Royal Exchange Assur. Co. Ltd v Bazzy, 1972-73 ALR S.L. 103

p I sECTION 16 ROYAL EXCHANGE ASSUR. CO. LTD. v. BAZZY, 1972-73 ALR S.L. 103 C.A. ROYAL EXCHANGE ASSURANCE COMPANY LIMITED v. BAZZY Court of Appeal (Cole, C.J., Cornelius Harding and Percy Davies, JJ.A.): May 19th, 1972 [1) Insurance-motor vehicles-rights of third parties-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 avoids as against third parties all policy conditions excluding liability no matter when events contemplated by conditions arise: The proper interpretation of the Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9, is that all conditions in an insurance policy relating to circumstances arising either before or after an accident giving rise to a claim under the policy, which provide, that in those circumstances, no liability shall arise or that liability so arising shall cease, are of no effect against third parties; so that a condition excepting the insurer's liability if the insured's vehicle is being driven by an unlicensed driver is invalid as against a third party, though it remains effective against the insured himself (page 107, line 33- page 110, line 34). [2) Insurance-motor vehicles-rights of third parties-Motor Vehicles (Third Party Insurance) Act (cap. 133) to be construed in favour of third parties as intended by legislature: It is the duty of the courts to construe an act in such a way as to give effect to its overall spirit and policy as intended by the legislature; and a study of the Motor Vehicles (Third Party Insurance) Act (cap. 133) shows that the legislature intended it as a measure for the protection and benefit of third parties using the highway against the hazards of motor accidents (page 109, line 35 -page 110, line 6). [3) Insurance-motor vehicles-unlicensed driver-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 avoids policy condition excluding liability if driver unlicensed-void against third parties but valid against insured: See [ 1] above. [ 4) Road Traffic-insurance-third party liability-Motor Vehicles (Third Part Insurance) Act (cap. 133) to be construed in favour of third parties as intended by legislature: See (2] above. [5] Road Traffic-insurance-third party liability-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 avoids as against third parties all conditions excluding liability no matter when events contemplated by conditions arise: See [ 1] above. 5 10 15 20 25 30 [6] Road Traffic-insurance-unlicensed driver-Motor Vehicles (Third 35 Party Insurance) Act (cap. 133), s.9 avoids policy condition excluding liability if driver unlicensed-void against third parties but valid against insured: See [ 1 ] above. [7] Statutes-interpretation-intention of legislature-intention to be derived from study of aims of whole enactment-Motor Vehicles (Third Party Insurance) Act (cap. 133) to be construed in favour of third parties: See 40 [2] above. 103 5 10 15 20 25 30 35 40 THE AFRICAN LAW REPORTS The respondent brought an action against the appellants in the High Court to recover a judgment debt arising out of proceedings by the respondent against a policy holder of the appellants. The appellants insured the owner of a car in respect of any liability for damages which might be incurred by him in respect of the death of or bodily injury to any person arising out of the use of the car. By the general exceptions in the insurance policy, the appellants were not liable in the event that a liability arose when an unlicensed driver was in charge of the car. The car was involved in an accident as a result of which the respondent sustained bodily injuries. At the time of the accident, the car was being driven by one Sahr Kissi Kondewa, an unlicensed driver. The respondent brought an action for damages in the High Court against Kondewa and against the insured, the owner of the car. He obtained judgment against them and notified the appellants accordingly. The judgment remaining unsatisfied, he sued the appellants for the recovery of the judgment debt under s.11 of the Motor Vehicles (Third Party Insurance) Act (cap. 133). The appel­ lants disputed liability on the ground that Kondewa was an unlicensed driver and therefore the liability was not covered by the terms of the insurance policy. The respondent contended that whether Kondewa was a licensed or an unlicensed driver did not affect the appellants' liability to satisfy his claim since; under s.9 of the Motor Vehicles (Third Party Insurance) Act, all conditions in an insurance policy which (a) sought to prevent liability from arising, and (b) sought to avoid a liability which had arisen after an accident giving rise to a claim were declared to be of no effect against third parties. The High Court (Tejan, J.) gave judgment for the respondent. On appeal, the appellants contended that the exception clause relating to the driver of the car was not a condition within the terms of s.9, but a classification of persons insured within the terms of s.7(1)(b) of the Act and that in any case 8.9 related only to events after an accident giving rise to a claim under the policy. The court also considered the general spirit and policy of _the Motor Vehicles (Third Party Insurance) Act and how it ought to be interpreted in order to give effect to the intentions of the legislature. The appeal was dismissed. Legislation construed: Motor Vehicles (Third Party Insurance) Act (Laws of Sierra Leone, 1960, cap. 133), s.7(3): 104 ROYAL EXCHANGE ASSUR. CO. LTD. v. BAZZY,1972-73 ALR S.L. 103 C.A. The relevant terms of this sub-section are set out at page 106, lines 14-20. s.9: The relevant terms of this section are set out at page 108, line 39- page 109, line 12. C.N. Rogers-Wright and S.H. Harding for the appellants; Smythe, Q. C., Miss Taylor and Mrs. Awoonor-Renner for the respondent. COLE, C.J.: The appellants in this appeal carry on the business of insurance in Sierra Leone. One Sorie Mansaray, the owner of a Peugeot saloon car 403/8 No. WU809 (which I shall refer to as "the car"), insured the car with the appellants. Exhibit B, the insurance policy issued by the appellants in respect of the car, was signed at Freetown on January 4th, 1966. The period of the insurance in the first instance was from December 6th, 1965 to December 5th, 1966. One of the risks insured against was in respect of the liability of Sorie Mansaray (whom I shall hereafter refer to as "the insured") to third parties caused by or arising out of the use of the car on the highway. The relevant clause in the policy is in these words: "Subject to the limits of liability the company will indemnify the insured in the event of accident caused by or arising out of the use of the motor car against all sums including the claimant's costs and expenses which the insured shall become legally liable to pay in respect of- ( a) death of or bodily injury to any person except where such death or injury arises out of and in the course of the employment of such person by the insured and excluding liability to any person being a member of the insured's household who is a passenger in the motor car unless such person is being carried by reason of or in pursuance of a contract of employment; (b) damage to property other than property belonging to the insured or held in trust by or in the custody or control of the insured or any member of the insured's household." This is, in effect, the risk which our legislature by the Motor Vehicles (Third Party Insurance) Act (cap. 133) (which I shall hereafter refer to as "the Act") requires all users of motor vehicles to be insured against. With regard to the person or persons who could drive the car it was agreed between the appellants and the insured as follows: "Driver: Any of the following: 105 5 10 15 20 25 30 35 40 THE AFRICAN LAW REPORTS (a) The insured. The insured may also drive a motor car not belonging to him under hire-purchase agreement. (b) Any other person who is driving on the policy holder's 5 order or with his permission. Provided that the person driving is permitted in accordance with the licensing or other laws or regulations to drive the motor car or has been so permitted and is not disqualified by order of a court of law or by reason of any enactment or 10 regulation in that behalf from driving such motor car." I shall deal later with what I consider to be the nature of this clause and its effect. Section 7 ( 3) of the Motor Vehicles (Third Party Insurance) Act (cap. 133) provides that- " A policy shall be of no effect for the purpose of this Act 15 unless and until there is issued by the approved insurer in favour of the person by whom the policy is effected a certifi­ cate (in this Act referred to as a 'certificate of insurance') in the prescribed form and containing such particulars of any conditions subject to which the policy is issued and of such 20 other matters as may be prescribed., No such certificate was produced at the trial of this action. From the pleadings and the evidence adduced at the trial there appears to be no dispute that in fact one such certificate was issued by the appellants to the insured. It would appear that in fact the trial 25 proceeded on that basis. I am satisfied that in fact such a certifi­ cate was issued. It transpired that on July 14th, 1966, whilst the insurance policy was in force, the car was involved in a road accident in which the respondent, through no fault of his, received bodily 30 injuries. At the time of the accident the car was being driven by a driver caught within the ambit of the proviso to the definition of "driver" in the schedule to Exhibit B which I have already quoted above, in that the driver was an unlicensed driver. The respondent sued in negligence and obtained judgment against the insured and 35 the driver of the car on August 21st, 1970 in the sum of Le6,500 and costs which have since been taxed and allowed in the sum of Le2,990.41. The respondent brought his action against the insured and the driver on April 30th, 1968 and on May 4th, 1968 the respondent caused notice of the commencement of these proceed- 40 ings to be sent to the appellants. The judgment was not satisfied and so on June 22nd, 1971 the respondent brought an action in 106 -- ROYAL EXCHANGE ASSUR. CO. LTD. u. BAZZY,1972-73 ALR S. L.103 C.A. the court below, pursuant to s.ll of the Act, claiming the sum of Le9 ,490.41 together with interest at 6% per annum from August 21st, 1970 and costs. The defence of the appellants in the court below is contained in paras. 3, 4 and 5 of their defence. These paragraphs read: 5 "3. The defendants say that in the particular circumstances of the said accident they are not obliged in law to indemnify the insured, Sorie Mansaray. 4. In answer to para. 3 of the statement of claim the defendants say that the driver of the vehicle at the time of 10 the accident, Sahr Kissi Kondewa, was an unlicensed driver. 5. The defendants therefore contend that the liability which has thus arisen is not covered by the terms of the policy issued to the insured and owner of the said vehicle, Sorie Mansaray." 15 The trial commenced on November 9th, 1971 and judgment was given on December 20th, 1971. Judgment was given in favour of the respondent against the appellants in the sum of Le9,490.41 and interest at the rate of 4% per annum from August 21st, 1970 to December 20th, 1971 and costs of the action to be taxed. It is 20 against this judgment that the appellants have appealed to this court. The main question to be answered in this appeal has, in his usual lucid and brilliant style, been posed by Mr. Rogers-Wright, learned counsel leading for the appellants, as follows: 25 "If the policy says in effect that liability attaches to the insurance company only if at the time of the event giving rise to the claim the car was being driven by a licensed driver and there is an admitted breach of such a condition, can it be said that such a liability is a liability covered by the terms of 30 the policy when the policy expressly excluded the liability?" This question brings me straight away to another question, namely, what is the nature of the proviso to the definition of "driver" given in the schedule to Exhibit B and which I have already quoted? Is it a condition? In answering these questions the policy 35 of insurance has to be looked into in order to ascertain the effect of the proviso. For the purposes of this appeal I shall confine myself to Section II of the policy headed "Liability to Third Parties" and the schedule to the policy. As I understand the whole tenor of that section read together 40 with the definition of 'driver' and its proyiso in the schedule 107 THE AFRICAN LAW REPORTS thereto it is to the effect that both the appellants and the insured agreed that whilst the policy of insurance was in force if an acci­ dent occurred giving rise to a claim under the policy, including a claim for bodily injury to any person, the appellants would 5 satisfy such a claim only if, with regard to the person driving at the time of the accident, such a driver was, for the purposes of this appeal, a licensed driver. If such a driver happens not to be a licensed driver no liability on the part of the appellants arises. In short, both parties agreed that liability on the part of the appellants 10 in respect of any event which gave rise to a claim under the policy was, as far as this appeal is concerned, conditional on the driver at the material time being a licensed driver. It is my considered view therefore that the proviso in question is a condition. Les termes de la ley defines a condition as a restraint or bridle 15 annexed and joined to a thing, so that by the non-performance or not doing thereof the party to the condition shall receive prejudice and loss, and, by the performance and doing of the same, com­ modity and advantage. Halsbury puts it this way (8 Halsbury 's Laws of England, 3rd ed., at 196): 20 "A promise may be either absolute or conditional. A con­ ditional promise is one where the liability to perform depends upon something; that is to say, it is one of the terms of the contract that the liability to perform it shall only arise or shall cease on the happening of some future event, which 25 may or may not happen, or on one of the parties doing or abstaining from doing some act. When the liability only arises on the happening of the contingency or performance of the condition, the condition is called a condition precedent, and when the liability ceases thereon it is called a condition 30 subsequent." The wording of the question posed by Mr. Rogers-Wright clearly supports my conclusion. This brings me to a consideration of s.9 of the Act. In construing this section I think it is immaterial whether a condition falling 35 within its ambit is precedent or subsequent; for, whether it is precedent or subsequent, so long as it is caught within the ambit of that section it is of no effect. Section 9 of the Act reads as follows: "Any condition in a policy or security issued or given for 40 the purposes of this Act providing that no liability shall arise under the policy or security or that any liability so arising 108 .... ROYAL EXCHANGE ASSUR. CO. LTD. v. BAZZY, 1972-73 ALR S.L. 103 C.A. shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy or security shall, in respect of such liabilities as are required to be covered by a policy or security issued for the purposes of this Act, be of no effect: 5 Provided that nothing in this section shall be so construed as to render void any provision in a policy or security requir­ ing the person insured or secured to repay to the insurer or the giver of the security any sums which the insurer or the giver of the security may have become liable to pay under the 10 policy or the security and which have been applied to the satisfaction of the claims of third parties." Let me now spell out the way I read the material portions of s.9 of the Act. I read them in this way: Any condition in a policy or security issued or given for the purposes of this Act providing- 15 (i) that no liability shall arise under the policy or security; (ii) that any liability arising under the policy shall cease in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy or security. 20 In other words, the section in my view embraces two separate and distinct types of conditions, namely, those which have the effect of negativing liability ab initio upon the breach of such a condition and those which make the negativing of the liability conditional upon the doing or omitting to do some specified thing after the 25 happening of the event giving rise to a claim under the policy or security. The section deals with conditions in a policy which seek to prevent liability from arising on the one hand and those which seek to avoid a liability which has arisen on the other. That, I think, is the only reasonable and proper construction that can be 30 put on s.9 which will not render it either nonsensical or, stronger still, which will not result in defeating the object of the Act, namely, the protection of third parties using the highway against death or bodily injury by the use of a motor vehicle on the high- way. It is beyond dispute that the Act was passed principally for 35 the protection and benefit of third parties using the highway. A close and carefUl study of the whole structure and provisions of the Act clearly shows this. That being the case, I share most strongly the view that people should be entitled to feel assured, as they walk along the streets or make any other lawful use of the 40 highway, that the legislature has protected them against the hazards 109 THE AFRICAN LAW REPORTS of motor accidents. It becomes the duty of the courts therefore to construe the ·Act in such a way as to suppress all manoeuvres which tend to frustrate the spirit and policy of the Act. To do otherwise would be acting contra bonos mores. Furthermore, to 5 construe s.9 of the Act otherwise would enable an insurer to obtain an unjust enrichment by various devices and designs. There can be no doubt that a number of conditions can easily fall within the first category, e.g., liability sustained or incurred whilst using the car otherwise than in accordance with the limi- 10 tations as to use imposed by the policy of insurance; liability sustained or incurred while the car is being driven by an unlicensed driver and so on, provided they are specified in the policy. It is my considered view therefore that the condition in the policy to the effect that no liability on the part of the appellants would arise 15 under the policy if at the time of the event, namely, an accident involving the car giving rise to a claim under the Act, the car was being driven by an unlicensed driver, falls squarely within the ambit of s.9 of the Act. It is therefore of no effect vis-a-vis the appellants and the respondent. As between the appellants and the 20 insured it remains very effective; hence the proviso to s.9 of the Act, which r,eads: "Provided that nothing in this section shall be so construed as to render void any provision in a policy or security requir­ ing the person insured or secured to repay to the insurer or 25 the giver of the security any sums which the insurer or the giver of the security may have become liable to pay under the policy or the security and which have been applied to the satisfaction of the claims of third parties." I therefore hold that at the time of the accident which gave rise 30 to a claim by the respondent, the liability of the insured as well as that of the driver of the car was not only required to be covered by a policy under the Act but was in fact so covered. The respon­ dent was therefore entitled to bring his action against the appel­ lants under s.11(1) of the Act. I would therefore dismiss this 35 appeal with costs. CORNELIUS HARDING and PERCY DAVIES, JJ .A. concurred. Appeal dismissed. 40 110