Super Chem Products Ltd v. American Life and General Insurance Co Ltd & Ors (Trinidad and Tobago)  UKPC 2 (12 January 2004)
Privy Council Appeal No. 68 of 2002
Super Chem Products Limited Appellant
American Life and General Insurance Company Limited
and Others Respondents
THE COURT OF APPEAL OF TRINIDAD
JUDGMENT OF THE LORDS OF THE JUDICIAL
COMMITTEE OF THE PRIVY COUNCIL,
Delivered the 12th January 2004
Present at the hearing:-
Lord Bingham of Cornhill
Lord Hope of Craighead
Lord Rodger of Earlsferry
Sir Kenneth Keith
[Delivered by Lord Steyn]
The Insurance Policies.
The terms of the policies.
On the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company, and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company
(a) a claim in writing for the loss or damage containing as particular an account as may be reasonably practicable of all the several articles or items of property damaged or destroyed, and of the amount of the loss or damage thereto respectively, having regard to their value at the time of the loss or damage, not including profit of any kind.
(b) particulars of all other insurance, if any.
The Insured shall also at all times at his own expense produce, procure and give to the Company all such further particulars, plans, specifications, books, vouchers, invoices, duplicates or copies thereof, documents, proofs and information with respect to the claim and the origin and cause of the fire and circumstances under which the loss or damage occurred, and any matter touching the liability or the amount of the liability of the Company as may be reasonably required by or on behalf of the Company together with a declaration on oath or in other legal form of the truth of the claim and of any matters connected therewith.
No claim under this Policy shall be payable unless the terms of this Condition have been complied with.
If the claim be in any respect fraudulent, ... or, if the claim be made and rejected and an action or suit be not commenced within three months after such rejection ... all benefit under this Policy shall be forfeited.
In no case whatever shall the Company be liable for any loss or damage after the expiration of twelve months from the happening of the loss or damage unless the claim is the subject of pending action or arbitration."
The relevant provisions of the consequential loss policy were as follows:
On the happening of any Damage in consequence of which a claim is or may be made under this Policy, the Insured shall forthwith give notice thereof in writing to the first named of the insurers and shall with due diligence do and concur in doing and permit to be done all things which may be reasonably practicable to minimise or check any interruption of or interference with the business or to avoid or diminish the loss, and in the event of a claim being made under this Policy shall, not later than thirty days after the expiry of the Indemnity Period or within such further time as the Insurers may in writing allow, at his own expense deliver to the Insurers in writing a statement setting forth particulars of his claim, together with details of all other Insurances covering the Damage or any part of it or consequential loss of any kind resulting therefrom. The Insured shall at his own expense also produce and furnish to the Insurers such books of account and other business books, vouchers, invoices, balance sheets, and other documents, proofs, information, explanation and other evidence as may reasonably be required by the Insurers for the purpose of investigating or verifying the claim together with (if demanded) a statutory declaration of the truth of the claim and of any matters connected therewith. No claim under this Policy shall be payable unless the terms of this condition have been complied with and in the event of non-compliance therewith in any respect, any payment on account of the claim already made shall be re-paid to the insurers forthwith.
If the claim be in any respect fraudulent, ... or, if the claim be made and rejected and an action or suit be not commenced within three months after such rejection ... all benefit under this Policy shall be forfeited."
The insured's reply.
Judgment at first instance.
The Court of Appeal judgment.
(1) The correctness of the judge's conclusion that the limitation provisions contained in the consequential loss policy were not incorporated in the contract.
(2) The Jureidini question, viz whether the insurers' assertion of fraud precludes them from relying on the limitation condition (i) in the stock policy and (ii) subject to the decision on (1) above, in the consequential loss policy, as well as on the claims co-operation conditions in both policies.
(3) The question whether the insured has established the necessary ingredients for a successful plea of waiver or estoppel to defeat the limitation defence under the stock policy and, if it arises, under the consequential loss policy.
(4) The question whether the insured's challenge to the judge's findings that there were breaches of the claims co-operation conditions in the stock policy and in the consequential loss policy ought to succeed.
The incorporation issue.
"What the defendants have not shown in their attempt at agency, is that the conditions came to the knowledge of the brokers. Without that information, the knowledge cannot attach to the plaintiff at all. Insofar as [the consequential loss action] is concerned, the limitation point does not succeed."
On this point the judge wrongly adopted a subjective approach to the formation of the contract. The decisive fact is that the brokers, whatever they may have known, committed the insured to a contract on all the standard form terms of the consequential loss policy. They unquestionably had authority to do so. Conditions 4 and 5 were validly incorporated. The judge erred.
The Jureidini issue.
"there has been in the proceedings throughout a repudiation on the part of the respondents of their liability based upon charges of fraud and arson, the effect of which, if they are right, is that all benefit under the policy is forfeited. But one of the benefits is the right to go to arbitration under this contract, and to establish your claim in a way which may, to some people, seem preferable to proceeding in the Courts; and accordingly that is one of the things which the appellants have, according to the respondents, forfeited with every other benefit under the contract.
Now my Lords, speaking for myself, when there is a repudiation which goes to the substance of the whole contract I do not see how the person setting up that repudiation can be entitled to insist on a subordinate term of the contract still being enforced."
If one were to assume that this passage correctly reflected the ratio decidendi of Jureidini it would not assist the insured in the present case. There are at least three obstacles in the way of the insured's argument. First, properly understood the insurers' defence of arson was not a repudiation of the contract but rather a defence based on the contract. Secondly, it is part of the very alphabet of contract law that, despite a repudiatory breach, obligations under the contract survive until the breach is accepted by the innocent party as terminating the contract. Here there was no such acceptance. Thirdly, counsel for the insured rightly accepted that if the relevant limitation and claims co-operation defences had come into existence before the insurers rejected the claim on 11 October 1991 the point cannot assist the insured. That is indeed the factual position in the present case. In the circumstances the Jureidini defence must be rejected.
"… I should say a single word as to the case of Jureidini. That case has in my view no application, for the simple reason that the clause of reference there was not a reference of all disputes, but only a reference as to the evaluation of loss. In other words, the clause was not a clause of the universal sort ..."
In Sanderson Viscount Haldane and Lord Shaw of Dunfermline expressly agreed with Lord Dunedin's opinion. In other words the ratio of Jureidini is based on the special wording of the arbitration clause and the fact that no dispute as to quantum had arisen.
"... I agree with the Lord Chancellor in thinking that the true ground of the decision in Jureidini v National British and Irish Millers Insurance Co Ltd was the narrowness of the field of submission and the fact that no dispute had arisen on the only point submitted to arbitration."
Lord Wright discussed what he called the curious case of Jureidini (at 385) and preferred the narrow view of its ratio decidendi. Lord Macmillan gave a separate opinion, with which Lord Russell of Killowen agreed, in which the analysis of Jureidini is perhaps not entirely clear.
"Thirdly, as to 'fundamental breach'. The proposition that exemption clauses may be held inapplicable to certain breaches of contract as a matter of construction of the contract, as held by the House of Lords in Suisse Atlantique Société d'Armement Maritime S.A. v N.V. Rotterdamsche Kolen Centrale  1 AC 361 and Photo Production Ltd v Securicor Transport Ltd  AC 827 and endorsed in Australia by Windeyer J. in Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353, 376 was not disputed. But Mr Hobhouse for the consignee put forward a special, and ingenious, argument that, because of the fundamental nature of the breach, the stevedore had deprived itself of the benefit of clause 17 of the bill of lading - the time bar clause. A breach of a repudiatory character, which he contended that the breach in question was, entitles the innocent party, unless he waives the breach, to claim to be released from further performance of his obligations under the contract - so far their Lordships of course agree. One of these obligations, counsel proceeded to argue, was to bring any action upon the breach within a period of one year, and the innocent party was released from this obligation. An alternative way of putting it was that the bringing of suit within one year was a condition with which the innocent party was obliged to comply: the repudiatory breach discharged this condition. ...
Their Lordships' opinion upon these arguments is clear. However adroitly presented, they are unsound, and indeed unreal. Clause 17 is drafted in general and all-embracing terms:
'In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered.'
it is quite unreal to equate this clause with those provisions in the contract which relate to performance. It is a clause which comes into operation when contractual performance has become impossible, or has been given up: then, it regulates the manner in which liability for breach of contract is to be established. In this respect their Lordships find it relevantly indistinguishable from an arbitration clause, or a forum clause, which, on clear authority, survive a repudiatory breach: see Heyman v Darwins  AC 356, Photo Production Ltd v Securicor Transport Ltd  AC 827, 849. Mr Hobhouse appealed for support to some observations by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd, at p 849, where reference is made to putting an end 'to all primary obligations ... remaining unperformed'. But these words were never intended to cover such 'obligations' to use Lord Diplock's word, as arise when primary obligations have been put an end to. There then arise, on his Lordship's analysis, secondary obligations which include an obligation to pay monetary compensation. Whether these have been modified by agreement is a matter of construction of the contract. The analysis, indeed, so far from supporting the consignee's argument, is directly opposed to it. Their Lordships are of opinion that, on construction and analysis, clause 17 plainly operates to exclude the consignee's claim."
Unfortunately, the citation was lengthy but it demonstrates the fallacy of the argument based on Jureidini with great clarity and authority.
Waiver and estoppel.
Claims co-operation clauses.
"The Insured shall also at all times at his own expense produce, procure and give to the Company all such further particulars, plans, specifications, books, vouchers, invoices, duplicates or copies thereof, documents, proofs and information (i) with respect to the claim and (ii) the origin and cause of the fire and circumstances under which the loss or damage occurred, and (iii) any matter touching the liability or (iv) the amount of the liability of the Company as may be reasonably required by or on behalf of the Company together with a declaration on oath or in other legal form of the truth of the claim and any matters connected therewith.
No claim under this Policy shall be payable unless the terms of this Condition have been complied with."
The corresponding provision in Condition 4 of the consequential loss policy provides as follows:
"The Insured shall at his own expense also produce and furnish to the Insurers such books of account and other business books, vouchers, invoices, balance sheets, and other documents, proofs, information, explanation and other evidence as may reasonably be required by the Insurers for the purpose of investigating or verifying the claim together with (if demanded) a statutory declaration of the truth of the claim and any matters connected therewith. No claim under this Policy shall be payable unless the terms of this condition have been complied with and in the event of non-compliance therewith in any respect, any payment on account of the claim already made shall be re-paid to the Insurers forthwith."
"It is not to be supposed that the condition in the policy required of the insured by way of information more than he had or could practically ascertain. Both parties accepted as applicable the statement in 25 Halsbury's Laws of England (4th ed) para 505:
'Particulars required. The particulars required necessarily vary according to the nature of the insurance. They must be furnished with such details as are reasonably practicable. Whether the details given are sufficient or not is a question of degree, depending partly upon the materials available which, particularly in the case of a fire, may be scanty, and partly upon the time within which they have to be furnished. In any case, the assured has not performed his duty adequately unless he has furnished the best particulars which the circumstances permit."
That is how the judge approached the issue in the present case. The Court of Appeal approached the matter in a similar way. At neither level was there any dispute about this legal approach to the claims co-operation provisions.
"The defendants requested the plaintiff's income tax returns. These were never provided. The plaintiff's explanation was that they were destroyed by fire and efforts by their auditor to obtain them were unsuccessful. Attorney-at-law for the plaintiff said that the plaintiff's servants and/or agents made strenuous effort to obtain same. All that Mr Sawh said is that he requested the documents from the Board of Inland Revenue and that their auditor Mr Omar Ali made the same request also without success. What is difficult for me to conceive is that the accountant/auditor was unable in 1990 to supply at least copies of tax returns for the year 1989, or that sufficient effort was made to obtain them from the Board of Inland Revenue. I am fortified in this view, by the statement made by Mr Sawh on the 3rd July 1995, that the efforts to obtain the tax returns were not successful, and that he did not mean by that that all methods to obtain the tax returns were exhausted. Did the plaintiff do all that was reasonably required to obtain the Income tax returns? I do not think so, the evidence of strenuous effort on the part of the plaintiff is not there."
The Court of Appeal affirmed these findings of fact. In the result there are concurrent findings of fact. The Board has carefully considered the oral and written arguments of the insured but concludes that the judge and Court of Appeal came to the correct conclusion on this aspect.
"It is a fact that some of the information was provided, so that I have not accepted the statement of Mr Zoe that he did not receive any information. However, there was other significant information which was not supplied to the defendants. One such request was for the cancelled cheques. According to Mr Sawh, when the request was made for the returned cheques, he sought to put them together and when it dawned upon him that there were so many, they thought that Mr Zoe should come to their premises to inspect them. That suggestion was not responded to and sometime after, a break-in occurred at the premises. Several documents were taken and the intruder was found to be an employee who had been defrauding the company. One wonders whether one should attach any significance to the timing of the break-in. Blame for not getting the documents in a timely fashion has been attributed to each side. Mr Sawh is saying that Mr Zoe did not come in when he was invited, and Mr Zoe is saying that he was put off several times, until the events related herein. Then it was suggested that the defendants could go to the bank and view the cheques there, as it was going to be quite costly to have them copied by the bank. Attorney for the defendants submitted that that was not a realistic approach since according to the clause in the policy, they were to be supplied at the cost of insured. It seems to me that the approach taken by the plaintiff cannot be in compliance with the terms of the policy."
Again, the Court of Appeal affirmed the judge's findings of fact. This aspect is, however, more troublesome, notably because the judge did not resolve the dispute between Mr Sawh and Mr Zoe. The Board prefers to express no concluded view on it.
"Another request which was made, was for the names and address of employees. This was not done, and Mr Sawh in evidence said that in hindsight, he could have obtained this information by going directly to the employees and requesting their addresses."
The Court of Appeal affirmed this finding of fact. It is a concurrent finding of fact. None of the oral or written arguments advanced on this appeal have caused the Board to question the correctness of this finding.