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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.