Kuparalne r. Manufacturer's Life Insurance Co.
COURT OF APPEAL
Manufacturers Life Insurance Co. of Canada.
C.A. (S.C) 480173—D.C. Colombo No. 69418/M
English Law of Insurance applicable. Insurable interest essential ingredient incontract of insurance Effect of Illegality in a suit. Duty of Court in such a case.
Prescription. When does prescription begin to run in cases of failure topay on insurance contracts?.
Appellant a retired Village Headman, and Don Benjamin Appuhamyobtained a Joint Thirty Year Endowment Insurance Policy dated 30.10.67for a sum of Rs.60,000/- payable on maturity on 10.10.87 if both wereliving or on receipt and due proof of the prior proof of death of eitherof the insured to the survivor receiver. A and Don Benjamin were alsoassociated in starting a brick manufacturing industry A had contributedthe entirety of the capital and had also paid the first premium which wasin fact payable by both.
In December 1957 Don Benjamin was drowned. A informed RespondentCo. on 05.01.57 of death of Don Benjamin and made claim for payment.R replied on 12.04.58 that on inquiries made there was no evidence atall of the death of Don Benjamin and therefore his claim would not beconsidered. A then made inquiries himself and found that there had beenan inquest on a person by drowning who was identified as Don Benjamin.
A submitted Death Certificate and proceedings of Inquest to R. On23.09.67 R wrote to A stating that their Principals were not satisfied withthe claim and that liability was not being admitted. In an action for therecovery of the sum of Rs.60,000/- due on the policy the Trial Judge held that –
Proof of Death was not satisfactory,
A did not have an insurable interest,
Action was time-barred.
Held (1). That the Trial Judge's finding that there was no reasonableproof of death should be set aside.
(2). That as the contract was one where A insured his lifenaming Don Benjamin beneficiary he had an unlimited insurableinterest on his life and Don Benjamin insured his life namingA beneficiary Don Benjamin had an unlimited insurable intereston his life and therefore the full amount of the Policy waspayable on Don Benjamin’s death.
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(3). That prescription according toS.6of the Prescription Ordinancebegins to run from date of breach of contract and date of breachof contract in this case was the day R refused to pay which inturn was the day R refused to accept proof of death of DonBenjamin and thereby denied A’s claim.
APPEAL from judgment of the District Court of Colombo
Argued on:Decided in:
Soza, J. (President) & Rodrigo, J.
C. Ranganathan, Q.C. with L.A.T.Williams for Plaintiff-Appellant.
F. Sethuk£v!alar, S.A. with BashirAhamad for Defendant-Respondent.18.6.80,19.6.80,08.12.8!', 15,12.8117.12.81,18.11:81, & 11.dr-82.
Cur. adv. vult.
SOZA, J. (President C.A)
The plaintiff-appellant in this case a retired Village Headman andone Don Benjamin Appuhamy had obtained from thedefendant-respondent Insurance Company a joint thirty year endowmentinsurance policy (No. 1447611) dated 30th October 1957 for a sumof Rs. 60,000/- (P3) payable if the policy was still in force, onmaturity on 10th October , 4987 to both, insured if they were livingor on receipt and approval of due proof of the prior death of eitherof the insured to the survivor. One K.J.M.A. Fernando an agent ofthe defendant Insuranfce Co. was instrumental'm getting this policyfor the plainitff and Benjamin Appuhamy. The plaintiff and BenjaminAppuhamy were associated in starting a brick-manufacturing businessand the agent Fernatido utilized his knowledge of this fact to persuadethe two men – especially the plaintiff – to take out this policy. Sofar as the brick-manufacturing business went,, the plaintiff was notable to conduct it in his own name, as he was a public servant.
Although the plaintiffs evidence was that he and Benjamin Appuhamycontributed m equal snares to the capital, the feamecf District Judge
held rightly that the Capital, if any,- was to come solely from theplaintiff. On 23.9.1957 the plaintiff submitted proposal form D1 and
CARuparauu• i Manufacturers Life Insurance <Y». tSoza. J.t67
Don Benjamin Appuhamy proposal form Dll. On information suppliedby the parties themselves the agent Fernando filled up these formsand an interim policy (D2) was issued providing cover until the issueof the main policy. The first premium of Rs.877.75 payable quarterlyby the two insured persons was paid by the plaintiff along with theappliction for the insurance policy. On 28.09.1957 Don BenjaminAppuhamy took out a license (P2) to establish a brick kiln on aland held by the plaintiff on a permit (PI) under the Land DevelopmentOrdinance. The purported arrangement was for Benjamin Appuhamyto run the business.
In December 1957 there were floods in this area and Don BenjaminAppuhamy who, according to the plaintiff, had gone to collect moneysdue on the sale of bricks was reported drowned. The plaintff onlearning of this informed the defendant Company of. this by his letterP4 of 05.01.1957 and submitted claim D6 dated 04.03.1958 callingupon the defendant Company to pay the sum. of Rs.60,000/-. Thedefendant-Compiany replied by letter P6 of 12.04.1958 that on theinquiries made by them they found there was “no evidence at allof the death of Don Benjamin Appuhamy” and that therefore theclaim could not be considered. If however proof of death wasfurnished the matter would be looked into further. Presumably theinquiries referred to in P6 were those referred to in the subsequentreport of 15.01.1959 (D15) by Mr.C. Schafter. Subsequently theplaintiff found that on 28.12.1957 there had been an inquest (seeP10) held by the Inquirer into Sudden Deaths of Rajakadaluwa,where it had been found that Don Benjamin Appuhamy was drownedon 27.12.1957. Having procured the death certificate Pll of DonBenjamin Appuhamy the plainitiff appears to have through the agentFernando submitted it on 06.04.1965 alpng with the inquest proceedingsP10 to the defendant Company in support of his claim. The plaintiffappears to have written on his own too to the defendant Companyand to this he received reply P8 on 28.07.1966 stating that his letterof 22.07.1966 had been referred to their principals for their advices.On 25.09.1967 the defendant-Company wrote P9 to . the plaintiffstating that their Principals were not satisfied with the claim andliability was not being admitted. On 26.10.1967 the plaintiff throughhis lawyers sent letter D16 to the defendant-Company demandingpayment. The defendant-Company’s lawyers replied by D17 denyingliability.
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The plaintiff then instituted the present suit in the District Courtof Colombo claiming on a first cause of action Rs. 60,000/- as thesum due on the Policy of Insurance P3 and on a second cause ofaction a sum of Rs. 36,000/- as damages sustained on account of thedefendant Company’s unreasonable delay and negligence in settlingpayment'. The defendant-Company filed answer raising mainly thequestions of proof of death, absence of insurable interest andprescription:The learned District Judge found for the
defendant-Company on all these points and dismissed plaintiffs actionwith costs. The plaintiff then filed the present appeal from this Judgment.
At the hearing before us the claim for the sum of Rs.36,000/- byway of damages was not pursued and therefore it is not necessaryto considbr that question. The questions argued before us were thesame as those that were at the centre of the dispute during theproceedings in the District Court, namely,
Proof of the death Don Benjamin Appuhamy.
2;' The question of insurable interest in the policy the subject' ^'' ' matter of this suit.
On the question of proof of death the best evidence was beforecourt, namely, the death certificate Pll. The inquest proceedingswhich formed the basis for this Certificate were before Court as P10.As against this the thinking of the learned trial Judge could besummarised as follows:
The death certificate Pll was obtained in 1961 but wasforwarded with the inquest proceedings only on 6.4.196S.The delay and hesitancy are attributable to the fact thatthe certificate was not genuine.
The inquest proceedings could have been on the body ofanother Don Benjamin Appuhamy and not on the bodyof the insured or mo,c probably on a dead body fraudulentlydescribed as the body of Don Benjamin Appuhamy.
While the death certificate Pll gave the occupation ofBenjamin Appuhamy referred to therein as “BrickManufacturing” none of the witnesses who gave evidenceat the Inquest (P10) spoke of the occupation of the deceased.
CARuparatne v. Manufacturers Life Insurance Co. ISoza. J.)69
Even the Inquirer has lent himself to be made use of bythe plaintiff in fraudulently identifying some unknown bodyas that of Benjamin Appuhamy.
I regret I an unable to agree with reasons given by the learnedDistrict Judge who appears to have placed undue weightage o.n^ theevidence of the representative Mr. Schafter whose report D15 wasadmitted and made use of in the teeth of opposition by learnedCounsel for the plaintiff who pointed out that this was a means ofbringing hearsay evidence into the case. The Inquirer Jusey Appuhamywho held the inquest was called as a witness but. none of the witnesseswho testified before him, namely, Carathelis Silya, J.lSft, Dp^JvIanuelAppuhamy, W.H.M. Dharmapala, Agosinghe Guneratne anjj S^A.M.Singappu were called. Carathelis Silva and Manuel Appuhamy hadgiven evidence before the Inquirer that they were with Don BenjaminAppuhamy when he was swept off by the flood waters of the SengalOya. These two witnesses ,had informed the village school masterGuneratne and he with tlje V.C.. number pharmapala and the VillageHeadman of the area one Singappu (now deceased-see PI 2) did asearch both on the 27th and 28th December,, On the second day ofthe search they found the body of the, deceased stuck in a tree nearthe Sengal Oya. At the inquest which was subsequently held thebody was identified as that of Don Benjamin Appuhamy by his twoerstwhile companions Carathelis and Manuel Appuhamy. To say thatthe body was not that of a person called Benjamin Appuhamy inthe absence of any other positive evidence to the contrary is in myview unwarranted.
If the bodywas that of one Don Benjamin Appuhanjyv.;was *tthat of the insured? The learned District Judge is here influencedby the fact .that the occupation “brick manufacturing” was not spokentorby any .of the witnesses at the inquest. When Jusey Appuhamythe Inquirer gave evidence not one question was addressed to himas to how the information about the occupation of the •deceased was .obtained. This information could/have,vTk-1< gathered by the Inquirerby questioning the witnesses who identified the body even thoughhe failed to make a record. In the circumstances to hold this omissionas .a (ground to. doubt the genuineness, of the proceedings is notjustified. The name and the age of the dead man apart from theoccupation according to the Death Certificate are consistent with theparticulars on these points as they . appear in the oth^r eyjtienpeadduced before Court on behalf of the plaintiff.
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1 would like to add that no issue was raised at the trial on anyallegation of fraudulent representations and/or misrepresentationsthough there is such ah allegation in the answer. Possibly the allegationof fraudulent representation or misrepresentation refers to the particularsgiven ,jn the proposal. However t^is, may be in making findings onfraud the learned District Judge has overshot the range and scopeof the dispute in the case befjire hinv,..
So far as the question of the death itself of the insured BenjaminAppuhamy is concerned nothing turns on delay. If it ,was DonBenjamin Appuhamy the insured that had died, and the ,inquestproceedings and death certificate relate to his deaths the.,,delay vrjQsubmit the death certificate proves nothing.^
I am conscious of the fact that an appellate Tribunal should not,ordinarily interfere with the findings of fact made by the originalcourt. But in the present case the handicap of – our not having seenand heard the witnesses in the witness box is one from which eventhe learned trial Judge suffers to some extent for the plaintiff andone of his chief witnesses B. Don Solomon Appuhamy had not givenevidence before him but before his predecessor. No doubt after thecases of both the plaintiff and the defendant were closed and whenaddresses were in progress, the learned District Judge on his ownmotion called the plaintiff into the witness box and examined himon the question of the floods. Having done this the learned DistrictJudge seems to have felt doubts on whether there were floods atall. No one who gave evidence in the case denied there were floodsand I feel constrained to say that the learned District Judge’s doubtson whether there were-floods are founded on very tenuous grounds.
The finding of the learned District Judge that there was noreasonable proof of death of the insured cannot be sustained andshould be set aside. I hold that the plaintiff has submitted acceptableproof of death and that the defendant Company was unreasonablyrefusing to approve it.
. I will turn now to the contention that the plain.tiff had no insurableinterest in the policy. At the outset it should be ,remembered thatin all questions or issues arising with respect to. the Jaw of lifeinsurance the law tcPbe administered has to be the same as wouldbe administered in England,,in the like case at the corresponding
Ot. Ruparaine v. Manufacturers i.ie Insurance it» iSt>za.'J.f • ''71
period .if such question or. issuc,.had arisen or had to be decided inEngland unless the matter is governed by a local statute-see section3 of the Civil Law Ordinance,.. The law of England applicable eventoday to life insurance is found, in the four …sections of the LifeAssurance Act 1774 (14 Geo. 3c. 48) commonly called the GamblingAct. The provisions of this Act can be summarised.as follows:
The person effecting the insurance must have an interestin the life assured. If there is no such interest or if thepolicy is made by way of gaming: artd'-wagering'then it isnull and void.
The name of the person or persons interested in the policymust be inserted in it.
No sum greater than the amount or value of the interestof the insured may be recovered.
The argument is that the plaintiff has no insurable interest in thepolicy sought to be enforced in this suit because in truth and in factwhat the plaintiff has done is to insure the life of Don BenjaminAppuhamy in contravention of the provisions of section 1 of theLife Assurance Act 1774. Where A having no interest in the life ofB induces B' to take out a policy in his (B* s name) funding B forthe purpose in the expectation of getting the benefit of the policyhimself, such policy is void in terms of section 1 of the Life InsuranceAct 1774 see the case of Wainewright v Bland 1
Lack of insurable-interest is a defence always available to theinsurance Company. In the instant case this defence was not evenhinted at in any of the numerous letters that were written by thedefendant-Company. It is only in the answer that the defence wastaken for the first time. Yet this cannot be held ' against thedefendant-Company because it is the duty of Counsel 'HBtoeverbelatedly to invite the attention of court to the illegality: In the caseof Mercantile Credit Co v Hamblin2 Counsel had raised1 the; defenceof illegality in the transaction which1'was the subjfecf-'mittef 'of thesuit at a late stage of th’e case ahd asked for leave to amend thepleadings. John Stephenson J. : refused leave to amend but findingfor the defendant on other grounds observed that Counsel was notacting improperly in drawing attention to the possible illegality. On
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the contrary it was Counsel’s duty however belated and embarrassingit may. be, to prevent the Court from enforcing an illegal transaction.
In the case of Scott v Brown, Doering. McNab & Co3 LindleyL.J. made the following oft-cited pronouncement on the question ofillegality:
“Et turpi causa non oritur actio. This old and well-known legalmaxim is founded in good sense, and expresses a clear andwell-recognised legal principle, which is not confined to indictableoffences. No Court ought to enforce an illegal contract orallow itself to be made the instrument of enforcing Obligationsalleged to arise out of a contract or transaction which is illegal,if the illegality is duly brought to the notice of the Court, andif the person invoking the aid of the Court is himself implicatedin the illegality. It matters not whether the defendant haspleaded the illegality or whether he has not. If the evidenceadduced by the plaintiff proves the illegality, the Court oughtnot to assist him.”
This dictum was cited with approval by Kennedy J. in the caseof Gedge v Royal Exchange Assurance CorporationThfe was anaction brought by certain insurance brokers as plaintiffs for the benefitof their clients on a policy of marine insurance. The defendantspleaded that there was concealment of material facts and that thepersons on whose behalf the plaintiffs effected the alleged policy hadno insurable interest in the subject-matter insured. At the trialhowever it became apparent that the alleged policy was in truth amere wager or wagering speculation and constituted an infringementof section 1 of the Marine Insurance Act, 1745 (19 Geo. 2, c. 37).
The defendants however in their defences had not pleaded theinvalidity of the alleged policy under the provisions of the MarineInsurance Act. 1745. Kennedy J. held that when upon the trial ofthe plaintiffs suit as happened there, the transaction which formedthe basis of theiclaim is found to be illegal, the Court cannot properlyignore the illegality and give effect to the claim even though theparticular illegality had not been pleaded.
Ruparatne r. Manufacturers l.tjc hisitrunci ( it. tSnza. J.)
This principle in regard to pleadings cannot be accepted withoutqualification. The cases draw a distinction between illegality forcontravention of a statute and the general issue of illegality. If it isa statutory defence that is being relied on, it must be pleaded. Asfar back as 1853 Parke B. held in the case of Bull i> Chapman5 thatif a contract is contended to be illegal because a statute prohibitsit. the defence founded upon the statutory provision must b.e>speciallypleaded. The same view was taken in the case of Bratton v BransonIn the case of Willis v LovickP Lord Alverstonc C.J. held thatwhen the defence is a statutory defence, it must be pleaded andthe decision in Scott v Brown. Doering. McNab & Co (supra)' hasno application in such a case. The decision in Scott’s case is applicableonly when the illegality is “duly brought to the notice of the Court”or where the illegality is a general issue. Although in Gedge’ss case(supra) the statutory defence was not pleaded the illegality becameapparent at the trial. In such circumstances whether the illegality ispleaded or not. the Court will not enforce the ;transaction; Wherethe illegality is apparent on the face of the record the court will notenforce the contract (see also Taylor v Chester^). If the contract isnot ex facie illegal but the question of illegality depends uponsurrounding circumstances; the Court will not as a general ruleentertain the question unless it is raised in the pleadings. If authorityis needed for this proposition it will be founded in the cases of InRe Robinson's Settlement, Gant v Hobbs'^ and North Western SaltCo. Ltd. v. Electrolytic Alkali Co. Ltd^ In the latter case ViscountHaldane speaking from the Woolsack explained the law as followsat p. 469:
“My Lords, it is no -doubt true that where on the plaintiff’scase it appears to the Court that the claim is illegal, and thatit would be contrary to public policy to entertain it. the Colirtmay-and ought to refuse to do so. But this must only be wheneither the agreement sued on is on the face of it illegal, or. where, if facts relating to such an agreement are relied on.the plaintiff’s case has been completely presented. If the pointhas not been raised on the pleadings so as to warn the plaintiffto produce, evidence which he may be able to bring forwardrebutting any presumption of illegality which might be basedon some isolated fact, then the Court ought not to take acourse which may easily lead to a miscarriage of justice. Onthe other hand, if the action really rests on a contract which
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on the face of it ought not to be enforced, then,,.as I. havealready said, the Court ought to dismiss the claim, irrespectiveof whether the pleadings of the defendant raise the questionof illegality.”
In the instant case we are invited to consider a statutory defenceof illegality, namely, infringement of section 1 of the Life AssuranceAct 17/4 and not a general issue of illegality. This defence does notarise necessarily from the plea of lack of insurable interest for sucha plea can be founded on other causes too apart from contraventionof the statute. Hence as the statutory defence has not been specificallypleaded''in the instant case it will be entertained only if the recordmakes ’such illegality apparent. No doubt the proviso 1 of section92' of our Evidence Ordinance enables the defendant to show thattfte contract is invalid and illegal by adducing oral evidence and thentfie general"prohibition against the admission of..oral, evidence tocontradict or vary or add tp^cp subtract from the . terms, of, a ;wnttencontract willJnpt apply. However .in .the instant,case the,.defendantfailed to plead its reliance bn the, proviso 1 to section, .92 and, hencethe Court' will have to consider, such evidentiary .material: as wentinto record without opposition , which is germane to the question, ,ofillegality ,J1 It is of course plaintiffs position that all the evidencepertaining to illegality that has got on the record is irrelevant.
Section 3 of the Life Assurance Act 1774 provides that no greatersum may be recovered than the amount or value of the interest ofthe assured. The insurable interest must be a pecuniary interest andthe defendant-Company contends that the amount or value of thispecuniary interest must be computed from authentic figures. A partnerwould have an insurable interest in the life of a co-partner to theextent of the moiety of the capital contracted to be brought in bythe co-partner. In certain circumstances one partner would have aninsurable interest in the life of his co-partner but it is the calculatedpecuniary loss that would be the amount or value of the insurableinterest. In the instant case it was submitted that the calculation hasbeen on a speculative basis and therefore is not legal. It is onlywhen a person insuses his own life that he is deemed to have anunlimited insurable interest in his own life. Reliance was placed forthese arguments on Houseman’s Law of Life Assurance (1978) 9thEd. PP., 35,36,38.
Ruparamc v. Manufacture l.ifr/hmirn-wr ( <• 1J )
In the instant case there can be little doubt that a partnership wasstarted for a brick-making enterprise. As a first step in the venturea licence P2 was taken for a brick kiln to be established on plaintiff’sland. Whether the relationship is regarded as that of partner andpartner or employer and employee one had an interest in the lifeof the other at the time the contract of insurance was entered intoeven if such interest did not persist until the date of the death ofDon Benjamin Appuhamy. About the nature of the interest and itsquantum the case of Dalby v India and London Life Assurance Co *'can be usefully referred to. In delivering the judgment of the Courtin the case Parke B explained the meaning and import of sectionsl and 3 of the Life Assurance Act 1774. Referring to section* 1the learned Judge said as follows at p. ;388:
“This section, it is to be observed, docs not provide for anyparticular amount of interest. According to it. if there was anyinterest, however small, the policy would not be avoided." ••
In regard i to; section 3 the learned Judge after discussing – thearguments adduced, in the case stated that if a reasonable constructionis to be put on the section it should be interpreted to mean “that,if there is an interest at the timeof the policy, it is not a wageringpolicy, and that the true value of that interest may be recovered inexact conformity with the words of. the contract itself" (p. 391)..
In the case in question it was further held that the Life AssuranceAct 1774 required an . interest only at the date of the contract andthe sum assured becomes payable irrespective of whether the assuredih fact sustains a pecuniary loss or not.. Contracts of Life insuranceare not contracts of indemnity unlike contracts of fire. and. marineinsurance-see Mac Giltivray on Insurance Law (1961) 5th-Ed. Vol.lpp. 180 to 183 paragraphs 361, 363, 364 and 365. Dalby's case isauthority for the proposition that although the insurable, interestshould be a pecuniary interest, it need not be calculated with,mathematical precision. The contracted amount will generally speaking-be the value of the interest.
If the. present case is considered on the basis of a partnership*there iis..however one besetting difficulty for the plaintiff. As the •partnershiprrwas not in writing and the capital exceeded Rs. 1.000/- ,the partnership-agreement was of no force or-avail :in law. It .has
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been held that the interest will not amount to an insurable interestunless it be one capable of being enforced under a binding contractor a legal right. A mere engagement binding in honour will notsuffice-see the cases of Stockdale v Dunlon^ (unenforceable contractas there was no memorandum in writing), Stainbank v Fenning^and Stainbank v Shepard(unenforceable hypthecation), and Hebdonv West^S (unenforceable promise).
It is not plaintiffs case as presented to us that the insuranceeffected in this case was on the footing of a partnership. But as thedefence contention was that this was a case of one partner illegallyinsuring the life of his co-partner and, as we heard considerableargument on the point, I thought it fit to discuss the law relating to it.
If this was no more than a case of one person insuring the lifeof another, and this again is not plaintiffs case, then this suit mustfail for violation of section 1 of the Life Assurance Act 1774. Thecases of Wainewright v Bland (supra) and Anctil v Manufactures’Life Insurance Company^ show that the Court will be always preparedto pierce the veil of legality with which an insurance contract maybe cloaked and unravel the truth. If the truth is that it is a case ofone person insuring the life of another in violation of section 1 ofthe Life Assurance Act 1774 then the Court will hold there is noinsurable interest and decline relief.
In the instant case however we have a contract which is valid onthe face *of it. The contract documents are the policy P3 and theproposals D1 and Dll and these demonstrate that the plaintiff insuredhis own life naming Don Benjamin Appuhamy as his beneficiary andDon Benjamin Appuhamy insured his own life naming the plaintiffas his beneficiary. The proposals D1 and Dll are clear on this, andalthough only one Policy was issued by the defendant-Company itrepresents two separate contracts of insurance – one with the plaintiffon the basis of his proposal D1 and the other with Don BenjaminAppuhamy on the basis of his proposal Dll.
Even if the brick-manufacturing partnership business was a shamand in any event illegal it has no more than a historical relevanceto the contract of insurance which was at the end of all the negotiationsconcluded between the parties. However much the discussions hoveredon the brink of illegality, however much the preliminary actions of
Ruparattu• r. Mnnufarlmrr l.i/c Itmirmu • • ( <•./ ;
the parties were characterised by shallow pretences and whateverwere the intentions and understanding of the parties (as evidencedby the testimony of the plaintiff and the agent Fernando and thestatement in the claim D6 that plaintiff was the surviving partner ina joint endowment policy) the contract that was entered into wason the face of it unexceptionable.
The defendant-Company contends that what the plaintiff did wasin reality to insure the life of Don Benjamin Appuhamy behind thelegal facade of a life endowment insurance on his own life. That iswhy plaintiff alone paid the premium on this contract of insurance.That is why he did not take meaningful steps to proceed with thebrick-manufacturing business or to commit the partnership agreementinto writing.
But the contract of insurance embodied in the documents PI, D1and Dll is clear and unequivocal and admits of no ambiguity. It isa fundamental principle in the construction of documents that thelanguage and words used must receive their ordinary, plain andpopular meaning. Where the language of a document is ambiguousor would become fully intelligible only in the light of surroundingcircumstances at the time when it was executed or where a knowledgeof trade usages and technical terms is desirable to comprehend itsmeaning then extrinsic evidence may be permissible. But in theinstant case the documents PI, D1 and Dll are clear and precisein their terms. Therefore there is no necessity to travel outside thefour corners of these documents and the evidence of prior negotiationsis irrelevant. The documents admit of only one construction, namely,that the plaintiff insured his own life naming Don Benjamin Appuhamyas the beneficiary while Don Benjamin Appuhamy insured his ownlife with the plaintiff as beneficiary.
Fraud was not in issue. Illegality for want of insurable interestwas in issue but the Court should have had much more cogentevidence than the defendant Company succeeded in adducing beforeCourt to find on that. The factual bases of the plea of illegalitymust be examined in the light of the fact that at no stage beforethe answer was filed did the defendant Company put forward anyof them although it had caused very careful investigations of its ownto be made (see Pft) and was in possession of Mr.G. Schafter’s reportD15 at least by 15.1.1959. The factual allegations made in this case
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are belated and smack very much of being an afterthought. Theyare in any event irrelevant.
The case of the plaintiff is a straightforward one. Don BenjaminAppuhamy entered into a contract of life insurance with the defendantCompany on his own life and named the plaintiff as beneficiary. Itis indisputable that a person has an unlimited insurable interest inhis own life. Don Benjamin Apphamy died on 27.12.1957 and inthe circumstances plaintiff is entitled to receive the sum insured. Forthe reasons stated I am unable to agree with the findings,of thelearned District Judge on the question of insurable interest.
I will now turn to the question of prescription. We are here dealingwith a written contract and its breach. Section 6 of the PrescriptionOrdinance stipulates that no action shall be maintainable upon awritten contract unless such action shall be brought within six yearsfrom the date of the breach of such written contract. In order todecide whether the plaintiffs action is prescribed it is necessary todetermine the date of breach of .the contract. Is the date of thebreach of the contract in the instant case the date of refusal toperform the contract? When a date for performance can be gatheredfrom the contract, three situations can be envisaged.
Firstly, when the date for the performance of an obligation isfixed, the maxim dies interpellat pro homine (the day interposesdemand instead of a human being) applies and prescription will beginto run, even without. formal demand, from the date fixed forperformance (Ismail v Ismail^ and Nomis Perera v MasingheThis principle is embodied in the following passage of Voet’s Pandects(22.1.26) (Gane’s Translation):
“Default in fact is that which arises without a demand, andthus is brought on by law withoutany act of a human being.
Or it occurs when the very fact includes default in itself
Although no default is understood to take place where noclaim is made, still you should know that demand is notmade by a human being only, but that the law also andeven a day makes demand instead of a human being,provided that a definite day has been attached to theobligation.”
Ruparatne v. Manufacturers Life Insurance (V/i ■«. J.)
Secondly, where performance has to be automatic on the happeningof an event depending bn the terms of the contract, prescription willbegin to run with the happening of that event: (Babun Nona v Siarrex^).
Thirdly, where on an interpretation of the terms of the contractthe happening of the eveht is only a prerequisite to the right-todemand performance, prescription will begin to run from the dateof refusal after demand is made (De Silva v Margaret Nona20). Toquote Voet (ibid) again (22:1.26):• < •,. .
• If an obligation has been made to'depend on-an uncertainday or an uncertain condition, the position is rather-that thedebtor is only put into default by a demandmade by a humanbeing.”-
' With these principles in mind let- as examine the terms of thecontract on the-question of payment. The policy PI states, that thesum insured will, be: payable.
on the 10th day-of October 1987 (the maturity-date),,.if both
insured are living and the policy, is in force,, or
on receipt and approval of due proof of the prior-dpath of
either of the-insured-while the policy-is in .force. .
– It will be at once seen that.if payment, becajne due. on maturityunder paragraph (a) above, the maxim dies, interpellat pro hpmtnewould become applicable and payment will.,be ..due. on 10th Octpber1987; Under this clause if the. question of. prescription arises, .nodemand for payment, will be considered necessary. Prescription, willrun. from 10th October 1987 because that, was the,.day..fixed ,if>x. payment and that will be., reckoned as the .day. of. the, bre^eh^ or..-.asthe civilians Paulus and. V.oet term, it, mora.in. rg,,.
Under paragraph (b) there, are ,,tvfo. factors;.,governing ^aynjept:firstly,. the.death of the. insured peKqn.,,and…$ecpndIy-,tb^,req?ipl>^indapproval of due,proof ofdeath.vsi
*! ’•*; *?. -v.'Vfil ftVPOl
, It was however,argued th?t prescription should be rccl^pnqd frqm. the date.of death. In support of this learned.,Counsel fprthe jdefgq^nt■ Gompany,.referred us to a pass.agejffrom>jWflcGi7fn’^ri(ib;jft)
Sri Lanka Law Reports
[1982J I S.L.R
pages 333 and 334, paragraph 1087. MacGillivray here discusses theapplication of section 2 of the Limitation Act, 1939 which providesthat all actions of debt grounded upon any lending or contract withoutspecialty must be commenced within six years next after the causeof action has arisen. Special reliance was placed on the followingpassage in paragraph 1087 (p. 534) of McGillivray:
“Prima facie the cause of action in respect of the sum assuredarises upon the maturity of the policy, i.e.,upon the happeningof the death of the life assured or such other event on thehappening of which it is expressed to be payable. Where apolicy provides that the office shall pay the sum assured onproof satisfactory to the directors of the death of the lifeassured and the title of the claimant, or at some specifiedperiod of time after such proof has been furnished, the operationof the statute is not suspended until after the furnishing ofsuch proof or the lapse of such time as may be specified,because these are matters which lie within the power of theclaimant to proceed with or not as he pleases, and if he doesnot proceed to perfect his right to sue by furnishing thenecessary proof the fault lies with him alone. The conditionrequiring proof is a condition precedent io the right to demandpayment and the right to sue: but it does not touch the causeof action, only the proof of it and the remedy.”
As authority three cases are referred to in the footnote to thispassage. Of these I have been able to consult two, namely, Coburnv Colledge21 and Monckton v Payne22. The first of these casesconcerned a suit by a solicitor for recovery of his costs. Under section37 of the Solicitors Act, 1843 there was no right of action to recoverthese costs until a month had elapsed from the delivery of a signedbill of costs to the defendant. If the cause of action was consideredto have arisen when the work was completed, the defendant wouldsucceed; but if it was considered to have arisen only at the expirationof the period of one month from the delivery of the signed bill ofcosts, the plaintiff would succeed. Lord Esher M.R. who deliveredthe leading judgment in the case said the Solicitors Act did nottouch the cause of action but only the remedy for enforcing it. TheAct did not take away the right to payment which is the cause ofaction but rather the right to bring an action directly the work isdone. The right to payment and with it the cause of action arose
Ru/uinmii* v. Manufacturers Life /*»'»ru»:» r ( .•
on the completion of the work. In the second case the suit was bythe lord of a manor. He was entitled to an arbitrary fine on theadmittance of a tenant1 to copyhold but he filed his suit more thansix years from the assessment and demand of the fine. A.L. SmithL.J. who tried this case pointed out that it was competent to thelord to complete his cause of action by assessing and demanding thefine on the very day of the admittance. The cause of action was theadmittance and not the assessment and demand. No doubt the lordwould not have been able to sue until he made assessment anddemand but if he chose to delay doing so he had only himself to blame.
MacGillivray uses the reasoning adopted in these cases to supporthis conclusion that the furnishing of proof satisfactory to the directorsof the death of the life assured and of the title of the claimant;does not affect the cause of action because these are matters whichlie within his power to do or not to do. Furnishing proof of deathrelates only to the proof of the cause of action and the remedy butnot to the cause of action itself.
We cannot however adopt this reasoning because we have a localstatute dealing with the question, that is. the Prescription Ordinancewhere the relevant provision is different. In terms of Section 6 ofour Prescription Ordinance, prescription will begin to run upon breachof the contract. The word “breach” with reference to the case weare considering refers to an act by the defendant-company. Theplaintiff is entitled to maintain his suit withih the period of six yearsfrom the date of the breach. The terms of contract cannot make thedeath of Don Benjamin Appuhamy alone a breach by the defendantcompany of its contract of insurance. Therefore prescription cannotbegin to run from the date of the death. The requirement of breachof contract as the starting point of prescription laid down by ourPrescription Ordinance makes it impossible to adopt the test formulatedby MacGillivray and Lord Esher.
The requirement of receipt of due proof of death connotes ademand for payment. And not only that. There should be approvalof due proof of death. These stipulations make this a case whichfalls into the third category in my earlier classification. This is a casewhere the happening of the event (here death) is a prerequisite tothe right to demand performance. Therefore prescription will runfrom the date of the refusal to pay.
Sri Lanka Law Reports
11982 j / S L R
When then was the refusal to approve payment?, Learned Counselfor the defendant company contends that the letter P6..of 12.4.1958must be regarded as the refusal to approve proof of death. Althoughin this letter^the. defendant-company, wrote that the plaintiff's claimcannot be considered, they left the matter open. In P6 itself thedefendant company wrote as follows:
“ If. however, you can furnish us .with proof of death weshall be pleased to look into the matter further."
It will be seen therefore that in P6 there is no unconditional andconclusive refusal. In fact when the plaintiff did submit proof ofdeath in 1965 the defendant Company took more than two years toconsider it and eventually on 25.9.1967 wrote P9 to say that theirPrincipals were not satisfied with the claim and denied liability. IfP6 was the effectiye, refusal all the defendant company need havesaid, on the second occasion would have been that they had nothingto add to their earlier refusal. The date of the refusal to approveproof of death, in other words, the denial of plaintiffs right topayment should be taken as 25.09.1967. That was the date of thebreach.. This action was filed on 03.07.1968 less than a year later.Therefore plaintiffs action is not barred by prescription.
In the result I allow the. appeal and set aside the judgment anddecree appealed from and order that judgment be entered.fpr.-plaintiffas prayed for in paragraph (a) of the prayer to’the plaint with .costsboth. ;here .and in the court below.
RQDRIQQ, J. — I agree.
(1835) 1M & Rob. 481.
(1964) I All ER 680 (note)
.3. (1892) 20.B: 724.,72?}i
(1900) 2. O.B, 2(4-
-• •• -‘.1 II:. > ••.
(1853) 8 Ex. 444.
(1898) 2 O..B, 219.
(1901) 2 K.B. 195. esp. 198.
Ruparatnc v. Manufacturers Life Insurance Co. (So:a. J )
(1869) 4 O B. 309.
(1912) 1 Ch. 717.
(1914) A.C. 461.
(1854) 15 C.B. 365.
(1840) 6 M. & W. 224, 233.
(1815) II. C.B. 51
(1853) 13. C.B. 418
(1863) 3 B. & S'. 579
(1899) A.C. 604
(1921) 22 NLR 476.
(1956) 59 N L R 14.
(1948) 50 N L R 143.
. .(1938) 40 N L R 251.
– (1897) 1 Q.B. 702. •
(1899) 2 Q.B. 603.
Ruparatne V. Manufacturers Life Insurance Co. of Canada