Argus Insurance Company Ltd v Duclos

• Jurisdiction: Bermuda
• Judgment Date: 16 May 2008
• Docket Number: Commercial Jurisdiction 2007 No. 247
• Date: 16 May 2008
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Bell, J

Commercial Jurisdiction 2007 No. 247

BETWEEN:

Argus Insurance Company Limited

Plaintiff

and

Paul Y M Duclos

Defendant

Mr J Pachai for the Plaintiff

Mr P Harshaw for the Defendant

The following cases were referred to in the judgment:

Kosmar Holidays plc v Trustees of Syndicate 1243UNK [2008] EWCA Civ 147

Suttle v SimmonsUNK [1989] 2 Lloyds Rep 227

Harker v Caledonian Insurance CoUNK [1980] 1 Lloyds Rep 556

Road traffic accident — Motorcycle collision — Insurance proposal void for non-disclosure of previous speeding conviction — Credibility of witnesses — Delay in reporting accident to insurer — Waiver and estoppel

JUDGMENT of Bell, J

Introduction

1. These proceedings arise from a road traffic accident which occurred on 5 November 2004, when the motorcycle ridden by the defendant (‘Mr. Duclos’) was in collision with a motorcycle ridden by Justin Carreiro at the junction of Lane Hill, Cavendish Road and Middle Road in Pembroke Parish. Mr. Carreiro suffered serious injuries in consequence of the accident.

2. Mr. Duclos' witness statement refers to his having bought the motorcycle which he was riding at the time of the accident in or about February 2003, that he had insured the motorcycle with the plaintiff (‘Argus’) at that time, and had registered it with the Transport Control Department (‘TCD’) in his own name. As appeared from Mr. Duclos' cross-examination at the hearing, none of these statements was correct. Neither was it correct that he had effected a renewal of his insurance policy with Argus approximately one year later. I will deal with the true position when I come to review the evidence as a whole, but suffice it to say for the purpose of this part of the background narrative that Mr. Duclos was not renewing insurance with Argus. The motorcycle in question had been ‘purchased’ by Mr. Duclos from his brother-in-law, Simon Watkinson, and the arrangement for the ‘purchase’ had involved Mr. Duclos' use of the motorcycle from about February 2003 onwards, instalment payments being made by Mr. Duclos to his brother-in-law for the ensuing period of approximately one year, and the actual transfer of ownership of the motorcycle being effected on or about 30 January 2004. And although Mrs. Duclos in her witness statement similarly referred to having attended the Argus offices, and having signed ‘renewal forms’ on her husband's behalf, in fact this was the issue of a new policy by Argus. Mrs. Duclos had attended the Argus offices on 2 February 2004, and had then completed and signed a proposal form for a new policy of insurance on the motorcycle on her husband's behalf. It is the completion of that proposal form which gives rise to this action, because in response to the standard form of question as to whether the proposed insured had been convicted of any traffic offences in the previous five years, Mrs. Duclos had ticked the box marked ‘no’. Her evidence was that she was unaware that Mr. Duclos had been convicted of speeding at 60 kph and for driving without a valid driver's licence, both on 1 July 2003.

3. Mr. Duclos' witness statement dealt at some length with the accident itself, which has limited relevance to the issues before me, and dealt sparingly with the detail of his July 2003 traffic offences. He simply said that he had never made any secret of his ‘one and only speeding conviction’, giving an incorrect date for the conviction, and saying that he was not aware that he had also been charged (and presumably had pleaded guilty to) driving without a valid driver's licence. In his report to Argus of the accident, Mr. Duclos indicated in response to the question whether he had any motoring convictions that he had one of speeding, which he referred to as being a first conviction, and in respect of which he gave the speed as being 52 kph, not 60 kph.

4. Because of the (admitted) inaccuracy of the proposal form in relation to Mr. Duclos, Argus now seeks a declaration that it is entitled to avoid the policy of insurance (numbered 0039208M/04) from its date of inception (given in the pleadings as 1 February 2004), pursuant to section 6(3) of the Motor Car Insurance (Third-Party Risks) Act 1943 (‘the Act’). In the alternative, Argus seek a declaration that its liability to indemnify Mr. Duclos under the provisions of the Act should be limited to the figure of $125,000 contained in section 4(l)(b)(ii) of the Act.

5. For Mr. Duclos, the argument is made that the mistake by Mrs. Duclos as her husband's agent in completing the proposal form was an honest mistake, and that in any event Argus would have issued its certificate of insurance on the same terms and at the same premium as the certificate was in fact issued. It is accepted by Mr. Harshaw for Mr. Duclos that such an honest mistake would not prevent avoidance by an insurer under general principles of insurance law. However, Mr. Harshaw submitted that the terms of the declaration in the proposal form, and specifically the use of the word ‘knowingly’ therein, make the position different. There are further claims on both sides, which I will deal with by reference to the pleadings themselves, to which I now turn.

The Pleadings

6. The points of claim endorsed on the writ detailed the terms of the proposal and policy issued by Argus to Mr. Duclos, and the failure to disclose Mr. Duclos' July 2003 convictions. Argus made complaint of the manner in which Mr. Duclos completed the report of his accident, when he disclosed a conviction for speeding for 52 kph, but not the lack of a valid driver's licence. Argus also made complaint that Mr. Duclos had failed to give prompt notice of the accident; the accident report form was dated 5 January 2005, some two months after the accident.

7. The pleading then referred to the accident and continued that in view of the pleaded non-disclosures, admissions and false statements, Argus had elected to rescind the policy of insurance between it and Mr. Duclos. However, that decision on the part of Argus was either not made or not put into effect until 4 September 2007, almost three years after the accident. Argus then sought the declaration that it was entitled to avoid the policy from inception, or alternatively that its liability to indemnify Mr. Duclos should be limited to the minimum limit required under the Act.

8. The defence admitted that Mr. Duclos had the convictions for speeding and driving without a valid driver's licence, as pleaded in the points of claim, but maintained that the inaccurate declaration was an honest mistake by Mrs. Duclos and that Argus would have issued its certificate of insurance in any event, presumably a plea that the nondisclosure was not material.

9. The defence carried on to plead that no policy had ever been provided by Argus to Mr. Duclos, in reply to the various policy terms which had been set out by Argus in its points of claim.

10. The accident was then admitted, but in relation to the accident report, the defence did not admit the contents of the report, pleading that Mr. Duclos had not retained a copy and had no recollection of what had been recorded in the report. There was an admission that Mr. Duclos had not held a valid driver's licence at the time of the accident, but a plea that this did not constitute a change of risk. In relation to the failure to give notice of the accident, the pleading maintained that this had been given ‘as soon as practicable’. In relation to the purported avoidance of the policy, the pleading indicated that Mr. Duclos had no knowledge of such investigation as may have been carried out by Argus, and no admission was made in that regard.

11. Although the skeleton arguments submitted on behalf of Mr. Duclos made arguments in relation to the issues of waiver and estoppel, these arguments were not at that time supported by anything in the pleading. No doubt appreciating this, Mr. Harshaw for Mr. Duclos made application at the commencement of the hearing to amend the defence so as to plead waiver and estoppel, essentially basing those claims on the fact that Argus did not purport to avoid the policy of insurance until September 2007, even though Argus had been aware of the true position in relation to Mr. Duclos' traffic convictions and his lack of a valid driver's licence at the time of the accident from about 12 August 2005. Further, the pleading made complaint of the fact that Argus had notice of a potential claim as early as January 2005, and had engaged in correspondence and discussion with the attorneys for the third party claimant without reference to Mr. Duclos.

The Evidence

12. For Argus, evidence was given by John Doherty, the Argus employee with responsibility for its motor insurance business. Mr. Doherty indicated that on joining Argus in May 2002 he had been given a mandate to get its hitherto highly unprofitable motor insurance business to a break even point in the shortest time possible. Mr. Doherty indicated that the only way to achieve his mandate was to institute very strict underwriting guidelines, and said that he had created a document described as ‘the Motor Matrix’ to assist in determining the acceptability of an applicant for motor insurance. The Motor Matrix operated on the basis of a points system, directed towards the...