Beacon Insurance Company Ltd v Maharaj Bookstore Ltd

JurisdictionUK Non-devolved
JudgeLord Hodge
Judgment Date09 July 2014
Neutral Citation[2014] UKPC 21
Docket NumberAppeal No 0102 of 2012
CourtPrivy Council
Beacon Insurance Company Limited
(Respondent)
and
Maharaj Bookstore Limited
(Appellant)

[2014] UKPC 21

before

Lord Mance

Lord Sumption

Lord Reed

Lord Toulson

Lord Hodge

Appeal No 0102 of 2012

Privy Council

From the Court of Appeal of the Republic of Trinidad and Tobago

Appellant

Peter Knox QC Prem Prasad Maharaj Robert Strang

(Instructed by Bircham Dyson Bell LLP)

Respondent

Michael A Quamina

(Instructed by Ross and Co Solicitors LLP)

Heard on 24 March 2014

Lord Hodge
1

This appeal concerns an insurance claim arising out of a fire and the insurance company's rejection of that claim on the ground that part of it was fraudulent or had involved fraudulent devices. The principal issue is whether the Court of Appeal was entitled to overturn the findings of fact made by the judge at first instance.

2

Maharaj Bookstore Ltd ("MBL), which was controlled by Mr Seunarine Maharaj, operated a bookshop at 117 Southern Main Road, Marabella, Trinidad. On 29 September 2005 MBL took out a new insurance policy with The Beacon Insurance Co Ltd ("Beacon") against loss and damage by fire or other perils. The sum insured was $950,000, consisting of $900,000 on stock, such as books and stationery, and $50,000 on business equipment, furniture, fixtures and fittings. Before the policy was agreed, an officer of Beacon inspected MBL's stock and examined an inventory of stock as at 1 July 2005 ("the inventory"), which MBL had prepared at Beacon's request.

3

The fire, which occurred on 3 November 2005, destroyed the stock and other property on the premises. Mr Maharaj, who kept copies of MBL's files of purchases and sales at his home, prepared a document dated 28 November 2005 in which he claimed on behalf of MBL $32,800 for fixtures and fittings and $756,586.43 for stock. The value of the stock was calculated by (i) starting with the cost price of the stock at 1 July 2005 ($683,533.27), which was taken from the inventory, (ii) adding the value of stock purchased between 1 July and 27 October 2005 ($197,791.44) and (iii) subtracting the value of stock sold between 1 July and 31 October 2005 ($124,758.28).

4

By letter dated 7 November 2006, loss adjusters acting on behalf of Beacon repudiated liability under the policy, alleging that MBL had made false or fraudulent declarations in ten bills or invoices for new purchases with a value of $117,263.56, which it had submitted with its claim document. Condition 8 of the insurance policy states:

"If any claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under this Policy, … all benefit under this Policy shall be forfeited."

The documents, which Beacon challenged, were:

(a) four bills (totalling $59,580.04) from "K & S Bookstore" ("K&S"), which Beacon said did not exist;

(b) a statement from Unique Services to which a calculation had been added suggesting that $12,188.22 had been paid, when the correct sum was $2,985.72;

(c) a document from Lexicon Trinidad Ltd ("Lexicon") in the sum of $27,127.10, which was a quotation for books which MBL had not purchased;

(d) three bills from Caribbean Children's Press Ltd ("CCP") which totalled $11,641.60 in respect of purchases from CCP by another bookseller, S & R Bookstore ("S&R"), two of which had been altered to suggest that MBL was the purchaser; and

(e) a bill from Mohammed Bookstore in the sum of $6,726.60 in respect of purchases made by Moy's Bookstore ("Moy's") but altered to show MBL as the purchaser.

5

MBL responded by letter dated 22 January 2007. In that letter Mr Maharaj accepted that there had been an error of calculation in the statement by Unique Services (para 4(b) above) and that the correct balance was $2,985.72. He also accepted that the quotation from Lexicon (para 4(c) above) had been included in the tally of bills in error and attributed the mistake to MBL's clerk. He argued that the other bills were genuine. He explained that K&S (para 4(a) above)) was a name used by K & S Maharaj Bookstore, which was run by his brother, Krishendath Ganga-Bissoon, from whom MBL often bought books. He asserted that the books from CCP (para 4(d) above) had been bought by S&R on behalf of MBL and provided a statement signed by Mr Peter Ramnarine of S&R that confirmed this. Finally, he stated that Moy's had purchased the books from Mohammed Bookstore (para 4(e) above) on behalf of MBL and provided a statement signed by Mr Jin Hing Moy that confirmed this.

6

Beacon was not satisfied by those explanations and maintained its repudiation of liability under the policy. As a result MBL commenced legal proceedings on 6 February 2007.

The legal proceedings
7

The case went to trial before Mr Justice Prakash Moosai in March 2009. He heard evidence from Mr Maharaj and three supporting witnesses, namely Mr Ramnarine, Mr Ganga-Bissoon and Mr Moy. Beacon led the evidence of Mr Bertrand Doyle, its consultant loss adjuster who adopted his witness statement and was not cross-examined. He spoke in his witness statement of his investigations into the documents listed in para 4 above. Written statements by Mr Archer Morris, investigator, Ms Leisha Manburgh of Lexicon, Mr Teddy Mohammed of Mohammed Bookstore and Mr Viren Annamunthodo of Unique Services were also tendered as evidence.

8

In a judgment dated 13 April 2010 Moosai J held that MBL had not made a fraudulent claim or used fraudulent devices and ordered Beacon to pay $753,056.83 with interest and costs. He accepted the substance of the evidence of Mr Maharaj and the witnesses who supported MBL's claim. He made findings on the individual claims as follows.

(a) In relation to the K&S invoices, he accepted Mr Ganga-Bissoon's evidence that he and his wife traded interchangeably as K & S Bookstore, K & S Maharaj Bookstore and K & S Maharaj Variety Store, that he often sold books to his brother, and that he had sold MBL the books listed in the disputed invoices.

(b) In relation to Unique Services, he accepted Mr Maharaj's evidence that he had tallied the items in the statement to make the calculations easier to understand and had made a mistake in calculation which was not intended to deceive.

(c) In relation to the Lexicon quotation, he accepted Mr Maharaj's account that he had found it in the purchase file and had asked an employee if the books had been purchased. When told that they had been, he wrote "paid cash" on the quotation. The judge held that Mr Maharaj had been careless rather than reckless in including the quotation in MBL's tally.

(d) In relation to the three CCP invoices, the judge accepted the evidence of Mr Maharaj and Mr Ramnarine that S&R often purchased books for MBL and that the invoices were for books which S&R had bought and then sold to MBL. The Judge accepted Mr Maharaj's evidence that he had altered the invoices to reflect the fact that MBL owned the books and not for any fraudulent purpose.

(e) In relation to the invoice from Mohammed Bookstore, he accepted the evidence of Mr Maharaj and Mr Moy that Moy's had bought books, including those listed in the disputed invoice, for MBL, which was why MBL had the invoice. He accepted Mr Maharaj's evidence that he had put his name on the invoice to reflect the fact that he had paid for the books and that he had no fraudulent intention.

9

Beacon appealed this judgment. It argued that the judge had wrongly assessed the evidence and had come to conclusions of fact which the evidence did not support or conclusions which no reasonable tribunal could have arrived at if properly directed. The Court of Appeal (Kangaloo, Stollmeyer and Smith JJA) delivered its judgment on 29 February 2012, allowing the appeal. It overturned the trial judge's findings on each of the disputed documents. It did so principally on three grounds. First, it held that the trial judge had erred in law by failing to distinguish between a fraudulent claim and a fraudulent device to support a valid claim and failing to address the latter allegation. Secondly, it held that the judge had erred in law in treating as relevant to the materiality of a fraud Mr Maharaj's concession, after Beacon repudiated liability, that MBL's claim in respect of Unique Services was overstated and that its claim in relation to Lexicon was in error. Thirdly, it held that the trial judge had erred in failing to draw proper inferences from the evidence. It did not decide whether MBL's claim in relation to each set of documents was fraudulent or involved fraudulent devices, but contented itself in stating that it was one or the other.

10

MBL appeals to the Board with the leave of the Court of Appeal.

The role of an appeal court
11

It is important to recall the proper role of an appellate court in an appeal against findings of fact by a trial judge. This is relevant to the third of the grounds on which the Court of Appeal overturned the judgment of the trial judge.

12

In Thomas v Thomas [1947] AC 484, to which the Court of Appeal referred in its judgment, Lord Thankerton stated, at pp 487–488:

"I Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion; II The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; III The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from...

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