Dyoll Insurance Company Ltd v Cordoza (David)
| Jurisdiction | Jamaica |
| Judge | DOWNER, J.A. , BINGHAM J.A: , PANTON, J.A. |
| Judgment Date | 26 February 2003 |
| Neutral Citation | JM 2003 CA 1 |
| Judgment citation (vLex) | [2003] 2 JJC 2602 |
| Court | Court of Appeal (Jamaica) |
| Date | 26 February 2003 |
INSURANCE LAW - Damage to property - Whether appellant was liable to indemnify respondent for damage to retaining wall - Insurance policy - Effect of Exclusion clause - Did Exclusion clause exonerate owner from the liability?
Introduction
Was the appellant, Dyoll Insurance Company Ltd. (the "Insurance Company") liable, to indemnify David Cardoza for the damage done to the retaining wall on his property? The respondent Cardoza had successfully contended in the Court below that the damage was caused by flood which was one of the perils covered by the policy. The insurer, on the other hand, argued that there was no flood and that the damage was caused by a landslip which was within the exclusion clause and so was not covered by the policy.
The learned judge, Cooke J. accepted the account of the experts called on behalf of the insurer as to how the damage was done. Despite this he found in favour of Cardoza on the basis that the flood was the proximate cause of the damage and the exclusion clause was not applicable in the circumstances of this case. The issue on appeal is to ascertain if the resolution of the conflict by the learned judge was correct.
The framework of the policy
The Householders Comprehensive Policy reads as follows in so far as is material:
"PRINCIPAL PERILS COVERED BY SECTION 1 OF THE POLICY"
Then referring to Section 1 it reads:
"Item 1 Private Dwelling House Item 2 Swimming Pool Item 3 Walls, gutter and fences"
Then the policy continues:
"Loss or Damage to property specified in the schedule caused by:
a. Fire, Explosion, Lightning
b. .......
k. Flood"
Then the exclusion clause reads:
"POLICY EXCLUSION
We will not pay for:
1...
7. Subsidence
Loss or damage caused by subsidence or landslip"
Was there "flood" within the ambit of the policy for insurance?
Here is how the learned judge found that "flood" was within the ambit of the policy at No 2 Norbrook Mount (at page 39 of the Record):
"But Mr. Bailey sought to use ordinary meaning for the flood in k. Mr. Bailey invited me to look at the ordinary dictionary meaning of 'Flood'. I could not read what was passed up to me so I had recourse to my own dictionary which is the Concise Oxford Dictionary 8th Edition 1990 and therein 'Flood' is defined as an 'overflow or influx of water beyond its normal boundaries: and inundation." I am persuaded by Mr. Bailey, and in my view there was flood at No. 2."
Porter C.J.O. came to the same conclusion in Oakleaf v. Home Ins. Ltd. 14 D.L.R. (2d) 535 at 538. He said:
"The word "flood" as applied to quantities of water inundating cellars as in this case is in common use."
As for the evidence here are the findings of Cooke 1 at page 37 of the Record:
"The Plaintiff, Mr. David Cardoza is the owner of property at 2 Norbrook Mount in Kingston 8. On August 4, 1998, he resided at 4 Norbrook Mount across the road from No. 2 Norbrook Mount (I will hereafter refer to these premises as No. 4 and No. 2 respectively). At No. 2 according to the Plaintiff there was a house under construction - about 90% complete. There was also a swimming pool and retaining wall - 70% complete.
On the morning of August 4, 1998 the plaintiff awoke to the sound of rainfall. He considered it to be heavy rainfall which was consistent. There was no cessation throughout the day. From No. 4 he observed water accumulating at No. 2. He says it was very high. He further said that water was flowing down the hill to No. 2 Norbrook Mount. He wished to leave No. 4 to go to No. 2 but the area was flooded with water. However at about 11:00 am., he heard a cracking sound emanating from No. 2 and it piqued his curiosity and so he went over to No. 2. At No. 2 there was much water gathered and to plaintiff's dismay, a part of the pool was torn off and part of the wall too. That is the genesis of this action."
On the issue of the heavy rainfall which caused the flood the experts on both sides were of one accord. Here is the learned judge's assessment of the matter at page 44 of the Record:
"In respect of my assessment of the evidence I I prefer the opinions given by the witnesses for the Defence. Their evidence was blessed with clarity and precision and I hold that there was slippage. What is constant to all experts is their recognition of heavy rainfall. Jervis spoke of heavy saturation. Betty of water in backfill. Thompson referred to the effect of water when he said "it is probable that the shear strength of the ground was reduced by the heavy rain which occurred"... Irvine said that the proximate cause was super-saturation. As I held that there was flooding I now hold there was slippage. This slippage was the last factor to damage."
The learned judge's finding on this aspect of the matter was never seriously challenged and the respondent Cardoza therefore proved this aspect of the case.
Did the exclusion clause exonerate the owner from the liability?
The ratio of the judgment in the Court below runs thus at page 48 of the Record:
"I regard the slippage as the final step. The prior flooding in my view is the proximate cause. Without the flooding there would have been no slippage without which damage would not occur. Slippage was the direct result of flooding. I find it curious that the exclusion of landslip was not put in the context of flooding."
Before coming to the above conclusion the learned judge posed the principal issue in the case thus at page 45 of the Record:
"The defendant placed great reliance on the exclusion clause in the policy where there is no liability on the defendant's part for payment for loss or damage caused by subsidence or landslip. So now there are two (2) operational factors - flooding and landslip. How does court resolve this issue?"
Since it was found that landslip was a contributory factor to the damage, it must be recognized that it was placed in the exclusion clause. That clause must be construed. The principle here is that the Insurance Company must bring itself within the exception with unambiguous words. What effect does the word landslip have in the context of the exception clause? There is no certainty on this issue. It could mean any landslip whatsoever is excluded, or it could mean the landslip must be the proximate cause of the damage for it to exclude the effect of the flood or, it could mean a landslip which followed the flood, and was merely incidental to it. It is this last meaning which the judge ascribed to landslip in the passage above where he stated that he found it curious that landslip was not put in the context of flooding.
The precisely worded exclusion clause in Oakleaf v. Home Insurance Ltd. 14 D.L.R. (2d) 535 at 536 reads:
"There shall in no event be any liability hereunder hereunder in respect to:-
(c) loss or damage caused by cold weather, rain, sleet, snow, sand or dust, unless same shall enter the building through an aperture concurrently broken therein by a wind or hail storm.
...
(e) loss or damage due to tidal wave, high water, 1 overflow, flood, land subsidence or landslip, irrespective of the cause."
Porter C J.O. stated the effect of the above clause thus at page 539:
"There is no doubt that policies such as these are to j be liberally interpreted in favour of the insured, and where there is ambiguity in the terms, the construction more favourable to the insured should be adopted: Worswick v. Can. Fire & Marine Ins. Co. (1878), 3 O.A.R. 487; Fitton v. Accidental Death Ins. Co. (1864), 17 C.B. (N.S.) 122 at p. 135, 144 E.R. 50 Willes J.; Re Etherington & Lancashire & Yorkshire Acc. Ins. Co., [1909] 1 K.B. 591 at p. 596, Vaughan Williams L.J.
In this case I can find no ambiguity. I think that the meaning is plain. From the wording of this I exclusion clause, it is clear that the parties contemplated the possibility of a flood or an overflow which in some way, wholly or in part, might be the i result of a windstorm, and that the water from the flood or the overflow might cause damage. By this clause the company clearly stated in effect that it would not be liable if such occurred, irrespective of whether the flood or the overflow were caused by a windstorm, or any other event."
Mr. Patrick Bailey for Cardoza, in the Court below grasped the principle of how an exclusion clause can be made effective. Here is how the learned judge acknowledged it at page 45 of the Record:
"Mr. Bailey referred the court to General Principles of Insurance Law by E R Hardy Ivanny (6 th edition). In particular the Court was referred to page 418 to the Section with the caption 'Where peril insured against precedes an excepted Clause.'
"Where the peril Insured against precedes an excepted clause which actually produces the loss, there is a loss within the meaning of the policy if, notwithstanding the operation of the excepted cause, the peril insured against is to be regarded as the proximate cause of the loss.
If there is a causal connection between the peril and the loss, the excepted cause being merely a link in the chain of causation inasmuch as it is a reasonable and probable consequence of the peril, the peril is the cause of the loss within the meaning of the policy.'
In the instant case the peril insured against is flooding and the excepted cause is landslip. I accept those passages as correct statement of law."
Since Porter...
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