Newis v General Accident, Fire & Life Assurance Corporation [1910] HCA 62; (1910) 11 CLR 620 (16 November 1910)

Richard John Newis Plaintiff, Appellant; and General Accident, Fire and Life Assurance Corporation Defendants. Respondents.

This is an action on a policy of fire insurance, dated 7th September 1909, by which the defendants agreed with the plaintiff that if the property therein described, or any part thereof, should be destroyed or damaged by fire, after payment of the premium, between 6th September 1909 and 6th September 1910 they would compensate him for such loss or damage. The plaintiff's property was damaged by fire on 14th December. The premium had not then been paid. The first contention relied upon by the appellant was that prior payment of the premium had been waived by the defendants. At the trial the pleadings were amended to allow this contention to be set up, but the amendment was not formally made. In my opinion the word "waiver" is entirely out of place in reference to a contract in this form. The contract is to pay for losses caused by fire after payment of the premium, and not for losses occurring at any other time, and to treat it as a contract to pay for losses arising before payment of the premium would be to alter the subject matter of the contract. It will appear clearly that there is no question of waiver if we suppose a count to have been formally drawn up in accordance with the leave to amend. The count would set out the contract as I have stated it, and then contain an allegation that the defendants had exonerated and discharged the plaintiff from the obligation of paying the premium before the loss occurred. Such a count would clearly be bad on its face. Mr. Shand indeed admitted that he could not press this point, and he then relied on the doctrine of estoppel, and contended that the defendants were estopped from saying that the premium had not been paid. The policy contained a recital "the insured having paid to the corporation the sum of £3 10s. 11d." and provided that "the corporation hereby agrees with the insured that if the property is destroyed after payment of the premium they will pay or make good," &c. The policy is not under seal. But even if it had been the case of the Equitable Fire and Accident Office Ltd. v. The Ching Wo Hong[1], in which the same words were considered by the Privy Council, shows that there would be no estoppel. The facts are that on 6th September an interim receipt was given for the premium, but the money was not paid. Subsequently two or three letters were written to the plaintiff asking for payment of the premium, but he did not pay it. He knew that, although the receipt had been given, the premium had not in fact been paid. It is impossible under such circumstances to say that the defendants are now estopped from saying that the premium was not paid. The only way in which the plaintiff's case could be put would be that there was a new contract to hold the plaintiff insured whether the premium had in fact been paid or not. No such case was set up, and it cannot be suggested on the actual facts that if it had been set up there was any evidence of such a new contract. We were told that at the trial of the action the learned Chief Justice held that payment of the premium had been waived, and that the only issue he left to the jury was the question of fraud. I cannot help thinking that there is some mistake on this point, for at the conclusion of the trial a verdict was entered for the defendants on all the counts except the first (for detention of the policy), and an application by the plaintiff's counsel that a verdict should be entered for the plaintiff on all the issues except the issue of fraud was refused.

An application was then made by the plaintiff for a new trial. The Full Court held that no case of waiver or estoppel had been made out, but the majority of the Court thought that there was not sufficient evidence of fraud to justify the finding of the jury against the plaintiff on that issue, and they varied the judgment accordingly. In the view which I take of the other part of the case this point is only material on the question of costs, but as it has been fully argued I think it right to express my opinion upon it.

As I have said, the fire occurred on 14th December. The premium had not then been paid. On 15th December two envelopes were handed in at the defendant's office by an insurance agent through whom the policy had been effected. These envelopes had been handed to the agent by the plaintiff on the morning of 15th December. One of them contained a letter, dated 13th December, in which the plaintiff said: "With reference to yours of the 9th inst. I am very sorry to have given you so much trouble over this account, but I thought Gibbs, Bolton could have obliged me by paying this, as I have so much dealings with them. However I herewith enclose cheque for the amount £3 12s. 11d." The cheque enclosed was dated 13th December. The other envelope contained a letter, dated 15th December, in which the plaintiff said he was very sorry to say there had been a fire, and that he had been burnt out. In cross-examination the plaintiff was shown the butts of his cheque book, from which it appeared that the cheque for £3 12s. 11d., dated 13th December, was preceded by the butt of a cheque dated 14th December for "cash," which was in fact cashed on 15th December. There were two other preceding cheques also dated the 14th. The first was for payment of wages up to 13th December, deducting half a day for time lost. On the evening of the day of the fire, the 12th, the plaintiff saw the agent in the train and told him he had not paid the premium and asked him what he should do about it. He did not mention to the agent that he had drawn a cheque and written a letter to the defendants on the previous day. The question is whether on these facts a jury could reasonably come to the conclusion that the letter and cheque bearing date 13th December had not been drawn on that day but were drawn after the fire. In my opinion reasonable men could properly come to that conclusion. There was primâ facie evidence on the face of the written documents that the cheque was drawn on 14th December. The onus was on the plaintiff to explain the apparent discrepancy, and the jury might reasonably come to the conclusion that the explanation he gave was untrue.

The condition in the policy on which this plea was founded provided that, if any fraudulent means or devices were used by the insured to obtain a benefit under the policy, all benefit under the policy should be forfeited. The fraudulent device suggested was ante-dating the cheque, and sending it by hand through an agent of the defendants in an envelope under such circumstances that it might reasonably be supposed that it had been drawn on the 13th, and handed to the agent on that day. If the suggested device succeeded the result would be that it would appear to the company that the fire had occurred after payment of the premium had substantially been made. In my opinion, if these were the real facts, it was a device to obtain a benefit under the policy, that is, to induce the defendants to pay the plaintiff a sum which they were not really liable to pay under the policy. In my opinion, therefore, there was no ground for disturbing the finding of the jury on this plea. I think therefore that the judgment of the Supreme Court should be varied by omitting the direction to enter a verdict for the plaintiff on the seventh plea, and that the judgment so varied should be affirmed.

I am of the same opinion. The appellant's case, as it comes to us, has been grounded on the policy only, and as Mr. Shand rightly said, there are three possible cases in which the plaintiff might have recovered under the policy:—(1), if he had paid the premium; (2), if the defendants were estopped from saying it had not been paid; (3), if the defendants had waived the payment and given credit for it. I think from what appears upon the notes made by the learned Chief Justice at the trial that he must have left the question of waiver to the jury, as in fact it ought to have been left. Taking it to have been so left, I think the verdict given negatives the allegation of waiver. In that case we are not concerned with it, and if we were, Mr. Shand now admits that he can only rely upon the doctrine of estoppel. He relies for proof of this upon the acts and conduct of the defendants, and principally on the fact that they gave an interim receipt in the first instance for the premium, and that they afterwards wrote certain letters in which they refer to the policy as having been current and in force for some time. The interim receipt was accompanied by an account asking for payment of the premium as such. Each letter contains a similar demand, and fails to give any support to the view of the transaction that Mr. Shand would have us adopt, namely, that the defendants treated the premium as having been paid for the plaintiff, and were only asking for a refund of the money they had paid to him. That is not the aspect in which the letters should be viewed. Each of them, as I have said, contains a demand for payment of the money as due for premium, and refers to the number of the policy, in which document it is expressly stated that the liability of the defendants arises in case of fire only after payment of the premium. It is not very easy to imagine how the defendants could have more clearly expressed their intention to hold the plaintiff liable for payment of the premium as such. It seems to me, therefore, that there is no warrant for the contention that an estoppel arose. It is impossible to say that there was in act or word any incorrect representation made by the company or that they caused the plaintiff to alter his position to his prejudice. The risk only arose upon payment of the premium, and as the fire occurred before the premium was paid, the plaintiff is not entitled to recover under the policy.

There remains the question of fraud. I agree with the Chief Justice in thinking that, while one jury might find this issue in one way, and another in a different way, there was evidence upon which the jury could find, not against reason, that the plea of fraud had been sustained. The comparison of the butts in the cheque book shows a transaction, not in the regular course, from which an intention to represent a cheque made after the 14th as having been made before that date might primâ facie be inferred. There were facts calling for an explanation, and from which an inference of fraudulent conduct might easily have been drawn, if the jury did not choose to adopt the explanation offered by the plaintiff. Some explanation was particularly called for as to the plaintiff's conduct in keeping back the cheque and the letter, if the date they bore was the true date, and not posting or sending them in the interval between the 13th and 15th of December. Moreover in his conversation with Hamblin on the day of the fire, although he told him he had not paid the premium before the fire, and asked his advice as to what he ought to do, and although he had the letter and the cheque in his pocket or at home, he did not put what he now alleges to be the true facts before him, and tell him that he had drawn a cheque for the premium which unfortunately had not been delivered before the fire. There was a good deal to be explained, and if the jury considered the explanation unsatisfactory, taken in conjunction with the evidence of the cheque butts in the plaintiff's own handwriting, their verdict is not one which reasonable men could not find. I do not say that the evidence would have convinced me as a juryman that the plaintiff was guilty of fraud, but that is not the point.

Having regard to the condition in the policy, it seems to me that the jury might well conclude that what the plaintiff desired to do, if in point of fact it was a fictitious transaction, was to obtain money from the defendants upon the footing of the policy, by causing them to waive the fact that the premium had not been received in time, seeing that there was a letter from him bearing date the 13th, the day before the fire, enclosing a cheque bearing the same date. If they believed the letter and cheque to have been written on the 13th, any insurance company would be justified in not insisting on their strict legal rights under the policy, and in holding that the plaintiff was entitled to recover upon his claim. It appears to me that there was evidence that the plaintiff attempted to obtain a benefit under the policy without a strict compliance with its conditions. I agree that the judgment of the Supreme Court should be varied in the way suggested by the Chief Justice, and affirmed as varied.

I agree with the judgment of the Chief Justice, and have very little to add. The main feature to be noted in the policy on which the action is brought is the form of the promise to pay. It is not a promise to pay generally on the destruction of the property by fire, but to pay only in the event of the property being destroyed by fire after payment of the premium. The payment of the premium is thus an essential condition of the defendants' liability under the policy. The plaintiff sought to get over the difficulty of having failed to pay the premium before the fire by alleging that that stipulation had been waived. It is evident that a promise of that kind cannot be a subject of waiver. The alteration sought to be made is an alteration, not in a condition to be performed by the insured, but in the promise of the insurer. However Mr Shand properly conceded that he could not establish a case of waiver on the evidence, and he relied on his defence of estoppel. Estoppel arises when a party is prevented by something he has done to the prejudice of another from asserting the true facts in a transaction. The true fact here is that the premium was not paid. But it is contended that the defendants, by reason of their conduct, cannot now be heard to say so. Having regard to the facts upon which it is sought to base the defence of estoppel, the contention seems to be somewhat daring. It is important to recognize that the insurance is divided into two periods. An interim receipt was given before the issue of the policy. That in express language acknowledges the receipt of the premium. If the fire had occurred at any time between then and the issue of the policy there might be a good deal to be said in favour of Mr. Shand's argument. But within a month after the interim receipt was given the policy was issued, the interim cover of the receipt then came to an end. The policy certainly contains a recital that the insured has paid the premium. But, as has been pointed out, it has been authoritatively decided that such a recital does not prevent the insurer from proving the real fact. The recital therefore does not carry the case any further. The plaintiff however relied also upon two letters of the defendants written subsequently to that. When they were written the plaintiff had in his possession the policy expressly stating that he is not to be entitled to compensation unless the premium is paid before the fire. Both letters remind him that he has not yet paid the premium. One was dated 10th November, a month after he got the policy. That encloses the account for the premium and goes on to say: "As this (the policy) has been in force since 6th September, I should be obliged if you would let me have a cheque." It in fact demands payment of the premium. In answer the plaintiff apparently refers the defendants' agent to the firm of Gibbs, Bolton & Co. The next letter is the company's reply of 9th December as follows:—"We have seen Messrs. Gibbs, Bolton & Co. with reference to payment of enclosed account, and are informed that all they can do is to honor a draft of yours for the account if drawn on them. As the insurance has now been current for three months I would ask you to let us have such an order or your cheque by return of post." There again a demand is made and the policy is incidentally referred to as current. The use in these letters of the words "in force" and "current" with reference to the policy is relied on by the plaintiff as involving a representation that the defendants treated the premium as having been paid, because it is said that the policy could not be in force or current unless it was paid. I do not wish to use any harsh words about the contention, but it seems to me an exceedingly daring thing to assert on facts such as these that the use of these words in letters actually demanding payment of the premium will estop the defendants from asserting that the premium was not at that time paid. In my opinion there is no ground whatever for such a contention. The policy therefore must be taken as it stands, and the plaintiff not having complied with its terms is not entitled to recover.

With regard to the other contention raised on the seventh plea, which affects only the question of costs, I think that there was sufficient evidence before the jury to entitle them as reasonable men to come to the conclusion that that plea was established. I agree therefore that the verdict found by the jury on this issue ought not to be disturbed, and that the judgment of the Supreme Court as so varied should be affirmed.

I am of the same opinion. I start with the form of the policy which says:—"If the property shall be destroyed or damaged by fire after the payment of the premium" then the company will pay compensation. The performance of that condition, or the existence of that fact, of payment of the premium, is an essential element in the creation of liability. The defendants' liability starts from that point. Therefore the performance of that factor must be proved—the premium must have been paid. I agree that the doctrine of waiver is quite inapplicable. Waiver might be applied in this way—under the policy the premium has to be paid in money. That form of payment might be waived. Something might be taken as equivalent to money, as, for instance, a negotiable instrument. But the fact of payment must be established in some form or other. If this has to be proved it can only be proved in one of two ways, either by proving the actual payment itself as a real fact, or by estoppel. The principle of estoppel has been thoroughly well and authoritatively settled. In Ex parte Adamson; In re Collie[2], James L.J. says:—"Nobody ought to be estopped from averring the truth or asserting a just demand, unless by his acts or words or neglect his now averring the truth or asserting the demand would work some wrong to some other person who has been induced to do something, or to abstain from doing something, by reason of what he had said or done, or omitted to say or do." Lord Shand in delivering judgment for the Privy Council in the case of Sarat Chunder Dey v. Gopal Chunder Laha[3] said:—"The law of this country gives no countenance to the doctrine that in order to create estoppel the person whose acts or declarations induced another to act in a particular way must have been under no mistake himself, or must have acted with an intention to mislead or deceive. What the law and the Indian Statute mainly regard is the position of the person who was induced to act; and the principle on which the law and the Statute rest is, that it would be most inequitable and unjust to him that if another, by a representation made, or by conduct amounting to a representation, has induced him to act as he would not otherwise have done, the person who made the representation should be allowed to deny or repudiate the effect of his former statement, to the loss and injury of the person who acted on it. If the person who made the statement did so without full knowledge, or under error, sibi imputet. It may, in the result, be unfortunate for him, but it would be unjust, even though he acted under error, to throw the consequences on the person who believed his statement and acted on it as it was intended he should do." Of course, "act" there includes omission to act. In this case the plaintiff knew that he had not made the payment, although he was asked to do so time after time. From the moment of his getting the receipt, which was accompanied by a demand for payment, until the 9th December, the company were continually asking him to pay. Therefore I can see no indication of their having treated him as having paid. He knew the real fact, and could not have been misled, and in addition to that there is his own sworn statement showing he did not believe he was being treated as having paid. He admitted that in his conversation with Mr. Hamblin, the company's agent, he told him he had not paid the premium, and asked him what he ought to do. That is not the language of a man who thought he was treated as having paid the premium. And when he sends his letter and cheque, and gets a reply from the company saying: "We are not prepared to accept payment now," he does not say a single word about it: not only does he not say so to Hamblin, but he does not at a critical juncture say to the company: "I understood I was regarded as having paid this premium," or intimate that the cheque represented the return of money, in effect, advanced by the company to pay his premium. Therefore I can see no possible ground for applying the doctrine of estoppel.

I thoroughly agree with the opinions expressed by my learned brothers as to the seventh plea, which raises the question of fraud. I am not surprised the jury took the view they did.

The evidence showed a most abnormal and unbusinesslike course of procedure, and there was a strong motive for the plaintiff's conduct. The jury had an opportunity to put their construction upon the facts. I have also looked at the letters dated 13th and 15th, and can well understand that the jury might have been of the opinion that they were written on the same day.

Judgment appealed from varied by omitting direction to enter a verdict for plaintiff on the seventh plea, and as so varied affirmed. Appellant to pay costs of appeal.

[1] (1907) A.C., 96.

[2] 8 Ch. D., 807, at p. 817.

[3] L.R. 19 Ind. App., 203, at p. 215

High Court of Australia

Newis v General Accident, Fire & Life Assurance Corporation [1910] HCA 62; (1910) 11 CLR 620 (16 November 1910)

HIGH COURT OF AUSTRALIA