KELLY v PICKERING AND ANOTHER 1980 ZLR 61 (G)

Author: Trodat Zimbabwe

KELLY v PICKERING AND ANOTHER 1980 ZLR 61 (G)

1980 ZLR p61

Flynote

Insurance — duty of insured to disclose in proposal form facts relevant G to risk — extent of duty — whether insured must disclose possible disability which subsequently turns out to have been non­existent — interpretation of warranty to disclose all facts.

Headnote

After he had had a fit while undergoing military training the defendant was diagnosed as a very mild epileptic. However, when he took out a motor insurance _H policy with the insurance company which was the third party to the action, this insurance broker answered “no” on his behalf to a question in the proposal form asking if he suffered from any physical or mental disability, despite his having advised the broker to consult his doctor before answering the question. Subsequent medical tests indicated that the defendant was probably not an epileptic after all, nevertheless, the insurance company repudiated the

1980 ZLR p62 policy on the ground that the defendant had breached his common­law duty of disclosure as well as a warranty in the proposal form that his answers were true, correct and complete and contained all information known to him affecting the risk to be insured. _A

Held that the defendant had given two warranties in the proposal form: that his answers were true, correct and complete, and that he had given all information apart from that requested in the form which affected the risk (Yorkshire Insurance Co. Ltd v Ismail, 1987 (1) SA 353 (T), followed).

Held, further, that the defendant’s unqualified answer breached both warranties: _B it was not complete in view of the then­existing possibility of epilepsy, and still less did it give all the information known to him affecting the risk to be insured.

Held, further, that the defendant had breached his common­law duty to disclose all material facts within his knowledge which would influence the insurer in _C deciding whether or not to accept the risk? the fact that the risk of epilepsy might subsequently have turned out to be non­existent did not relieve him of the duty (MacGillivray and Parkington on Insurance Law, 6th edition, paragraph 759, and Seaman v Fonerau, 2 Strange 1183? 93 ER 1115, referred).

Held, further, that the defendant’s duty to disclose material facts was absolute and could not be avoided by delegation to his insurance broker (Hardy Ivamy, _DGeneral Principles of Insurance Law, 3rd edition, page 139, referred).

Cases cited

Yorkshire Insurance Co Ltd v Ismail 1957 (1) SA 353 (T)?

Seaman v Fonerau2 Strange 1183? 93 ER 1115? _E

Books cited

Insurance Law MacGillivray and Parkington, 6th edition?

General Principles of Insurance Law Ivamy, 3rd edition.

Case information

C W Jordaan, for the plaintiff. _F

A P de Bourbon, for the defendant.

I A Donovan, for the third party. _G

Judgment

Beck J: The issue to be determined in this trial is whether the third party (hereinafter called the insurer) is liable, in terms of a comprehensive motor insurance policy that it issued to the defendant, to indemnify the defendant in the sum of $18 786, being the amount of damages suffered by the injured plaintiff as the result of an accident that was caused by the _H defendant’s negligent driving.

In January, 1976, the defendant completed a proposal form that contained the following declaration:

1980 ZLR p63

Beck J

“I hereby declare that the above particulars and statements are true, correct and complete and contain all information known to me affecting the risk to be insured, and that this and any other written statement made by me or A on my behalf for file purposes of the proposed insurance shall be the basis of, and incorporated in, the contract between me and the Company, and shall be promissory. I further agree to accept insurance on the terms and conditions set forth in the Company’s policy.”

Consequent upon this proposal the insurer issued the policy of insurance _B for the period 1st February, 1976, to 31st January, 1977. The policy contains the following preamble and condition:

(Preamble): “Whereas the insured described in the Schedule hereto by a Proposal and Declaration (dated as stated in the Schedule) which shall be the basis off this contract and is deemed to be incorporated herein has applied C to the Standard General Insurance Company Ltd for the Insurance herein after contained . .

.”

(Condition): “9. The due observance and fulfilment of the terms and conditions of this Policy by the Insured in so far as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the said proposal shall be conditions precedent to any liability D of the Company to make any payment under this Policy. No waiver of any of the terms conditions and endorsements of this Policy shall be valid unless made in writing signed by a duly authorized officer of the Company “

This policy was renewed on the 31st January, 1977, for a further twelve _E months. The accident that has given rise to this suit occurred in April, 1977.

The following question in the proposal form was answered in the negative by a broker acting as the defendant’s agent: “Do you, or any other _F person who to your knowledge will drive, suffer from defective vision or hearing or from any physical or mental infirmity?”

The evidence has established that the defendant, in 1967 at the age of 13, became prone to recurrent severe migraine attacks associated with _G visual disturbance, nausea and paresthesia, notably of the left hand and arm. These attacks decreased in intensity and frequency as the defendant passed beyond adolescence, but in April or May, 1974, during or shortly after strenuous exercise while on military training, the defendant had a fit with accompanying total unconsciousness and was taken to hospital, _H where he later had another episode in which he bit his lip. It was suspected by a military doctor that he had suffered an epileptic “Grand Mal” seizure and the defendant was referred to a neurological surgeon for examination. Electro­encephalogram tests were conducted which gave borderline results, and in June, 1974, the neurosurgeon expressed the

1980 ZLR p64

Beck J view to the military doctor that the defendant should be categorized as a very mild epileptic and be exempted from further active military duties. Although it is not clear exactly what was then told to the defendant by _A the neurosurgeon concerning this diagnosis, it is apparent that before the proposal form was submitted the defendant was made aware that it has been said that he was a mild epileptic and had on that account been returned by the military authorities to his civilian occupation. In June, 1974, he was advised by the neurosurgeon to return for a further EEG _B examination in six months’ time, and in the meantime to continue to take Epanutin tablets daily, a medication which the defendant knew to be a prophylactic prescribed to ward off possible future seizures. Although the defendant chose after a while to discontinue the use of Epanutin he did not experience any further seizures, but he did continue to experience _C occasional migraine attacks from which he found relief by using an analgesic at the time of such attacks. In April, 1975, after a protracted spell of dizziness, he underwent another EEG test. This was within normal limits, but daily use of Epanutin was again prescribed for him. In October, 1975, he was again seen by the neurosurgeon who found him _D very much more settled and having no further seizures, but who nevertheless advised the defendant that “certainly for the next year he should continue with his medication (viz. daily Epanutin) and return at that time for an EEG and review”. During the next twelve­month period the defendant only infrequently experienced ill­health and he did not, in the result, _E return for the suggested EEG and review of his condition, which he says he assumed was a suggestion that had been made at the behest of the military authorities who wanted, so he thought, a periodic check on his condition. However, on the 25th January, 1977, only days before the policy fell due for renewal, the defendant, having again been called up by the _F military authorities, certified the complete correctness of the under mentioned answers to the following questions on the military Medical Examination Form:

“Have you suffered from any of the following? Give dates:

   1.      Fits or convulsions? Answer: Yes, May, 1774. G Severe or ‘sick’ headaches, migraine? Answer: Yes, continuous. At infrequent intervals (last on 3rd November, 1976).”

The defendant was forthwith categorized as unfit for any military duty (category “E”), was not called up, and it was again explained to him that he had been categorized as a mild epileptic by his neurosurgeon. _H

The neurosurgeon has very recently examined the defendant again, and has found him to be quite fit, although the neurosurgeon was not told that in 1978 the defendant had again suffered three severe migraine

1980 ZLR p65

Beck J

attacks with associated visual disturbance and nausea, that had necessitated medical treatment for relief. The neurosurgeon is of the view that _A the defendant has never really been a victim of epilepsy but merely of severe migrainous headaches that have lessened with the passage of time. It is his opinion that the defendant’s susceptibility to such headaches did not amount to a physical infirmity? nor, in his opinion, did it impair the defendant’s ability to drive a motor­vehicle, because the onset of such _B headaches is preceded by warning symptoms such as would cause the defendant to refrain from driving before finding himself in the throes of an attack when he would be quite incapable of controlling a motorcar. It is the neurosurgeon’s opinion therefore that the negative answer that was given in January, 1976, to the question in the proposal form that _C I have previously set out was, objectively speaking, true.

None of this information was revealed to, or known by, the insurer, either at the time when the insurance was proposed in January, 1976, or at the time when, a year later, it was renewed. It is not suggested that _D the accident, in April, 1977, was at all occasioned by any physical defect in the defendant that impaired his driving ability. The insurer’s contention is simply that, in the light of the facts that I have recounted, the negative answer to the question in the proposal form to which I have referred is a breach of the warranties contained in the declaration made by the defendant _E in that proposal form, and constituted conditions precedent to any liability on the insurer’s part by condition 9 of the policy. Additionally, the insurer contends that the defendant’s failure to furnish this information _F to the insurer when proposing and renewing the insurance was a breach of the defendant’s common­law duty to disclose material information within his knowledge such as would influence the judgment of a prudent, or reasonable, insurer in determining whether to accept the risk or in fixing the premium. _G

In Yorkshire Insurance Co. Ltd v Ismail, 1957 (1) SA 353 (T), the view was expressed by KUPER, J, at page 356H, with regard to an identically worded declaration in a proposal form, that:

“ . . . the grammatical construction of the declaration is clear. The position H of the comma after the word ‘true’, and the use Of the word ‘and’ after ‘correct’ show that the first part of the declaration was that the particulars and statements were true, correct and complete. The words ‘and contain all information known to me’ express a further warranty (designed to deal with particulars and statements not requested in the proposal but which affect the risk) and cannot qualify the preceding warranty.”

1980 ZLR p66

Beck J

I am in agreement with that view which seems to me to be obviously correct. _A

When those two warranties were given the defendant was aware that fairly recent tests (the most recent of which was done only three months previously) had indicated that he might have been a mild epileptic, that a future EEG test was still intended before it could be determined whether that possible condition was a thing of the past, and that medical _B advice was that he should continue the daily use of a prophylactic to ward or possible future seizures ­ advice, incidentally, that he had chosen not to follow. However much the neurosurgeon may today be confident that he was not epileptic in fact, and that, as an objective fact, it is true that he did not super from “defective vision or hearing or from any _C physical or mental infirmity” (except for temporary visual disturbance and infirmity when in the throes of a migraine attack), I fail to appreciate how it can be contended that the unqualified negative response to the question asked was a “complete” answer, having regard to the possibility, as matters then stood, of a continuing mild epilepsy. Still less _D can it be said, in my opinion, that the “particulars and statements” comprehended within the simple answer “No” to the question put, contained “all the information known to (the defendant) affecting the risk to be insured”. The suddenness of a possible epileptic seizure with its attendant total impairment of the ability to control a motor­vehicle is, it _E need hardly be said, a matter that very gravely affects the risk to be insured and, as the defendant’s own expert witness freely conceded, information indicating a mere possibility that a proposer for motor insurance might be an epileptic sufferer, however mild, would most certainly put a prudent insurer on guard and on further inquiry before _F determining whether to accept the risk and on what terms. Much stress was laid by counsel for the defendant on the circumstances that only short­term insurance was being proposed, and that the question, as framed by the insurer, related to the present physical condition of the defendant only, and not to past maladies. The fact remains, however, _G that when the defendant gave those warranties his knowledge was such that he could not be sure that he was presently free from a susceptibility to mild epileptic seizures, but had, on the contrary, been told to use daily medication for months to come to reduce the likelihood of suffering such episodes. _H

I am of the opinion that the defendant must accordingly be found have breached both the warranties that are contained in the declaration of January, 1976, that he gave when he proposed the insurance that he

1980 ZLR p67

Beck J sought, and that the insurer is entitled, in terms of condition 9 of the policy, to avoid liability in consequence. If I am correct in that view _A need not go on to consider whether, regardless of the warranties given, the defendant in any event breached his common­law duty to disclose all material facts within his knowledge which would influence the judgement of a prudent or reasonable insurer in determining whether, and on what terms, he will accept the risk. Nevertheless, I am prepared _B to hold that the evidence equally establishes such a breach by the defendant. Both in January, 1976, and again in January, 1977, it was material to the risk accepted for the insurer to have been told that, as the defendant well knew, specialist medical opinion had not pronounced him free of a suspected tendency to mild epilepsy? and, indeed, _C that in January, 1977, he had been totally exempted from military service by reason of that very risk, namely that he might still be mildly epileptic. The fact, assuming it to be a fact, that this risk has subsequently turned out to have been non­existent cannot operate to relieve the defendant from his duty of disclosure at the time. (MacGillivrayand _DParkington on Insurance Law 6th edition, paragraph 759, Seaman v Fonerau, 2 Strange 1183? 93 ER 1115).

Accordingly, it must be held that the defendant is not entitled to the indemnity that he has sought from the insurer. It may not be unhelpful _E to say that one has a measure of sympathy for the defendant on all the evidence that has been heard. I did not detect in his evidence any indication that he ever intended to deceive his insurer in any way. It is likely that in January, 1976, he personally considered that any possible epileptic condition was a thing of the past and that his occasional _F migraines were irrelevant to the question asked of him in the proposal form Even so, however, it was his testimony that, on coming to the question in the proposal form concerning his health, he did not answer it then and there, but suggested to his agent ­ an employee of the insurance brokers who were placing the insurance ­ that she make _G inquiries of his usual general practitioner before answering the question, which she later answered in her handwriting. Whether or not she made any such inquiry before completing the form on his behalf, I do not know, but if he did make that suggestion to her it does underline his bona fides. Unfortunately for the defendant, the duty to disclose _H material facts within his knowledge is absolute and cannot be avoided by delegation, so that his conduct cannot be taken into consideration as in any way defeating the insurer’s right to avoid liability. (Ivamy, General Principles of Insurance Law, 3rd edition, at page

139). Moreover, I think it not improbable that, had the disclosure been made and had the

1980 ZLR p68

Beck J

insurer been able to make further inquiry from the neurosurgeon, the insurer may well have decided to issue the policy nevertheless. I say that on the strength of the neurosurgeon’s evidence before me which seems _A to indicate that the categorization of the defendant as a mild epileptic may well have been an over­cautious description. In making these observations I do not for a moment wish to suggest that the insurer was not fully entitled, morally as well as legally, to resist liability when it was revealed that the defendant had at all material times known of the possibility _B that he might be mildly epileptic. Now that the matter has been more fully canvassed and the insurer is possessed of the broader picture, it may be felt that the defendant’s conduct was not as blameworthy as might first have been thought to be the case. _C

There will be a declaratory order that the third party (the insurer) is not liable to indemnify the defendant in the amount of plaintiffs claim. Judgment is entered for the Plaintiff in the sum of $18 786 and the Plaintiff is declared to be a necessary witness. The Plaintiff’s costs, and the costs of the third party, in these proceedings, including the _D reserved costs incurred in the application to join the third party and the reserved costs arising from the defendant’s application in limine to strike out certain portions of the affidavits filed in the notice of motion proceedings, will all be borne by the defendant. _E

Calderwood, Bryce Hendrie & Partners, Bulawayo, and Gill, Godlonton & Gerrans, Salisbury, attorneys for the plaintiff.

Granger & Archer, attorneys for the defendant. _F

Atherstone & Cook, attorneys for the third party.