Fire hit policyholder awarded $132M from Hand-in-Hand


Guyana Chronicle
February 2, 2001


CHIEF Justice Desiree Bernard yesterday awarded policyholder Somat Ali $132M in a claim against Hand-In-Hand Mutual Fire & Life Insurance Company Ltd.

The case turned mainly on an issue of non-disclosure as the underwriting firm had denied liability on the ground that the plaintiff was bankrupt at the time he took out the policy and did not disclose that fact.

But the judge found the neglect did not matter and that evidence from technical witnesses said nothing to prove that Hand-in-Hand had repudiated the debt.

The June 30, 1994 policy was issued for the sum of $72, 871,000 to cover Lots 105 - 106 Agriculture Road, Triumph, East Coast Demerara and the paid premium for one month, up to July 30, 1994, was $66,067.20.

The assets were a two-storey wooden and concrete building used as a private dwelling and fiberglass factory containing equipment (moulds).

On July 28, 1994, Ali applied for additional coverage in the amount of $59,129,000 and paid more, making a total of $1,196,755.32.

However, a July 31, 1994 blaze destroyed the edifice and contents, leading the plaintiff to claim.

The defendants argued, though, that Ali had failed to reveal he was declared bankrupt in Canada in 1991 and contended, if it had been known, the occurrence might have influenced their decision to accept the risk.

Chief Justice Bernard noted that Hand-in-Hand sought the Court's leave to issue interrogatories against Ali concerning his financial dealings and creditworthiness in the light of his bankruptcy in Canada and she ruled that he should provide answers.

Ali explained that in November, 1992 he was absolutely discharged from the bankruptcy and, when he applied for the insurance, he was not bankrupt, although he had unpaid debts totalling Cdn$362,500 in Canada.

The judge said she had not personally been able to discover any case nor was any cited to her where failure to disclose prior bankruptcy when applying for fire insurance coverage was held to be a material fact or where it entitled the insurer to avoid a policy.

Justice Bernard said, if the defendants were not satisfied that the particulars Ali supplied were reasonably practicable in the circumstances, they ought to have formally repudiated the policy soon after his failure to comply with the conditions of the policy.

She said she concluded that, by their conduct, the defendants indicated to the plaintiff that they would not rely on strict compliance with condition 11 (1) of the policy and treated it as still subsisting.

Chief Justice Bernard dismissed a counterclaim by Hand-in-Hand and gave Ali taxed costs.


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