E. C. V. BUULTJENS, Appellant, and CEYLON INSURANCE CO, LTD , Respondent

118-NLR-NLR-V-61-E.-C.-V.-BUULTJENS-Appellant-and-CEYLON-INSURANCE-CO-LTD-Respondent.pdf


SDOTETAMBY, J.—Buulijena v. Ceylon Insurance Co., Ltd.
473
1960Present: Sansoni, J., and Sinnetamby, J.
E. C. "V. BTJULTJENS, Appellant, and CEYLON INSURANCE CO.,
LTD.. Respondent
S. G. 146—D. G. Colombo, 43449jM
Insurance—Motor car—Third party risks—Proposal Form—Ambiguity in questions
appearing therein—Truth of answers—Relevancy of offences in breach of Motor
Traffic Act— Suppression of material foots—Burden of proof.
Where au ambiguity exists in a question put in the proposal Form of acontract of insurance, the contract must stand if an answer has been made tothe question on a fair and reasonable construction of that question. Otherwisethe ambiguity would be a trap against which the insured would be protected byCourts of Law.
In a motor car insurance policy in respect of third party risks, the answers tothe questions in the proposal Form were made the basis of the contract and werewarranted to be true. The applicant for insurance, who had been fined Rs. 5twenty years earlier for driving a car without a certificate of competence,answered in the negative question No. 5 which was as follows :—1 ‘ Have you orany other person, who to your knowledge will drive, ever been convicted of anyoffence in connection with the driving of a motor car or cycle ? ”.
Held, that the proposer could not be deemed to have given an untrue orincorrect answer to question No. 5. The conviction for non-possession of acertificate of competence did not relate to an offence “ in connection with thedriving ” of a motor car. If the question was intended to cover all offencesunder the Motor Traffic Act, it was most ambiguous and a Court of Law shouldprotect the insured against such “ traps ”.
Held further, that the proposer could not be said to have withheld anymaterial information which was likely to increase the risk of the insurer.
^^-PPEAL from a judgment of the District Court, Colombo.
Ranganathan, with V. J. Martyn and K. N. Ghoksy, for plaintiff-appellant.
N. E. Weerasooria, Q.G., with H. Wanigatunga and H. Mohideen, fordefendant-respondent.
Gut. adv. vult.
January 21, 1960. Sisnbtamb y , J.—
The plaintiff, while driving his motor ear No. CN-1144, met with anaccident and injured his passenger one Mr. Koch, who in D. C. Colombo,Case No. 39,422 /M obtained a decree for damages against the plaintiff inthe sum of Rs. 21,748*58 and costs, alleging negligence. The car wasinsured by plaintiff with the defendant company and in the present casethe plaintiff sought to obtain judgment against the defendant companyin this sum.
474
SINNETAMBY, J.—Buvltjena v. Ceylon Insurance Co., Ltd.
In tli© ©arller case brought by Mr. Koch against the plaintiff, thedefendant company conducted the plaintiff’s defence and in the courseof his evidence the plaintiff stated that he had been fined Rs. 5 in 1938for driving a car without a certificate of competence. It would appearthat before the fine was imposed he was asked to furnish a certificate ofcompetence for perusal by the Magistrate within a week and that heobtained one and did so. Upon this evidence being given the defendantcompany disclaimed liability and wrote letter F 10 to the plaintiff statingthat they were not assisting him any further in the action and that thepolicy was void, giving as their reason the fact that in the proposal formwhich incidentally was signed in 1955, the plaintiff had not disclosed thisconviction. The plaintiff, thereupon, brought this present action after adecree had been entered in Mr. Koch’s favour.
The defendant company in seeking to avoid their liability under thepolicy, based their defence on two grounds. First, they pleaded that inthe proposal form, the plaintiff had incorrectly answered in the negativequestion No. 5 which is as follows :—
“ Have you or any other person, who to your knowledge will drive,ever been convicted of any offence in connection with the driving of amotor car or cycle? ”
It was contended that inasmuch as the answers to the questions in theproposal form were made the basis of the contract and were warrantedto be true, the incorrect answer entitled the company to avoid thecontract. The second ground of defence is that quite apart from theanswers to the questions, the plaintiff had withheld inforniation whichtended to increase the risk of the company ; and in view of the agreementin the proposal form, by which the plaintiff undertook to withhold noinformation which might materially affect the risk, the failure on thepart of the plaintiff to disclose this information rendered the subsequentpolicy void.
The District Judge held in favour of the defendant company on bothgrounds and the present appeal is against the learned Judge’s findings.
In regard to the first of these defences, it was submitted that theconviction in 1936, approximately 20 years prior to the date of theproposal, was a fact the plaintiff should have disclosed in answer toquestion No. 5 and that having warranted the truth of the answers,quite irrespective of any other considerations, inasmuch as the answerwas false, the contract is avoided. For the plaintiff, it was contendedthat the conviction for non-possession of a certificate of competence didnot relate to an offence in connection with the driving of a motor car. Itwas contended that the words' “in connection zoith the driving” involvedonly physical manipulation of the car and the non-possession, of a certi-ficate of competence was not the kind of offence contemplated by thequestion. In support of this contention the learned counsel for theplaintiff cited the case of JRevell v. London General Insurance Co. Ltd.1.
1152 Law Times Reports 258.
8ISXETA1IBY. J.—Buultjens v. Ceylon Insurance Co., Ltd.
475
That too "was a case in which the insurance company sought to disclaimliability on the ground that one Mrs. Revel] had incorrectly answered aquestion, which was formulated as follows :—
“ Have you or any of your drivers ever been convicted of anyoffence in connection with the driving of any motor vehicle V*
She had answered " Ho ” whereas, in fact, both she and her driver hadbeen convicted of two offences, namely, (1) of driving a motor vehiclewithout a suitable reflecting mirror and (2) nsing a motor vehicle withouthaving in force an insurance policy in respect of third party risks.Mackinnon, J., who heard the case took the view that neither convictionwas in connection with the driving of a motor vehicle. In the course ofhis judgment he stated :—
“ If there is an ambiguity in the question so that upon one vi 3w ofthe reasonable meaning which is conveyed to the reasonable reader ofit the answer was not false, the company cannot say that on the othermeaning of the words the answer was untrue so as to invalidate thepolicy. The question is this ; 1 Have you or any of your drivers everbeen convicted of any offence in connection with the driving of amotor vehicle’.” It is not “convicted of any offence under the RoadTraffic Aet ”, it is “ any offence in connection with the driving of anymotor vehicle. ”
The learned Judge continued —
“ I think that a reasonable person reading that question mightreasonably regard the purpose of this question as being directed to thecarefulness of the driver who is likely to be driving cars under thispolicy. The most expert and careful driver in the world, who hasnever been convicted of any offence of careless driving, who never fora moment has departed from the most perfect standard of good andcareful driving, could still become liable to a conviction of an offenceunder these two sections. ”
Healing with the question of ambiguity in the wording of questions inthe proposal form Lord Shaw of Dunfermline in Condogianis v. GuardianAssurance Go. Ltd.1 stated :—
“In a contract of insurance it is a weighty fact that the questionsare framed by the insurer, and that if an answer is obtained to such aquestion which is upon a fair construction a true answer, it is not opento the insuring company to maintain that the question was put in asense different from or more comprehensive than the proponent’sanswer covered. Where an ambiguity exists, the contract must standif an answer has been made to the question on a fair and reasonableconstruction of that question. Otherwise the ambiguity would be atrap against which the insured would be protected by Courts of Law. ”
1 {1921} 2 Appeal Cases 125.
476
SINJTETAJlB'5r, J.—Luultjens v. Ceylon Insurance Co., Ltd.
The question considered in that particular case -was as follows :—■
“ Has the proponent ever been a claimant on a fire insurancecompany in respect of property now proposed or any other property?If so, state when and the name of company.”
The answer was “ Yes. 1917 ‘ Ocean The answer was literally trueas in 1917 the insured had claimed against the Ocean Insurance Co. inrespect of the burning of his motor car but in 1912 he had made a claimagainst another company in respect of a similar loss. The learned LawLord went on to state :—
“ the principle of a fair and reasonable construction of the questionmust also be applied in the other direction—that is to say, there mustalso be a fair and reasonable construction of the answer given : and ifon such a construction the answer is not true, although upon extremeliteralism it may be correct, then the contract is equally avoided. ”
The learned Judge took the view that this was a matter which affectedthe risk and the importance of the question increased with the number oftimes on which claims had been made. On the basis, therefore, that theanswer was not reasonable or fair having regard to the object underlyingthe question, their Lordships held that the answer was incorrect and that,therefore, the contract was avoided. Learned counsel for the respondentcompany relied on this case, hut it seems to me that the answer given inthe present case can neither he regarded as unreasonable nor unfair. Areasonable man who undertakes to answer the question will have in mindonly such matters as would affect the risk. How could the non-possessionof a licence twenty years before the proposal form was signed affect therisk undertaken by an insurance company particularly when immediatelyprior to the conviction for that same offence the certificate of com-petence had been obtained and no accident or collision of any kind wasinvolved % Ho reasonable man, it seems to me, would think of dis-closing that conviction as something connected with the driving of amotor vehicle.
It is undoubtedly true that when one considers the meaning attachedto the phrase “ in connection with the driving of a motor vehicle ” in sofar as it relates to offences tinder the Road Traffic Act in England or theMotor Traffic Act in Ceylon a different construction has been placed on it.The meaning attached to words depends largely on the context in whichIhe words are used. Where offences more or less of a statutory kind arecreated for the first time by Aets, in considering the meaning of wordsone would naturally take into consideration the objects which the Actseeks to achieve. The Motor Traffic Act undoubtedly has as its mainobjectives the safety of all road users and the protection of revenue.The failure, therefore, to conform to certain regulations made to achievethose objects, relating to such matters, for instance as proper lighting,necessary accessories, and so on, may he regarded as offences connectedwith the driving of motor vehicles for the purposes of the Motor TrafficAct. One can readily understand, therefbre, why in regard to certain
SI^STN"ETAMJ3Y, J.—Buziltjens v. Ceylon Insurance Co., Ltd.
477
motoring offences, a different interpretation has "been placed on thewords “ in connection with the driving of a motor vehicle VideIsmail v. Per era 1 where, it was held, that these words were not confinedto the actual manipulation of the motor vehicle. But when we come toconsider the meaning to be attached to the words in a proposal form inwhich questions are answered for the purpose of a policy of insurance,one has to construe the words having in mind the object of the question.Quite clearly, in the mind of the insurer, in order to assess the risk,safety of road users or the protection of revenue, is not his primaryobject. How could the fact that a person, who in all other respects hasadmittedly been a very careful and cautious driver, has been convictedof not possessing a certificate of competence, render the risk the insurancecompany runs any greater ? Ho average person who reads the questionwould think it wrong to give the answer which the proposer in this casegave. I think it will come within the principle enunciated by Mackinnon J.in Revell v. London General Insurance Qo., namely, that the purpose of thequestion was to ascertain the carefulness of the driver “ who will bedriving the car under the policy
Learned counsel for the defendant company relied also on the case ofGlicksman v. Lancashire & General Assurance Go. Ltd. s. The questionin the proposal form which was considered in that case was as follows :—
“Has any company declined to accept, or refused to renew yourburglary insurance ? If so, state name of company. ”
The answer was “ Yorkshire accepted but proposers refused “. Theproposal form was signed by the appellant, one Glicksman, when he wasdoing business in partnership with another but prior to the partnershipan application for insurance by Glicksman, when he was sole owner ofthe business, had been refused. The insurance company sought toavoid liability on two grounds which are the same as those pleaded in *this case, namely :—
that the answer was incorrect, and
that a material fact affecting the risk had been concealed and
withheld.
There, too, as in this case, there was a condition that the answers to thequestions in the proposal form shall be the basis of the contract coupledwith an undertaking giver, by the insured not to withhold .any infor- ’mation which may tend to increase the risk. On the first ground theirLordships of the House of Lords took the view that the question wasambiguous. The word “ You ” in the question was answered by theproponent on the basis that it was used in the plural. In such an eventthe answer would have been correct; but if it had been used in thesingular also, the answer would have been incorrect. The 'Judges ofthe Court of Appeal differed on this question but Viscount Dunedin whodelivered the judgment of the House of Lords stated that it was un-necessary to come to a conclusion as to which of these views was right,and refused to express an opinion upon it. He, however, held “ with
1 (1956) 58 N. L. B. 46.
2 {1927) Appeal Cases, 139.
478
SIN2TE1TAMBY, J_.—Butdljens v. Ceylon Insurance Co., Lid.
unfeigned regret ” that on the ground of materiality and concealment*the policy was avoided as this was a matter of great importance to theinsurance company which affected its risk and which should have beendisclosed by the proponent:- * Some of the learned-dudges in-that caseexpressed in no uncertain terms their disapproval of the defence takenby the insurance company to avoid the policy. It must be stated thatmost reputable insurance companies do not take defences of this kindbut when the amount involved is large the temptation is great to fi-ndsome excuse for not paying.
In Zurich General Accident and Liability Insurance Go. Ltd. v. Morrisondo others1 the question on the proposal form was as follows u—
“ state whether you have driven motor vehicles regularly andcontinuously in the United Kingdom during the past twelve months.”
Lord Greene M. H. referring to this question observed :—
" The question is hopelessly vague and I am quite unable to giveany precise meaning to it. It is to my Tnind most unfortunate thatquestions framed in such a slovenly way should be put to a personmaking a proposal for insurance who may afterwards find himselfaccused of having given a false answer according to the constructionwhich the insurer may, in his particular case, choose to put on thequestion. This practice is particularly vicious when, as in the presentcase, the proposer is required to warrant the truth of his answer.Questions of this kind are—I do not say designedly—mere traps, andinsurance companies must not he surprised if they are construedstrictly against them. ”
If I may say so with great respect, these observations of Lord Greeneare most appropriate and must be kept in mind when answers to questionsin proposal forms are examined. In the present case the question, if itwas intended to cover all offences under the Motor Traffic Act, was cer-tainly most ambiguous and in the words of Lord Shaw of Dunfermline^quoted earlier, Courts of Law should protect the insured against such“ traps ”.
In regard to the second ground of defence to which I have alreadyreferred the burden is upon the insurance company to show that thematters concealed had they been disclosed would have affected the. risk.This, it seems to me, they could not in any event have established evenif they had endeavoured to do so, but in this case no evidence of anykind was called by the insurance company and they had accordinglyfailed to discharge the burden. The test was laid down in the PrivyCouncil case of Mutual Life Insurance Go. of New York v. Ontario MetedProducts Go. Lidnamely ;—
" It is a question of fact in each case whether, if the matters concealedor misrepresented had been truly disclosed thej would, on a fair con-sideration of the evidence, have influenced a reasonable insurer to dec-line a risk or stipulate for a higher premium.”
11942 (2) K. B. 53.
a (1925) Appeal Cases 544.
Jayasehera u. TJvais
479
On® can only say that in the present case even if the insured haddisclosed this conviction it would not, having regard to the circumstances,in any way have influenced a reasonable insurer to either decline the riskor alter the premium.
Learned counsel for the appellant referred also to the case of Taylor v.Eagle Star*-. This report unfortunately is not available to us. There,according to the note in Shawoross, drunkenness was held to be amaterial fact which should have been disclosed, and the failure to doso, avoided the policy. In the absence of the report, it is not possibleto say whether the conviction for drunkenness was in respect of thedriver’s condition while at the wheel or not, though one can conceiveof the driver’s drunkenness even at a time when he was not driving,being a matter which an insurer would take into consideration asaffecting the risk.
In my opinion, therefore, the answer to question 5 of the proposal formis not incorrect and the proposer has not withheld any material infonna-tic n which was likely to increase the risk.
I would accordingly set aside the judgment of the learned DistrictJudge and direct that judgment he entered for the plaintiff with costsboth here and in the Court below.
S-ArrsoNi, J.—I agree.
Appeal allowed: