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(1982)1982 September 6 [A. Loizou, SAVVIDES A N D STYUANIDES, JJ.J TAKIS XENOPOULOS, Appellant-Plaintiff, v. THOMAS NELSON (INSURANCE) LTD., AND OTHERS, Respondents-Defendants. (Civil Appeal No. 6220). Contract—Insurance contract—-Construction—Principle of construction contra preferentem. Evidence—Extrinsic evidence—Written agreement—Circumstances under which extrinsic evidencemay be admitted to vary orsupplement it—Party adducing extrinsic evidence cannot be allowed 5 to complain. Contract—Insurance—When acceptance of a contract of insurance is subject to condition there is no contract until condition is performed—Receipt of premium—Effect—Insurance on the life of a mare subject to the production of veterinary certificate as 10 to the soundness of the health of the mare—Production of certificate referring to a date before conditional acceptance of proposal —Condition precedent not performed—No contract formed and insurers not liable. These proceedings arose out of the death of a maie and 15 related to a dispute as to whether the mare was covered by an insurance or not. On 5.6.1976 the plaintiff, owner of the mare, attended the office of Andreas Papageorghiou who was authorised to act on behalf of the insurers. After having a talk with the plaintiff, Papageorghiou made a note at the back of the last 20 livestock insurance for the said mare. "I certify that on production of a ceitificate by veterinary surgeon Mr. Sawides, the mare *XemV will be consideied as re-insured for the sum of £2,
  1. Its colt (femab) born on 19.4.1976from southern star will also be considered 25 as insuied for the sum of £1000"). 674 1 C.L.R. Xeoopoulos v. Thomas Nelson' 20 On the same day the plaintiff and Papageorghiou separately rang up veterinary surgeon Savvides and requested him to examine the mare and issue the relevant veterinary ceitificate. In the afternoon of the same day the plaintiff gave to Papageorghiou an envelope containing cheques for an amount equal to the premium and a veterinary certifiate issued by Savvides on his examination of the mare on 3.6.
  2. The mare died on the night of the 6th-7th June, 1976 and when the plaintiff askedfor payment oftheamountinsuredthedefendants declined any liability because the mare was not examined by Sav\ides and no veterinary certificate as to the health of the mare was issued or presented by Savvides. The trial Couit dismissed plaintiff's claim against the defendants for the amount insurtd having held that the veterinary certificate of health was a condition precedent to the insurance policy and this condition was not performed because what the defendants actually asked was not just a mere production of the certificate of Savvides, they actually asked Savvidesto goat any timeafter the 5.6.1976 to examinate the mare and produce his findings for the health condition of the animal after 5.6.1976, not before. 25 Upon appeal by plaintiff it was mainly contended that as the condition precedent—the above1note—emanated from the insurers it should be construed contra preferentem and that the Court admitted and acted upon oral evidence which varied the written agreement, as set out in the note. 5 10 15 30 35 40 Held,that if theie is any ambiguity in the language used in a policy, it is to be construed more strongly against the party who prepared it, that is in the majoiity of cases against the company; that the general rule is that when a tiansaction has been reduced to, oi recorded in, writing either by requirement of the law, or agreement of the parties, extrinsic evidence is, in general, inadmissible to contradict, vary» add to oi subtract from thetermsofthedocument;that extrinsicevidence,howevei, isadmissibletoshowthetruenatureofthetransaction, although such evidence may vary or add to the written instrument; that where a contract, not required by law to bein writing, purpoits to be contained in a document which the Court infers was not intended toexpressthewholeagreement between theparties, proof may be given of any omitted or supplemental oral term, expressly or impliedly agreed between them before or at the time of executing the document, if it be not inconsistent with 675 Xenopoulos v. Thomas Nelson
(1982)the documentary terms; that the inference that the writing was or was not intended to contain the full agreement may be drawn not only from the document itself, but from extrinsic circumstances; and that, therefoie, the trial Court rightly took into consideration the surrounding circumstances in order to ascertain the true intention of the parties as expressed in the document, and gave effect to it. 5 Held,further, that the evidence as to the request by Papageorghiou that Savvides should examine the mare and issue a medical certificate upon such examination was adduced by 10 the plaintiff and irrespective of any other consideration the plaintiff cannot be allowed to complain about this.
(2)That when the acceptance of a contract of insurance is subject to a condition, there is no contract until the condition is performed; that the receipt of the premium and its retention 15 by the insurers may raise the presumption, in the absence of any circumstances leading to a contrary conclusion, that the insurers have definitely accepted the proposal; that the offer of the premium in the way it was offered in this case could not be considered as acceptance, as it was dependent upon a vet 20 certificate of the soundness of health of the mare; that receipt by Andreas Papageorghiou of the envelope in which the vet certificate of 3.6.1976 and the cheques for the premium were enclosed, in the circumstances of this case, does not preclude the defendants from maintaining that the condition precedent 25 was not peiformed; that the issue of a veterinary certificate and the production thereof as to the soundness of the health of the mare were to the root of the subject of the insuiance; that Savvides on 5.6.1976 was employed by the insurers and, therefore, he was acting as their agent; that there is no doubt, 30 however that on 3,6.1976hewastheagent or veterinary surgeon acting foi and on behalf of the owner; that on 3.6.1976 hewas labouring under a distinct capacity than the one for which he was employed by the insurers; that he issued a certificate with legard to the health of the mare on 3.6.1976, the day that he 35 examined the mare on behalf of the owner; that the insurers cannot be obliged to attachan insurance on thelife of themare, the certificate of soundness of health of which refers to a date before their conditional acceptance of the proposal; that the condition precedent was not peiformed because the presentation 40 676 1 C.L.R. 5 10 15 Xenopoulos v. Thomas Nelson of the certificate of the examination with respect to the health of the maieof 3.6.1976 isinsufficient to amount to peiformance; and that, therefore, no contract was formed and the insureis are not liable; accoidingly the appeal must fail. Appeal dismissed. Cases referred to: Mercantile BankofSydneyv. Taylor [1893]A.C. 317at p.321; . Kalantan v. Duff Development Co. [1923] A.C. 395 at p. 412; UDrive Company Limitedv.PanayiandAnother
(1980)1C.L.R. 544 at p. 548; Polycarpou v. Polycarpou
(1982)1 C.L.R. 182; English v. Western[1940] 2 K.B. 156; . Lake v. Simmons [1927] A.C. 487 at p. 509; Union Insurance Societyof Canton Ltd. v. GeorgeWills& Co. [1916] 1 A.C. 281 at p. 288; YorkshireInsuranceCompany Ltd. v. Campbell[1917] A.C. 218 at p. 225; Harrington v. PearlLifeAssurance Co.Ltd. [1913]30T.L.R. 24; Canningv. Farquhar [1886] 16 Q.B.D.
  1. 20 Appeal. Appeal by plaintiff against the judgment of the District Court of Nicosia (Papadopoulos, P.D.C.) dated the 17lh February, 1981, (Action No. 504/77) whereby his claim for the sum of £2,500.- being the amount the mare "Xenia" was in25 sured and/or as damages for breach of contract and/or breach of instructions to renew an insurance policy was dismissed. St. Erotokritou (Mrs), for the appellant. A. Timothi (Mrs.), for the respondent. Cur. adv. vult. 30 A. Loizon J.: Thejudgment of the Court will be delivered by Mr. Justice Stylianides. STYLIANIDES J.: The death of a mare resulted in the institution of this action. The plaintiff was the owner of mare Xenia. Defendants No. 1 are insurers, having their seat in 35 London and carrying on business in Cyprus through their agents, defendants No. 2, a limited company. Defendant No.3 is the Managing Director of defendants No.
  2. 677 Stylianides J. Xenopoulos v. Thomas Nelson
(1982)After the death of the mare a dispute arose as to whether the mare was covered by an insurance or not.—The plaintiff-owner contended that a valid insurance was in existence whereas the defendants alleged that a condition precedent to the formation of the contract of insurance and the issue of a policy was not 5 performed and, therefore, the mare was not insured at the time of her death. The said mare was insured with the defendants for £1,250.from 2.3.73 - 1.3.74, for £2,000.- from 6.3.74 - 5.3.75 and for £2,000.- from 9.3.75 - 30.4.
  1. (See certificates of livestock insurance, exhibits No. 1, 2 and 3, respectively, and indorsement on exhibit No. 3). 10 Andreas Papageorghiou at the material time was employed at the central offices of the Bank of Cyprus. He is the brother of defendant No.
  2. On 5.6.76 the plaintiff-owner attended 15 the office of Andreas Papageorghiou; he asked for the said mare to be insured by the defendants. Andreas Papageorghiou communicated by phone with his brother abroad and received instructions on the matter. Hehad a talk with the plaintiff and thereupon he made a note at the back of exhibit No. 3, the last 20 livestock insurance for the said mare. It reads as follows:"Βεβαιώ ότι άμα τη προσαγωγή ττιστοποιητικοΰ Crrro τοΟ κτηνιάτρου κ. Σαββίδη ή φορβάς Ξένια θα θεωρηθή Επανασφαλισμένη δια ποσόν £2,500,-. Επίσης θα θεωρηθή ασφαλισμένο το πουλάρι της (θηλυκό) γεννήσεως 19.4.1976 άπό τον Southern Star δια ποσ6ν £1,000.-." ("I certify that on the production of a certificate by vete­ rinary surgeon Mr. Savvides the mare Xenia will be con­ sidered as re-insured for the sum of £2,500.-. Its colt (female) born on 19.4.1976 from Southern Star will also be considered as insured for the sum of £1,000.-"). On the same day the plaintiff and Andreas Papageorghiou separately rang up veterinary surgeon Savvides and requested him to examine the mare and issue the relevant veterinary certificate. The plaintiff in his examination-in-chief said: " I did what Mr. Papageorghiou told me. I rang up Mr. Sav­ vides to come and see (examine) my mare in order to issue a certificate" - (Page 14 of the record). In the afternoon of the same day at the race-course, during 678 25 30 35 1 C.L.R. Xenopoulos v. Thomas Nelson Stylianides J. theraces of theday,theplaintiff gavetoAndreas Papageorghiou an envelope containing cheques for an amount equal to the premium and a veterinary certificate (exhibit No.4), issued by Savvides on his examination of the mare on 3.6.
  3. Papa5 georghiou understood that what the plaintiff handed him was a veterinary certificate and the premium in cheques. He did not examine these documents. It was Saturday afternoon. His brother would be coming from Greece after the weekend and he intended to hand them over for examination and further 10 action to his brother. On thenight of the 6th -7th June, 1976, that is to say, on Sunday night, the mare died. She was found dead early in the morning of 7.6.
  4. A P.M.E. was carried out on 7.6.76 by Efstathiou (P.W.3), a veterinary surgeon, in the Government service, who concluded that the cause of death was 15 asphyxia due to intestinal tympani. Papageorghiou brothers were informed of the death after the burial of the corpse on 8.6.
  5. The plaintiff thereafter asked for payment of the amount insured. Defendants No. 2 through the Managing Director, 20 G. M. Papageorghiou, informed the plaintiff that the mare was not considered insured. The company declined any liability as the mare was not examined by Savvides and no veterinary certificate as to the health of the mare was issued for the insu­ rance company by Savvides or presented as per written state25 ment. This was repeated by letter dated 10.6.76 addressed to the plaintiff by defendants No.Ίand signed by defendant No.3 as Director (exhibit No. 5). The trial Court found that the veterinary certificate of health was a condition precedent to the insurance policy. This was 30 not contested before us. The Court considered this condition piecedent totheinsurancepolicy and decided thatthiscondition was not performed. The relevant passage from the judgment reads as follows:35 40 "Now Ishall examine if thiscondition was fulfilled. There is no doubt that a vet certificate was issued and it is before the Court as exhibit No.
  6. But does it comply with the requirements of the condition? My answer is no. The instructions of thedefendants to Dr.Savvideswere givenon the 5.6.76 and he produced a certificate dated 3.6.
  7. I do not accept that that is sufficient fulfilment of the con670 Stylianides J. Xenopoulos v. Thomas Nelson
(1982)dition. Because one must examine the root of the condition and not the surface. What the defendants actually asked is notjust a mere production of the certificate; they actually asked the vet to go at any time after the 5.6.76 to examine (he mare and produce his findings for the health 5 condition of the animal after 5.6.76, not before. They were not and could not be interested in the health of the animal prior to the time they gave the relevant instructions. They could only be interested in the condition of the health of the animal from the moment they gave instructions to 10 the vet and onwards; definitely not backwards. The fact that Mr. Andreas Papageorghiou put in his pocket some cheques and the vet certificate at the race-course does not alter the situation. Besides I believe him when he said that he never examined these documents". 15 It is common ground that Dr. Savvides did not examine the mare on 5.6.
  1. On 3.6.76 he visited the farm of Costas Christofi (P.W.4); he examined a number of other horses and saw Xenia. On 5.6.76 he issued the veterinary certificate (exhibit No. 4). It is dated 3.6.
  2. At the bottom thereof we read: 20 "Date of examination: 3rd June, 1976". It was contended for the plaintiff-appellant that the condition precedent is the one written down by Andreas Papageorghiou and no more. As this emanated from the insurers, it should be construed contra preferentem - or to state if in full - verba 25 chartarum fortius accipiuntur contra preferentem, i.e. against the person who put the language into the document upon which he is relying; that the Court admitted and acted upon oral evidence which varied the written agreement, as set out in that confirmation or note, and submitted that the condition pre- 30 cedent consisted of the presentation or production or issue of a medical certificate by Savvides, without Savvides examining the mare, and that the date of the certificate or the examination of the mare did not constitute part of the condition precedent, and the issue and production of the certificate by Savvides of 3.6.76 35 was sufficient performance of the condition precedent. Savvides was the agent of the insurers and as the condition precedent was fulfilltd, the defendants were liable to pay the amount insured. The general rule is that when a transaction has been reduced 40 680 I C.t.R. Xenopoulos v. Thomas Nelson Stjlianides J. to, or recorded in, writing either by requirement of the law, or agreement of the parties, extrinsic evidence is, in gt-neral, inadmissible to contradict, vary, add to or subtract from the terms of the document. Extrinsic evidence, however, is admissible 5 to show the true nature of the transaction, although such evidence may vary or add to the written instrument. Where a contract, not required by law to be in writing, purports to be contained in a document which theCourt infers wasnot intended to express the whole agreement between the parties, proof may 10 be given of any omitted or supplemental oral term, expressly or impliedly agreed between them before or at the time of executing the document, if it be not inconsistent with the documentary terms. The inference that the writing was or was not intended to contain the full agreement may be drawn not only 15 from the document itself, but from extrinsic circumstances. (Mercantile Bank of Sydney v. Taylor, [1893] A.C. 317, at 321). Cave, L.C., in Kelantan v.Duff Development Co., [1923] A.C. 395, at 412 said:20 25 "No doubt surrounding circumstances may not be used for the purpose of adding to a deed a stipulation to which the parties did not intend by that deed to agree; but if a judge or an arbitrator, knowing the terms of a deed and the circumstances surrounding its execution is satisfied by those means that the parties intended by that instrument to agree to terms which, though not clearly expressed, are in his belief to be implied in it, there is no reason why he should not give effect to it". In view of the above we are of the opinion that the Court rightly took into consideration the surrounding circumstances 30 in order to ascertain the true intention of the parties as expressed in the document, and gave effect to it. We may observe that the evidence as to the request by Papageorghiou that Savvides should examine the mare and issue a medical certificate upon such examination was adduced by the 35 plaintiff and irrespective of any other consideration the plaintiff cannot be allowed to complain about this. (U Drive Company Limited v. Efstathios Panayi and Another,
(1980)1 C.L.R. 544, at 548; Polycarpou v. Polycarpou,
(1982)1 C.L.R. 182). The principle of construction contra preferentem is best and 681 Stylianides J. Xenopoulos τ. Thomas Nelson
(1982)conveniently explained as follows in Mcgillivray on Insurance Law. 2nd ed., p.1029, where the authorities are conveniently set out. The relevant passage adopted by Slesser, L.J., in English v. Western[1940] 2 K.B. 156, reads:"If there is any ambiguity in the language used in a policy, 5 it is to be construed more strongly against the party who prepared it, that is in the majority of cases against the company. A policy ought to be so framed that he who runs can read. A party who proffers an instrumentcannot be permitted to use ambiguous words in the hope that the 10 other side will understand them in a particular sense, and that the Court which has to construe themwill givethema different sense, and therefore, where the words are ambi­ guous they ought to be construed in that sense in which a prudent and reasonable man on the other side -that is the 15 side to whom the policy is proffered - would understand them". As itwas said, however, by Lord Sumner inLake v. Simmons, [192η A.C. 487, 509:"Every one must agree that commercial contractsare to be 20 interpreted with regard to the circumstances of commerce with which they deal, the language used by those who are parties to them, and the objects which they are intended to secure". Thecardinal rule is that theintentionof the parties as expres- 25 sed by their words must prevail. The intention of the parties must be gathered from the lan­ guageof the contract,the subject-matter, and thecircumstances in existence at the time it was made. (Union Insurance Society of Canton. Limited v. George Wills& Co.. [1916] 1A.C. 281,at 30 p.288; Yorkshire Insurance Company, Limited v.Campbell, [1917] A.C. 218, at 225). Having regard to thematerial before thetrial Court,to which we havejust referred, and guided by theaforesaid principles, we find that there is no ambiguity in the endorsement or note of 35 A. Papageorghiou of 5.6.
  1. A vet certificate of the sound health of the mare Xenia was a condition precedent to the insurance. Theinsurers could notbe interested in the health of 682 1 GL.R. Xeoopoolos r. Thomas Nelson Styllanfded J. the mare prior to 5.6.76but on 5.6.76or thereafter. Savvides, the veterinary surgeon, agent of the insurers, did not issue a certificate relating to the health of the mare after hid mandate on 5.6.
  2. From 3.6.76, when Savvides, as agent of the plain5 tiff, examined the mare until 5.6.76 when Papageorghiou put downinwritingtheconditionprecedentand/orthetimeatwhich theproposal was conditionally accepted by the insurance company,a material changemight havetaken placeinthe natureof the risk. The acceptance of the risk was subject to the con10 dition that the health of the mare proposed should be sound after the time that the note was written. The object of the condition precedent wasnone elsebut to securefor the insurers that the mare was of sound health not prior but at any time after the conditional acceptance. This is the only construction 15 that can be placed in the circumstances on that writing. The words"on production ofacertificatefromDr.Savvides"cannot betakentomeantheproduction of acertificate byDr. Savvides whenever issued, either at any time prior to 5.6.76or on 5.6.76 and thereafter, relating to the health of the mare before 5.6.
  3. 20 When the acceptance of a contract of insurance is subject to acondition,thereisnocontract untiltheconditionis performed. The moment of the beginning of the risk is material. The insurancewasonlyfor a year and that moment isthecommencement of the year. Before the beginning of the insurance year 25 thereisno binding contract. No insurer is interested as to the state of the person's or animal's health of yesterday or two weeksago and no one at the time of the formation of the contract ofinsurance can say what would bethe state of the health tomorrow or next week. 30 The receipt of the premium and its retention by the insurers may raise the presumption, in the absence of any circumstances leading to a contrary conclusion, that the insurers have definitelyaccepted theproposal. (Harrington v.PearlLifeAssurance Co. Ltd., [1913], 30 T.L.R. 24; Canning v. Farquhar, [1886] 35 16 Q.B.D. 727). The offer of the premium in the way it was offered in this casecould not beconsidered asacceptance,asit wasdependent upon a vet certificate of the soundness of health of the mare. Thereceipt byAndreas Papageorghiou of theenvelope inwhich 683 Stylianides J. Xenopoulos v. Thomas Nelson
(1982)the vet certificate of 3.6.76 and the cheques for the premium were enclosed, in the circumstances of this case, dots not preclude the defendants from maintaining that the condition precedent wasnot performed. Theissue of a veterinary certificate and the production thereof asto the soundness of the health of 5 the mare were of the root of the subject of the insurance. Dr. Savvides on 5.6.76 was employed by the insurers and, therefore, he was acting as their agent. There is no doubt, however, that on 3.6.76 he was the agent or veterinary surgeon acting for and on behalf of the owner. On 3.6.76 he was la- 10 bouring under a distinct capacity than the onefor which hewas employed bytheinsurers. Heissutd acertificate withregard to the health of the mare on 3.6.76, the day that he examined the mare on behalf of the owner. The insurers cannot be obliged to attach an insurance on the life of the maie, the certificate of 15 soundness of health of which refers to a date before their conditional acceptance of the proposal. The condition precedent was not performed. The presentation of the certificate of the examination with respect to the health of the mare of 3.6.76 is insufficient to amount to performance. Therefore, no contract 20 was formed and the insurers are not liable. For all the aforesaid reasons this appeal is dismissed with costs. Appeal dismissedwithcosts. 684

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