Provincial Insurance Company Ltd v Morgan

JurisdictionEngland & Wales
JudgeLord Buckmaster,Lord Russell of Killowen,Lord Wright
Judgment Date08 December 1932
Judgment citation (vLex)[1932] UKHL J1208-2
Date08 December 1932
CourtHouse of Lords

[1932] UKHL J1208-2

House of Lords

Lord Buckmaster.

Lord Blanesburgh.

Lord Warrington of Clyffe.

Lord Russell of Killowen.

Lord Wright.

The Provincial Insurance Co., Ltd.
and
Morgan and Another.

After hearing Counsel for the Appellants on Monday, the 14th day of November last, upon the Petition and Appeal of The Provincial Insurance Company, Limited, whose registered office is at Sand Aire House, Stramongate, Kendal, in the County of Westmorland, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 22d of January 1932, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Leslie Morgan and Lewin Foxon, lodged in answer to the said Appeal; and Counsel appearing for the Respondents, but not being called upon; and due consideration being had this day of what was offered for the said Appellants;

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 22d day of January 1932, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.

Lord Buckmaster .

My Lords,

1

The question on this Appeal depends upon the true construction of a policy of insurance issued by the Appellants in favour of the Respondents insuring them against liability to the public for damage caused by the use of a motor vehicle. The insurance was consequent upon a proposal form which was signed by the Respondents in March of 1931. In that form there was a statement in following words:—

"State ( a) the purposes in full for which the vehicle will be used; and ( b) the nature of the goods to be carried."

2

The answer was ( a) delivery of coal; ( b) coal. At the foot of the proposal form and above the Respondents' signature was a statement in the following words:—

"I hereby declare and warrant that the above questions are fully and truthfully answered, that I have not withheld or concealed any circumstance affecting in any way the proposed Insurance, and that the vehicles described are in good condition. I agree that this declaration and the answers above given shall be the basis of the contract between me and the Provincial Insurance Co., Ltd., and I agree to accept a policy subject to the conditions prescribed by the Company and expressed in the policy."

3

The policy which was subsequently issued referred to the proposal and declaration which it was agreed should be deemed to be of a promissory nature and effect and should be the basis of the contract for the insurance thereby intended. The policy itself provided that the indemnity should be subject to the exclusions and conditions therein set out and one of those conditions was condition 6:—

"It is a condition precedent to any liability on the part of the Company under this Policy (i) that the terms, provisions, conditions and endorsements hereof, so far as they relate to anything to be done or complied with by the Insured, are duly and faithfully observed; and (ii) that the statements made and the answers given in the proposal hereinbefore referred to are true, correct and complete."

4

And one of the endorsements was under the head "Endorsements and Use Clauses," "Transportation of own goods in connection with the Insured business."

5

The Respondents in fact did use their car for hauling timber of the Forestry Commission in pursuance of a verbal contract to that effect and had so used it on the day when an accident occurred. But the finding of fact is clear that the Claimants were engaged in the business of delivering coal when the accident arose, and it is not suggested that this was not in general terms the use to which the vehicle was put. The Appellants have repudiated liability under the contract upon the ground that the use of the lorry for a purpose other than that of carrying coal was a breach of the statement as to the purpose for which the vehicle was to be used, and as this was made the basis of the contract the risk has never attached. Now it is old and well-known law that parties to an insurance contract are at liberty to contract upon the footing that any statement can be made the basis of the contract, and if the statement be inaccurate its materiality does not arise. In the case of Dawsons v. Bonni, 1922, A.C. 413, Lord Haldane said:

"If the Respondents can show that they contracted to get an accurate answer to the question and to make the validity of the policy conditional on that answer being accurate whether the answer was of material importance or no, the fulfilment of this contract is a condition of the Appellants being able to recover."

6

He then continues in words which I think must have been overlooked in some of the other cases, for he says that the question which lies at the root of the matter is simply one of construction. From that it follows that unless some other contract of insurance is either couched in identical terms or terms the effect of which cannot be distinguished from those which were there considered, this authority except so far as it shows that a contract as to future conduct can equally be made the basis of a contract with a statement of existing fact does no more than apply well-established principles to a special state of facts. It is for that reason that I cannot see that either the antecedent case of Farr v. The Motor Traders Insurance Company, 1920, 3 K.B. 669, or the subsequent case of Roberts v. The Anglo-Saxon Company, 96 L.J.K.B. 590, are affected by the decision. In each of these cases it was held that a description as to the use to which a vehicle was to be put was descriptive of the character of the risk rather than a warranty that that particular use and no other was the one to which the vehicle was confined, and this depended upon the meaning of the words in a particular document.

7

I entirely agree with Scrutton, L.J., when he says that neither the question in this case nor in the other cases arise in such a manner that it can be said that this House has decided it. Turning, therefore, back to the words in the present case, the question that arises is, were these words intended to mean that the use of the vehicle was to be exclusively confined to that of carrying coal so that any temporary, trivial and incidental use would completely defeat the policy or was it not? I wish again to repeat that it is perfectly open to people to make such a bargain and when made it is useless to complain that the bargain is harsh. But it is at least essential that the bargain should be plain in order that it may be clear that a man has contracted on the faith of something which may rob the Insurance of the greater part of its value. It is said here that the Insurance was at a lower rate because it was a coal cart and that may be so, but that does not help the question on the one side or the other. To state in full the purposes for which the vehicle is to be used is not the same thing as to state in full the purposes for which the vehicle will be exclusively used, and as a general description of the use of the vehicle it is not suggested that the answer was inaccurate.

8

I am, therefore, of opinion that there was no bargain here so to confine the use of the vehicle to the cartage of coals as to make any occasional use that did not destroy the general purpose of its user a breach of the condition upon which the policy was based.

9

I think the judgment of the Court of Appeal was right and the full explanation given by Scrutton, L.J., renders further elaboration unnecessary.

Lord Russell of Killowen .

My Lords,

10

It appears to me that the result of this Appeal depends solely upon the true construction of the documents.

11

There is no need for me to recapitulate the facts. It is sufficient to say that the Insurance Company claim that the policy by its terms provides that if at any time during its currency the assured used the vehicle in question for any purpose other than the delivery of coal or carried in it goods other than coal, no liability on the part of the Insurance Company would arise thereunder.

12

The foundation of this contention is as...

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