Colina Insurance Limited (Appellant) v Enos Gardiner (Respondent)
Introduction:
This ruling was described by Justice Ian Winder (as he was then) in his ruling dated the 1 May, 2019 in Tamika Bootle v. Colina Insurance 2009/CLE/gen/1378 as “providing a useful and conclusive discussion in the issue of documents contained in an agreed bundle” and that it “provided the latest and most comprehensive statement on the law of material non-disclosure in this jurisdiction”.
Facts:
Following a Supreme Court Judgment handed down on 30 April, 2015 which awarded Enos Gardiner (“the Respondent”) the sum of $150,000.00 (being the face-value of a life insurance policy issued by Colina Insurance Limited (“the Appellant”) to a Mrs. Monique Gardiner on 8 December, 2011), the Appellant sought an order that the Judgment of the Honourable Philip C. Dunkley J. (ag) (“the Judge”) be set aside in its entirety.
When applying for life insurance from the Appellant, policyholder Mrs. Gardiner failed to disclose relevant medical history concerning hypertension, high blood pressure and headaches. Mrs. Gardiner passed away on 18 November 2012, approximately 11 months after being issued the policy and squarely within the 2-year contestability period stipulated by the contract. Mrs. Gardiner’s medical history was subsequently revealed to the Appellant upon acquiring her Medical Summary of Patient Visits Report from the Department of Public Health (“DPH Summary”) which outlined previous diagnoses and treatments for the above-mentioned medical conditions. The Appellant, represented by E. Terry North of Alexiou, Knowles & Co., sought to rely on the Incontestability Clause in the policy which serves to render null and void any policy issued because of a misrepresentation of, or failure to disclose, any fact material to that insurance.
The Judge rejected the Appellant’s Defence, ruling that the DPH Summary was hearsay and inadmissible which, as a result, rendered the DPH Summary inadequate evidence that could not be relied upon to establish the right to repudiate the contract on the ground of non-disclosure. The Judge further held that the Incontestability Clause was irrelevant, and that the Appellant did not satisfy, what he considered to be, a requirement to plead inducement by reason of non-disclosure. The Judge also refused to allow the Appellant to amend its Defence to include any such pleading.
Ultimately, The Court of Appeal set aside the Judge’s decision in its entirety and entered judgment on 16 July, 2018 for the Appellant on its Defence with costs of the appeal and in the court below awarded to the Appellant to be taxed if not agreed.
Issues:
The Court of Appeal was faced with, what they identified as being, two broad issues arising from 13 grounds of appeal.
- The first issue revolved around two questions:
a) whether the Judge erred in finding that the DPH Summary was hearsay and inadmissible; and
b) whether, on the evidence which was before him, the Judge’s conclusion that Colina had failed to establish its right to repudiate the contract of insurance on the ground of non-disclosure was plainly wrong. - The second issue concerned the correctness of the Judge’s views regarding:
a) Colina’s reliance on the incontestability clause to avoid the policy;
b) Colina’s failure to plead that it had been induced to enter the contract of insurance by reason of the nondisclosures; and
c) whether the Judge’s refusal to allow Colina to amend its pleadings to allege inducement was unreasonable and plainly wrong.
Holding:
Issue 1
The Court of Appeal held that the Judge’s decision to exclude the contents of the DPH Summary on the basis that the document was inadmissible hearsay was unreasonable, unfair, and plainly wrong. The Judge’s ensuing conclusion that the Appellant was unsuccessful in establishing its right to repudiate the insurance contract on the ground of non-disclosure, due to a lack of proper evidence which arose in due course by labelling the DPH Summary inadmissible hearsay, was clearly wrong.
Issue 2
The Court of Appeal held that the Judge was wrong in both of his views that the Incontestability Clause of the policy was irrelevant and that inducement must be specifically pleaded. Having taken these views, the Judge’s discretion to refuse to allow the Appellant to amend its pleadings to allege inducement was irrelevant, unreasonable and plainly wrong.
Rationale:
Issue 1
The DPH Summary formed part of the agreed trial bundle, inherently admitting the document as proper evidence through the parties’ mutual consent. Although the Evidence Act Chapter 65 does not explicitly speak to whether documents in an agreed bundle are admitted as evidence of their contents, the Court of Appeal held that the position in The Bahamas is no different from that of UK or Malaysian Practice Directions which do specifically state that documents in an agreed bundle are admissible at trial as evidence of their contents, unless objection is taken. As there was no formal objection made by the Respondent at the beginning of the trial regarding reliance on the contents of the DPH Summary, the Court of Appeal held that the Appellant was entitled to assume that any future dependance on the document and its contents was a non-issue and that there would be no need to take further steps to authenticate the document or the truth of its contents. At Paragraph 96 of the appellate judgement, the Justices state: “It seems to us that the inclusion of a document in an agreed trial bundle in accordance with Supreme Court Practice Direction No. 2 means that it is admitted in evidence before the trial judge by agreement, without the party wishing to rely on it having to call a witness to formally produce it or to authenticate it”. Therefore, the judge was not only unreasonable and unfair but also plainly incorrect to disregard the contents of the DPH Summary from his consideration on the basis of the hearsay rule and to consequentially determine that the Appellant was unsuccessful in establishing a right to repudiate the insurance contract on the basis of non-disclosure. The Judge erred in law by further concluding that the Appellant “had not established by ‘proper evidence’ the material non-disclosures pleaded in its Defence” (105).
Issue 2
The Judge was wrong to regard the Incontestability Clause as irrelevant and to consequently consider the Appellant’s Defence of non-disclosure as unsuccessful on the basis that inducement had not been explicitly pleaded. The Incontestability Clause was clearly and unequivocally manifested as a contractual term of the policy issued to Mrs. Gardiner and gave the Appellant the right to avoid any claims under the policy due to a misrepresentation or non-disclosure of material facts. Further, “as the Respondent’s claim was presented to [the Appellant] well within the two-year contestability period, the clause was clearly relevant to [the Appellant’s] Defence” (125). The Court of Appeal acknowledged that the existence of such a clause does not absolve the Appellant from the evidential burden of proving that the material facts had not been disclosed and that the non-disclosure had induced them to issue the Policy. However, the Justices emphasized the fact that there is no rigid requirement for inducement to be pleaded (126). Rather, inducement must be established or proved by evidence. The Court of Appeal held that the material non-disclosure directly and undoubtedly influenced the Appellant’s decision to issue the insurance policy on the terms that it did. “In law,” the Justices explained, “this influence is considered inducement” (140). By treating the Incontestability Clause as irrelevant, the Judge neglected to examine the evidence to determine whether Colina had adduced evidence of inducement and further failed to consider whether, even in the absence of such evidence, the nature of the non-disclosure was such that inducement could nonetheless be inferred (129).
Following these errors of law, the Judge’s exercise of discretion in refusing to allow the Appellant to amend its Defence in order to include pleadings which the Judge raised of his own motion was unfounded and fundamentally incorrect. The Judge’s reasons for prohibiting the amendments included the fact that his tenure as an acting judge expired at midnight that evening and that, while it may be technically possible to carry on with proceedings after the expiry of his term as an acting Justice, there would be serious logistical and administrative difficulties. Another reason for the Judge’s refusal was that ‘the Plaintiff had been through enough’. The Court of Appeal expressed that “such considerations were completely irrelevant to the application before him and clearly were not matters on which a judge ought to have based his discretion whether to permit or refuse the amendment” (134). The Justices concurred that by raising what he thought was a technical defect in the pleadings, requesting additional submissions on the issue, and then refusing an application to plead inducement, the Judge unfairly undermined the Appellant’s case and made it impossible for their Defence to succeed (135).