Greene v New India Assurance Company Limited (CIV APP 15 of 1971) [1973] SLCA 5 (27 April 1973)

SECTION 38 GREENE v. NEW INDIA ASSUR.-CO. LTD., 1972-73 ALR S.L. 303 c, ~ ,. ·' 1 ,. GREENE v. NEW INDIA ASSURANCE COMPANY LIMITED Court of Appeal (Marcus-Jones, J .S.C., Cornelius Harding and Percy Davies, JJ. A.): April 27th, 1973 (Civil App. No. 15/71) C.A. [1] Civil Procedure-pleading-matters which must be specifically pleaded -estoppel-failure to plead estoppel not fatal when due to lack of opportunity: Although estoppel should normally be specifically pleaded, failure to do so due to lack of opportunity will not prevent reliance on the estoppel (page 308, lines 35-37). [2] Estoppel-conduct-insurance-insurer's conduct in respect of claim­ failure to repudiate claim and undertaking defence of insured estops insurer from denying liability to indemnify: An insurer who does not repudiate a claim but exercises his right under the insurance policy to conduct the defence of the insured in an action against him is thereby estopped from denying his liability to indemnify the insured against the claims made (page 308, lines 8-15, 31-35). [ 3] Estoppel-pleading-should be specifically pleaded-failure to plead estoppel not fatal if due to lack of opportunity: See [1] above. [ 4] Estoppel-representation-insurance-insured not estopped from claim­ ing full indemnity by signature of receipt acknowledging payment in purported final settlement before size of claim known: If an insurer, who has agreed by the terms of the policy to indemnify the insured against all payments he shall become legally liable to make in the event of an accident, fails to investigate the possible extent of the claims after disclosures by the insured which reasonably put the insurer on enquiry, he is deemed to waive the information he would have dis­ covered; and a receipt which he requires the insured to sign acknow­ ledging that a payment made to him is in purported settlement of all present and future claims arising from the accident is not binding on the insured if it is signed before the actual size of the final claim is known (page 308, lines 16-31). [5] Insurance-motor vehicles-claims under policies-insurer's failure to investigate extent of claims after put on enquiry is waiver of infor­ mation-insured's receipt acknowledging payment in purported final settlement before size of claim known not binding: See [ 4] above. [ 6] Insurance-motor vehicles-obligations of i1,1surers-obligation to indem­ nify-failure to repudiate claim and undertaking defence of insured estops insurer from denying liability to indemnify: See [2] above. [ 7] Road Traffic-insurance-claims under policies-insurer's failure to investigate extent of claims after put on enquiry is waiver of infor­ mation-insured's receipt acknowledging payment in purported final settlement before size of claim known not binding: See [ 4] above. 303 5 10 15 20 25 30 35 40 THE AFRICAN LAW REPORTS ' ' ' [ 8] Road Traffic-insurance-obligations of insurers-obligation to indem· nify-failure to repudiate claim and undertaking defence of insured estops insurer from denying liability to indemnify: See [2] above. The appellant brought an action in the High Court against the 5 respondents, his insurers, claiming an indemnity from them in respect of damages and costs awarded against him in previous proceedings. By the terms of an insurance policy the respondents agreed to indemnify the appellant against, inter alia, the legal liability of the 10 insured to meet claims for compensation in respect of personal injuries caused by the use of his car. While the policy of insurance was in force the appellant negligently injured four passengers in his car. In due course the respondents paid the sum of £444.2s.6d. to 15 the appellant, who signed a receipt stating that he agreed to accept the money in full satisfaction of all claims present or future under the policy in respect of the accident. The passengers brought an action against the appellant claiming damages for negligence and the respondents undertood the 20 defence of the appellant by their solicitor. The passengers' claim succeeded, however, and damages and costs were awarded against the appellant. He demanded the money from the respondents but they refused to pay. He then brought the present proceedings to obtain indemnification from the respondents under the terms of 25 the policy. The High Court (Warne, J.) dismissed the claim holding that satisfaction of the judgment against the appellant was a con­ dition precedent to the respondents indemnifying the appellant. It also held that the receipt signed by the appellant absolved the respondents from indemnifying him further. The court did not 30 consider the issue of estoppel raised by the appellant. On appeal the appellant contended that - (a) the trial judge erred in law in holding that the appellant should satisfy the judg­ ment against him as a condition precedent to claiming indemnifi­ cation from the respondents; and (b) the respondents were 35 estopped from denying their liability to indemnify the appellant by their failure to repudiate the passengers' claim when the appellant presented it to them, and by their conduct in instructing their solicitor to defend the claim against the appellant; and the trial judge was therefore wrong in holding that the receipt signed 40 by the appellant absolved the defendants from indemnifying the appellant in respect of passenger liability. 304 GREENE v. NEW INDIA ASSUR. CO. LTD .• 1972-73 ALR S.L. 303 . _. ~ _. _. _. C.A. The appeal was allowed and the respondents ordered to indemnify the appellant. Cases referred to: (1) Coppinger v. Norton, [ 1902] 2 I.R. 232; (1902), 35 I.L.T.R. 250, applied. (2) Worsley v. Wood (1796), 6 Term Rep. 710; 101 E.R. 785. Berthan Macaulay, Q.C., S.H. Harding and Miss Dworzak for the appellant; Gelaga-K ing for the respondents. PERCY DAVIES, J.A., delivering the judgment of the court: This is an appeal from the judgment of Warne, J. dated July 5th, 1971. The short facts are these: The plaintiff at all material times was and is the owner of a car registration No. C 6670 and the defen­ dants are an insurance company carrying on business in Sierra Leone. By a policy of insurance No. MV /650/04/00514 dated August 22nd, 1963, made between the plaintiff and the defen­ dants, the defendants agreed to indemnify the plaintiff against, inter alia, the legal liability of the insured for claims for com­ pensation in respect of personal injuries caused by the use of the plaintiff's car, registration No. C 6670. While the said policy of insurance was still in force on March 30th, 1964, the plaintiff negligently injured Alexander Greene, Regina Greene, Teddy Greene and Elizabeth Drayton (hereinafter called "the passengers"). The said passengers brought an action in the then Supreme (now High) Court of Sierra Leone against the plaintiff, claiming damages for negligence. The passengers lost the action but on appeal, the appeal court on November 20th, 1968, set aside the judgment of the High Court and gave judgment for the passengers in the total sum of Le5,680.50 damages and Le1,245.25 costs. The plaintiff accordingly demanded the damages and costs from the defendants, but the defendants refused and still refuse to pay the amount. The plaintiff therefore issued a writ against the defendants claiming the amount of damages and costs awarded by the Court of Appeal. In their defence the defendants averred that on May 13th, 1964, the plaintiff was paid the sum of Le888 .25 by the defendants and that the plaintiff agreed to accept and accepted the said sum in full satisfaction and discharge of all claims present or future under the said policy No. MV /650/04/00514. The case was tried by Warne, J. who dismissed the plaintiff's claim with costs. 305 5 10 15 20 25 30 35 40 THE AFRICAN LAW ·REPORTS From this decision the plaintiff has appealed to this court on three grounds, viz.: 1. The learned trial judge erred in law in holding that satis­ faction of the judgment against the plaintiff is a condition 5 precedent for the defendants to indemnify the plaintiff. 2. The learned trial judge failed to consider the question of estoppel raised by the plaintiff and thus came to the wrong con­ clusion that the receipt dated May 13th, 1964 absolved the defendants from indemnifying the plaintiff in respect of passenger 10 liability. 3. That the decision is against the weight of evidence. I propose to deal with Grounds 1 and 2 together. It has long been the practice of insurance companies, for the purpose of their own security, to incorporate in their policies, 15 by reference to their proposals, various stipulations for matters to be done by the assured making a claim, before the company is to pay them, and to make the fulfilment of the conditions a con­ dition precedent to liability, and since Worsley v. Wood (2) it has been settled law that this mode of protecting themselves is effec- 20 tive. On March 30th, 1964 the accident took place whilst the plaintiff and passengers were driving from Port Loko to Tagrin. The car was damaged beyond repair. Section 1, cl.l(a) of the policy of insurance (hereinafter referred 25 to as "the policy") reads: "The company will indemnify the insured against loss of or damage to the motor car andjor its accessories whilst thereon (a) by accidental collision or overturning or collision or overturning consequent upon mechanical breakdown or con- 30 sequent upon wear and tear .... " The accident was accordingly reported to the respondents and on May 13th, 1964, the appellant signed a receipt in the following terms: "Received this 13th day of May, 1964, from the New India 35 Assurance Co. Ltd. the sum of £444.2s.6d. only which 1/we agree to accept in full satisfaction and discharge of all claims present or future under policy No. MV /650/04/00514 in respect of the accident which occurred on or about March 30th, 1964. £444.2s.6d." 40 Section II- Liability to third parties- cll.1(a) and 6(b) read: 306 GREENE v. NEW INDIA ASSUR. CO. LTD., 1972-73 ALR S.L. 30.3 C.A. "1. Subject to the limits of liability the company will indemnify the insured in the event of accident caused by or arising out of the use of the motor car against all sums including claimant's costs and expenses which the insured shall become legally liable to pay in respect of 5 (a) death of or bodily injury to any person except where such death or injury arises out of and in the course of the employment of such person by the insured and excluding liability to any person being a member of the insured's household who is a passenger in the motor car 10 unless such person is being carried by reason of or in pursuance of a contract of employment. 6. The company may at its own option ... (b) undertake the defence of proceedings in any court of law in respect of any act or alleged offence causing or 15 relating to any event which may be the subject of indemnity under this section.'' Seven months after the issue of the receipt for £444.2s.6d., Rowland E.A. Harding, Solicitor, on October 29th, 1964, informed the respondents by letter of the injuries sustained by the passengers 20 and requested them to disclose the name and address of their solicitor so as to facilitate a settlement of the passengers' claims. On November 18th, 1964, the respondents addressed a reply to Rowland E.A. Harding, Solicitor, in which they stated, inter alia -"however, for your information, we would mention that Mr. 25 J.E.R. Candappa of 3 Trelawney Street, Freetown represents us." On June 18th, 1965, Rowland E.A. Harding wrote to the respon- dents as follows: "Mr. J.E.R. Candappa informed me that he no longer represents you. 30 I write on behalf of Alex Greene, Mrs. Greene (wife of Alex Greene), Teddy Greene, and Elizabeth Drayton who were passengers in your insured's car, registration No. C 6670 and were travelling from Port Loko to Lungi to connect the ferry for Freetown on March 30th, 1964. 35 Owing to the negligence of your insured T .0. Greene who drove car registration No. C 6670, the car had an accident and all the passengers were injured, and were treated by a surgeon specialist, Mr. A. Olu Williams. The passengers are not members of your insured's house- 40 hold. 307 THE AFRICAN LAW REPORTS , I proposed issuing a writ of summons against your insured unless you are prepared to settle my client's claim. Please let me have a reply not later than June 23rd, 1965." The respondents replied by a letter in which they said they were 5 requesting Mr. G. Gelaga-King to contact Rowland E.A. Harding. There appears to be no further development until Rowland E.A. Harding, Solicitor, on February 8th, 1966, issued a writ of summons against the insured Theophilus Greene. When the writ was served on the insured, he took it to the respondents and the 10 respondents never repudiated the claim. Several letters passed between Rowland E .A. Harding and the respondents and at no time did the respondents repudiate the claim. As a fact the action brought by the passengers against the insured on February 8th, 1966 was defended by the respondents both in the High Court 15 and in the Court of Appeal. In the light of the plain and unmistakeable language used in Section II, cl.1(a): "the company will indemnify the insured in the event of accident caused by or arising out of the use of the motor car against all sums including claimants' costs and expenses 20 which the insured shall become legally liable to pay ... " I am at a loss to understand how the respondents could cause or allow the insured to execute the receipt which was printed in part and written in part. It says (and this portion of the receipt is printed) "which lfwe agree to accept in full satisfaction and discharge of all 25 claims present or future under policy No. MV /650/04/00514 in respect of the accident which occurred on or about March 30th, 1964." This to me is a fraud on the insured and the respondents cannot avail themselves of their own wrong. Be that as it may. An insurer will be deemed to waive information when facts are 30 disclosed which put him as a reasonable man on enquiry and he fails to make enquiry. It is not disputed that the respondents instructed their solicitor to defend the claim against the appellant and they cannot now repudiate liability. They are bound to indemnify the appellant. By their conduct they are estopped from 35 denying their liability to indemnify the appellant. Estoppel, I concede, must be specially pleaded but this can only be so when there is an opportunity to do so (Coppinger v. Norton (1)). In this case, the respondents by their conduct left the appellant in the belief that they were going to indemnify him. 40 In my view the learned trial judge erred in law in holding that satisfaction of the judgment against the appellant is a condition 308 GREENE v. NEW INDIA ASSUR. CO. LTD .• 1972-73 ALR S.L. 303 _. .. f • ·, .. .. • C.A. precedent for the respondents to indemnify the appellant. As regards Ground 2, I hold that the learned trial judge came to a wrong conclusion that the receipt absolved the respondents from indemnifying the appellant in respect of passenger liability. As regards the third ground of appeal, it is clear from the facts 5 already recited that the decision arrived at by the learned trial judge is against the weight of evidence. By instructing a solicitor to defend the appellant both in the High Court and the appeal court, the respondents left the appellant in the belief that they were going to indemnify him. 10 The result is that the appeal succeeds the judgment of the High Court is set aside and the orders made by the appeal court on November 20th, 1968, are hereby confirmed. I further order that the sum of Le5,680.50 representing damages and Le1,245.25 representing costs do carry interest at the rate of 2112% per annum 15 as from November 20th, 1968. Costs in this court and in the court below are to be paid by the respondents to the appellant, such costs to be taxed. Appeal allowed. 309 20 25 30 35 40