ASSAD FAKHRY AND SONS v. GHANA UNION ASSURANCE CO., LTD.

The appellants took an insurance policy against fire from the respondents, the insurers, in respect of two different consignments of textiles imported into the country. The respondents issued the appellants with an insurance policy which had in its schedule the following indorsement, "The property insured is in accordance with the proposal dated 6 April 1977 and lodged with this company." In that proposal, the property to be insured was described as "stock or material in trade, the property of the proposer or held by him in trust or on commission for which he is responsible." In the schedule to the policy, however, the appellants were named as the insured and the words "held by him in trust or on commission for which he is responsible" were omitted. The goods having been subsequently destroyed by fire whilst stored in a warehouse, the appellants submitted a claim for loss. In the claim form, the appellants stated that they were owners of the property. The respondents repudiated liability saying that their adjusters had found that the appellants were not the owners of the goods at the time of the loss.

At the trial, counsel for the appellants sought a rectification of the policy on the ground that the property had not been insured in accordance with the terms set out in the proposal dated 6 April 1977 since interests declared in the proposal had been omitted. In raising an objection to the application for rectification, counsel for the respondents submitted that the appellants, having declared on the claim form, exhibit D, that they were owners, they could not seek rectification to show that they held the goods in trust or on commission. It was also contended that the appellants had no insurable interest. The trial judge (in his judgment: see [1980] G.L.R. 704) refused the application for the rectification of the policy and held, inter alia, that the appellants had no insurable interest in the goods. On appeal,

Held, allowing the appeal (per Jiagge J.A., Anin and Edusei JJ.A. concurring):

(1) the claim form, exhibit D, was filled in after the goods had been destroyed by fire and long after the proposals had been accepted [p.164] by the respondents, the premium paid, and the insurance policy issued. The declaration on the claim form could therefore not have retrospective effect on the agreement completed long before the claim came into existence.

(2) Although the proposals could not be used in an action on the policy in order to construe the policy,