Law Union & Rock Insurance Co Ltd v. Suen Shuk Man

HCA000951/1977

-----------------

Coram: Cons J.

Date of Judgment: 11th October 1978

-----------------

JUDGMENT

-----------------

1. In July 1974 the defendant purchased a brand new Ford Cortina motor car. Before he could drive it on the open road of course he had to get it licenced and registered and obtain the appropriate insurance cover. He did this last with the plaintiff company, which is an English company operating here through agents known as Insurance Advisory Services Ltd. In order to obtain the cover the defendant signed a proposal form. One of the questions contained in that form was this:

Provision was made for the answer to be given by inserting a tick in one of the two boxes marked "NO" or "YES". There followed a note in heavy type requiring the proposer to give details of ALL convictions. In this instance the box marked "NO" had been ticked. At the end of the form, and beneath which the defendant signed, there were the usual declarations. In fact the answer I have just referred to was not true. The defendant had at that time already been convicted of three offences in connection with a motor vehicle, that is, speeding, carrying an excess passenger and a traffic light offence. Some six months after he signed that form the defendant was involved in a traffic accident which caused personal injury to third parties. In the circumstances the plaintiff company claims that it is, and has at all material times been entitled to avoid the policy.

2. It would seem that the sale of the car took place one evening at the defendant's home and that the insurance was dealt with at the same time. The defendant says that it happened this way. The car salesman was one Danny Chan. He was also an agent of the plaintiff company and entitled to commission on any insurance business that he introduced. After the sale had been completed Danny Chan enquired of the defendant whether he wished to take out insurance and if so whether he wanted comprehensive or third party only. He recommended comprehensive. The defendant replied that he did want insurance and that he would accept Danny Chan's recommendation. Danny Chan then said that the defendant would have to fill in a form. The defendant replied that he did not know English. The form incidentally is printed in both English and Chinese characters. Then Danny Chan asked the defendant to give him his identity card and driving licence. He also asked the defendant if he had been involved in any traffic accident or convicted of any traffic offence. The defendant said no to the first question and as to the second told Danny Chan about the three offences I have just mentioned. Danny Chan did not write anything down. He merely asked the defendant to sign the form saying that he would fill it in later because he had a friend waiting down below and would have to get down quickly. The defendant did as he was requested.

3. If this story be true, when Danny Chan filled in the form later he did so contrary to the information that he had been given. We do not know why. We cannot ask him. We are told he has emigrated to Canada. There is nothing to suggest that he acted dishonestly. He may of course have forgotten his instructions. That is a possibility. But I think it far more likely that he was not told. I take this view because when the accident occurred shortly afterwards the defendant was again requested to fill in a form, this time a motor vehicle accident report form. On that occasion he filled in the form by himself. That form contained a similar question. Again two alternative answers were provided. Again the answer "NO" was given. When taxed in cross-examination with the obvious inconsistency with his evidence all the defendant could say was

"It could be that after I had had that accident my mind was not as good as it was before."

I note that the form was completed three days after the accident and that the defendant was not himself injured. Later also in cross-examination he said

"It could be that I made a mistake when filling in the accident form."

I regret to say that I think the defendant's mistake was in not telling the truth to Danny Chan. I am satisfied he did not disclose his previous convictions.

4. That finding is sufficient in itself to dispose of this action. But in deference to the well considered arguments of counsel on both sides I feel I should indicate what my view would have been if the defendant's story had in fact been true. That situation once presented a conflict in the authorities. Scrutton L.J. in Newsholme Brothers v. Road Transport and General Insurance Co. Ltd.⁽¹⁾ described it as

"a conflict, .... between the desire to hold the insurer, who employs an agent to bring him business, liable for anything that agent does in procuring business, and, on the other hand, the contention that a man who signs a promise that certain written statements are true and the basis of his contract, which statements, if he read them before signing, he would know to be untrue, cannot claim to vary his contract by omitting that promise and misstatement."

That case resolved the conflict. It was held that where an insurance agent fills in the proposal form for a customer, then at that moment he acts merely as the scribe of the customer and not as an agent for his company; and any knowledge that he may have as to the inaccuracy of any statement entered in the proposal form is not to be imputed to his company. In my view the law is now certain, although some insurance companies seek to make certainty more sure by adding a further declaration to similar effect. The present plaintiff is one of those companies. So also was the defendant company in Facer v. Vehicle and General Insurance Co. Ltd. ⁽²⁾. Marshall J. thought the additional declaration strengthened his decision that the law to be applied was as I have just mentioned.

5. Nevertheless there may still be cases where other considerations pre-empt the doctrine of Newsholme, and even where it has been so strengthened. One such many years ago was Bawden v. London, Edinburgh and Glasgow Assurance Co. Ltd. ⁽³⁾. The most recent that has been pointed out to me is Stone v. Reliance Mutual Insurance Society Ltd. ⁽⁴⁾.

6. In January 1968 an inspector from Reliance Mutual called on Mr. Stone, who lived with his wife in a flat in the East End of London. Mr. Stone was not in but it was his wife in any event who dealt with matters of that kind in that family. She agreed to take out another policy with the company. There had been an earlier policy but it had by then lapsed. The inspector filled in a proposal form and gave it to Mrs. Stone to sign. She did so without reading it. If she had read it she would have noticed that the answers to two of the questions were inaccurate. One question asked about other policies with the company and whether they had lapsed or not. The second asked for particulars of any earlier claims. To each the answer "NONE" had been given. In each case it was wrong. There had been a fire the year before and Mr. Stone had claimed upon the policy which at that time was still current. In October 1969 thieves broke into the Stones' flat. They took property worth over £200. Mr. Stone duly made a claim upon the policy. The company sought to evade liability on the ground that the proposal form contained those two untrue statements. The Court of Appeal in England held that the company could not evade its liability in that way. The case differed from Newsholme. There the agent had no authority from the company to fill in the form. But it was the deliberate policy of Reliance Mutual that he should do so. Therefore the mistakes made in the answers entered - and there was no suggestion that they were anything other than mistakes - were made in the course of carrying out the company's policy and the company should bear the responsibility.

7. The present case is not quite the same. The plaintiff company does not encourage car salesman to complete the proposal form. It asks the salesman to let the customer to do it himself. But the company takes no active step to enforce its policy. It could do so quite easily. It could, for example, require the proposer to complete the form in his own handwriting, at least in the case of individuals. Or it could remove from its list salesmen who do not follow its policy. Counsel for the defendant submits that in these circumstances the Stone principle should apply; the plaintiff in effect holds out its agent as having authority to fill in the form; therefore justice demands that if he make a mistake in doing so the company should accept responsibility.

If the matter rested there I think I would have agreed with counsel. But justice must look at the mistakes on both sides. Denning L.J. did so in Stone. He found that Mrs. Stone also made a mistake. She should have read the form before she signed it. But he considered her mistake was excusable, because she was of very little education and in the circumstances would have assumed that the company already knew all that was necessary. The defendant cannot plead those excuses. He is a man of business, the sole proprietor of a firm importing electronic components from Japan. I do not know the level of his education, save that he can read and write Chinese characters. But he is certainly not one of the "small people" whom Megaw L.J. had in mind at p. 477. Furthermore he signed the form in blank. He left Danny Chan to fill in absolutely every particular. That is one step further than merely not reading what has already been written down. The opportunity for mistake is very greatly increased. Should the responsibility still lie then with the company? I think not. It would not be reasonable to assume that the company had authorised its agent to obtain the customer's signature in blank and rush out straight away for an evening with a friend. The defendant took the risk entirely on his own shoulders. It is suggested that in some way the company was exploiting an unfair bargaining position, that the defendant desperately wanted to get his new car on the road but could not do so without insurance. I regret that I am unable to appreciate the application of that principle to the circumstances put forward. My judgment would have been the same in any event. The plaintiff company may have the declaration that it seeks and costs.

Representation:

Mr. William Lane (Johnson, Stokes & Master) for the plaintiff.

Mr. Frankie Leung (W.S. Lo & Co.) for the defendant.

(1) [1929] 2 K.B. 356 at 363

(2) [1965] 1 LI. R. 113

(3) [1892] 2 Q.B. 534

(4) [1972] 1 LI.R. 469