SRI LANKA INSURANCE CORPORATION LTD

SRI LANKA INSURANCE CORPORATION LTD

Vs.

CONSUMER AFFAIRS AUTHORITY AND OTHERS

COURT OF APPEAL
J. DE SILVA, J.
FERNANDO, J.
CA/WRIT/177/2017
MARCH 21, 2019

Writs of certiorari and prohibition-Consumer Affairs Authority Act, No. 9 of 2003, sections 13(1), 32, 75, section 3(4) of the schedule-Powers of the Consumer Affairs Authority to conduct inquiries into insurance contracts-Implied terms in contract law-Jurisdiction of the Consumer Affairs Authority-Quorum-Natural justice-Validity of decision signed by those who did not participate at the inquiry

The 7th respondent made a complaint to the 1st respondent Consumer Affairs Authority against the petitioner's refusal to cover the loss claimed by the former in terms of the impact damage cover provided under the fire insurance policy entered into by the parties.

On the urging of the 1st respondent, the petitioner reconsidered the 7th respondent's claim made on appeal but rejected the same with reasons. Thereafter the petitioner was summoned for an inquiry in terms of section 13(1) of the Consumer Affairs Authority Act, No. 9 of 2003, and an order (P23) was made in terms of section 32(5) of the Act against the petitioner. Later, an application for enforcement of the said order was made on behalf of the 1st respondent in the Magistrate's Court.

The petitioner sought a writ of certiorari quashing the order P23 and a writ of prohibition preventing any further steps in the Magistrate's Court.

Held:

1. Parties cannot by agreement oust the jurisdiction vested in a statutory body or person by the legislature.

2. According to section 75 of the Consumer Affairs Authority Act, "service" means service of any description which is made available to actual or potential users, and includes inter alia insurance.

3. The 1st respondent can conduct inquiries into insurance contracts in general and has the power to inquire into complaints of any breach of an implied warranty set out in sections 32(1) and 32(2) of the Act. The 1st respondent did have the power to inquire into specific insurance disputes in terms of section 32(3).

4. An exercise of power will be referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it will be nugatory.

5. Although the petitioner was summoned for an inquiry in terms of section 13(1) of the Act, the inquiry proceedings indicate that at the end of the inquiry the petitioner was informed that it was an inquiry in terms of section 32(1). Hence the petitioner has been denied a fair inquiry as the scope and ambit of sections 13(1) and 32(1) are different.

6. Section 32(3) vests jurisdiction in the 1st respondent to inquire into complaints of any breach of an implied warranty set out in sections 32(1) and 32(2).

7. Implied terms in contract law are terms that are read into a contract between parties though not included in the contract. Implied terms can arise in three ways: (1) terms implied in fact; (2) terms implied by operation of law; (3) terms implied by custom.

8. Neither the complaint made by the 7th respondent nor the impugned order relates to the breach of an implied warranty.

9. In terms of section 3(4) of the schedule to the Act, the quorum for any meeting of the Authority is four members. A decision taken without such quorum is devoid of any legal effect.

10. The inquiry proceedings in this case indicate that four members of the 1st respondent participated. However, the impugned order has been signed by only two of them; the other two signatories to the impugned order did not participate at the inquiry. Hence the rules of natural justice have been breached.

Cases referred to:

1. Peiris v. Commissioner of Inland Revenue 65 NLR 457
2. Shell Gas Lanka Ltd v. Consumer Affairs Authority and others [2007) 2 Sri LR 212

3. Shell Gas Lanka Ltd v. Consumer Affairs Authority and others [2008] 1 Sri LR

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