214 Haniffa v. Ocean Accident and Guarantee Corporation, Ltd.
Present: Garvin A.C.J. and Maartensz AJ.
HANIFFA v. OCEAN ACCIDENT AND GUARANTEECORPORATION, LIMITED.
122—D. C. (Inty.) Kandy, 43,078.
Cause of action—Accident insurance—Obligation to indemnify—Where doest the cause of action arise?—Jurisdiction—Roman-Dutch law.
The obligation to indemnify contained in a policy of insurance againstdamage by accident must be determined in accordance with the Roman-Dutch lav/.
In that law, the place where the cause of action arises must beascertained with reference to the rule that, in the absence of a specialagreement, an obligation must be performed at the place at which thecontract was entered into.
Where the main purpose of an insurance policy is to indemnify theinsured against damage from accident, the circumstance that, incidentally,the policy also gives cover in case of damage by fire does not convertwhat is in its essence and substance a policy of accident insurance intoa policy of fire insurance.
HIS was an action to recover a claim based upon a. policy of insurance
against accident made in respect of a motor lorry. The defendantstook the preliminary objection that the District Court of Kandy had hojurisdiction to entertain the action. The defendant company was resi-dent in Colombo and it was held that the contract was also entered intoat Colombo. But it was contended by the plaintiff that the cause ofaction, which was the failure to pay his claim, arose within the jurisdictionof the District Court of Kandy as the plaintiff was resident at Wattegamawhich was within that jurisdiction. The learned District Judge upheldthe contention.
H. V. Perera (with him Gratiaen and D. W. Fernando), for defendant,appellant.—The only point that arises on this appeal is a question ofjurisdiction. Plaintiff has sued the defendant company on an accidentinsurance. There are two causes of action—(1) in respect of actual loss,(2) third party claim. The action has been instituted in the DistrictCourt of Kandy. Defendant is resident in Colombo and contract wasentered into in Colombo. The learned District Judge has gone on the* question of convenience, but no sufficient cause has been given forconferring jurisdiction on the District Court, Kandy.'
Hanifia v. Ocean Accident and Guarantee Corporation.
[Maartensz J.—Where was the accident ?] *
At Kadugannawa. Accident alone would not do. There must be aclaim. Until such claim be made one of the contracting partfes would not.know that events had taken place making them liable. Immediatelythe claim is made liability arises.
[Garvin J.—Where has the claim to be made ?]
The claim has to be made in Colombo as the condition of the policy sostates.
Cause of action here is the repudiation of the liability and hence theColombo courts have jurisdiction.
[Garvin J.—What is the ground on which the District Judge hasassumed jurisdiction ?]
The District Judge has applied English law, the principle being thatthe debtor must seek out the creditor. The cases under the English lawarise under specific provisions, e.g., Sale of Goods Act, Fire Insurance.It is submitted that in this case the English law would not apply as it isa case of accident insurance. The appropriate rule to be applied isthe rule of the Roman-Dutch law that the creditor must make a demandfrom the debtor and this can be done only where the debtor resides. Therefusal giving rise to the immediate cause of action would thereby arisewhere the debtor resides.
Ordinance No. 22 of 1866 (Vol. I., p. 648) does not introduce principlesof the English Common law. In any event in cases of insurance thisOrdinance applies only to fire and life insurance but not to accidentinsurance.
[Maartensz J.—Is the rule of Roman-Dutch law that the creditor mustseek out the debtor ?]
Yes, vide Subetheris v. Singho1 and Lee (1st ed.), p. 225.
Under English law the principle that a cause of action arises at place ofpayment has been applied always where there has been a credit sale.
Even under English law where there is an unliquidated claim it isdoubtful whether the above principle would apply, or, in such a case, itis inappropriate to speak of creditor and debtor.
The term “creditor” is discussed in Fernando v. Fernando*. Counselcited Morice on English and Roman-Dutch Law, p. 95, and Van Leeuwen4. 40. 6.
The principle of the Roman-Dutch law is now simple—where partiesagree on a place of payment it should be made there ;—if not, where partieschoose to enter into the contract. This is also reasonable as all obligationsarising from the contract, unless specifically exempted, must have beenexpected to be fulfilled at the place of execution of agreement.
E. Navaratnam, for plaintiff, respondent.—The cause of action is to beproved by examination of two documents, viz., the proposal and thepolicy. There is no obligation to repair the vehicle. This can only befulfilled at the place of accident which is admittedly within Kandy juris-diction. If there is any doubt, the document should be construed
against the insurers, vide 17 Halsbury 1138.
>32 N. L. R. 360.
* 26 N. L. R. 292.
21b GARVIN A.C.J.—Haniffa v. Ocean Accident and Guarantee Corporation.November 24, 1933. Garvin A.C.J.—
The only question which arises upon this appeal is whether the learnedDistrict Judge was right in his view that he had jurisdiction to entertainthe action. The claim is based upon a policy of insurance against accidentmade in respect of a motor lorry. It was alleged that as a result of anaccident which took place at Kadugannawa the plaintiff has sustainedthe damage in respect of which 'this action was brought. The defendantcompany took the preliminary objection that the District Court of Kandyhad no jurisdiction to entertain the action. The parties are agreed thatthe defendant company is not resident within the jurisdiction of theDistrict Court of Kandy. It has also been found by the learned DistrictJudge that the contract was entered into at Colombo within the juris-diction of the District Court of Colombo. But it was urged upon thelearned District Judge that the cause of action which was the failure ofpay the plaintiff’s claim arose within the jurisdiction of the District Courtof Kandy for the reason that as the plaintiff was resident at Wattegamawithin that jurisdiction it was the duty of the defendant company topay these damages to him at his residence. The learned District Judge hasupheld this view and it remains for us to consider whether he is right.
The main ground upon which the learned District Judge has arrivedat his conclusion that he had jurisdiction is that this is a case to which theEnglish law is applicable and that therefore the obligation of the defend-ant company must be determined with reference to the maximum of theEnglish law that the debtor must seek out his creditor and make paymentto him.
– The first objection to the judgment is that this is not a case to whichthe English law is applicable. This is a form of insurance which isgenerally referred to as accident insurance. The obligation which wasundertaken by the defendant company was to indemnify the insured inrespect of the motor vehicle in question up to a .limit of Rs. 15,000 inrespect of claims resulting from death or bodily injury to third partiesand accidental damage to property and various other risks amongst themdamage by fire. The law applicable in the case of life and fire insurancein the English law—see Ordinance No. 22 of 1866, and Ordinance No. 5of 1852. The learned District Judge seems to think that inasmuch assome of the risks covered by this policy relate to death or bodily injuryand to destruction or damage by fire that the policy is brought into closeapproximation with life insurance on the one side and fire insurance onthe other and that therefore he was justified in his view that the lawapplicable was the English law. But in so far as the policy refers todeath or bodily injury, the learned District Judge is mistaken in treatingit as akin to a policy of life insurance in that the risk is what is generallyknown as a third party risk and has no relation whatever to the life ofthe insured. Nor is it possible to accept the learned District Judge’sview that, inasmuch as one of the risks covered by the policy is fire,that immediately entitles him to treat this as a policy of fire insurance.An examination of the policy and all its terms and conditions clearly .takes it outside both the category of life insurance and that of fireinsurance. It is a form of policy with which we are now familiar. Themain purpose of it is to indemnify the insured against damage from
GARVIN A.C J.—Haniffa v. Ocean Accident and Guarantee Corporation. 219
accident. The main risks are clearly specified and the mere circumstancethat incidentally the policy also gives cover in the case of damage by firedoes not convert what is in its essence and substance a policy of accidentinsurance into a policy of fire insurance. The matter, therefore, mustbe determined with reference to the rules of the Roman Dutch law.Contracts of indemnity are not unknown to that system and if the matterbe determined in accordance with the rules of the Roman-Dutch law the'place where the cause of action arose must be ascertained with referenceto the rule, that in the absence of a special agreement an obligation mustbe performed at the place at which the contract was entered into—seeLee’s Roman-Dutch Law (1915 ed.), p. 225, and also Morice’s Englishand Roman-Dutch law (2nd ed.), p. 95. In .this view the cause ofaction, i.e., the failure to indemnify the plaintiff, arose at Colombooutside the jurisdiction of the District Court of Kandy.
There are other objections which have been raised to the applicationof the principles of the English law, namely, that it is a question whetherit is possible to treat a person who makes a claim for unliquidated damagesas a creditor. But it is unnecessary to examine this argument furthersince the matter appears to be concluded for the reasons already given.
Learned counsel for the respondent did not appear to us to endeavourseriously to support the judgment for the reasons given by the learnedDistrict Judge but he submitted for our consideration a somewhatdifferent contention. He urged that in reality the cause of action herearose in Kadugannawa where the accident occurred. It was urged thatinasmuch as by reason of certain provisions in this policy there wasreserved to the defendant company the right in certain circumstances totake over the vehicle, to repair it themselves or to cause it to be repairedand alternately to exercise various rights, that it must be taken that,where upon notice of the accident they failed to exercise any of theserights, a cause of action arose and that that cause of action arose atKadugannawa. I am unable to accede to this contention. The obliga-tion which the defendant company had undertaken was to indemnifythe insured. Their failure to exercise any of the rights reserved to themdoes not give the plaintiff a cause of action. They were entitled to anopportunity in terms of this agreement to exercise any of these rights ifthey so desired, but their obligation from the first to the/ last was anobligation to indemnify the plaintiff and the cause of action was theirfailure to do so.
For reasons already given, it seems to me that any cause of actionbased upon an alleged failure on the part of the defendant company topay a claim based upon this policy must be taken to have arisen withinthe jurisdiction of the District Court of Colombo.
The appeal must therefore be allowed and the plaintiff’s action willstand dismissed with costs both here and below.
Maabtensz A.J.—I agree.