Queensland Insurance Co. Ltd v Colonial Sugar Refining Co. Ltd [1962] FJLawRp 43; [1962] 8 FLR 59 (23 March 1962)

[1962] 8 FLR 59

SUPREME COURT OF FIJI

Appellate Jurisdiction

QUEENSLAND INSURANCE CO. LTD.

v

COLONIAL SUGAR REFINING CO. LTD.

Hammett Ag. C.J.

26th January, 23rd March 1962

Insurance—third party policy—motor vehicle—liabilities required to be covered—exemption of liability arising solely by virtue of Workmen's Compensation Ordinance—exemption limited to liability of policy holder to own employees— Workmen's Compensation Ordinance (Cap. 93) s.25—Motor Vehicles (Third Party Insurance) Ordinance (Cap. 236) ss.6(1) Proviso (i),11.
Workmen's Compensation—workman injured by negligent third party—compensated by employer under Workmen's Compensation Ordinance—action for reimbursement by employer against insurer of third party—liability of insurer not one arising solely by virtue of Workmen's Compensation Ordinance—included in policy—Workmen's Compensation Ordinance (Cap. 93) s.25—Motor Vehicles (Third Party Insurance) Ordinance (Cap. 236) ss.6(1) Proviso (i),11.

An employee of one Somdatt Sharma, by negligent driving of a motor vehicle, injured the servant of the respondent company. The servant claimed and was paid £157-2-3 under the Workmen's Compensation Ordinance by the respondent company, which then obtained judgment against Somdatt Sharma for that amount under section 25 of the Workmen's Compensation Ordinance. The respondent company brought an action in the Magistrate's Court against the appellant company, from which Somdatt Sharma held a policy of insurance against third party risks, under section 11 of the Motor Vehicles (Third Party Insurance) Ordinance, and obtained judgment.

On appeal the appellant company contended that it was not liable under section 11, as that section embraced only such liability as was required to be covered by the policy, and by section 6(1) proviso (i) the policy was not required to cover "liability solely arising by virtue of the provisions of the Workmen's Compensation Ordinance".

Held –

1. The word "liability" in section 6(1) proviso (i) of the Motor Vehicles (Third Party Insurance) Ordinance referred to the liability of the person insured, namely Somdatt Sharma.

2. The only liability of Somdatt Sharma solely arising by virtue of the provisions of the Workmen's Compensation Ordinance was that arising between him and his own employees.

3. The liability of Somdatt Sharma arose by virtue of the negligence of one of his employees in the course of his employment and was not a liability excluded from the policy.

Case referred to: N.I.M.U. Insurance Co. Ltd. v Viles [1939] NZGazLawRp 116; [1939] NZLR 981.

Appeal from a judgment of the Magistrate's Court.

K. A. Stuart for the appellant company.

A. D. Leys for the respondent company.

The facts sufficiently appear from the judgment.

HAMMETT Ag. C.J.: [23rd March, 1962]-

This is an appeal from the decision of the Magistrate's Court sitting at Lautoka whereby the Plaintiff Respondent obtained judgment on a claim arising under the following circumstances.

On 28th July, 1958, a collision occurred between motor vehicle No. 9017 owned by one Somdatt Sharma and driven by his servant and vehicle No. 7189 owned by the Plaintiff Respondent and driven by its servant Joni Ratubuli. In this collision the Plaintiff Respondent's servant, Joni Ratubuli, was injured and it was agreed that this accident was due to the negligent driving of the servant of Somdatt Sharma.

Somdatt Sharma was insured by the Defendant Appellant Insurance Company under a Third Party Policy of Insurance against any liability incurred by him arising out of the use of his vehicle No. 9017.

Joni Ratubuli could of course have claimed damages for negligence against Somdatt Sharma and his driver in respect of his injuries. He did, however, as he was also entitled to do, claim compensation under the Workmen's Compensation Ordinance (Cap. 93) from his employer, the Plaintiff Respondent, and was paid the sum of £157-2-3. It was agreed, in this action, that this was the proper compensation to which Joni Ratubuli was entitled under the Workmen's Compensation Ordinance.

The Plaintiff Respondent then sued Somdatt Sharma in Supreme Court Action No. 180 of 1959 to recover from him the compensation paid by them to their employee and obtained judgment for that sum against him by default. Due notice of this action was given to the Defendant Appellant, the insurers of Somdatt Sharma, but neither he nor his insurers chose to defend the action.

That claim was brought by the Plaintiff Respondent under the provisions of Section 25 of the Workmen's Compensation Ordinance of which the material part reads as follows:

"25. Where the injury in respect of which compensation is payable under this Ordinance was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof –

. . . . . . . . . . . .

(b) if the workman has recovered compensation under this,., Ordinance, the person by whom the compensation was paid — . . . . shall be entitled to be indemnified as regards the amount of compensation, including costs, by the person so liable to pay damages as aforesaid, . . . ."

It is agreed that that judgment was not satisfied and the Plaintiff Respondent therefore brought this action against the Defendant Appellant, the insurers of Somdatt Sharma, to recover the amount of their judgment against Somdatt Sharma under the provisions of Section 11 of the Motor Vehicles (Third Party Insurance) Ordinance (Cap. 236) of which the material parts read:

"11. If after a certificate of insurance has been delivered . . . to the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by policy . . . . being a liability covered by the terms of the policy, is obtained against any person insured by the policy then . . . . the insurance company, shall . . . . pay to the persons entitled to the benefit of such judgment any sum payable thereunder in respect of the liability including any amount payable in respect of costs and any sum payable by virtue of any written law in respect of interest on that sum."

The learned trial Magistrate held that the Plaintiff Respondent was entitled to succeed in its claim against the Defendant Appellant.

The Defendant Appellant has appealed on a large number of grounds, which it is not necessary to set out here in detail. For the purposes of this appeal, Counsel for the Appellant intimated that there is only one short point for determination in the appeal and that is the proper construction of the word "solely" in the Policy and in Section 6(1) proviso (i) of the Motor Vehicles (Third Party Insurance) Ordinance, which he maintains was not properly construed by the learned trial Magistrate.

F
Both Counsel agree that an Insurance Company is only bound, under Section 11(1) of the Motor Vehicles (Third Party Insurance) Ordinance, to satisfy a judgment against a person it has insured under the provisions of this Ordinance, if, as is stated in that section, the judgment is one in respect of a "liability as is required to be covered by a policy under the provisions of the Ordinance" and is a "liability covered by the terms of the policy".

Section 6(1) proviso (i) of the Ordinance provides that a policy under the Ordinance shall not be required to cover "liability solely arising by virtue of the provisions of the Workmen's Compensation Ordinance".

It is also agreed that the terms of the Policy issued to Somdatt Sharma in this case expressly exclude "any liability which arises solely by virtue of the provisions of the Workmen's Compensation Ordinance".

It is the contention of the Defendant Appellant Insurance Company that the claim of the Plaintiff Respondent against the Defendant Appellant arose solely by virtue of the provisions of the Workmen's Compensation Ordinance.

I have examined these several provisions of the law to which I have been referred. The relevant part of the proviso to Section 6(1) of the Motor Vehicles (Third Party Insurance) Ordinance reads:

"Provided that such policy shall not be required to cover liability solely arising by virtue of the provisions of the Workmen's Compensation Ordinance."

It appears to me to be clear that the word "liability" in this proviso refers to and means "any liability of the person by whom the policy has been effected" i.e. the insured — or in this case Somdatt Sharma.

Excluding the provisions of Section 25 of the Workmen's Compensation Ordinance for the time being, it is clear that the only liabilities of Somdatt Sharma solely arising by virtue of the provisions of the Workmen's Compensation Ordinance, are liabilities arising as a result of a relationship between Somdatt Sharma in his capacity as an employer and his own employees, not the employees of the Plaintiff Respondent, and Joni Ratubuli it must be remembered was not an employee of Somdatt Sharma.

Under Section 25 of the Workmen's Compensation Ordinance the liability of Somdatt Sharma did not arise solely by virtue of the Workmen's Compensation Ordinance but by virtue of the negligent driving of Somdatt Sharma's servant in the course of his employment for which Somdatt Sharma was responsible. Section 25 merely provided a remedy by which compensation paid by an employer under the Workmen's Compensation Ordinance as a result of an injury caused to a workman by the negligence of third parties, who are neither the employers or fellow employees of the workman, is recoverable by the employer from the third party.

In my opinion the liability of Somdatt Sharma did not arise solely by virtue of the provisions of the Workmen's Compensation Ordinance. It arose by virtue of the negligence of one of his employees in the course of his employment. His liability was not therefore one excluded from the terms of his Policy either by its express wording or by the provisions of Section 6(1) proviso (i) of the Motor Vehicles (Third Party Insurance) Ordinance.

For these reasons I am of the opinion that the learned trial Magistrate was correct in his decision that the employers, the Plaintiff Respondent in this case, were entitled to recover from the insurers of the employer of the negligent person responsible for the injuries to their employee, the amount of compensation under the Workmen's Compensation Ordinance they properly paid their employee. In my view the reasons for the decision in the case of N.I.M.U. Insurance Co. Ltd v Viles [1939] NZGazLawRp 116; [1939] NZLR 981 are equally applicable to the facts in this case.

The appeal is dismissed with costs.

Appeal dismissed.