel for the plaintiff contended that this is not so, whilst for the defendants it was argued that everything done by the parties and all the documents executed and put in evidence point unquestionably to the policy as the document containing all the terms and conditions of the contract of insurance between them. We have come to the conclusion that the documents put in issue in this case and the evidence given on both sides point unequivocably to the existence as between them of a policy of insurance.
We have also concluded that in the construction of the documents before the court the policy must be deemed to have been incorporated by reference as being a document which was in the contemplation of both parties as forming part of the contract into which they had entered. The defendants had put in evidence the company’s usual form of policy and this was admitted as exhibit ‘N’. Exhibit ‘N’ was put in without objection and indeed in the oral evidence of Mr. Butt, the Branch Manager of the defendants, when putting in the document exhibit ‘N’, he described it as “a specimen copy of the policy issued to the plaintiff in this case”.
In our view, therefore, the pertinent question was and is whether the plaintiff was bound by the terms and conditions of the policy and certainly not whether or not he had a copy of that policy. The pertinent question is answered in the affirmative. In Coleman’s case, supra, a point was taken as to whether or not a condition which the assured was supposed to comply with before taking advantage of the insurance cover was a condition precedent so as to make it obligatory on the part of the assured to fulfil such a condition.
As stated before, a great deal depends upon the construction of the documents actually placed before the court or the admissible oral evidence which was available. In the present case the policy exhibit ‘N’ carries as one of the conditions the following:- “9 The due observance and fulfilment of the terms conditions and endorsements of this Policy in so far as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability of the Company to make any payment under this Policy”.
A fair reading of this condition must in our view dispose in this case of any contention as to whether or not compliance by the assured is a condition precedent or a mere matter of warranty the breach of which can only give rise to an action for damages. In the case in hand we have come to the conclusion that the plaintiff is bound by the conditions appearing in the policy and in any case by conditions No. 1 and No. 8. Condition No. 1 requires him to give notice to the defendants of, among other things:- “…any impending prosecution, inquest or fatal inquiry in respect of any occurrence which may give rise to a claim under this Policy….”.
There is no doubt that he knew or ought to have known that the driver of his vehicle was being prosecuted. On the 10th March, 1965, he completed a motor accident report form, exhibit ‘M’, and delivered it to the defendants in which he described the accident and stated, inter alia, that a report had been made to the Police at Ibadan and that particulars had been taken of the accident. He also in the course of his evidence in court stated that when he went to see the manager of the defendants’ company after the accident the manager asked him about the driver and about what action the Police had taken in the matter.
The breach of a condition precedent is a matter which as in all cases of contract must be proved by the party who will stand to benefit from the occurrence of that breach and, normally in a policy of insurance, this is the insurer. See Bond Air Services Ltd. v. Hill [ 1955] 2 Q.B. 417 (especially per Lord Goddard, C.J., at p. 426). In this case, apart from the evidence to which we have referred, the evidence of the manager of the defendants to the effect that the plaintiff did not report to them the prosecution of his driver or the other proceedings which featured in this case, clearly leaves no room for any finding that there has not been a breach of that condition. In view of certain events which have happened, the defendants have not sought to rely upon the failure of the plaintiff to give notice to them of the service of the writ of summons against the plaintiff for damages since at that point of time the defendants had made it clear that they were no longer abiding by the contract. The point was whether the plaintiff was in breach of a condition precedent and in our view he clearly was. If that was so, as indeed it was, the contention of learned counsel for the defendants was right that the plaintiff was not entitled to succeed on any of the three heads of his claim and that the learned trial judge erred in giving him judgment.
Having regard to the conclusions at which we have arrived in this case, we have had some anxiety about the nature of the orders to be made therein. The first claim of the plaintiff postulates the existence between the parties of a contract but both parties fell out on the nature and content of such a contract. The contract advocated by the plaintiff consisted, according to him, of:-
(a) the cover note; and
(b) the certificate of insurance and that contract was not to recognise the existence of a policy. That was the contract which the plaintiff sought to establish under his first claim.
On the other hand, according to the defendants the contract of insurance in the case consisted of the policy and all the other documents incorporated there-with by reference. An order other than a mere dismissal of the plaintiff’s first claim is therefore called for. The plaintiff’s second claim concerns the terms of the contract envisaged by the first claim and it is necessary in view of our decisions, not only to declare against the inapplicability of the two clauses referred to in that claim but also to say positively that the plaintiff is bound by those clauses. In the result the appeal succeeds and the judgment of the High Court, Ibadan, in Suit No. 1/150/65, including the order for costs, is hereby set aside and the following orders are hereby made:-
(i) that the plaintiff’s first claim, i.e. that for a declaration of the subsistence of a contract of insurance between the parties be dismissed it being understood that the contract referred to by the plaintiff in that claim is NOT the contract of insurance as contained in the policy and other documents therewith incorporated by reference;
(ii) that the plaintiff’s second claim, i.e. that for a declaration that clauses I and 8 of the standard form policy contract do not apply to him be dismissed and that is to say that the plaintiff is bound by those clauses;
(iii) that the plaintiff’s third claim, i.e. for payment to him of the sum of £725.10s. in the circumstances therein described be dismissed;
(iv) that orders No. (i), (ii) and (iii) shall be the judgment of the Court;
(v) that the respondent shall pay to the appellants the costs of this appeal fixed at 58 guineas and costs in the High Court assessed at 75 guineas.
Other Citation: (1969) LCN/1736(SC)