ALLAO v. R. T. Briscoe (Ghana) Ltd.
1970
HIGH COURT
GHANA
CORAM
- AMPIAH J.S.C. (PRESIDING)
- KPEGAH J.S.C.
- ADJABENG J.S.C.
- ACQUAH J.S.C
Areas of Law
- Contract Law
- Insurance Law
- Commercial Law
1970
HIGH COURT
GHANA
CORAM
AI Generated Summary
An extract from a Supreme Court judgment addresses clause 5(e) in a hirepurchase arrangement for a motor vehicle, under which the seller required the hirer to obtain insurance. The court explained that the clause barred any act whereby the insurance may be invalidated and framed the issue as whether an unauthorized use by Adam Dagomba on 21 October 1965 invalidated cover. Interpreting invalidate to mean the cessation of cover, the court emphasized the policys purpose of protecting the sellers interest. It held that an event that gives the insurer the right to repudiate liability totally renders the policy invalidated for that occurrence. Evidence, including that of Mr. Burrell, showed that the use was outside the policy, so no insurance was in force for that user, and the policy ceased to be effective on 21 October 1965.
EXTRACT FROM JUDGMENT:
“It is clear from the terms of clause 5(e) that once the buyer has taken out a policy or entered into a contract of insurance on terms of it he is bound not to do or permit any act to be done ‘whereby the insurance may be invalidated.’ The issue here is whether the breach of the contract of insurance by the unauthorized driving of Adam Dagomba on 21 October 1965 was such an act ‘whereby the insurance may be invalidated.’
In my understanding of this provision all that is required is that the effect of the insurance cover be brought to an end whether temporarily or permanently in such circumstances that there would be no cover for the insured. If the insured is not covered by the policy, then in my view it is invalidated for the purposes of the clause, and the entire contract of insurance need not be at an end finally. In interpreting the clause considerations has to be given to the purpose for which a contract of insurance is required by the seller to be taken out by the hirer in a hire-purchase transaction involving a motor vehicle. The clear purpose as it seems to me is to insure the interest of the seller in the vehicle. If therefore an event occurs which has the effect of terminating the liability of the insurer to the insured in respect of any claim whatever that may be made in respect of persons, or goods in the vehicle or of damage or loss of the vehicle itself then in my view the policy is invalidated in respect of that occurrence. Clause 5(e) speaks of any act or thing whereby the insurance may be invalidated. In my view the clause is breached if circumstances occur which give the insurer the right to repudiate liability totally in respect of any claim that may be made. That was clearly the position in the present case. The evidence of Mr. Burrell is explicit on the point. In its ordinary acceptation to invalidate means to render invalid, to render of no force or effect, to deprive of legal efficiency – See the Shorter Oxford English Dictionary, 3rd edition. The use of the vehicle by Adam Dagomba was not covered by the insurance arranged between the plaintiff and the insurance company. There was therefore no insurance in force in relation to that user. The insurance which was in force on 20 October 1965 was invalidated, that is ceased to be of effect, on 21 October 1965. That is how I see the position and so do I construe the clause.”