Royal Exchange Assur. Co. Ltd v Bazzy, 1972-73 ALR S.L. 336

SECTION 41

S.C. ROYAL EXCHANGE ASSURANCE COMP.A.NY LIMITED v. BAZZY Supreme Court (Betts, J.S.C., Bridges, C.J. (Gambia), Luke and Forster, JJ. S.C.; and Browne-Marke, J.A.): October 17th, 1973 (Civ. App. No. 1/72) [ 1] Insurance-motor vehicles-permitted driver-provision specifying per mitted drivers is condition for purposes of Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 but not avoided by that section: The word "condition" in s.9 of the Motor Vehicles (Third Party Insurance) Act (cap. 133) means a "term" or "provision" in a policy of insurance, so that a provision specifying who shall be permitted drivers is a condition specifying the "person or classes of person" insured by the policy (page 363, lines 31-36). [ 2] Insurance-motor vehicles-rights of third parties-right of action against insurer-insurer liable to satisfy third party's judgment against insured only where Motor Vehicles (Third Party Insurance) Act (cap. 133) and terms of policy observed-breach of term of policy negatives insurer's liability: Though s.11 of the Motor Vehicles (Third Party Insurance) Act (cap. 133) empowers third parties who have obtained a judgment against the insured to institute an independent action against the insurers on the basis of an insurance policy in force, the insurers' liability will not arise unless both the Act, and the terms of the policy have been ful filled; thus, where the driver of a car involved in an accident is unlicensed and therefore does not come within the definition of "person or classes of person" covered by the policy, there is a breach in the terms of the policy so that it cannot be considered to be in force, and the insurers are consequently not liable (page 349, line 26- page 350, line 16; page 350, line 38- page 351, line 1; page 378, line 15- page 379, line 6). [ 3] Insurance-motor vehicles-rights of third parties-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 avoids as against third parties policy conditions excluding liability only where events precluding liability arise after accident: 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 an act or omission by the insured 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; but a condition such as one excluding liability if the insured's vehicle is being driven by an un licensed driver, which relates to acts or omissions by the insured before the accident, remains effective (page 369, lines 1-26; page 372, lines

[ 4] Insurance-motor vehicles-unlicensed driver-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 does not avoid policy condition excluding liability if driver unlicensed: See [ 3] above. [ 5] Insurance-policy-interpretation-courts must construe plain and unambiguous words in ordinary meaning, not so as to make reasonable contract for parties: It is the courts' function to construe policies of

ROYAL EXCHANGE,ASSUR. CO. LTD. v. BAZZY, 1972-73 ALR S.L. 336 S.C. insurance like other written instruments, that is, in such a way as to give plain and unambiguous words their ordinary meaning, not so as to make a reasonable contract between the parties which they have not made for themselves (page 353, lines 5-18). [ 6] Road Traffic-insurance-permitted driver-provision specifying per- 5 mitted drivers is condition for purposes of Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 but not avoided by that section: See [1] above. [ 7] Road Traffic-insurance-third party liability-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 avoids as against third parties policy conditions excluding liability only where events precluding 10 liability arise after accident: See [3] above. [ 8] Road Traffic-insurance-third party liability-right of action against insurer-insurer liable to satisfy third party's judgment against insured only where Motor Vehicles (Third Party Insurance) Act (cap. 133) and terms of policy observed-breach of term of policy negatives insurer's 15 liability: See [2] above.

[9] Road Traffic-insurance-unlicensed driver-Motor Vehicles (Third Party Insurance) Act (cap. 133), s.9 does not avoid policy condition excluding liability of driver unlicensed: See [3] above.

[10] Statutes-interpretation-structure and parts of stature-long title may be used in interpretation only if words used in statute ambiguous: If the words used in a statute are ambiguous, the long title may be looked at to resolve the ambiguity; but if the words are plain and unambiguous, the long title may not be used to modify or control the meaning (page 374, lines 8-33). [ 11] Statutes-interpretation-structure and parts of statute-punctuation marks-may be used as aids in interpretation but not to override clear meaning of whole statute: Punctuation marks in a statute may be called in aid in construing the statute but they should not be allowed to over ride the clear and unambiguous meaning of a statute when read as a whole (page 366, lines 34-38). 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 policyholder of the appellants.

The appellants insured the owner of a car in respect of any 3 5 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 40 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 owner of the car. He 5 obtained judgment against them and notified the appellants accord ingly. 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 appellants disputed liability on the ground that Kondewa was an unlicensed 10 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 Act, all conditions in an insurance policy which sought to (a) prevent 15 liability from arising, and (b) avoid a liability which had arisen after an accident giving rise to a claim were 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 20 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 s.9 related only to events after an accident giving rise to a claim under the policy. The Court of Appeal held that all conditions in an insurance policy, 25 whether relating to events occurring before or after the happening of the event giving rise to a claim were of no effect against third parties, and that an insurer was liable to satisfy a third party's judgment against the insured in respect of bodily injury arising out of the use of a motor vehicle irrespective of the terms of the 30 policy, especially since the Motor Vehicles (Third Party Insurance) Act was clearly passed for the protection and benefit of third parties using the highway, and it was the court's duty to give effect to the intention of the legislature. The appeal was dismissed. The proceedings in the Court of Appeal are reported at 1972··-73 35 ALR S.L.

103. On further appeal to the Supreme Court the appellants main tained that the Court of Appeal was wrong in law in its construc tion of ss.9 and 11 of the Act. They reiterated their contention that s.9 ought to be construed conjunctively -in other words, that 40 the phrases "any condition in a policy ... issued or given for the purpose of this Act providing that no liability shall arise under

ROYAL EXCHANGE ASSUR. CO. LTD. v. BAZZY, 1972-73 ALR S.L. 336 S.C. the policy" and "that any liability so arising shall cease in the event of some specified thing being done or omitted to be done" should both be controlled by the words "after the happening of the event giving rise to a claim under the policy." Conditions referring to events before an accident were not affected so that when the insured allowed an unlicensed driver to drive his car in breach of the terms of the policy, the appellants were not liable and the respondent not entitled to benefit arising out of an independent right of action against the appellants under s.ll of the Act. They further contended that a study of the whole Act clearly showed that it was not the intention of the legislature to render all conditions in insurance policies ineffective, as argued by the respondent, since the Act itself recognised that it was permissible to insert conditions in policies. The respondent relied on the dictum of the learned Chief Justice (Cole, C.J.) that s.9 should be construed disjunctively, thus negativing exclusion clauses referring to events before, as well as after, an accident. He further contended that under s.ll, so long as the statutory provisions in favour of an insured person whose liability was covered by a policy were fulfilled, the appel lants, as the insurers, were obliged to satisfy the judgment obtained by him against the insured. The appeal was allowed. Cases referred to:

(1) Austin v. Zurich Gen. Ace. & Liab. Jns. Co. Ltd., [1945] K.B. 250; [1945] 1 All E.R. 316.

(2) Bright v. Ash{old, [1932] 2 K.B. 153; (1932), 147 L.T. 74, applied.

(3) Croxford v. Universal Ins. Co. Ltd., Norman v. Gresham Fire & Ace. Ins., [1936] 2 K.B. 253; [1936] 1 All E.R. 151.

(4) John T. Ellis Ltd. v. Walter T. Hinds, [1947] K.B. 475; [1947] 1 All E.R. 337, distinguished.

(5) Gray v. Blackmore, [1934] 1 K.B. 95; [1933] All E.R. Rep. 520, applied. -

(6) Hardy v. Motor Insurers' Bureau, [1964] 2 Q.B. 745; [1964] 2 All E.R. 7 42, distinguished.

(7) Hart v. Standard Marine Ins. Co. (1889), 22 Q.B.D. 499; 60 L.T.

(8) Herbert v. Railway Passengers Assur. Co. [1938] 1 All E.R. 650; (1938) 158 L.T. 417.

(9) Joel v. Law Union & Crown Ins. Co., [1908] 2 K.B. 863; (1908), 99 L.T. 712.

(10) Jones v. Welsh Ins. Corp., [1937] 4 All E.R. 149; (1937), 157 L.T.

(11) Jubilee Ins. Co. v. Ombaka, 1972(1) ALR Comm. 200; [1972] E.A.

(12) New Gt. Ins. Co. of India, Ltd. v. Cross, 1965 ALR Comm. 449; [1966] E.A. 90, not followed.

(13) Passmore v. Vulcan Boiler & Gen. Ins. Co. (1935 ), 154 L.T. 258. 10

(14) Pokua v. State Ins. Corp., [1973] 1 G.L.R. 335, followed.

(15) Revell v. London Gen. Ins. Co., (1934] All E.R. Rep. 744; (1934), 152 L.T. 258.

(16) Rogerson v. Scottish Automobile & Gen. Ins. Co. Ltd., [1931] All E.R. Rep. 606; (1931), 146 L.T. 26.

(17) Royal Exch. Assur. v. Owusu, 1965 ALR Comm. 391; [1965] G.L.R.

(18) Schuler v. Wickman Tools, [1974] A.C. 235; [1973] 2 All E.R. 39, dictum of Lord Morris of Borth-y-Gest applied.

(19) Sesay v. White Cross Ins. Co. Ltd. (1961), 1 S.L.L.R. 162.

(20) Sosu v. Royal Exch. Assur., 1970(3) ALR Comm. 13.

(21) State Ins. Corp. v. Mansah, 1969(1) ALR Comm. 326.

(22) Taylor v. Kenyon, [1952] 2 All E.R. 726; (1952), 96 Sol. Jo. 749.

(23) In re Williams (Dcd.), 1964-66 ALR S.L.

511. Legislation construed: Motor Vehicles (Third Party Insurance) Act (Laws of Sierra Leone, 1960, cap. 133), s.3(1): The relevant terms of this sub-section are set out at page 342, lines 15-20. s.7(1)(b): The relevant terms of this sub-section are set out at page 342, lines

(3): The relevant terms of this sub-section are set out at page 367, lines

s.9: The relevant terms of this section are set out at page 343, lines 6-13. s.10: The relevant terms of this sub-section are set out at page 367, line 39 -page 368, line 25. s.11(1): The relevant terms of this sub-section are set out at page 347, lines

(2): The relevant terms of this sub-section are set out at page 3 76, line 39- page 377, line 34. 40 (5): The relevant terms of this sub-section are set out at page 34 7, lines

ROYAL EXCHANGE ASSUR. CO. LTD. v. BAZZY,1972-73 ALR S.L. 336 S.C. Road Traffic Act, 1960 (8 & 9 Eliz. II, c.16), s.207(1): The relevant terms of this sub-section are set out at page 351, lines 11-28. Insurance (Motor Vehicles Third Party Risks) Act (Laws of Kenya, 1962, cap. 405), s.8: The relevant terms of this section are set out at page 366, lines 24-31. 5 C.N. Rogers- Wright, S.H. Harding and Basma for the appellants; Smythe, Q. C. Miss Taylor and Metzger for the respondent. BETTS, J .S.C.: This is an appeal from the Court of Appeal against the judgment 10 of that court (Cole, C.J., Cornelius Harding and Percy Davies, JJ.A.) confirming an award of Le9,490.41 (damages and costs) together with interest of 6% per annum from the date of the accident, July 14th, 1966 to August 21st, 1970 the date of judg ment. This action arose from a motor traffic case which started 15 in the Magistrate's Court, Kono, in which Sahr Kissi Kondewa was charged with several offences including driving a vehicle "without first obtaining a licence to do so." He pleaded guilty to that charge and was fined Le100 or three months' imprisonment in default. After Kondewa's conviction Toufic Bazzy, who was injured as a 20 result of the accident, brought an action for damages against one Sorie Mansaray, the insured, and the driver Kondewa in the High Court (then the Supreme Court). On the date of the accident July 14th, 1966, the vehicle WU 809 was insured with the Royal Exchange Assurance Co. Ltd. Judgment was given for the respon- 25 dent (then the plaintiff) in the sum of Le6,500 with costs which were taxed at Le2,990.41 and interest. The respondent notified the appellants (then the defendants) about the judgment against the insured and the driver. The judgment remaining unsatisfied, the respondent thereupon successfully sued the Royal Exchange 30 Assurance Co. Ltd. for the recovery of the judgment debt. The Royal Exchange Assurance Co. Ltd. appealed to the Court of Appeal which dismissed the appeal. It is against this decision that the Royal Exchange Assurance Company has appealed to this court. The appellants have argued that the Court of Appeal was 3 5 wrong in law in their construction of ss.9 and 11 of the Motor Vehicles (Third Party Insurance) Act (cap. 133). They have argued in effect that in the particular circumstances of the accident they were not obliged in law to satisfy the judgment in favour of the respondent. The Motor VehiCles (Third Party Insurance) Act 40 (cap. 133) (hereinafter referred to as "the Act") makes provision

for a third party who suffers death or injury as a result of a motor vehicle accident, or his dependants in the former case, to seek redress, if necessary in the courts of the land against the owner of the vehicle and/or an insurance company. The statute is entitled 5 ''An Act to make provision against third party risks arising out of the use of motor vehicles." The effect of the argument on behalf of the appellants is that on a proper interpretation of s.9 of the Act, the respondent should not have been caught by the condition contemplated by s.9 and 10 therefore ought to be outside the scope of the policy under this Act and not entitled to the benefits arising out of an independent right of action against the appellants' company contained in s.11(1 ). The Act provides in s.3(1) that- 15 " ... no person shall use, or cause or permit any other person to use a motor vehicle unless there is in force in relation to the user of the motor vehicle by such person or such other person, as the case may be, such a policy of insurance or such a security in respect of third party risks as complies with the 20 provisions of this Act." The Act imposes a criminal sanction for a contravention of this provision in order to impress the imperative and comprehensive character of its specific requirement. Imperative conditions are also set out in s.7(1)(a) and (b) of the Act; (a) provides that the 25 insurer must be approved by the President and (b), which is more immediately relevant to the issue, states that, for the purpose of this Act, the insurance policy must insure- ". . . such person or classes of person as may be specified in the policy in respect of any liability which may be incurred 30 by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of a motor vehicle covered by the policy." This is a mandatory statutory condition and I think it is relevant to point out here that impliedly the law empowers the insurers 35 to exercise a right of restricting the persons or classes of person they would cover. To achieve the purpose of the Act there are certain fundamentals necessary. Those outlined are: No motor vehicle is to be used on the highway without an insurance policy covering its use; the policy should be issued by a recognised 40 insurer; and a recognisable person or classes of person is to be covered by the policy. The policy required under the Act is not,