R.V. Kewalsons (A Firm) v. National Insurance Co Ltd
Read the full judgment text of CACV 6/1970 on BabelCite. This Court of Appeal judgment was delivered on 27 November 1970.
1. This is an appeal against part of a judgment of a District Judge awarding to the respondents a total sum of $7,368.50 under a policy of insurance. The policy was described as a "burglary policy" and the claim under it related to loss alleged to have been suffered as a result of a breaking and entering and the theft of what may conveniently be called "jewellery" although there were items of value not strictly falling within that category. The loss included damage to furniture in the premises a
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IN THE SUPREME COURT OF HONG KONG (APPELLATE JURISDICTION) CIVIL APPEAL NO. 6 OF 1970 -----------------
Coram: Blair-Kerr, Mills-Owens, and Huggins, JJ. Date of Judgment: 27 November 1970 ----------------- JUDGMENT ----------------- 1. This is an appeal against part of a judgment of a District Judge awarding to the respondents a total sum of $7,368.50 under a policy of insurance. The policy was described as a "burglary policy" and the claim under it related to loss alleged to have been suffered as a result of a breaking and entering and the theft of what may conveniently be called "jewellery" although there were items of value not strictly falling within that category. The loss included damage to furniture in the premises and no appeal is made against the award of $370 for that. 2. Before the learned judge below it was in issue whether there was a burglary at all but, the judge having found that there was, that finding is not challenged. What is challenged is that the loss of the jewellery was a loss covered by the terms of the policy. 3. The facts may be briefly stated. Mr. Subhwani is the general manager of the assured firm. That firm carries on an import and export business and deals with Hong Kong manufactured goods "like garments, textiles, toys, radios, sundries and precious articles". It was admitted that the firm did not deal in "jewellery". However, from time to time foreign clients of the firm would visit Hong Kong and would leave with Mr. Subhwani the things (including jewellery) which they had purchased during their stay pending collection by, or despatch to, the clients. It was property so held which the learned judge found to have been stolen during the period of the insurance policy held by the respondents. 4. The policy was issued as a result of a proposal which was expressly agreed to form the basis of the contract between the insurer and the assured. The proposal was admittedly signed by Mr. Subhwani. He described the "trade or business" as "Import. Export." and completed the schedule of property to be insured as follows:
The policy issued was stated to be "for business premises only" and provided cover against loss or damage by burglary or house breaking to "the property or any part thereof described in the Schedule hereon and belonging to the Assured or held by him in Trust or on Commission for which he is responsible while contained in the premises". Condition 10 of the policy reads in part:
The schedule to the policy differs slightly from that in the proposal form because the description of property insured reads:
It will thus be seen that in Section A the nature of the stock in trade is expressly described and in Section B the conjunctive has been used in place of the disjunctive although in the earlier part of the policy the disjunctive had been used. 5. The learned judge came to the conclusion that the jewellery found to have been stolen, although not within the ambit of the respondents' business as importers and exporters, was nevertheless "goods in trust" within the meaning of the policy and he further held that there was no obligation of disclosure of the likely presence of such property in the premises. As we understand it no question of non-disclosure can be material unless the goods were covered by the policy. Mr. Ching for the appellants sought to argue a number of points but since Mr. Swaine for the respondents found himself unable in the face of the authorities to support the judgment on the first of them Mr. Ching was content that we should decide the case on the first point only. We allowed the appeal accordingly and said we would give our reasons later. 6. It is not sought to dispute the learned judge's interpretation of the words "in trust" as meaning that goods have been entrusted in a broad sense and not merely that a trust has been created in equity. Some reliance was, however, placed on a passage in the judgment of Mr. Justice Crompton in Waters v. Monarch Fire and Life Assurance Company (1856) 1843-60 All E.R. (Rep.)654 where he is reported as saying at p.656:
It is suggested that the learned judge meant to imply that had the goods not been entrusted in the way of their trade the policies might not have applied. The other judges in the Divisional Court said nothing from which such an intention could be inferred and some of the other reports of the same case do not attribute these words to Mr. Justice Crompton at all. Nevertheless it is said that in the many, many cases where the phrase "goods in trust" has been in issue the goods have always been goods entrusted in the course of a trade. 7. We prefer to base our decision upon our view of the particular contract as a whole. Although Section B of the schedule did not include the words "in the course of the assured's trade" we think it is beyond doubt that jewellery received in the circumstances found to have existed here was never in the contemplation of the parties when making the contract. The appellants were invited to give cover and it was necessary for them to assess the risk which they were underwriting. The appellants said they wanted insurance related to their business premises and that the nature of their business was that of importers and exporters. The policy shows that the insurers understood the business to be confined to garments and textiles. They had no reason to believe that jewellery would be in the premises. The presence of articles of high value which could not only be easily removed but also easily disposed of would, if covered by the policy, manifestly increase the risk, using that word in a non-technical sense. Description of the subject matter "is an essential element in the description of the risk because identification of the subject matter is fundamental to the policy. ...... The insurance is, therefore, only operative in relation to a claim if the subject matter of the claim corresponds with the description which the policy contains, whether on its face or by reference to the incorporated documents or to the surrounding circumstances admissible as aids to its interpretation": 22 Halsbury's Laws of England (3rd Ed.) 230 (para. 435); and see also per Mr. Justice Blackburn in Mackenzie v. Whitworth (1875) 1 Ex. D. 36, 40. Suppose Lord Justice Scrutton's interfering bystander had read the draft policy and said "You know the proposers often have jewellery left in their custody by visiting clients, don't you?", can it be doubted that the insurers would have said "That, of course, will not be covered by the policy we have been asked to give: if the proposers want to insure articles of that kind we shall want the fullest details and the premium will be substantially higher than we have quoted"? We are satisfied the answer must be "No". The reason lies in the fact that it is absurd to suppose that an ordinary commercial policy insuring a textile trader's "goods" against burglary and theft extends to cover articles such as jewellery, which, as it is said, any customer may happen, gratuitously and for his own convenience, to leave with the trader for safe custody for despatch. 8. In the present case there is an axpress reference to jewellery in Section (f) of the schedule of property in the proposal form but, as we have seen, the marginal note refers to "the proposer's private dwelling rooms" and we agree with the learned District Judge that this implies that this form of policy was designed for those business premises whereof a portion is used as the trader's dwelling place - a common feature in Hong Kong. There is a further implication that it is only in the dwelling portion that such articles as jewellery are expected to be kept. 9. Although on a very strict interpretation of the words "goods in trust" standing by themselves it could be said that the jewellery was within the cover extended by the policy the words used in a policy may come to be construed otherwise than literally as in Watchorn v. Langford (1813) 3 Camp. 422 where a person who was not a linen draper insured his "stock in trade, household furniture, linen, wearing apparel and plate" and was held not protected against loss of a large stock of linen drapery goods subsequently purchased by him on speculation. That was an application of the rule noscitur a sociis - an illustration of construction according to the context. 10. In Pearson v. Commercial Union Assurance Company (1876) 1 App. Cas. 498 at P.510 Lord O'Hagan said:
Here we have a policy insuring, against burglary risks, the goods of an import/export merchant, such goods being defined by Section A of the schedule as "consisting of garments and textiles". In the case of any such business it would be important to insure that goods not technically belonging to the insured were held covered, first, goods held on commission, i.e. goods of others held as an agent for sale, and, secondly, goods held in trust, as for example goods hypothecated to a bank in return for finance afforded by letter of credit, which goods are released to the merchant "in trust" to enable him to realise them and thus to repay the bank. It was, surely, for these purposes that Section B was inserted in the schedule, having regard to the context of the policy and the circumstances surrounding it. To give to Section B a literal, unrestricted meaning would be to enlarge the nature of the risk by holding the policy to extend to "goods" at large, putting the insurers in the position of having insured, at ordinary commercial rates, articles of an unspecified nature, of an unspecified value, and different from the goods which it was the main object of the policy to insure - articles which, moreover, if jewellery were to be included, were peculiarly susceptible of theft and to a considerable value. The word "goods" in Section B must hinge upon the main purpose of the policy. 11. Although we have allowed the appeal on this one ground we think there may well be substance in the further contention that the words "for which he is responsible" in Section B would prevent a gratuitious bailee such as the respondents from recovering under the policy: Engel v. Lancashire and General Assurance Company, Limited (1925) 41 T.L.R. 408. However, for the foregoing reasons we set aside the judgment in so far as it included the sum of $6,998.50 in respect of the "jewellery". Representation: Mr. C. Ching (Messrs. H. A. Hoosenally) for Appellant. Mr. J. Swaine (Messrs. Brutton & Stewart) for Respondent. |