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IN THE SUPREME COURT OF BELIZE, A.D. 2011
CLAIM NO. 11 of 2008
FUTURE VISION INVESTMENT CO. LTD. CLAIMANT
AND
INSURANCE CORPORATION OF BELIZE LTD. DEFENDANT
Hearings 2011
7 th February 14 th February 28 th February 11 th April
Mr. Godfrey P. Smith SC for the Claimant. Mr. Rodwell R.A. Williams SC, C.B.E. and Mrs. Julie Ann EllisBradley for the Defendant.
LEGALL J.
JUDGMENT
1. Bacab Eco Park, which was previously known as Ridge Lagoon Eco
Park, is a tourist resort, catering mainly for cruise ship tourists, and is
located at Mile 14 Boom Road, about 300 yards from the Northern
Highway in Ladyville Village, Belize District, Belize. The claimant is
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a company incorporated under the laws of Belize and owns Bacab Eco
Park (the Resort). Directors and shareholders of the company are
Giovanni Smith and his wife Lourdes Smith who represent the
claimant in these proceedings.
2. The Resort is comprised of two buildings. The first one houses an
information center, gift shop, kitchen, restaurant and bar. The second
building houses a restaurant, kitchen, bar, restroom, office and
storeroom. The buildings are single storeys with concrete slab tiled
floors; and except for the gift shop and kitchens, the buildings are
largely open structures, built from wood and stone, with bay leaf
thatched roofs. There is also a large area near to the buildings, where
a pool was constructed, parts of which are known as the kiddies pool;
and there is a main pool close to which a manmade waterfall deposits
water into the pool. Near to the pool, there is the Pokono Bwai Bar
and a restaurant. In the buildings were accessories and facilities that
were required for use and managing the Resort, such as furniture,
electrical and plumbing facilities, and kitchen utensils.
3. Ridge Lagoon Eco Park, the predecessor of the Resort, was issued a
policy of insurance by the defendant on July 7 th 2005 for one year, to
7 th July 2006 with respect to the property at the said mile 14 Burrell
Boom Road where the Resort is located. The sum insured was
$336,436.00 to cover the bar, restaurant, kitchen, equipment pumps,
and filters for the pool and other facilities and structures on the
property. The insurance provided cover for perils, such as cyclone,
earthquake, volcanic eruption to include “floods caused by these
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perils.” The insurance policy was renewed for the period July 2007 to
July 2008. The policy holder paid all the required premiums through
the said Giovanni Smith and Lourdes Smith, as the cheques indicating
the payments would show. The insurance policy contained a
mortgage clause which stated that:
“Upon request by the Insured Ridge Lagoon Eco Park c/o Giovanni Smith supported by written information supplied by the mortgagee or assignees, the corporation shall agree that loss, if any under Policy No. PPROP/0000849 shall be payable to Scotia Bank, Belize City.”
4. The corporation referred to is the defendant. The mortgage clause is
dated 7 th July, 2005 and it is signed by the Executive Director of the
defendant. The claimant states that this mortgage clause was assigned
to another bank – Belize Bank Limited – which required, around 10 th
October 2008, a valid copy of the insurance policy, which at that time
was not renewed for the year 2008 to 2009. As a result, Mrs. Smith
contacted the defendant to renew the insurance for the period 2008 –
2009. On 21 st October, 2008, the defendant provided insurance
coverage to the claimant for the property at the Resort for the period
October 21 st 2008 to November 4 th 2008. The items covered by this
insurance coverage were:
“Buildings $225,000.00
Restaurant equipment $ 61,436.00
Pumps, filters & pool $ 40,000.00
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Watchman quarters $ 10,000.00
Total $336,436.06”
The insurance also provided coverage for loss or damage to property,
caused by fire, lighting, thunderbolt, hurricane, windstorm, tornado,
cyclone, hail, typhoon, earthquake and volcanic eruption and flood
caused by these perils.
5. On 27 th September, 2008, a tropical wave emerged from the coast of
West Africa. The wave crossed the Atlantic Ocean into the southwest
Caribbean Sea on the 10 th October, 2008, and developed into a broad
area of low pressure. On 13 th October, 2008, the low pressure turned
northward and passed some miles east off the cost of Nicaragua. A
strong area of disturbed weather occurred – thunderstorms – off the
cost of Nicaragua/Honduras that formed into a tropical depression on
14 th October, 2008 about 45 nautical miles northeast off the coast of
the Nicaragua/Honduras border. For the hurricane season 2008, this
was the sixteenth tropical depression, and became known as tropical
depression sixteen or TD16. TD16 made land fall in Honduras, a
neighbouring country to Belize, on 15 th October, 2008 at about 6:00
a.m. Belize time. The TD16 moved slowly across Honduras and
degenerated into a low pressure system and moved into southern
Belize. The TD16, according to the expert witness Gonguez, “did not
made landfall in Belize. All warnings for the coast of Belize were
lifted at 3:00 p.m. on 15 th October, 2008.”
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6. The National Hurricane Centre, Miami, Florida USA, issued its last
bulletin at 9:00 p.m. on 15 th October, 2008 on Tropical Depression 16.
The bulletin states that the “depression become illdefined inland over
Honduras and that heavy rains expected to continue over portions of
Central America, ….. maximum sustained winds have decreased to
near 30 mph.” The bulletin also advised as follows:
“This system is expected to produce total rainfall amounts of 4 to 8 inches over Nicaragua Honduras…Belize…Guatemala … and the Yucatan Peninsula with maximum amounts up to 15 inches. These rains could produce lifethreatening flash floods and mud slides.”
7. After the bulletin, the National Hurricane Centre did not continue to
track TD16. The bulletin, as we saw above, advised that the system is
expected to produce rainfall in Belize and other countries up to a
maximum of 15 inches and that the rains could produce floods and
mudslides. The expert witness Mr. Fuller states that the depression
produced heavy rainfall across Belize. This seems to be consistent
with the National Hurricane Centre bulletin which stated that the
system was expected to produce rainfall and floods in Belize. Mr.
Gonguez, the expert meteorologist called by the defendant, says that
there was incessant rainfall over Belize amounting to 21.5 inches over
the period 13 th to 20 th October 2008 with most of the rainfall occurring
on the 16 th October at a time when TD16 was no longer a tropical
depression but as a low pressure system.
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8. The incessant rainfall occurred in several areas in Belize, including
the area in Ladyville where the Resort was located. The Resort was
flooded due to the heavy rainfall. The Resort started experiencing
flooding on 25 th October, 2008. In both buildings, the flood waters
rose to about 5 feet 4 inches above the floor level of the buildings.
There were flood watermarks on the buildings showing the levels to
which the water rose, which indicate that the water was at that level
for days or more longer period of time. The claimant was of the view,
that the flooding was caused by TD16 which caused damage to the
buildings, facilities and equipment. By letter to the defendant dated
30 th October, 2008 the claimant informed the defendant that it would
be submitting a claim under the insurance policy for damages caused
to the Resort due to the flooding.
9. On 4 th November, 2008, the claimant submitted to the defendant a
claim, accompanied by photographs showing the level of flooding, for
compensation under the policy. The defendant replied by letter dated
5 th November, 2008 stating that it terminated the insurance policy and
returned by cheque the premium of $8,747.37 paid by the claimant
under the policy. The claimant’s attorneyatlaw wrote a letter dated
6 th November, 2008 to the defendant as well as to the Supervisor of
insurance, Ms. Alma Gomez, who sent a letter dated 22 nd January,
2009 to the defendant requesting that the defendant reconsidered its
position, with respect to the insurance claim of the claimant. The
defendant refused to change its position, and the claimant filed a claim
dated 5 th December, 2008 in the Supreme Court against the defendant
for:
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“(1) The sum of three hundred and thirty six thousand, four hundred and thirty six dollars ($336,436.00) being the sum insured and the value of the insured property comprising buildings, restaurant equipment and pool equipment destroyed and damaged.
(2) Alternatively, damages; (3) Such further or other Orders as the
court deems fit; (4) Interest and costs.”
10. The insurance policy gives coverage for floods caused by a cyclone.
The expert witnesses agree that tropical depression 16 fell within the
definition of a cyclone. But it was submitted by the defendant that
since the tropical depression 16 ended on October 15 th 2008, no
tropical depression or cyclone occurred during the period of the
insurance policy, which was between 21 st October, 2008 and 4 th
November, 2008 and therefore the defendant could not be liable under
the policy.
11. It is admitted by the claimant that TD16 dissipated before the
insurance policy was agreed to. The expert meteorologist called by
the claimant gave evidence that the tropical depression dissipated on
16 th October at about 6:00 p.m. and on this date it was not a tropical
depression. It went to Honduras and dissipated to a low system and
continued in Belize. The expert witness for the defendant, stated that
on the 16 th October, 2008, the weather could no longer be classified as
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a tropical depression but rather as a remnant low. The experts agree
that the weather system tropical depression 16 dissipated and no
longer could be classified as a tropical depression on 16 th October,
2008. Therefore at the date of the policy – 21 st October, 2008 – there
was no tropical depression 16 or cyclone in Belize: it had degenerated
to a low system or a remnant low pressure system.
12. Though TD16 dissipated on 16 th October, 2008 and became a remnant
low, the question remains whether or not it was the cause of rainfall
across Belize on 25 th October, 2008 and onward and flooded the
Resort. In other words, was TD16 the proximate cause of the floods
to the Resort? The defendant has submitted that the claimant has
failed to prove that the TD16 caused the floods that damaged the
Resort. The expert evidence of Mr. Fuller for the claimant is that
“Tropical depression No. 16 produced widespread and heavy rainfall
across Belize ….. . The tropical depression 16 was forecast to
produce rainfall total 4 to 8 inches over Belize with maximum
amounts of up to 15 inches.” This witness also stated that flooding
was extensive in the Burrell Boom area and that it was expected that
the locations closer to the Belize River, including the Resort, would
also be inundated. But Mr. Gonguez, the expert called by the
defendant, swore that incessant rains over Belize “brought on by
instability induced by the remnant low pressure system that was once
TD16 amounted to as much as 21.5 inches (of rain) ….. at the upper
reaches of the Macal Branch of the Belize River.”
13. The evidence shows that the remnants low pressure from the TD16
caused rainfall across Belize, including Burrell Boom, where the
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Resort was located. The submission of the defendant is that its
liability under the insurance policy to indemnify the claim for loss,
could only be brought about by the occurrence of one of the insured
perils, during the period of the policy which protected the claimant
against specified perils occurring during the period of the insurance
policy, and not against damage occurring during the period of the
insurance, but resulting from a peril which had occurred before the
policy came into effect. Since TD16 ended on 15 th or 16 th October,
2008, before the policy came into effect, though damage occurred
during the period of the policy, the defendant was not liable under the
insurance policy. In support of this submission, the defendant relies
on Kelly v. Norwich Union Fire Insurance Society Ltd. 1990 1
W.L.R. 139.
14. In Kelly, the plaintiff, Mr. Kelly, in 1961 went to live at a house as a
lodger and stayed there for some years until 1971 when he purchased
the house, and afterwards did some repairs thereto. In October 1977
he took out a policy of insurance with the defendant which was
initially for one year, but renewable on a yearly basis. The last
renewal was in October 1980 which expired in October 1981. The
renewed policy provided coverage for loss or damage to the house or
building caused by any of the eleven insured perils mentioned in the
policy. Two of the perils relevant to the case were, bursting or
overflowing of water tanks, apparatus, pipes, washing machines or
water mains of the building; and “landslip or subsistence of the site on
which the building stands.” Mr. Kelly observed in 19771978 breaks
in, and disconnection of, the pipes of the building, causing water to
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escape where the breakage and disconnection had taken place, which
resulted in damage, including cracks in the walls of the building.
15. On inspection of the land on which the building stood, it was found
that the incursion into the land of a lot of water caused the clay soil to
swell up and rose too much and caused damage to the building or
house on top of it. It was therefore the submission of the defendant
that it was the burst of the pipes in 1977, which continued, that cause
the damage to the building. Since the burst occurred prior to the
renewed insurance policy, or what was described in the case as “pre
policy water” the defendant was not liable. The judge at first instance
found that the 1977 burst of the pipes, not having happened during the
currency of the insurance policy, was not an insured peril within the
meaning of the policy at that time, notwithstanding that it caused loss
or damage to the building after the insurance had begun in October
1977, and the judge dismissed the plaintiff’s claim.
16. On an appeal, the Court of Appeal agreed with the judge and
dismissed the appeal. CromJohnson LJ gave the reason:
“In this policy the liability is brought about by the happening of one of the insured perils; and the very description of the peril as being an insured peril means that at the time when it becomes fact the insurance is already effective, in other words, that the insurance period has begun when that event takes place ….. . The risk
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must take place, as an event, during the period of the insurance.”
17. In Kelly there was a clause in the insurance policy which stated that
the insurance company would pay the insured “in respect of events
occurring during the period of insurance …. .” The word “events”
was interpreted by the Court of Appeal as “referring to any of the
events which brings about the liability of the insurance company once
the policy has become effective, and does not deal simply with the
occurrence of the damage. The basis of the decision in Kelly was the
court’s interpretation of the above clause of the insurance policy. In
this case before me, there is no such clause in the insurance policy;
and, in my view, this distinguishes Kelly from the case before me.
But more importantly, the limited insurance policy provides coverage
to the claimant for “floods caused” by the perils mentioned in the
policy and the main issue for the court is whether TD16 was the
proximate cause of the flood to the Resort.
18. I accept the evidence of the expert Fuller that the TD16 continued to
impact the country until the end of October, 2008 and that it did
produce considerable more rainfall than normal. In the final advisory
of National Hurricane Centre in Miami issued at 9:00 p.m. on 15 th
October, 2008 the centre stated that the “depression becomes ill
defined inland over Honduras ….. Heavy rains expected to continue
over portions of Central America.” (emphasis mine) Although the
floods occurred after the TD 16 dissipated, rainfall continued, and on
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the evidence of Fuller and the bulletin of the National Hurricane
Centre in Miami, I hold that the TD16 continued to impact Belize till
the end of October, 2008 and that TD16 was the proximate cause of
the flooding and the damage to the Resort.
19. The defendant further submitted that it was not bound by the
insurance policy because of misrepresentation or fraud by the
claimant contained in the Proposal Form for the policy of insurance.
In that form, in answer to the question whether the property to be
insured was mortgaged it is ticked on the form “No;” and in answer to
the name of bank that gave the mortgage, it is ticked on the form
“NA” (not applicable). There is ample evidence that the property was
in fact mortgaged at Bank of Nova Scotia; and later at Belize Bank.
The defendant submitted that the contract of insurance was vitiated by
this misrepresentation and nondisclosure by the claimant; and
therefore the defendant was not liable under the contract of insurance.
20. The Proposal Form was signed by a director of the claimant who
testified that she did not read the whole form before signing it, and
that it was prepared by an employee of the defendant before she
arrived at the defendant’s office to sign the document. This was
denied by the employee of the defendant. Just above the signature on
the form of the director are words to the effect that the director
declared that the statements in the form were true and complete; and
that the proposal form shall be the basis of the contract between the
parties. The defendant submitted that it was therefore not bound by
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the policy and relied on the case of Zabanet v. N.E.M. (West Indies)
Insurance Limited NO. 342 of 2004 (Supreme Court) (unreported).
21. In Zabanet, the claimant on a Proposal Form for fire insurance with
the defendant was asked this question: “Have you ever suffered a loss
by fire? If so, give details.” The claimant answered “No.” A policy
of fire insurance was executed, under which the defendant provided
coverage for the claimant’s property, which was subsequently
destroyed by fire. A claim by the claimant under the policy for
compensation was rejected by the defendant on the ground that the
claimant had in fact suffered previous loss by fire in July 1984 when a
dwelling house he owned was destroyed by fire. The defendant
argued before the court that the claimant’s answer that he never
suffered loss by fire was untrue and amounted to a misrepresentation
and nondisclosure of a material fact which was known to the
claimant but which fact was not known to the defendant; and therefore
the claimant was not entitled to compensation under the insurance
policy.
22. There was evidence in Zabanet, from a witness for the claimant, that
the defendant knew that the claimant had suffered loss by fire before
the claimant signed the Proposed Form; and it was submitted that the
defendant agreed to issue the policy to the claimant with knowledge
of the untruth in the Proposal Form and therefore waived any right it
might have to avoid the policy on the ground of misrepresentation or
nondisclosure of material fact. Conteh CJ did not accept the
evidence of the witness for the claimant that the defendant knew of
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the untruth in the Proposal Form prior to issuing the policy, on the
ground that the evidence of the witness was “pure fiction and his own
invention.” The court dismissed the claim on the ground of the
claimants material nondisclosure of the previous fire. The defendant
has asked me to do likewise in this case.
23. Firstly I do not think that the claimant in this case before me could
successfully resist the argument that the answers to the questions in
the Proposal Form are not its answers on the ground that the whole
form was not read by the claimant before signing it. The signature is
that of a director representing the claimant, and the claimant cannot
say that it is not its document, when the claimant was negligent, if it is
accepted that the document was not read, in not reading the document
before signing it. I have to echo the words of Scrutton LJ when he
said that he had “great difficulty in understanding how a man who has
signed, without reading it, a document which he knows to be a
proposal for insurance, and which contains statements in fact untrue,
and a promise that they are true and the basis of the contract, can
escape from the consequences of his negligence” ….”: see
Newsholme Bros v. Road Transport and General Insurance
Company 1929 2 K.B. 356, at p 376.
24. Secondly, the claimant does not deny that the Proposal Form shows
that the property was not mortgaged when in truth it was. But the
claimant says that the nondisclosure of the mortgage was firstly not a
material nondisclosure; and, secondly, that the defendant knew that
the property was mortgaged by virtue of the mortgage clause above in
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the policy, and the fact that the policy was renewed annually by the
defendant since 2005. What amounts to a material nondisclosure?
The teachings in Pan Atlantic Insurance Ltd. v. Pine Top
Insurance Co. Ltd. 1995 1 AC 501 by Lord Goff are to the effect that
the “test of materiality in cases of nondisclosure ….. is that every
circumstance is material which would influence the judgment of a
prudent insurer in fixing the premium, or determining whether he will
take the risk.” About fifty years prior to Pan Atlantic, in Mutual Life
Insurance Co. of New York v. Ontario Metal Products Co. Ltd.
1925 A.C. 344, Lord Salvesen in the Privy Council felt that
materiality would be established where, if the fact concealed had been
disclosed, the insurers would have acted differently. His Lordship
continued:
“It is a question of fact in each case whether, if the matters concealed or misrepresented, had been truly disclosed they would, on a fair consideration of the evidence have influenced a reasonable insurer to decline the risk or to have stipulated for a higher premium.” At p 352
25. I am not satisfied on the evidence before me, assuming that the
defendant had no prior knowledge that the property was mortgaged,
that the defendant would have declined the risk, or would have
stipulated a higher premium had the fact of the mortgage been
disclosed. Moreover, a material fact is one that would have an
effect on the mind of a prudent insurer in estimating the risk and it is
not necessary that the material fact should have a decisive effect on
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the insurers acceptance of the risk or on the amount of premium
demanded: see Pan Atlantic Insurance above. The test of
materiality in insurance policies is whether the information would
have influenced a reasonable insurer to decline the risk, or to have
stipulated for a higher premium. For these reasons, I am not satisfied
that the nondisclosure amounted to a material nondisclosure.
26. I turn now to the next question whether the defendant knew of the
mortgage prior to the signing of the Proposal Form. The general
principle is that an insurer can avoid an insurance contract on the
ground of nondisclosure of a material fact, if he could show that he
had actually been induced by the nondisclosure to enter into the
policy. The claimant’s case is that the defendant was not induced by
the nondisclosure of the mortgage in the Proposal Form, because on
the facts, the defendant knew, prior to the signing of the form, that the
property was mortgaged. There is sufficient evidence, including the
mortgage clause above, which leaves no doubt in my mind that the
defendant knew that the property was mortgaged prior to the issuing
of the policy. This is what distinguishes the decision in Zabanet from
the case before me. In Zabanet the court did not believe that the
insurer knew of the nondisclosure prior to the issue of the policy.
The defendant in this case before me, has failed to show that it was
induced by the nondisclosure to enter into the insurance policy.
27. The defendant also submitted that the claimant failed to disclose
whether the buildings were specifically exposed to the risk of damage
by storm or flood. In the Proposal Form, there is a question:
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“Are the buildings:
(a) (b) specially exposed to the risk of
damage by storm flood (give details below)
(c) ”
There is no “yes” or “no” answer box to the question at (b), as there
are for (a) and (c) parts of the question. There is no tick for any of the
boxes at question (b) and no details were given. Did the claimant
know that the buildings were specially exposed to storm or floods?
The defendant has failed to show that the claimant had this knowledge
and did not disclose it. Moreover, the expert witness Fuller swore:
“The tropical depression was forecast to produce rainfall total of 4 to 8 inches over Belize with maximum amount of up to 15 inches. This maximum was exceeded …. . The flooding was unprecedented.”
28. The defendant made a further submission that the claimant had failed
to prove that it owned the property in question. The witness Giovanni
Smith swore that the claimant took out the policy of insurance “to
cover the assets of the claimant’s EcoPark” and that the bank held the
claimants property that comprised EcoPark. I think this is evidence
that the claimant owned the property in EcoPark.
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Based on my findings above, the claimant has proved that the
defendant is liable to pay compensation to the claimant on the policy
of insurance.
29. In the claim form, the amount of compensation claimed was
$336,436.00 being the value of the insured property “destroyed or
damaged.” The claimant alleged that the buildings, restaurant and
pool equipment at the resort “became a total constructive loss from
the flooding.” To prove the extent of its loss, the claimant called
Nelson Neal, who inspected the property on 7 th November, 2008 and
prepared a report on the value of the loss and an appraisal of the
damage to the property caused by the flooding. In his report, tendered
in evidence by consent, he gave the cost of materials and labour for
repairs to the buildings, the electrical and plumbing system, for
cleaning and sanitation, for replacement of furniture, kitchen utensils,
and pool equipment and also for the replacement of computers and
printers and miscellaneous equipment. His total for doing these things
amounted to $298,811.70.
30. In his report, Mr. Neal dealt with damage to the buildings and
furniture therein, and concluded that because of the flooding, to use
his own words “these wooden structures will inevitably experience
warping, shrinkage and joint separation. My recommendation is that
these items be replaced.” The electrical parts were under water and
Mr. Neal recommended replacement. Kitchen equipment and
facilities were also submerged in contaminated water for long periods
of time and Mr. Neal recommended replacement. Computers,
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printers, pressure washers, compressor drill and a circular saw were
completely submerged in the flood waters and he also recommended
replacement. In relation to the plumbing system, he recommended
that plumbing fixture that were submerged in the flood waters to
undergo cleaning and repairs and not replaced.
31. The replacements involved the purchasing of new materials and
equipment as well as labour cost. Apart from the plumbing system to
be cleaned and repaired, all the other damage he mentioned in the
report, he recommended replacements. He did not recommend
cleaning kitchen utensils and facilities, including stoves and grills. He
did not recommend repairing furniture, electrical fixtures, or
structures in the buildings, like doors, rails and posts. His total cost
structures for the replacements came up to about $290,000.00 and the
cleaning and repairing of the plumbing system came up to just over
$8,000.00.
32. There are issues that detract from the evidence of Mr. Neal. Though
in his report he gives his opinion as to future damage that would occur
to the furniture and wooden structures of the building as a result of the
flooding, and gave his opinion as to costs, no application was made to
deem this witness an expert, and he was not deemed an expert by the
court. In his report, he gave the cost for replacement of numerous
items, but apart from a few photographs of a few items in his report
showing their costs, there is no evidence of how he arrived at most of
the cost of the items in his report to be replaced. He could have
obtained from commercial business places documentary evidence of
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the cost of all the replacement items, or if the items were already
purchased, receipts showing their costs.
33. The source of the cost of replacing most of the items in his report
remains a mystery. In his report, substantial amounts are stated there
for labour cost, but how he arrived at those amounts also remains a
mystery. In addition, this witness admitted he had no qualifications in
electrical or civil engineering. He is a member of the Association of
Professional Architects of Belize. He says he has a bachelors degree
in Architecture from the Belize Institute of Technology and that he
could produce the degree to the court at any time. The court has not
seen the degree. Moreover, this witness admitted that the
recommendations in his report relating to the electrical system of the
property was on the advice of an electrical engineer. This electrical
engineer, whoever he was, was not called to testify.
34. On the other hand, the defendant called Phillip Andrewin, a civil and
structural engineer, who holds a Master’s Degree in foundation
engineering with over thirtyseven years of professional experience.
On application by the defendant, he was deemed by consent of the
claimant an expert in civil and structural engineering. He submitted a
report giving his assessment of flood damage at the Resort. He
assessed the damage at $16,600.00. He states that the damage is
assessed “in terms of the estimated costs of cleaning up and servicing
equipment” and he gave a table in his report of how he arrived at this
figure. There was a vast difference between this witness and Neal on
the question of replacement of items and facilities.
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35. Mr. Andrewin conducted his assessment of damage on 14 th April,
2009, more than five months after the flood had occurred, and at a
time when the Resort was fully functional after the flood, “with
several patrons …. Indulging in various activities,” to use his own
words. According to him, he based his assessment on speaking with
the proprietor and on flood water marks he observed on both buildings
which indicated to him that the flood remained at a certain level “for
an appreciable time” and would have submerged items on the property
in more than six feet of water. He said that no structural damage to
the buildings was evident.
36. The major concern with the testimony of this witness is that he visited
the Resort more than five months after the flooding and at a time
when the resort was fully functional, after a period of not being in
operation after the flood. But it must have taken some work, such as
cleaning up and some repairs to make the resort functional after the
period of dysfunction due to the flood. The witness Andrewin did not
inspect the Resort during the period it was not functioning; and did
not observe first hand the effect of the flooding on the structures and
the equipment at the Resort. He gave in his report the theoretical
effect of the submergence in water of building materials and
components, including electrical and electronic facilities, such as
computers which he said would not have suffered damage by
submergence in water, unless they were plugged into an electrical
outlet at the time.
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37. This witness is highly qualified to give an assessment of flood damage
at the time when he conducted the inspection. The witness Neal had
conducted his inspection on 7 th November, 2008 after the flood water
started to recede. That is just about two weeks after the flood. He
must have seen first hand the flood waters, though at a lower level,
and the damage to the structures and facilities at the Resort. But his
evidence, in my view, is generally unreliable because he is not
qualified to give opinions on matters involving training in civil
structural engineering, and there is considerable doubt in my mind
about the accuracy of the costs, including replacement costs, stated in
his report.
38. I accept the evidence of the expert Andrewin, that because of the
physical feature of the land, the flood waters did not possess
destructive force, and therefore the only effects of the flooding was
the submergence in water of the structures and facilities and
equipment of the Resort, which could be cleaned. I therefore accept
this witness’ assessment of damage at $16,600.00. I do not accept Mr.
Neal’s evidence of extensive replacement of facilities and the various
costs mentioned in his report.
39. Mr. Andrewin is an expert and he gave a clean up cost of $5500,00
which he said was to clean up 12000 square feet, which I accept to
mean square feet of land. He does not give a cost to clean up
equipment and kitchen facilities and furniture. He said the computer
and printer if submerged in water could suffer damage if plugged in at
the time of the flood waters. I have no evidence from the claimant
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that these items were in the electrical outlet at that time. Mr.
Andrewin pointed out that wood submerged in water would suffer
warping and could remain warped. He admitted that his report did not
include an amount for warping of the wood structures. He also said
that kitchen utensils were not his expertise. An amount will have to
be added to Mr. Andrewin’s assessment, for the cleaning of the
kitchen utensils and facilities, and the warping of the wooden
structures.
40. From the facts, the claimant must have incurred expenses in cleaning
the kitchen utensils, facilities and equipment and furniture; and must
have suffered some loss as a result of the warping. The problem for
the court is a lack of cogent and admissible evidence in this regard
from the claimant. There is a lack of evidence in relation to the cost
of cleaning up of the kitchen facilities, equipment, furniture and the
cost of the warping of wooden structures.
41. Where the evidence shows that the claimant has suffered loss but the
evidence does not enable the loss to be precisely quantified, the
authorities establish that the court will assess damages as best it can
on the available evidence; and the fact that the amount of loss cannot
be precisely ascertained does not deprive the claimant of a remedy:
see Tai Hing Cotton Mill Ltd. V. Kamsing Knitting Factory 1979
AC 91. The question of nominal damages arises where a claimant,
although he has suffered loss, fails to prove the actual amount of his
loss: see Erie Country Natural Gas and Fuel Co. Ltd. v. Carroll
1911 A.C. 105. The court has to do the best with the evidence
24
available, bearing in mind that the burden of proof is on the claimant
to prove its case on a balance of probabilities. I am satisfied that there
was warping of wooden structures on the property and that expenses
were incurred by the claimant to clean up kitchen facilities, equipment
and furniture as a result of the flood. Based on the above authorities
and doing the best I can, I award a nominal damages of $10,000.00 for
the cleaning of the furniture, kitchen facilities and equipment, and the
warping of wooden structures.
42. Before concluding this judgment, I have to consider a further
submission by the defendant that the claimant made an exaggerated
claim in this matter for a sum largely in excess of the actual loss; and
therefore the claim is fraudulent and “the entire claim is lost,” to use
the words of learned senior counsel for the defendant. Reliance on
this submission was placed on AXA Insurance Company v. Gottlieb
2005 Lloyd’s Rep 369.
43. In AXA, the policy holders made four claims under an insurance
contract to the insurance company for payments under the policy. The
company made payments to the policy holders. Subsequently, the
company discovered that the policy holders acted fraudulently by
submitting a forged document. The company brought proceedings to
recover the money paid to the policy holders on the basis that they
made fraudulent insurance claims. The judge held that the policy
holders had committed a fraud and that the insurance company was
entitled, as a result of the fraud, to recover from the policy holders, all
the sums paid to the policy holders by the company.
25
44. There is no question that it is the law that where an insured is found to
have made a fraudulent claim upon the insurers, the insurer is not
liable on the fraudulent claim. The insured who has made a
fraudulent claim would not be allowed to recover: see The Star Sea
2001 UKHL page1. The principle is that the presentation of a
dishonest or fraudulent claim constitutes a breach of duty that entitles
the insurer to repudiate any liability for the claim, and to avoid any
liability under the policy.
45. The claimant in this case before me did, by letters dated 30 th October,
2008 and 4 th of November, 2008, stated an intention to submit a claim
and did submit a claim to the defendant for total loss due to the
flooding. The total loss according to the sum insured is $336,436.00.
These letters given in the appendix were accompanied by photographs
of the flooding and were written when the Resort was still flooded,
although the waters were beginning to recede. The letters did not
mention the amount of compensation being claimed.
46. It is quite possible for the claimant to have thought, rightly or
wrongly, based on the flooding as could be seen from the
photographs, that a total loss could possibly result. But I do not think,
in the circumstances of this case, that the defendant has shown that the
claim to the insurer was motivated by dishonesty or fraud. I think at
the time when the claim was made to the defendant by the claimant
who saw first hand the flooding which lasted for several days, the
claimant may well have believed at that time that he would suffer a
total loss. I am therefore not satisfied that the defendant has shown
26
that the claimant had the intention to make a dishonest or fraudulent
claim to the insurer
47. I therefore make the following orders:
(1) The defendant shall pay to the claimant the sum of $26,600.00
being compensation due and payable under a policy of insurance
dated 21 st October, 2008.
(2) The defendant shall pay interest on the said amount at (1) at the
rate of 6% per annum from 5 th December, 2008 until the said
sum is fully paid.
(3) Defendant to pay costs to the claimant, to be agreed or taxed.
Oswell Legall JUDGE OF THE SUPREME COURT
11 th April, 2011
SEE APPENDIX
Letters Paragraph 45
P.T.O.