Fiji Insurance Company Ltd v Lami Builders Limited [1979] FJSC 92; Action 274 of 1976 (9 May 1979)

IN THE SUPREME COURT OF FIJI
CIVIL JURISDICTION

Action No. 274 of 1976

BETWEEN

FIJI INSURANCE COMPANY LIMITED
Plaintiff

LAMI BUILDERS LIMITED
Defendant

JUDGMENT

On or about the 15th August, 1974 vehicle Number AE701 owned by the defendant company and driven by one of its employees was involved in an accident in which two pedestrians were injured. At all material times the defendant was the holder of a motor vehicle Third Party Policy issued by the plaintiff in respect of the said vehicle.

The two injured pedestrians in Action No. 78 of 1975 commenced action against the Company and the driver of the vehicle seeking damage.

The plaintiff settled this action for the sum of $8150 and incurred costs amounting to $201 and now seeks to recover the sum of $8351 from the defendant pursuant to the provisions of section 16 of the Motor Vehicle (Third Party Insurance) Ordinance.

The foregoing facts are not in dispute and I hold teem to be established.

The plaintiff alleges that the first notification, it had of the accident was on the 7th April, 1975 when it received the writ of summons in Action 78 of 1975 and that it was not until the 30th April, 1975 that the defendant notified the plaintiff of the accident. These facts are not denied by the defendant. The defendant, however, alleges that it notified the plaintiff soon after it first became aware of the alleged injuries arising out of the accident.

It is clear that the notification alleged by the defendant was on the 30th April, 1975 some 8½ months after the accident.

One of the two pedestrians received serious injuries which hospitalized him for close on 3 months.

Mr. Frank Chang, a Director of the defendant company, stated he was not aware at the time that anyone had been injured in the accident. It was not until the defendant received the writ of summons that he became aware that the pedestrians had been injured. Under cross-examination he admitted that the driver of the company's vehicle involved in the accident had informed him of the accident on the day it happened and reported he had struck two people but the witness said the driver did not report that they had received injuries. He said he made no enquiries to ascertain whether the pedestrians had been injured other than to enquire of the driver whether he had killed anybody and received a negative answer. He admitted he did not at the time he learnt of the accident report the accident to the plaintiff.

This witness did not impress me at all. Either he was aware that the pedestrians had been injured or he was not concerned to enquire whether they had been injured. In any event I do not believe that this witness was not aware at the time the company's driver reported to him that the pedestrians must have received some injuries. I do accept that he may not have bothered to enquire as to the nature of the injuries other than to satisfy himself no one had been killed. I hold as a fact that this witness had knowledge on the day of the accident that two persons had been struck by the company's vehicle from which knowledge any reasonable person would have appreciated that such persons must have sustained some personal injury. They did in fact sustain personal injury. I am satisfied the company had knowledge of the accident through its director. In any event the nature of the injuries sustained by the pedestrians were such that the company's driver, who was not called. as a. witness, must have been aware that they were injured in the accident. It is a reasonable assumption that he was so aware and I hold as a fact that he was so aware.

Under section 16 of the Motor Vehicles (Third Party Insurance) Ordinance it is the duty of the owner of a vehicle forthwith after an accident involving that vehicle, resulting in death or personal injury to a person, to report such accident to the insurance company. Where the owner is not using the vehicle at the time it is the duty of the person using the vehicle to forthwith notify the insurance company of the accident. The owner in such an event is also duty bound to report the accident forthwith on first becoming aware of the accident.

It was the driver's statutory duty to report the accident to the plaintiff. It is clear that he did not do so at any time.

The company through its director Mr. Chang was aware of the accident on the day it happened and did not notify the plaintiff until some 8 ½ months later.

I hold that both the company and its driver were in breach of the statutory duty to forthwith notify the plaintiff of the accident.

Under subsections 4 of section 16 of the Ordinance where the owner or driver of a vehicle involved in an accident resulting in personal injury to a person fails to promptly notify the insurance company of the accident the company can recover as a debt from the owner the amount equal to the total amount including costs paid by it in respect of any claim relating to such accident.

The defendant, however has raised a number of alternative defences. It alleges the plaintiff took over the conduct of the proceedings in Action No. 78 of 1975 and settled the claim for damages without the approval or consent of the defendant. It complains that thereby the defendant was deprived of an opportunity to defend the action or of mitigating the claim for damages.

As an alternative defence the defendant alleges that in admitting liability and settling the claim throw the plaintiff's solicitors without the knowledge and approval of the defendant the plaintiff acted improperly and to the prejudice of the defendant.

As a further and alternative defence the defendant alleges the plaintiff in admitting liability and taking over control of the claim for damages waived the requirement to give notice under section 16 of the Ordinance and is estopped from making any claim against the defendant.

Under section 17 of the Ordinance the plaintiff was empowered to take over the conduct and control of Action No. 78 of 1975 on behalf of the owner. Pursuant to such power the plaintiff instructed Messsrs. Cromptons to enter an appearance to the writ.

Section 17 also empowers the plaintiff to settle the claim.

Nothing in section 17 requires the plaintiff to first seek the prior approval or consent of the defendant to taking over the conduct and control of Action No. 78 of 1975 or to arranging to settle the claim.

In so acting the plaintiff exercised its statutory rights. It was open to the defendant to inform the plaintiff of any defence they had to the claim but they did not do so. The defendant's driver was convicted of the offence of careless driving in respect of the accident and there would appear to have been no doubts as to his negligence. If there was any contributory negligence on the part of the pedestrians, it was the defendant's duty to inform the plaintiff of the facts which would establish such contributory negligence. The defendant did nothing after receiving the writ other than to comply with the plaintiff's request to submit a claim form. The plaintiff did not settle the claim until 7 months after appearance had been entered to the writ.

Before Action 78 of 1975 was settled Messrs. Cromptons wrote to the defendant by letter dated 12th November, 1975 giving the defendant full particulars of the proposed settlement and stating that unless Messrs. Cromptons heard from the defendant within 7 days they would assume the defendant approved the settlement. No reply to this letter was received by Messrs. Cromptons who then proceeded with their instructions from the plaintiff and settled the claim.

The defendant alleges it never received the letter. It was incorrectly addressed to the defendant at P.O. Box 3156 Lami instead of P.O. Box 3590 Samabula which was the correct address. P.O. Box 3156 Lami is the postal address of Lami Joinery Limited.

Mr Chang admitted he was a director of the defendant company as well as Lami Joinery Limited. He admitted that if a letter came addressed to the defendant at P.O. Box 3156 Lami he or his clerk would collect it and he would open it. I am satisfied Messrs. Cromptons wrote and posted the letter and that it was not returned to them through the dead letter office.

I am satisfied that Mr. Chang did receive the letter and as a director of the defendant company that the defendant received it.

The defendant's real complaint which is reflected in all the alternative defences is that the plaintiff did not make it clear to them that the plaintiff would seek reimbursement from them before settling the claims. They allege they were led to believe that they were covered by their policy.

As to this contention the defendant was well aware that it had not reported the accident to the plaintiff and must be deemed to know the law which gives the plaintiff the right to recover from the defendant the amount the plaintiff paid to settle the claims.

The plaintiff forwarded a carbon copy of its letter on 7th April 1975 to the defendant it which the plaintiff refers to the fact that it had not previously been notified of the accident and referring to the fact that it was not admitting liability to the defendant.

The plaintiff followed up this letter with a letter of 24th April, 1975 correctly addressed to the defendant referring to the letter they had written to Messrs. Cromptons and attaching a claim form.

In Messrs. Cromptons letter of 12th November, 1975 to the defendant they specifically referred to the fact that the defendant had not immediately notified the plaintiff of the accident and did not notify them until the 30th April 1975.

I have considered the authorities furnished by Mr. Chauhan but none of them assist the defendant. One case does in fact assist the plaintiff.

Beacon Insurance Co. Ltd. v. Langdale (1939) 4 A.E.R. p.204 is a case which bears some similarity to the instant case.

In that case the appellant was insured with the respondent against third party risks in respect of a motor cycle. The appellant while riding the motor cycle collided with a bicycle and the bicycle rider claimed damages. The respondent pursuance to authority given to them under the policy settled the claim without consulting the appellant. The respondent then sued the appellant for the sum of $5. Under the policy the appellant had to pay the first $5 of any claim. The appellant contended the respondent was not entitled to settle any claim without notice to him and that they had not acted reasonably in the exercise of their authority.

It was held that the policy gave the respondent power to settle the claim without consulting the appellant and, where such a settlement included a payment of money, the appellant was liable to pay the respondents the first $5 of that sum.

Beacon's case was concerned with an authority pursuant to the terms of the insurance policy. In the instant case the plaintiff acted under statutory powers in settling the claims.

It was not incumbent on the plaintiff to consult the defendant before they settled the claims. I do not consider that the fact that the plaintiff had a statutory right, due to the defendant's failure to report the accident promptly, to seek to recover the money they had paid out and chose to exercise that right, in any way alters the position. They did advise the defendant of the proposed settlement although not legally bound to do so. Both the plaintiff and their solicitors in my view acted with propriety and there is nothing to suggest that the settlement of the claims was not in the best interests of the plaintiff and the defendant. In my view no question of waiver or estoppel arises in this action. It is true that neither the plaintiff nor its solicitor in express and clear terms advised the defendant that the plaintiff proposed to seek the recovery from the defendant of any money paid in settlement of the claims due to the defendant statutory breach of duty.

The plaintiff and its solicitors did however point out in clear terms that the defendant had not promptly reported the accident to the plaintiff. There is nothing in the correspondence to indicate the plaintiff waived its right to recover from the defendant as a debt the settlement moneys paid it.

Even if the plaintiff had in express terms advised the defendant that it proposed to recover from the defendant any moneys the plaintiff had to pay in settlement of the claims, the defendant could not have taken over conduct of the case. If the defendant was aware of facts which might have reduced the claims it should have made these facts known t o the plaintiff. The defendant was advised of the proposed settlement and chose to do nothing about it.

The plaintiff succeeds on its claim. There will be judgment for the plaintiff in the sun of $8351 with costs to be taxed if not agreed.

(Sgd.) R. G. Kermode
JUDGE

Suva,
9th May, 1979.