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New India Assurance Company Ltd v Narayan [2001] FJHC 153; Hbc0395j.1998 (1 May 2001)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 395 OF 1998

Between:

NEW INDIA ASSURANCE COMPANY LIMITED
Plaintiff

and

JAGAT NARAYAN
(trading as DIAMOND EXPRESS)
Defendant

G. O’Driscoll for the Plaintiff
M. Arjun for the Defendant

JUDGMENT

The Plaintiff is an insurance company which has for several years insured the Defendant and his transport business. The Defendant’s policies included motor vehicle, fire, homeowners and workmen’s compensation. The annual premiums were substantial amounting, in year in dispute to almost $20,000.

The dispute between the parties is very simple. The Plaintiff’s case is that it renewed the policies in question at the request of the Defendant but that the Defendant failed to pay the premiums. The Defendant’s case is that he never requested renewal of the policies and therefore he owes the Plaintiff nothing.

Perhaps because of the apparent simplicity of the issue between the parties the Plaintiff’s case was not prepared with the care that it merited and two policies were omitted from paragraph 1 of the Statement of Claim. In view of the fact that the inclusion of the policies did not result in a variation of the amount claimed and that the nature of the Defendant’s defence was also unaffected I gave leave to the Plaintiff to amend the statement of Claim so as to include the two additional policies and treated the defence as though it also included a denial that instructions had been given by the Defendant that the policies were to be renewed.

The only witness was an assistant manager with the Plaintiff company, Mr. Jagdish Chandra Khatri. Mr. Khatri told me that he had over 20 years experience in the insurance business and that he had been dealing with the Defendant’s account since 1990. He told me that he was thoroughly familiar with the Defendant’s files and from the ease with which he found his way around them while giving his evidence this was clearly the case.

Mr. Khatri described the Defendant’s account as “major”. He explained that as each individual policy expired a renewal intimation notice was sent out to the Defendant. An example of such a notice was the third document in a bundle of documents, Exhibit 16. The practice with major accounts was to speak personally to the insured who might want to vary some aspects of the policy before renewing it. Once agreement to renew was given a fresh policy was issued containing a schedule giving details of the new policy. Renewal certificates for the defendant’s various policies were produced as Exhibits 1, 2, 3, 5, 6, 7 and 16.

Mr. Khatri explained that the Defendant had a current account with the Plaintiff covering all his policies. Rather than pay for each individual policy by way of lump sums the Defendant, with the agreement of the Plaintiff, paid by way of reasonably regular instalments. In turn the Plaintiff would send the Defendant a monthly statement.

After the Defendant’s payments to the Plaintiff stopped two statements were prepared by the Plaintiff for the periods June 1994 to December 1996 and February 1997 to July 1997. Copies of these statements were produced as exhibits 13 & 14. Mr. Khatri explained that payments received were credited to the account rather than to individual policies but were set against policies on a “first in, first out” basis, in other words policies were retired by age as sums credited to the unpaid premiums were received.

As will be seen from the renewal certificates the various policies did not all expire on the same day but generally all fell in between the second half of 1996 and February 1997. As can be seen by comparing Exhibit 13 with Exhibit 14 the number of payments received from the Defendant began to dwindle quite markedly from December 1996 and a number of dishonoured cheques were received including one drawn in July 1997 (Exhibit 15).

In August 1997 the Plaintiff wrote to the Defendant (Exhibit 8) pointing out that premiums in respect of seven policies were well overdue and requiring immediate payment of the sum outstanding. When the sum claimed was not paid demand was again made and failing payment these proceedings were commenced.

Mr. Khatri told me that at no time had the Plaintiff received any instructions from the Defendant not to renew the policies and that none of the renewal intimations or new policies had been returned. So far as the Plaintiff was aware the Defendant continued to act as though insured and it was only after payments were not made that the Defendant alleged, through his solicitors, that the Plaintiff had renewed the policies without his agreement. In support of his claim that the relationship of insured and insurer continued and was acknowledged to be continuing by the Defendant after the policies had been renewed Mr. Khatri produced Exhibit 17, a claim made in October 1996 on policy 27940 which had been issued in August 1996 and a letter dated 22 November 1996 (Exhibit 10) referring to a vehicle covered by policy 27242 which was issued in August 1996 but which is one of those policies disputed by the Defendant (Exhibit 5).

Mr. Khatri was cross examined at some length by Mr. Arjun. The major concession obtained was that Mr. Khatri had not himself dealt with the Defendant personally and that he relied for his assertion that the Defendant requested renewal of the policies on file notes made by other employees of the Plaintiff and on what he said was the Plaintiff’s established practice. It was put to Mr. Khatri that the case really involved Mr. Khatri’s word on the one hand largely based on hearsay and the Defendant’s word on the other.

In his skeleton submission Mr. Arjun again emphasised the lack of direct evidence that the Defendant had ever agreed to the renewal of these policies. He submitted that such evidence as had been produced was of such an unsatisfactory nature that even on the balance of probabilities the Plaintiff’s case had to fail.

In answer Mr. O’Driscoll (who also filed a helpful written submission) pointed out that Mr. Khatri’s evidence was largely unchallenged. In particular there was nothing to contradict his assertion that the Plaintiff’s practice was not to renew policies except at the request of the insured.

In my opinion the central weakness in the Defendant’s case was his failure to testify. The defence as pleaded is a mere series of denials. But such denials do not even begin to answer the very real questions posed by the Defendants failure to instruct the Plaintiff not to renew the policies and by his failures to return either the renewal intimations or the new policies when they were sent to him. The inferences reasonably to be drawn from the letter (Exhibit 10) and the claim (Exhibit 17) are also unchallenged. If indeed the Defendant intended to terminate his relationship with the Plaintiff then he would surely have had to make alternative arrangements to have his property insured elsewhere. But whether the Defendant in fact ever made such arrangements or not we were not told.

While I accept that there is no direct first hand evidence that the Defendant requested renewal of the policies there is in my view a substantial body of circumstantial evidence which suggests that in fact he did. The inferences to be drawn from this evidence are all the stronger because of the Defendant’s failure to testify (see Jones v. Dunkel [1959] HCA 8; 1959 101 CLR 298, especially 308).

There will be judgment for the Plaintiff for the sum claimed. I will hear counsel both as to interest and costs.

M.D. Scott
Judge

1 May 2001