011-NLR-NLR-V-22-WIJERATNE-v.-THE-CHINA-MUTUAL-LIFE-INSURANCE-COMPANY.pdf
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Present: Bertram 0. J. and Schneider A. J.WIJERATNE v. THE CHINA MUTUAL LIFEINSURANCE COMPANY.1920.
31—D. G. (Iwty.) Colombo, 53,890.
Interrogatories—Action for “profits ” by a policy holder against insmancecompany—Application that insurance company, should discloseprofits—Liability of insurance company to pay profits should beestablished before the company is called upon to disclose profits.
By an insurance policy the defendant company undertook to.give to the plaintiff, a policy holder, a share of the profits inaddition to the amount for which he was insured. The policyexpired in 1919, and, no profits having been declared for that year,the plaintiff was paid only the amount for which he was insured.T^'^SSutiff sued the defendant company for a share of profits.The defeafl&nt company denied their liability to pay anything forprofits. The plaint^.moved the Court to call upon the defendantcompany to-amount of their profits/
Held, that t^l^^iTfiation^ /sought for by the plaintiff waspremature befoi^^t ^^^^ngj|^^fi^>y to pay was decided. 1
1 (1902)L. R., at page 267.
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The Court cited, with approval, the dictum of Cotton L.J.:“The Court is always unwilling, before the right to relief isestablished, to make an order for discovery which may be injuriousto the defendant, and will only be useful to the plaintiff if hesucceeds in establishing his title to relief,*'
E!E plaintiff sued the defendant company for the recovery ofprofits alleged to be, due to him on a policy of insurance issued
to him by the defendant company. The plaintiff estimated theprofits due at E>s. 2,500 and prayed for judgment for that sum, orin the alternative for an accounting.
The defendant company pleaded in defence that no profits hadbeen declared (fix the said policy and no sum was due to tte plaintiff.
The plaintiff administered the following interrogatories to thedefendant:—
What are the profits made by you during the years 1904-1919
inclusive ? Give each year’s profits separately. Attach toyour answer copies of the balance sheets and profit and lossaccount for each year.
Is it the fact that your deed of settlement provides that at least
90 per cent, of the profits of the company shall be distri-buted among policy holders ?
Did you represent to the plaintiff that the profits on his policy
would not be less than Be. 2,500 ?
What profits have you paid since 1904 to policy holders in
Ceylon ? Attach to your answer a list of .such payments.
Is the following a correct statement of the .method adopted
by you for the distribution of profits: “ The method ofdistribution provides for the allocation of the profitsequitably as between policy holders under different plansand at varying ages. Profits are distributed on the deferredbonus plan, by which bonuses vest at the.end of the deferredbonus period chosen, and, subsequently, at the expiry ofperiods of five years. In the case of endowment assurancepolicies,* the deferred bonus period is taken as the full termof the policy in the absence of any expressed wish on thepart of the policy holder for some other term. In the caseof whole life policies, the deferred bonus period may beeither five, ten, or twenty years, as desired by the assured."
Did you adopt this method in the case of policy No. 21,040,
which was held by Mr. Peter de Almeida ?
What was paid by way of profits on the said policy No. 21,040 ?
Did you in 1904 represent to Mr. C. M. Leitan of Negombo
that the profits on his policy for Rs. 1,000 maturing intwenty years would amount to Rs. 800 ?
Are the premiums in the case of policies with profits higher
than those without profits ?
Do you say that it is within your discretion to declare or
refrain from declaring profits on a policy issued by you onthe footing that it is payable on maturity with profits ?
When did you receive in Colombo the printed form of the
letter sent by you to the plaintiff bearing date June 1,1919 ?
1920,
Wijeratne v,The ChinaMutual LifeInsuranceCompany
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By whom, at whose instance, and with whose authority were
the typewritten words following, to wit, “ 1st June,” " 9,”and “R. J. V. de S. Wijeyeratne, Esq., Clifton, Hortonplace, Colombo,” inserted T
When was the decision of the directors referred to in the letter
arrived at ?
Was such decision placed before a meeting of the shareholders
and/or policy holders f
Wore shareholders and/or policy holders notified of the
intention of the directors to arrive at such a decision ?
How do you reconcile the said decision with the terms of the
deed of settlement providing for the payment to the policyholders of 90 per cent, of the profits t
The defendant filed the following affidavit in answer:—
I, Thomas Staines Clark, of Colombo, make oath and say as follows:—
I am a partner in the firm of Clark, Young & Company, and my
firm are tho manager and general agents of the defendantcompany in Ceylon.
I refuse to answer interrogatory (1) on the ground that it is
irrelevant at this stage of the action. If the defendantcompany is ordered to render an account, the figures can,I believe, be supplied, then, but they are not available inCeylon.
Answering interrogatory (2), I say that the deed of settlement
will speak for. itself. A copy of the deed can be inspectedat the office of the defendant company’s proctor.
Answering interrogatory (3), I say that I did not make any
such representation, nor to the best of my knowledge andbelief did the defendant company.
Answering interrogatory (4), I say that the defendant
company has since 1904 paid as profits to policy holders.in Ceylon Rs. 27,642*50. I refuse to attach a list of suchpayments on the ground that the requirement of such a listis offensive and irrelevant to the action, and in any eventoppressive (irrelevant) at this stage of action.
Answering interrogatory (5) I say that to the best of my
knowledge and belief the statement therein is a correct state-ment of the method adopted by the defendant company.
I refuse to answer interrogatories (6), (7), (8), and (16) on the
ground that they are irrelevant to the action.
The answer to interrogatory (9) is yes.
I refuse to answer interrogatory (10) on the ground that
what either the defendant company or I may say is notrelevant to the action, except in so far as it may constitutethe defence putforward, which is fully stated in the defendantcompany’s answer to the plaint.
My answer to interrogatory (11) is in May, 1919.
Answering interrogatory (12), I say that the words mentioned
were inserted by a clerk at the instance of Charles BertieFinney, an assistant in my firm, and with the authority ofthe firm.
1980.
Wijeratne e.The ChinaMutual LifeInsuranceCompany
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192&
Wiferatne v.The ChinaMutual LifeInsurance-Company
Answering interrogatory (13), I say that to the best of my
knowledge and belief the answer is April 30, 1910. but 1have no personal knowledge of the matter.
Answering interrogatory (14), 1 say to the best of my knowledge
and belief such decision was placed before a. meeting ofshareholders.
I am unable to answer interrogatory (16). I can supply the
information after reference to the office of the company inShanghai if required.
The District Judge (F. E. Pieris, Esq!) made the following order:—
Plaintiff has come into Court, claiming from the defendant, aninsurance company, a sum of money which plaintiff estimates to be theprofits accrued on his policy during a period of fifteen years. He hasadministered certain interrogatories, some of which the defendant hasrefused to answer, and he has moved the Court to compel the defendantto answer the same.
The first interrogatory refers to the amount of profits made duringthe period of fifteen years in question, and includes a demand for theproduction of the balance sheet and the profit and loss accounts. Thedefendant objects that the information is immaterial at this stage.Plaintiff does not contemplate more than one stage, namely, the trial.The defendant hints at two stages, a trial to be followed by an accounting.The necessity for two stages can well be avoided, and the informa-tion is material at this stage, and must be supplied by the defendant.In reply to the fourth interrogatory, the defendant has stated, asrequired, the amount paid since 1904 as profits to policy holders inCeylon, but has declined to give a list of such payments. The defend-ant has urged that the requirement of such, a list is offensive. Theoffensiveness is not self-evident. It is urged that it is irrelevant. Onthe-other hand, it would be abundantly relevant as supplying thedetails which plaintiff is seeking to establish. It is said that therequirement is oppressive at this stage. Here, again, the defendantis contemplating two stages when one suffices. There is no materialon which it can be held that there is any oppression in the requirement.There is.no suggestion that the number, of items is exhaustingly great.It was urged in the course of the argument that a bare list of paymentswould be useless. What the plaintiff requires is, not a bare list but adetailed list. The defendant is directed to supply the list demanded.Interrogatories (6), (7), and (8), call for certain information in regard tothe policies held by two others, whom , the plaintiff proposes to call as hiswitnesses at the trial, on the footing that their policies were identicalwith his, 'and that a certain course of business was followed in respectof such policies. The defendant has pleaded that such informationwould be irrelevant. Ex facto, it appears to me that the informationis not irrelevant, and those interrogatories must be answered.
In the answer of the defendant it is stated that the defendant ata certain date decided not to declare any profits on certain policies.Interrogatories (10)and (16)are connected withthis portion of the answer.The defendant is called upon to state if the company claims a dis*cretion in regard to the declaration of profits, and also to reconcile thesaid decision with certain terms in the deed of settlement. Theseappear to me to be matters more suitable for oral cross-examinationand legal argument, and these two interrogatories need not be answered.
The costs of this matter will be paid by the defendant; The answermost be filed in Court on or before February 16.
Drieberg, for the defendant, appellant.
H. J. C. Pereira, for the plaintiff, respondent
August 3, 1920 Bhbtram G.J.—
This is an appeal against the order of the senior Distriot Judgeof the District Court of Colombo requiring the defendant to answercertain interrogatories. The action is an action on an insurancepolicy. The policy undertakes to give to the policy holder a shareof profits in addition to the amount for which he is insured. Whatthe profits referred to are is not specified. Nor is the share specified.The only other document which explains what the rights of thepolicy holder in respect of profits may he is the application which hesigned when the policy was granted. In that application he declaredthat “ the methods which might be adopted by the company forany distribution of surplus and its determination of the amountapportioned to the said policy are hereby accepted for every personwho shall have any interest in the said policy.” This policy wasentered into in the year 1904, and expired in the year 1919. Itappears by a statement in the defendant’s answer, that in April,1919, the company determined not to declare any profits on.policiesexpiring before the date of the next annual mooting, unless thedirectors should otherwise decide after considei mg the accounts forthe financial year 1919. In view of this resolution the plaintiff hasreceived no profits. He is simply paid the amount for which he wasinsured, and he now brings his action declaring that he is entitled tosomething in respect of profits. What his rights are must, in thefirst place, depend upon a determination of what is the agreementbetween the plaintiff and the company. The company say, as Iunderstand their case, that by profits is meant simply “ the profitsof the year in which the policy matures.” The appellant conteststhis. He maintains, in the first place, that this is not the naturalmeaning of the words in the context in which they occur, and inthe second place, he points to a resolution of the Board of Directorswhich was incorporated as an amendment in what is described as theDeed of Settlement of the. company, and is in the following terms :
“ From and after the year ending. March 31, 1906, not less than90 per cent, of such sum, if any, as would (but for this clause) beavailable for distribution as profits of the company in each yearshall be applied for the benefit of such of the policy holders of thecompany as may be insured with profits at such tunes, in such amanner, and upon such terms as the directors may from time totime determine."
He maintains that, by virtue of that clause in the deed of settle-ment, a trust fund is, in fact, annually constituted of 90 per cent, ofthe sum available for distribution of profits. He maintains furtherthat this clause indicates that the profitsxontemplated in the policy
Wijeratne v.The ChinaMutual LifeInsuranceCompany
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1920.
Bbbtbau
O.J.
Wijeralne v.The ChinaMutual LifeInsuranceCompany
are not profits in the year in which the policy matures, but profitsduring all the years for which it is running, and that at the con-clusion of this period he is entitled to the accumulated result of thesums appropriated to his policy in respect of profits during its wholecourse. He maintains, therefore, that, if there had been profitsearned between 1904 and 1919, he must at least be entitled tosomething on the maturing of the policy. The company claims, onthe other hand, that he is absolutely bound by the terms of hisapplication, and that the fact that they have not apportioned any-thing to the policy in respect of which he sues is conclusive againsthim that there is nothing due in respect of profits on that policy.There are thus two questions to be determined: firstly, What is thecontract between the parties ? And secondly, as a term of thatcontract, Is the plaintiff bound by the words of his application insuch a way that he is not entitled to sue in respect of profits ?
As I say, it must be first determined whether the plaintiff is entitledto any relief before the amount of that relief can be estimated, andwe are asked before that question is determined to call upon thedefendant company to disclose the amount of their profits duringthe years 1904 and 1919, giving each year’s profits separately.They ^re also asked to attach to the answer a copy of the balancesheet and profit and loss account for each year.
The question of the principle on which Courts grant discovery ofthis kind has been discussed in many cases, but I will cite twopassages only from two of the most important cases. The first isParker v. Wells.1 Jessel M.B>. says : s< Now, in deciding whetherdiscovery ought to be given, we must first consider whether itwill help the plaintiff at the trial. If it will not, but will only be ofuse if the plaintiff obtains a decree, then we must consider whetherit is fair that the defendant should be obliged to give it at this stageof the proceedings, or whether to compel him to give it wouldbe oppressive.” The other passage is Finnessy v. Clark,2, where .Cotton L. J. says : “ The Court is always unwilling, before the rightto relief is established, to make an order for discovery which may beinjurious to the defendant, and will only be useful to the plaintiffif he succeeds-in establishing his title to relief.”
It seems to me that the information sought for by the plaintiff ispremature at this stage'. If he establishes his title to a share of theprofits, and satisfies the Court that his interpretation of the agree-ment on which he sues is aright one, then,no doubt, the Court willtake measures to give him by means of an inquiry such relief ashe may be entitled to. I confess that, from the very wide terms ofthe resolution in respect of the appropriation of the 90 per cent, ofthe profits, it may be very difficult for any Court to give the plaintiffany definite relief. But this is a matter for subsequent discussion.
1 (1381) 18 Ch. Div. 477, at p. 483.2 (1887) 37 Ch. Div. 184, alp. 187.
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Mr. Pereira maintains that at this stage he is at least entitledto be told whether during the years 1004 to 1010 the company haverealized any profits at all, Unless he can show that, there is no
basis for the action. I think he is unnecessarily apprehensive. Bythe terms of their answer to one of the interrogatories (interrogatory
) the defendant company expressly states that since 1904 it haspaid as profits to policy holders a sum of Rs. 27,642*50. It seemsto me that there is a clear admission, for the period in question, thatsome profits have been earned, and that is enough foundation forthe plaintiff’s case.
In my opinion it will be oppressive at this period to require thedefendant company to answer interrogatory (1). Similarly, withregard to the fourth interrogatory, I see no reason why the defendantcompany should be required to give a detailed list of the paymentsthey have made to other polioy holders. With regard to the sixthand seventh interrogatories, they have references to the defendant’sdealings with another policy holder. I cannot see how this is relevantto the plaintiff’s action against the company. He can obtain suohinformation as he desires from the policy holder in question.Similarly, with regard to interrogatory (8), I do not think thatthis is one which the company should be required to answer,It relates to an assurance said to have been given by some unnamedperson to another polioy holder with regard to the profits likely toaccrue upon his polioy when it matured. I do not see how thecompany can answer the interrogatory as it at present stands, inany case, it appears from the form of the application which theplaintiff signed that the defendant company expressly disclaim allresponsibility for statements, representations, promises, or informa-tion given by their agents, unless they are reduced to writingand presented at the office of the company with the application.
I cannot see that this interrogatory is relevant to the action, andI would not require the defendant company to answer it. I am,therefore, of opinion that this appeal should bo allowed, with costs.
1920.
Bertram
C.J.
Wijeratne v.The ChinaMutual LifeInsuranceCompany
Schneideu A.J.—I agree.
Appeal allowed.