ACTION SUCCEEDS

Poverty Bay Herald, Volume LIII, Issue 16297, 23 March 1927, Page 5

ACTION SUCCEEDS

UNUSUAL INSURANCE CLAIM 1 ' DELTRER ATR MISREPRESENTATION '' Holding that there had boon deliberate and wilful misrepresentation to induce the plaintiff and his fellow contributors to the scheme 1o enter into sin insurance proposal, Mr, E. C Lovvpv, S.M., in the Magistrate's Court ypslprfday afternoon, gave judgment for Roy Murdoek in the action against the- Australian Provincial Assurance Association for the recovery of premiums paid by him and on his behalf. His Worship hold that the legal defences raised wore not effective, and stated that in any case ho would not have ruled the claim out on that: ground, but would have done what ho considered right and just by exercising his equitable .jurisdiction. Judgment was fdr £l7 4s 8(1, the total premiums paid, and £1 damages, with costs £ll 3s (id. Mr. Nolan moved for a nonsuit on the ground that the plaintiff had no rights iu the policy at all, the policy having been assigned by him to trustees. The assignment was still current and the deed of trust was still current. This plaintiff, he submitted, had jio right under the policy, and the only ones who could sue wore those who were set out. as trustees.

Mr. Barnard said,, in reply, that if the point raised had any value, it could he easily settled because the trust deed had been cancelled, and a new one drawn up giving the plaintiff all the benefits of his policy. Tn any case, however, it was not a claim under the policy, but a claim because the plaintiff had been induced by the wrongful acts of the company and its agents to part with certain sums of money. It had clearly been shown that the sums had been fruitlessly paid, and the claim was a perfectly just one. A case of fraud must depend on the facts, and could not be hampered by technicalities. The magistrate said it was clear that the claim was for fraud, and the nonsuit point would therefore be dismissed.

Walter Henry Chrisp, secretary of the Herald Co., produced the deed of trust, and the policy of the plaintiff assigned under the deed. lie, as trustee, had the handling of the secretarial work involved —paying of premiums, etc. Prom the premiums a 5 per cent, reduction was made in each instance, and of the sum sent forward half of the money was paid by the Herald Co., and the other half by the employee concerned. The A.P.A. company was not. a party to the deed,, which Mr. Lowndes instructed Messrs Chrisp and Chrisp to draw up. It was thought, that if the scheme were good enough for Levin and Co., it was good enough for them, and it was on the assurance that Levin and Co. had. taken up the scheme that the policies were entered into. The firm took the benefit of the 5 per cent, on account of an explanation by Mr. Lowndes that the firm had paid their share of the premiums in a lump sum. Mr. Lowndes stated that the firm were entitled to the fi per cent, since they were paying the wages in full. To Mr. Bufnard witness said Mr. Lowndes made three different statements —one to him, one to Mr. Muir and one to the men—and he obviously led the mon to believe that they would receive the 5 per cent. The policies had been discontinued, and the firm had re-vested its interest in the plaintiff and the other employees. Addressing the court in defence of the action, Mr. Nolan said the plaintiff had taken benefits under the policy and could not now seek to claim under it.- He could not approbate and reprobate the contract at one and the same time. A point upon which he relied to the fullest extent was the provision of the proposal form and the policy itself. The former form contained a declaration signed by the assured, and this included a statement that the assured would not hold the company responsible for any .statements made'by its agent, unless they were reduced to writing.

His Worship: I have soon a good many forms of insurance before, Mr. Nolan, but I have never come across anything like this. Ts it usual? Mr. Nolan said it was a form similar to that used by one other eompnnv, and had formed the basis of one Court action. Mr. Orr-Walker, S.M.. had given judgment in a similar action against the company last year, on the same grounds. The Magistrate there held that the special terms of the proposal form precluded a successful claim. The clause was also considered in an action against the Southern Cross Company in tho Supreme Court in which it had been held that the clause was binding. Everything possible was done to call attention to the clauses in the proposal form, and he was, counsel submitted, estopped from making any chum for anything outside the policy. The company issued the policy on the understanding that it was not to be bound by anything not contained in the proposal form. Tlis Worship: lu the decision you havo quoted there was no allegation of fraud, and where there is fraud a man cannot be estopped. Mr. Nolan contended that the allegation of fraud made no difference. His Worship: But surely, Mr. Nolan, tho whole position is altered by the fraud, the wickedness of the statements, assuming that the evidence is accepted. There is the moral, or equitable aspect. If a company employs a man who, on tho facts, is most incorrigible, and that man induces another to enter into a contract, has the hitter no remedy? I don't suppose one man in 5000 would road this form, and yet you say he has no remedy. Mr. Nolan: The company receive* that proposal, and is told it shall be bound by anything not contained thereinHis Worship: I don't think it is right. Mr. Nolan pointed out that when i the policy was forwarded it again asked that it should be read, and rci ceived a receipt to this effect. The insurer had not; read any of the documents he had signed; how-then could he expect any redress? If such a right were given to an insurer what remedy would an insurance company have ? Mr. Burnnrd: They could employ better men. Mr. Nolan contended that the eompany had done everything in good faith, and the policy or contract could not now be rescinded. No attempt was made at rescission until two years after the issue of tho policy. Another point was in regard to the amount claimed. The plaintiff himself had only paid half the- premium, the other half being paid by the employers, and yet ho claimed tho full premiums for a period of four yearn. At most he could only ask for what he had himself actually paid. Ho could not recover what he had not lost. Instead of suffering damage, as ho alleged, he had had cover for two years.

The company was not in a position to know what representations were uiade, but whatever they wore they could not bind Iho company. What over was said in regard to the possible bonus j could not he held against the com- \ puny, and the statements thai the company was the best in the world was "merely the putting of a man with something to sell." The •"> per cent, allowance was actually made, mill this allegation was also dismissed. In view of all Iho facts he sub-,, milted that the plaintiff could not" succeed, and thai llio representations made by the agent had no effect on the action. For the plaint ill' Mr. Barnard said he proposed to first attack, the defence's reliance on the clause in the proposal form. If this course had not been open to him then he could have invoiced the court's equitable jurisdiction. Here was a case where serious fraud was allegro, and the defence did not reply to those allegations, but virtually admitted them. The clause in the form, and the receipt for the polity, almost, made it look as if the company was conniving at fraud on the part of its agents. Anything more contrary to re:isoji or justice was difficult to imagine. The first fact shown in regard to the. policy was that the plaint ill' had no opportunity to read the proposal form. Instead of his attention being called to what he was signing it was d'stracted from it. It would be noticed that Hie critical words in the clause referred to were as much obscured os possible, but even accepting the clause at its full value, it could not be held to cover misrepi esentation as alleged in this case. If the company was protected against fraud there would j be authorities to support the defence, and the absence of such cases indicated that the company was not so protected. Counsel quoted authorities to show that an employer could not exempt himself from fraudulent statement made by his agents. A man could not contract himself out of fraud, yet this was precisely what the defendant company tried to do. The next aspect of the defence was that the plaintiff had. taken benefits under the contract. If the authorities were consulted it would be found that there was no such defence as the receipt of benefits, and ho could conceive of no case of fraud where there would be no benefits. The defence that the plaintiff had signed a receipt stating that he read the policy could not hold when it had been shown that he never read the policy. Length of time did not bar the right to the action, provided the action was not delayed after the fraud was discovered. On the question of damages, Mr. Burnard submitted that the plaintiff was first entitled to receive back all the moneys paid by him or on his behalf. The value of a life policy was its continuity over a period of years, and the damages through losing the benefit of the first two years was substantial. Now he had been compelled to take out a policy in another company at a higher premium. jThe plaintiff had paid £3 16s Ad for two years. This sum was gone, and in addition he was Entitled to be compensated for the, loss of having to take out a new policy at a higher cost. Dealing with the misrepresentation, Mr. Barnard said it was clear that Lowndes had said there would be a surrender value of the policy at the end of two year?, and that an annual bonus would be paid. The statements regarding the bonus was a very clear fraud. All the misrepresentations were of fact, and the most striking _was the printed statement, of the company that Levin ami Co. had insured wjth the defendant company. No greater misrepresentation could be made. In the same booklet appeared the letter from a firm which had insured in another office altogether.. In each case the fraud was proved; in few had it betn even disputed. One of the most striking was the representations in regard to the 5 per cent, rebate. Lowndes had promised this first to the employees and then to the employers, and he had given the instruction for the alteration in the deed.

Giving decision. His Worship said the agent Lowndes was to all intent the defendant company for the purpose of effecting the insurance of the Herald employees. Lowndes had made the statements upon which the policies were agreed to. As a result of the, statements made, the scheme was adopted. Lowndes had been exceedingly busy throughout, and had, undoubtedly " bustled " tho employees into completing the policies. The policies were duly received, and a receipt given. It- was alleged that there were seven particular misrepresentations made by the company's agent. No question was raised on these points until sickness claims were made. The correspondence from the company showed that an adjustment had been necessary- in this respect." The x stability of the -company was subsequently called into question, and immediate inquiries were made. The outcome was the present action. His Worship said he could say at once that lie was satisfied beyond any shadow of doubt that Lowndes had deliberately and wilfully made the statements alleged, with the intention of misleading the plaintiff and his fellow contributors, and inducing them to adopt the scheme. The allegation regarding Levin and Co. could only be characterised as a very deliberate piece of fraud. Tho company's own pamphlet actually set out a copy of a document purporting to have been entered into by that firm, but which had never been entered into. Lowndes had clearly told the employees that they were to receive a 5 per cent, rebate, but in actual facthad arranged for the rebate to go to the company. He could only find that this, too, was a deliberate fratid, quite on a par with all the other allegations. Healing with the defence, His Worship said the question of the plaintiff having received benefits did not affect the position. The clause in the proposal form, however, was a. difficult problem. He was satisfied, nevertheless, that the warning in the proposal form had never been seen by the plaintiff. If that defence wen; binding on the court, he would exercise the court's equitable jurisdiction. If such a case of deliberate fraud could be overcome by ir legal point such as that raised he would not hesitate to give decision under the equity and good conscience clause. He preferred to do that which was right and proper, and would find that the plaintiff had been defrauded and was entitled, in equity, to recover damages. He would be entitled to recover the whole of the premiums paid by him and on his behalf; and in respect of damages be would allow £l. Costs were allowed against the company in the sum of £ll 3s 6d. '