Chand v Sun Insurance Company Ltd [2006] FJHC 97; HBC265.2005 (15 February 2006)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

ACTION NO. HBC265 OF 2005

NO. 13/2006

BETWEEN

PRANISH PRAKASH CHAND
PLAINTIFF

AND

SUN INSURANCE COMPANY LIMITED
DEFENDANT

Mr Samuel K Ram for the Plaintiff
Messrs A K Lawyers for the Defendant

Date of Hearing: 28 November 2005
Date for Submissions: 12 December 2000 (subsequently extended to 15 February 2006)
Date of Judgment: 15 February 2006

JUDGMENT OF FINNIGAN J

I have for me an Originating Summons which seeks determination of three questions of law and consequent declarations that the Defendant is liable to pay the Plaintiff the sum of $137,674.20. That is the amount of a judgment obtained by the plaintiff against two other defendants as owner and driver respectively of a motor vehicle that injured him. The present Defendant was the Third Party insurer of that vehicle at the time of the accident.

The insurer declines to indemnify the owner and driver under the policy and refuses to pay the judgment sum to the Plaintiff.

The given reason for the refusal is that at the time of the accident the driver was operating the vehicle outside the terms of the Third Party Insurance Policy because he had on board a passenger whom he was carrying an agreed fare.

The Evidence:

The essential facts are not complex. Counsel for the Plaintiff raises issues in submissions which I cannot resolve on the untested affidavits. There is in effect one affidavit filed by each party. When Counsel appeared before another Judge on 7 October 2005 it was agreed that Written Submissions would be filed by 25 November and the matter would be heard on 28 November 2005. On 28 November 2005 both Counsel had their Written Submissions with them and handed them up. A timetable was fixed for further submissions in answer and there was no suggestion that Counsel for either party wanted to cross-examine deponents or call oral evidence.

The Submissions:

The Submissions both primary and supplementary are of a high order. Copies of authorities relied upon have been supplied. My intention is to deliver this judgment without further delay and thus to keep it brief. For that reason I shall not refer in detail to the excellent submissions I have received.

The Essential Facts:

Sandhika Chand owned a Toyota Hilux van, registered number BH552. Sandhika Chand hired the vehicle out to Ganpati Bala for $100.00 per week. Ganpati Bala supplied his own fuel and attended to maintenance.

On 24 March 2003 Ganpati Bala used the vehicle to convey one Prem Singh in return for a payment of $35. Prem Singh at the outset paid $10.00 for a fill of diesel and was to pay the balance at the end of the journey.

During the journey Ganpati Bala allowed his vehicle to cross the center line of the roadway and collided head-on with a vehicle containing the Plaintiff, who was injured.

The plaintiff commenced proceedings against Sandhika Chand and Ganpati Bala. Neither of them took steps, judgment in liability against them was obtained by default and damages were proved at a hearing.

The Defendant in the present proceedings had issued a Third Party policy to Sandhika Chand for the Toyota Hilux van registered number BH552 and it was in force on 24 March 2003. The cover issued was far a goods vehicle. The premium was $90.00. The policy contains exclusions and defines the persons or classes of persons entitled to drive and enjoy cover under the policy. The main term is as follows:

Limitations as to use -

"Premium has been paid for only the use of the motor vehicle for the purposes set out in item number 3 (A) of the schedule on back hereof, provided however that a premium paid for the use of the motor vehicle for the purpose set out in No.2, 3, 4, 5, or 10 of the schedule shall also cover use of the motor vehicle for social domestic or pleasure purposes, or for the Owner's business within the limits set out in Item No.1(b) of the schedule, or in the case of a hire car or rental car, for the hirer's business. That motor vehicle must not be used for any other purpose unless the policy is endorsed and extra premium (if any) paid."

Item No.3 (a) of the schedule on back thereof is as follows:

GOODS VEHICLE. A motor vehicle which is constructed or adapted or primarily used for the conveyance of goods or merchandise of any description in connection with trade, business or agriculture. For the purpose of this definition the performance by Government or a local authority of any of its functions shall be deemed to be the carrying on of a business.

(a) "Light goods vehicle with a carrying (capacity?) of up to 2 tons ................."

(b) "Light goads vehicle as in (a) authorized under regulation 54 of the Traffic Regulation 1967, to carry excess passengers .............."

The Issues:

I set out here the three issues in the Originating Summons.

[i] Whether the defendant is required to compensate the plaintiff (and therefore indemnify Ganpati Bata and Sandhika Chand) for the full judgment sum in High Court Civil Action No.112 of 2004 under the Motor Vehicles (Third Party Insurance) Act (Cap 177, Laws of Fiji).

[ii] Whether the defendant can refuse to compensate the plaintiff on the grounds that allegedly a person (known as Prem Singh) was a passenger being carried for a sum of $35.00 in the vehicle belonging to the insured when such alleged carriage of passenger for hire or reward was not within the knowledge of the plaintiff.

[iii] Whether the defendant can refuse to compensate the plaintiff under the Motor Vehicles (Third Party Insurance) Act (Cap 177, Laws of Fiji) on any grounds that is private to or is a breach as between the defendant and its insured or on any grounds whatsoever.

In other words, is the Plaintiff entitled to payment of the amount of his judgment from the Third Party insurer?

Discussion:

Both Counsel have referred to Bijma Wati -v- Queensland Insurance Limited Civil Action No.385/2003L, Interim Judgment 31 May 2005, Final Judgment 5 August 2005. In that case an injured fare-paying passenger in a private motor vehicle sued for cover under the owner's Third Party policy, without success. I do not rely on that case.

Neither shall I set out the several provisions of the Motor Vehicle (Third Party) Insurance Act Cap. 177 or the several provisions in the Insurance Policy, which have been extensively set out by Counsel, and from which I have greatly benefited.

There is dispute between Counsel about some facts, example the extent of Ganpati Bala's use of the vehicle for carrying passengers. Most of these disputed facts are to be gleaned from imperfect photocopies of handwritten notes made day an insurance investigator and a police constable. They are hearsay without any test of either the alleged maker of the statement or the recorder of it. I prefer to put those fact statements aside.

From the decided cases some fundamental principles emerge. In Dominion Insurance Limited -v- Bamforth, Wilson and Ors Civil Appeal No.CDV0005/2002S, Judgment 24 October 2003, the Supreme Court made it plain that the liability of an insurer under the Act to a third party is not contractual but statutory. It stated that where the statute has imposed a condition precedent to the liability, then by statute the liability cannot fall on the insurer unless and until the condition has been met.

Subsequently, the Court of Appeal in Kumar and Singh -v- Sun Insurance Company Limited Civil Appeal No. ABU0072/2004S, judgment 11 November 2005 made it plain that the legislature at Section 6 (1) (b) of the Act has allowed the insurer to determine what person, persons or classes of persons will be covered in any particular Third Party policy. Then Section 6(3) provides that an approved insurer issuing a policy under Section 6 "shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons". Thus, while the Act is strict in some areas it allows the insurers to design their own conditions within the policy. This right, as Counsel for the Defendant observes, is not entirely unlimited because Ss.9 and 10 place restrictions on the conditions. I accept his further submission however that those restrictions do not apply in the present case.

In the present case the policy set out certain conditions which included the following:

"(1) the person insured shall not use the motor vehicle nor shall the owner permit or suffer any person to use such motor Vehicle,

(a) ............................

(b) ............................

(c) to carry passengers for hire or reward or in pursuance of a contract of employment in contravention of the licence issued for the vehicle described herein,

(d) ............................."

The owner Sandhika Chand hired out the vehicle to Ganpati Bala, under terms that are indistinct except for the payment of $100.00 per week. Apparently no particular use for the vehicle by the hirer was stipulated. There is insufficient evidence to make a finding about what use he made of the vehicle, except for the occasion when he carried Prem Chand in return for an agreed payment of $35.00. Counsel for the Defendant suggested that the vehicle was registered or used as a commercial vehicle and I find the evidence about that in the Plaintiff's annexure PPC-2. There is the LTA Certificate evidence that the insurer noted the nature of the vehicle in one of its documents (TN-2) as "light goods (no passengers)" in return for the premium of $90.00.

Sandhika Chand presented the vehicle to the Defendant for cover against claims by Third Parties for personal injury. She presented it as a light goods vehicle able to carry up to 2 tons and paid the premium for the cover offered by the Defendant to that class of vehicle.

The authorities cited by Counsel are plain in the saying that the Courts, far from promoting the social policy of the compulsory Third Party Insurance legislation, are interpreting the Act and the policies made under it strictly so that the public gets no more benefit than is designed by the statute and a policy properly made under it and so that the insurers are protected from claims outside the terms of their policies and the terms of the Act. An example is the judgment of the Court of Appeal in Kumar and Singh -v- Sure Insurance Company Limited (above), particularly at paras 29 and 30. This leads to a result which in many cases is unfortunate for the Plaintiff e.g. Bijma Wati, above, Kumar and Singh (itself).

After studying all of the nine judgments provided for me by Counsel, I have no doubt that (if the facts are found to be as they appear in the annexures to both affidavits), the result in the present case must be against the Plaintiff. Stated simply, my reason is that the policy, as it was entitled to do under the Act, offers cover to the owner against claims by Third Parties for personal injury but does not offer unlimited cover. It restricts what cover it will offer, as it is permitted to do. The owner (usually by the nature of the vehicle itself) makes the choice of what cover to take out by nominating the class of vehicle to be covered. In the present case the owner insured the vehicle as a light goods vehicle that could carry up to 2 tons. There was another category of light goods vehicle that is authorized under the Traffic Regulations to carry passengers (condition 3(b)) but this was not the cover that was chosen. The insurer is liable only for what cover the policy contains for a light goods vehicle that can carry up to 2 tons. I cannot conjure out of the words of the policy a liability that may be claimed for an accident when the vehicle is being used otherwise than as a light goods vehicle.

From among the annexures to the Plaintiffs affidavit I note exhibit PPC-2 (the LTA certificate) that vehicle was recorded as being registered as a commercial vehicle with seating for three persons. From among the exhibits to the Defendant's main affidavit I note TN-3 (page 2) that the owner is recorded as having told the insurance investigator that the vehicle was "registered as commercial with a canopy at the back" and that Bala "had used it far carrying fare passengers".

From exhibit TN-4, a note of a statement allegedly made by Prem Singh to a police officer, a statement by Prem Singh "I hired the van to go to..........."

From annexure TN-5, a note of a statement allegedly made by Prem Singh to the insurance investigator, the same remark.

That is the quality of the evidence that I have. I do not have oral evidence. Clearly Counsel for the Plaintiff now disputes strongly the credibility of the Defendant's annexures, which are no more than photocopies of what are said to be handwritten notes of what are said to be statements allegedly made to a police officer and to an insurance investigator by persons in an interview situation. I accept his submissions about hearsay evidence and the Evidence Act.

I commend Counsel for the Defendant for his submissions which are a scholarly step-by-step progress through the Act, the policy and the principles. I commend Counsel for the Plaintiff for submissions of an equally high order, delivered with scholarship commitment and, I might say, passion. However, since facts are now in issue, I cannot issue a definitive ruling on the facts of this case.

What I can say is this:

(1) The evidence is unsuitable for the present argument. It should have been tested and the facts found.

(2) My impression of the facts (not a finding) is that the vehicle BH552 is what I would call a ute or utility vehicle, three seats in a cab and a canopied deck used as a "people carrier".

(3) For that reason Ganpati Mala was outside the terms of Sandhika Chand's Third Party policy whenever using the vehicle as a people carrier. In terms of the Third Party policy both of them had been using the vehicle for a purpose for which it was not insured.

(4) Thus, that being the use of the vehicle at the time it injured the Plaintiff, the insurer is not liable to indemnify the owner and the driver for injuries which the vehicle caused to the Plaintiff.

Conclusion:

For these reasons I answer the Plaintiff's three questions no, yes and yes. The Defendant is not liable to the Plaintiff because the driver of the insured vehicle had invalidated the cover provided to Third Parties by the Defendant's policy. This is yet another case of a blameless member of the public being deprived of what the legislature and the Courts clearly recognised is the protection he should have against impecunious wrongdoers. His only recourse is to enforce his judgment against the owner and driver personally. Judgment is entered for the Defendant. In the circumstances I make no order for costs.

D. D. Finnigan
JUDGE

At Lautoka
15 February 2006