Naba v Tower Insurance (Fiji) Ltd [2005] FJHC 498; HBC0260J.2000L (19 August 2005)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action HBC0260.2000L

REPEKA NABA

V

TOWER INSURANCE (FIJI) LTD

Fiji High Court, Lautoka
9th November, 15th December 2000
19th August 2005
Gates J

JUDGMENT

Originating Summons; motor vehicle accident; Motor Vehicles (Third Party Insurance) Act Cap 177; whether third party claim based on contract or statute; standard copy contract of insurance exhibited, not original; plaintiff must rely on contract whether or not compliant with legislation; extra-contractual liability with policy of insurance; driver permitted by insured held no licence and had never held a licence; significance of qualification to drive as an insurance risk; initial competence; whether requirement for holding of driving licence a permissible condition.

Mr V.M. Mishra for the Plaintiff
Mr P.I. Knight for the Defendant

[1] The issue for decision here is whether the defendant’s insurance policy which covered a named motor vehicle and owner would found liability for the defendant for the injury caused to the plaintiff, an innocent third party, as a result of the negligent driving of the permitted driver of the vehicle who did not hold, and who had never held, a driving licence.

[2] The infant plaintiff, through her father and solicitors, filed an originating summons with a supporting affidavit. She seeks for herself the entering of judgment against the defendant insurance company, judgment having been delivered by Madraiwiwi J on 29^th May 2000. That judgment was for $110,011 with costs of $1,700. Her solicitors seek for her also, interest upon judgment.

[3] On 11^th September 1987 the driver in question, Shameem Buksh, had been driving on a public road the motor vehicle registered number BG838, which belonged to Rahim Buksh. Shameem Buksh’s driving had been so negligent that he had seriously injured the plaintiff who was a pedestrian.

[4] The defendant admits through the affidavit of its claims officer Shangita Devi Ali that on the day of the accident there was in force a third party policy issued by the defendant insurance company over the relevant vehicle. Rahim Buksh was acknowledged as the owner. Ms Ali said the driver, Shameem Buksh, was only 16 years of age at the time and did not hold a driving licence. Liability was declined.

Existence of a contract

[5] Ms Ali also exhibited a copy of the standard third party policy which was issued by the defendant at that time. The defendant was then the National Insurance Company of Fiji Ltd. The fact of there being in existence at the time of the accident a Third Party Insurance policy is admitted in the affidavit sworn by the plaintiff’s father. The plaintiff claims that she is covered by insurance since this is a claim by virtue of statute not contract.

[6] The Motor Vehicles (Third Party Insurance) Act Cap 177 is a piece of social legislation. It is enacted to protect third parties from the consequences of harm caused to them by motor vehicle accidents. By the Act, users of motor vehicles must take up insurance against third party risks [section 4]. Such policies of insurance must include within them the requirements of the Act [section 6]. A failure to do so will mean the insured is not covered for third party risks. If the insured takes a motor vehicle upon the road in breach of those conditions, it cannot throw a greater obligation upon the underwriter: Gray v Blackmore [1933] Lloyds LLR 69 at p.76.

[7] An insurer cannot contract out of those requirements by writing avoiding and restrictive conditions into the policy [sections 3, 9, 10]. If it did, it is likely the minister would revoke the status of the insurer as an approved insurance company [section 3]. But as Mills-Owens CJ said in Murtaza Khan v R [1965] 11 Fiji LR 161 at p. 167H:

“Apart from these statutory exceptions the company may so far as Cap. 236 is concerned, as between itself and the insured, impose whatever conditions it likes.”

[8] An insurance company must satisfy judgments against persons insured in respect of third party risks [section 11]. The insurance company here had been served with the requisite notice prior to commencement of these proceedings seeking payment of the judgment award [section 11(2)(a)]. The onus is on the insurance company to disprove liability by reason of a condition of the policy, that is, that there had been a breach of the permissible contract: Pacific Insurance Company Ltd & Dip Narayan (unreported) Fiji Court of Appeal Civil Appeal No. 26 of 1979, 28^th November 1979 at p.7, citing MacGillivray and Parkington on Insurance Law (6^th edit.) at para 877.

[9] A signed contract document had not been exhibited by the defendant. The plaintiff protests the use of a copy of the standard document. No evidence or argument has been adduced or addressed to suggest the exhibited copy is an inaccurate replica of the actual contract document, a short standard document which numerically must have been issued in the thousands. It cannot be denied by the plaintiff that a contract of insurance to cover third party risks had been issued. Indeed the plaintiff must rely on the contract, and not simply on the statute, in order to make her claim. The Supreme Court in Dominion Insurance Co Ltd v Bamforth & Others CBV0005 of 2002S (unreported) 24^th October 2003 has said:

“That liability is extra-contractual although necessarily conditioned upon the existence of a policy of insurance. It is important therefore, when looking to the provisions of section 11(2), to bear in mind that the section is concerned with the imposition and the conditions of the imposition of a special statutory liability.”

[10] The suggestion that the policy document cannot be considered because of non-production of the original is counterproductive. In General Accident v Shuttleworth Humphreys J said at p.306:

“I cannot help saying that I think it would be extremely unfortunate in the interests of innocent third parties if the Court felt itself bound to hold that in such a case there was no policy of insurance in force,”

I shall treat the exhibited copy as the contract document. In the circumstances it is the best evidence and I have no reason to doubt its reliability and accuracy on the evidence.

The proviso

[11] It is obvious from the jurisprudence that insurance companies are entitled to set conditions in their contracts of insurance provided that the contract covers the areas stipulated by the Act for inclusion and does not omit areas which must be covered.

[12] In this case the contract included the following conditions:

“4. PERSONS OR CLASSES OF PERSONS ENTITLED TO DRIVE AND INSURED UNDER THIS POLICY

(a) The Owner, and

(b) Any person who is driving on the Owner’s order or with his permission:

Provided that the person driving holds a licence permitting him to drive a motor vehicle for every purpose for which the use of the above motor vehicle is limited under paragraph 5 below or at any time within the period of thirty days immediately prior to the time of driving has held such a licence and is not disqualified for holding or obtaining such a licence.”

[13] Not only did Shameem Buksh not hold a driving licence at the time, but as a person aged 16 years he was not qualified to apply for or to hold a driving licence. He had never held a driving licence and he was not qualified to drive.

[14] Being under age for driving purposes would appear not to be the ground raised by the defendant for denying liability. Section 10(a) of the Act prohibits the restriction or avoidance in the policy of cover on the grounds of “(a) the age or physical or mental condition of persons driving the motor vehicle.”

[15] The ground here is rather the fact that the driver did not hold, nor had ever held a driving licence. Other disabilities might occur to a driver which manifest deterioration of competency of driving skills. Competency skills would have been present earlier. So a driver who forgets to renew his driving licence has not thereby lost his driving skills or become a greater insurance risk for the insurer. With a driver who has never qualified, those skills are absent, and the risks associated with the driving of such a person are thus far greater. To impose on an insurer the requirement to cover such a driver who is permitted by the insured to drive would be a requirement to provide cover for the insured’s own criminal act in permitting the unqualified driver to drive. This interpretation is not a necessary intention of such social legislation.

[16] Parliament has not insisted that the insurance companies must be responsible for all third party risks irrespective of the conduct of the insured either pre-contract or during the contract regardless of reasonable terms. In General Accident Fire and Life Assurance Corporation Ltd v Shuttleworth and Anor. [1938] 60 Lloyds LLR 301 at p.305 Humphreys J said:

“But Mr. Terrell in this case has got to go much further than that. He has to say that it has in effect declared that an insurer who has once granted a policy of this nature against third-party risk must be held to be liable in respect of any accident, whether it is the particular thing that he has insured against or not. That seems to me to be an impossible argument. It would be adding a burden to the insurance companies which would in effect prevent the insurance of motor cars continuing at all, for no one would insure motorists against that which they have not undertaken to insure at all;”

and further on:

“I think it must follow as a matter of law, and indeed as a matter of common-sense, that there is nothing in sub-s. (1) of Sect. 10 which would make the company liable for that which in truth they have never insured against;”

The cases

[17] In Ram Dayal v R [1958-59] 6 Fiji LR 134 the appellant had been convicted of driving an uninsured vehicle when there was not in force a third party policy. The appellant had not renewed his driving licence. He had had a licence and had made application for renewal but the new licence had not in fact been issued. This was a case of non-renewal. On the wording of the then policy Lowe CJ held the policy to be merely voidable at the instance of the insurer.

[18] In Murtaza Khan Mills-Owens CJ questioned whether a stipulation that a driver must hold a current driving licence was material to the risk, and thus a fundamental term of the policy. That was a case where the appellant had been convicted of using a vehicle when uninsured. But on appeal it was held the Ordinance had not been breached by the carriage in a private car of passengers on an isolated occasion. The case of R v Temo Maya Review No. 6 1977; 12^th July 1977, followed the same reasoning where failure to renew a learner’s permit which had expired was held to have rendered the policy of insurance merely voidable and that it was still in existence at the time of the impugned driving.

[19] In Raj Kumari v QBE Insurance Co Ltd (1977) 23 Fiji LR 180 Stuart J found that the policy was quite specific and did not extend cover to an owner or a driver who was disqualified from holding a driving licence at the time when the liability arose. Therefore the plaintiff’s third party action failed. In effect the refusal to cover third party risks when the driver had been disqualified or who did not hold a licence was a permissible condition under the legislation. The court relied on Shuttleworth (supra at p.305) and Spraggon v Dominion Insurance Co (1940) 67 Lloyds LLR 532.

[20] In Michael Raman v R (unreported) Crim. App. No. 27 of 1978, 30^th May 1978 Kermode J commented that the usual English policy wording was “very much more favourable to third parties from the Fiji form of policy.” In Raman’s case the driver had, as here, never held a driving licence. The judge discussed the earlier decisions and concluded (at p.6):

"Ramdayal’s case was properly decided but the decision turned on the form of the policy then in existence. It is not now authority for cases where the driver is not licensed due to the form of the policies now issued to which I will shortly refer. It is still authority, however, for other cases where there has been a breach of a condition which makes the policy voidable at the instance of the insurer.”

[21] After Ram Dayal’s case the insurance companies changed the wording of their policies to the present wording. Kermode J concluded:

“This was a very substantial change of form. In 1959 the breach of a condition to like effect made the policy voidable. But by virtue of this proviso the legal position now is that a driver who holds no valid driving licence, or did not hold one within 30 days prior to the time of driving, or is disqualified from holding or obtaining a licence, is not covered by the policy at all. There would in fact be no policy in force covering such an unlicensed driver, because the policy does not extend to cover an unlicensed driver.”

[22] In view of his opinion contrary to Temo Maya, Kermode J consulted with Grant CJ and obtained his concurrence for the view that Temo Maya was wrongly decided. He accepted that Murtaza Khan dealt with breach of a condition which made the policy voidable only, the policy remaining in force.

[23] Kermode J found the appellant had therefore been correctly convicted of driving whilst uninsured. Finally, his lordship observed (at p.8):

“There appears to be no logic in excluding from the policy drivers who have passed driving tests and have held a licence, but who are unlicensed at the relevant time or have not held a licence within 30 days prior to that time. If a driver has forgotten to renew his licence for 30 days he will still be covered by his policy – but not if the period is 31 days. The Ordinance seeks to protect third parties, and the real criteria should in my view be whether the driver is competent to drive the vehicle. Obviously he is not if he has been disqualified; but I fail to see the logic of exempting an insurer from liability where a competent driver previously licensed and not disqualified has omitted to renew his licence for more than 30 days. However, that is a condition insurers have imposed in their policies.

Only legislation can now bring Fiji policies into line with English policies in this respect and, in the interests of third parties, a change of law would appear desirable.”

[24] Michael Raman was followed in Satish Chandra Maharaj [1983] 29 Fiji LR 164 and applied frequently, a more recent example being Sun Insurance Co Ltd v Kurisoru and 3 Others (unreported) Lautoka High Court Civil Action HBC0238.2002L, 23^rd September 2004 per Byrne J.

[25] As Mr Knight properly says in his submission “one naturally sympathises with innocent victims of motor vehicle accidents, but this does not allow the courts to interpret the Act in such a way to compensate victims where liability is not covered under the policy. If there is any injustice, it is for the legislature to change the law. Moreover there are (other) innocent victims who are (also) not covered under the Act e.g. passengers in vehicles used for private use.”

[26] As the law stands, this unfortunate child victim is unable to gain satisfaction from the earlier judgment, at least from the insurance company.

[27] The summons must be declined. I make no order as to costs.

A.H.C.T. GATES
JUDGE

Solicitors for the Plaintiff: Messrs Mishra Prakash & Associates, Lautoka
Solicitors for the Defendant: Messrs Cromptons Solicitors, Suva