Bans v Jan's Rental Cars (Fiji) Ltd [1992] FJLawRp 20; [1992] 38 FLR 158 (7 August 1992)

[1992] 38 FLR 158

HIGH COURT OF FIJI

Civil Jurisdiction

MICHAEL BANS

v

JAN'S RENTAL CARS (FIJI) LIMITED

Scott J

7 August 1992

Insurance - rental car - whether the hirer of a rental car drives the car as the rental company s servant or agent - Motor Vehicles (Third Party) Insurance Act, Cap 177.

The Plaintiff was injured when he was hit by a motor car which had been rented from the Defendant by a third party who was driving it. The High Court HELD: that the driver of a rental car does not drive the car qua servant or agent of the rental company merely as a result of having rented the car from the company.

Cases cited:

Christmas v Nicol Bros Pty Ltd (1941) 41 SR 317
Dowd v Alex Kay Pty Ltd (1971) 2 NSWLR 368
Gould v Incorporated Norminal Defendant (1971) VR 488
Jennings v Hannan (No. 2) (1969) 71 SR NSW 226

Interlocutory ruling by the High Court.

V. Maharaj for the Plaintiff
J. G. Singh for the Defendant

Scott J.:

On 28 February 1987 the Plaintiff received injuries when a motorcar driven by one Jacob Groot collided with a van in which he was a passenger. Groot was a tourist and the car he was driving was a rental car which he had hired from the Defendant. Shortly after the accident Groot left Fiji. He has never been traced or served and is accordingly not a party to this action.

A formal defence putting the Plaintiff to proof of his allegations of negligence against Groot and denying the particulars of injuries received was filed and this was followed by an amended Statement of Claim which additionally alleged that at the time of the accident (a) Groot was driving the car "as a servant and/ or agent of the (First Defendant)" and (b) that there was in force at the time "in relation to its use by the (First) Defendant, his servant or agent of the (First) Defendant's said vehicle an insurance policy in respect of third party policy risks in terms of the Motor Vehicles (Third Party Insurance) Ordinance - Cap. 13." This reference is incorrect and should be to the corresponding Act - Cap. 177.

On 11 May 1992 I heard evidence by and on behalf of the Plaintiff. If accepted that evidence clearly shows that Groot drove his car negligently and was responsible for the damage and injuries that followed. The Plaintiff also gave evidence of the injuries received and his consequential loss of earnings.

After argument I allowed a photocopy of the relevant Third Party Policy to be tendered. After further argument it became clear that the central issue between the Parties was not whether, how and with what result the accident occurred but whether at the time of the accident Groot was driving the rental car qua the Defendant's servant or agent. With the consent of both Counsel it was ordered that written submissions be filed on this preliminary but central issue.

Submissions filed were as follows:-

(a) Plaintiffs submissions filed 28 May 1992.

(b) Defendant's submissions filed 11 June 1992.

(c) Further submissions by the Plaintiff filed 15 July 1992.

(d) Defendant's reply to further submissions filed 20 July 1992.

The Third Party Policy is exhibited to the Plaintiffs submission dated 28 May. It is a policy between the Defendant and the Pan Pacific Insurance Company which it is not disputed ceased trading in October 1990. The Policy is in respect of rental cars only driven either by the owner (the Defendant) or by any person 'driving on the owner's order or with his permission'. A copy of the rental agreement between Groot and the Defendant was also filed. Given the wealth of personal details recorded it is odd that he could not be traced.

Mr. Maharaj submits that Groot was "driving the vehicle in the ordinary course of the rental agreement and more particularly of the (First) Defendant's business. In other words it was being used for a pleasure purpose which was in accordance not only with the hire agreement but consistent with the relevant Third Party Policy."

Mr. Singh accepts that Groot was driving the vehicle in the ordinary course of the rental agreement but rejects the proposition that by so doing he was going about the Defendant's business. Mr. Maharaj's case is that the Defendant is vicariously liable for Groot's driving. Mr. Singh disagrees. Mr. Maharaj's proposition is a novel one with far reaching ramifications. It would make rental scar companies liable for the driving of their cars by persons hiring them. No direct authority was cited for this proposition but Mr. Maharaj relied on dicta to be found in Christmas v Nicol Bros Pty Limited (1941) 41 SR 317 and Jennings v Hannan (No. 2) (1969) 71 SR NSW 226. These cases established, he submitted, that the inference can be drawn that a person driving a car is driving it with the owner's authority. He further submitted that the Act created a presumption of agency. He relied on two authorities, namely Dowd v. Alex Kay Pty. Limited ( 1971) 2 NSWLR 368 and Gould v. Incorporated Nominal Defendant. (1971) VR 488. Finally, Mr. Maharaj repeated that it was "irresistible that the car was being utilised on the business of the First Defendant which was to rent and hire such cars for reward".

In reply, Mr. Singh rejected the suggestion that Groot had ever been the Defendant's servant or agent. Apart from anything else he submitted that the rental agreement established just the contrary. As to the Third Party Policy Mr. Singh's argument was that this was quite irrelevant to the proceedings. In the first place the Insurance Company was not a Party to the proceedings and in the second place the question of indemnity could not arise since the liability of the Defendant for the accident could not be established.

As I see it, the basic question is whether the mere fact that Groot hired the car from the Defendant can give rise to the Defendant's liability. In my view it cannot. In his discussion of liability for torts committed by an agent the learned author of Bowstead on Agency makes no mention of any rule that a hiring company is liable in the way being suggested. On the contrary, under the C heading "Casual Delegation" (15th edition page 393) a large number of cases are cited which tend to establish just the opposite and it is said "there is no question of liability where A is merely driving with B's permission for a purpose of his own in which B has no interest." In the present case the Defendant's business was to rent cars but in my view that does not mean that each hirer is going about the Defendant's business. If the Defendant had asked Groot to perform some small service for him on his way to Sigatoka such a dropping off a packet to a friend of the Defendant and had an accident occurred while the packet was being dropped off then perhaps it could be argued that at time Groot was driving on the Defendant's business. In my view the first submission made by Mr. Maharaj and already quoted is fallacious. Either a person is driving on the rental car hirer's business or he is driving for a pleasure purpose, not both. That the Defendant may have had an interest in seeing his hire car safely returned to him by the hirer did not. in my view, mean that he had an interest in legal terms in the hirer's driving. I agree with Mr. Singh that the evidence also quite clearly shows that the reason that Groot was driving the car was that he had rented it for a pleasure purpose of his own. He had paid to rent the car. If he had been about the Defendant's business then one would F have expected the Defendant to pay him, not the other way around.

The authorities cited by Mr. Maharaj do not, in my view, assist him. The first two, as the passages quoted make clear, are only authority for the position where, owing to the absence of evidence, presumptions and inferences have to be applied and drawn. Where, as here, there is clear evidence that the driver was driving the car for a purpose of his own in which the owner had no interest the authorities have no application. The presumption arising cases depend, as was pointed out by Mr. Singh, on there being a Fiji a section of the Act equivalent to Section 16 (1) of the New South Wales Motor Vehicles (Third Party Insurance) Act 1942 which in fact there is not. Finally, I agree with Mr. Singh that the Third Party Policy is irrelevant to the Plaintiffs claim. The insurance company's liability to the Plaintiff probably could not be denied but the company is not a party to these proceedings, and it is the liability of the Defendant which is in question not the Insurance company's duty to indemnify.

I rule in favour of the Defendant.

(Ruling in fervour of Defendant)