Supreme Court
Action No. 141 of 1976
31st August, 1978
Malone, C.J.

Senator S. W. Musa for the Plaintiff
Mr. L. Sanguinette for the Defendant

Damages - Failure to pay damages awarded by the Court - Whether Defendant liable to pay the whole of the judgment sum awarded - Insurance policy limits liability in respect of claims - Section 20 of Motor Vehicles Insurance (Third Party Risks) Ordinance No. 14 of 1958.

J U D G M E N T

By a judgment of this Court, the Plaintiffs in an Action of negligence were awarded as damages the sum of $21,360.00 against the owner of a bus insured by the Defendant under a motor vehicle insurance policy. The bus owner having failed to pay the damages, the Plaintiffs sought to recover from the Defendant, but the defendant refused to pay more than $8,000.00 of the damages awarded. This Action was then brought by the Plaintiffs, against the Defendant, and the sole issue is whether the Defendant is liable to the Plaintiffs for the whole of the judgment sum awarded, or is liable for more than $8,000.00 of that sum.

On the face of it, the Schedule to the policy in question limits the liability of the Defendant in respect of the total claims for any one accident to $8,000.00. A limitation of that description does not conflict with the provisions of the governing Ordinance which is the Motor Vehicles Insurance (Third Party Risks) Ordinance, No. 14 of 1958, and which is hereinafter referred to as "the Ordinance". The reason being that section 4(1) of the Ordinance which specifies the requirements that must be complied with by motor vehicle insurance policies, authorizes such a limitation in proviso (vi) to that section. But it is the contention of Counsel for the Plaintiffs that the rights conferred on a third party by the Ordinance against an insurer are not necessarily governed by any limitations to which the contract made between the insurer and the insured may be subject. That, he says, is because the provisions of section 20 of the Ordinance enable a third party to recover from an insurer a sum greater than the amount which the insurer undertook to indemnify the insured. So it comes down to this: that the outcome of this case is dependent on the construction to be given to section 20 of the Ordinance. The relevant provisions of that section are as follows:

(2) ……………….

(3) ………………..

(4) If the amount which an insurer becomes liable under this section to pay in respect of a liability of a person insured by a policy exceeds the amount for which he would, apart from the provisions of this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person.

(5) …………………

(6) …………………"

That section is not unique to this country, as its equivalent is to be found in similar Acts enacted by other Commonwealth Caribbean territories. The corresponding Act of Guyana is one such example.

The language of section 20(1) of the Ordinance differs however from the language of section 8(1) of the equivalent Act of Guyana (The Motor Vehicles Insurance (Third Party Risks) Act, No. 22 of 1937) in a significant respect. It omits the words "and subject to any limitations on the total amount payable under the policy in consequence of the fourth, fifth and sixth provisos to section 4(1)(b)" which appear in section 8(1) of the Guyana Act, immediately after the words "Insurer shall, subject to this section . . . "

Had the language of section 20(1) of the Ordinance followed that of section 8(1) of the Act of Guyana, the submissions of Counsel for the Plaintiffs must obviously have failed. As, although the respective enactments of the two territories in effect turn the judgment obtained by the third party against the insured into a judgment debt, the incorporation in section 20(1) of the Ordinance of the additional words of the equivalent section of the statute of Guyana must have, in this instance, resulted in the Defendant being liable to pay no more than $8,000.00 because of the limitation authorised by proviso (vi) to section 4(1) of the Ordinance and expressed in the policy. It would then also have followed that there could be no substance in the submissions made by Counsel for the Plaintiffs with respect to section 20(4) of the Ordinance. Namely, that that subsection enables an insurer to recover from the insured any sum paid on a judgment in excess of the amount of the indemnity given by the insurer to the insured on the policy. So then, the short point is whether the absence from section 20(1) the Ordinance of the words to be found in the equivalent sections of the Acts of other Commonwealth Caribbean territories affects the construction to be given to that section.

Counsel for the Plaintiffs submitted that the omission must result in a different construction and as an argument in support of that submission, pointed out that English law had no limitation similar to proviso (vi) of section 4(1) of the Ordinance and that sections 10(1) and 10(4) English Road Traffic Act, 1934, (24 & 25 Geo. 5, c. 50) are, for all material purposes, expressed in precisely the same language as sections 20(1) and (4) of the Ordinance. To my mind, that is not an argument which supports the submission because of the fact that under English law there is no provision comparable to proviso (vi) of section 4(1) of the Ordinance. But neither in my view does it follow, as Counsel for the Defendant submitted, that because of the existence of proviso (vi) to section 4(1) of the Ordinance, there would be a conflict in the policy of the Ordinance if sections 20 (1) and 20(4) were so construed as to permit a third party to recover from an insurer the full amount of a judgment obtained, notwithstanding that the judgment exceeded the amount of the indemnity given by the insurer to the insured. For under such an arrangement, the Legislature would be ensuring full protection of the third party whilst giving to the insurer freedom of contract. In that context there would then seem to me good cause for section 20(4) of the Ordinance as it would confer a right on the insurer to recover from the insured any sum paid to the third party in excess of the indemnity given by the policy.

The foregoing observations are not, however, of the essence as it is the language of section 20(1) of the Ordinance which is the concern. In James Harker v Caledonian Insurance Co. decided by Donalson J. on the 24th June, 1977, in the High Court of England, the learned judge held that the paragraphs of the proviso to section 4(1) of the Ordinance which relate to quantum, (namely paragraphs (iv), (v) and (vi)), limited the scope of the opening words of that section which requires the policy to cover the insured "in respect of any liability which may be insured by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the motor vehicle on a public Road".

Accordingly, the learned judge held that as section 20(1) makes an insurer liable to a third party for a judgment obtained -

"in respect of any such liability as is required to be covered by a policy under paragraph (b) of subsection (1) of section 4 (being a liability covered by the terms of the policy) .....",

section 20 had no application to an amount which on a judgment obtained exceeds the indemnity given by the insurer to the insured. In the result, Donaldson J. construed section 20(1) of the Ordinance in precisely the same manner as I think would have to be construed section 8(1) of the Act of Guyana notwithstanding that section 20(1) of the Ordinance does not contain the additional words to be found in the said section 8(1). The judgment of Donaldson J. was delivered after the hearing of the instant case, but I venture to think that had it been before this Court at the hearing of this case, an objection that Counsel for the Plaintiff might have taken to it, as he raised it in another context, would have been that the word "1iability" in section 20(1) should be interpreted as meaning the nature and not the amount of the liability. I can see no reason for so interpreting it. I accept the submission by Counsel for the Defendant that the word "liability" in the context of: "liability as is required to be covered by a policy under paragraph (b) of subsection (1) of section 4" in section 20(1) of the Ordinance refers both to the nature and amount of the liability under the terms of the policy which must be read subject to section 4(1)(b) and its provisos.

Further, I agree with Donaldson J. that had the Legislature intended to treat paragraphs (iv), (v) and (vi) differently from paragraphs (i), (ii) and (iii) of the proviso to section 4(1)(b), it would have included them in section 11 instead of section 4. As Donaldson J. pointed out, if those paragraphs had been included in section 11 and omitted from section 4, that "would have rendered the limitations effective as between the insured and the underwriter, but ineffective as against the third party".

In the result, I accept the judgment of Donaldson J. and find that the construction of section 20(1) of the Ordinance is unaffected by the omission of the additional words to be found in section 8(1) of the Act of Guyana. I might add that, notwithstanding that upon the construction given to section 20(1) of the Ordinance by Donaldson J. the insurer is only liable to satisfy a judgment obtained by a third party to the amount for which it was liable to the insured under the terms of the policy, there still is scope for the operation of section 20(4) of the Ordinance. Its purpose is, I think, explained by Donaldson J. when he said:

"Subsection (4) is necessary in order to give underwriters a right to recovery (a) if the policy was voidable at common law and they have not taken the necessary steps to obtain a declaration to this effect either in time or at all or (b) if it was voidable under a condition of the policy, this not being a defence to a third party's claim under section 20 of the Ordinance."

Some support for the finding that the construction of section 20(1) of the Ordinance is unaffected by the omission of the additional words to be found in section 8(1) of the Act of Guyana is, I think, found in the judgment of Luckhoo J.A. in Jamaica Co-op. Fire and General Insurance Co. Ltd. v Sanchez (1968) 13 W.I.R. 138. Under the relevant statute of Jamaica, which is the Motor Vehicles Insurance (Third Party Risks) Law, Cap. 257, section 16(1) is the section which corresponds to section 20(1) of the Ordinance. Whilst the language of that section follows the language of section 20(1) of the Ordinance and does not contain the additional words to be found in section 8(1) of the Act of Guyana, in subsection (2) of section 16 of the Jamaica law, provision is made in paragraph (a) as follows:

"(2) No sum shall be payable by an insurer under the foregoing provisions of this section:

(a) liability for which is exempted from the cover granted by the Policy pursuant to any of the provisos to section 4, subsection (1) of this Law."

Of that paragraph, Luckhoo J.A. said at p. 145: "I think that Mr. Griffith's submission that the provisions have been inserted ex abundante cautela is sound".

The learned judge of Appeal in the course of his judgment also referred to the Acts of Barbados, Guyana and Trinidad and Tobago and pointed out that section 8 of the Trinidad and Tobago Motor Vehicles Insurance (Third Party Risks) Ordinance, 1941, which is the section of that Ordinance corresponding to section 8 of the Guyana Act, did not contain the additional words to be found in section 8 (1) of the Act of Guyana and section 9(1) of the Act of Barbados. The relevant section of the Trinidad and Tobago Ordinance was in fact cast in the same mould as section 20(1) of the Ordinance. In reference to those enactments, Luckhoo J.A. at page 145 said:

"No reported cases were cited to us to show how the respective Barbados, Guyana or Trinidad and Tobago provisions have been interpreted, but I would venture to think that despite the omission of words similar to those mentioned above from the corresponding Trinidad and Tobago provisions that enactment would, when construed, have the same effect and result that the Barbados and Guyana provisions have".

There remains one other case to which I would refer. It is the case of Free Lanka Insurance Co. v Ranasinghe (1964) A.C. 541. In that case, the effect of a limitation of liability provision in section 128(l)(c) of the Ceylon Motor Car Ordinance, No.45 of 1938 had to be considered by the Privy Council in relation to a claim by a third party against insurers. Although the Ceylonese Ordinance differed in certain respects from the pattern of Legislation in the Commonwealth Caribbean, section 133(1) of that Ordinance was for all material purposes the same as section 20(1) of the Ordinance. In it is to be found the words:

"any such liability as is required by section 128 (1) (b) to be covered by a policy of insurance……"

Construing those words, the Board said at p. 554 of the judgment that:

"the 'liability' referred to in section 133 is, by the terms of subsection (1), a 'liability as is required by section 128(1)(b) to be covered by a policy of insurance'. It is therefore necessary to turn back to section 128, and it is to be observed that the terms of paragraph (b) of subsection (1) expressly incorporate the succeeding paragraph (c).

It therefore follows that in the case of a lorry the liability 'required' to be covered is a liability which shall not be less than Rs 20,000 but need not exceed that figure - so that any liability in the present case (having regard to the terms of the policy) in excess of Rs 20,000 was not one 'required' to be covered by the policy."

Although Donaldson J., in construing section 20(1) of the Ordinance in James Harker v Caledonian Insurance Co. (ibid) appears to me to have followed the above reasoning of the Board in Free Lanka Insurance Co. v Ranasinghe (ibid), he commented in reference to that case that -

"The respondents were not represented and it is fair to say … that there are certain clear errors which made the authority much less persuasive than would otherwise be the case."

However that may be, it would seem to me as a judge of a Court which is bound by the judgments of the Privy Council that as regards the interpretation to be given to section 20(1) of the Ordinance, I am bound by so much of the judgment in Free Lanka Insurance Co. v Ranasinghe (ibid) as I have cited. The claim, accordingly, must fail but this more must be said. James Harker was a soldier in the British Army stationed in Belize. As a result of a motor accident, he suffered severe injuries. He was awarded $175,000.00 damages, but because the car driver in his case was a man of straw and because of the very low limitations permitted by the Ordinance, recovered only $4,000.00. In this case, the Plaintiffs are dependents of persons who died when the bus in which they were travelling fell into the Belize River at Burrell Boom.

Again, because the bus owner was a man of straw and because of the low limitations permitted by the Ordinance, they can recover between an amount less than a half and more than a third of the damages awarded. It is very much to be hoped that the Legislature of this country will take note of these cases and, even if not minded to follow the enlightened lead of Barbados which in 1971 amended its Act so as to provide unlimited coverage for personal injuries and death, it will raise the present limitations as I understand has been done in the other Commonwealth Caribbean territories to which I have referred in this judgment, if only to take account of the fall in the value of money.

The Action is dismissed.

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