(CARLOS MOSSIAH PLAINTIFF
BETWEEN (
(AND
(
(REGENT INSURANCE CO. LTD. 1ST DEFENDANT
(BECKY ORIO 2ND DEFENDANT

Supreme Court
Action No. 196 of 1999
Shanks, J.
2nd February, 2000

Mr. Nicholas Dujon for the Plaintiff
Mrs. Lois Young-Barrow for the First Defendant

Motor Vehicle Insurance (Third Party Risks) Act - First Defendant's
agent issuing thirty day cover note - Defendant resisting claim for
insurance after Plaintiff's vehicle involved in a road traffic accident -
Effect of cover note - Interpretation of Section 19 of the Motor Vehicle Insurance (Third Party Risks) Act.

J U D G M E N T

This is a claim under Section 19 of the Motor Vehicle Insurance (Third Party Risks) Act.

On 5th July, 1997 the Plaintiff suffered a road traffic accident upon colliding with a vehicle CZL C6651 being driven by Rigiberto Bonilla. He started proceedings and obtained a judgment against Mr. Bonilla in the sum of $116,998 with interest and costs in respect of that accident. There was in existence a 30-day cover note No. 38503 in respect of CZL C6651 dated 9th June, 1997 signed on behalf of the Defendant insurance company by Becky Orio (who was Second Defendant but played no part in the trial). That cover note stated that:

"Mr. Gilberto Vivas/Florencio Esquivel/Mario Quan having proposed for insurance or having renewed in respect of the Motor Vehicle(s) described in the Schedule below and having paid the sum of … the risk is hereby held covered in terms of the Company's usual Motor Vehicle Insurance Policy applicable thereto for a period of thirty days that is to say from … am/pm on the above date to the same time on the thirtieth day after such date. This Covering Note may be cancelled on seven days written notice given by the Company to the Insured in which case the insurance will thereupon cease and a proportionate part of the annual premium otherwise payable for such insurance will be charged for the time that the Company has been on risk. Upon the issue of a Policy this Covering Note shall cease."

The schedule gave details of vehicle CZL C6651 and at the bottom left hand corner near the date 16th April, 1997 - 16th April, 1999 were handwritten.

Section 19(1) states as follows:

(1) "If, after a certificate of insurance has been issued under section 4 (3) in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under section 4 (1) (b) or (c) (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled the policy, the insurer shall, subject to this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."

Although the terms of that section appeared to be prima facie satisfied, Ms. Young for the Defendant resisted the claim on a number of grounds. Since it seemed to me that the onus was on her to establish one or more of these grounds, she called her evidence first.

Mr. Alpuche was called from the Department of Transport. His evidence showed that the vehicle had been registered in the name of Mr. Quan from 18th April, 1996, that he was issued with a duplicate certificate of registration from 7th July, 1997 and that the registered ownership of the vehicle was transferred from Quan to Florencio Esquivel on 12th July, 1998.

Mr. Flyn, the Managing Director of Regent, gave evidence. He told me those agents like Becky Orio had authority to issue 30-day cover notes if satisfied that a risk was acceptable to Regent. They then send the proposal form and a copy of this cover note to Regent's officer in Belize City. He produced his Company's underwriting guide, which stated among other things:

"(3) Upon acceptance (by the agent) of a completed motor Proposal & Declaration, and payment of premium, a cover note shall be issued. This covering note shall bear the date wherein the client actually signs the Proposal & Declaration Form; irrespective of any other intimation to confirm/effect cover, whether they be verbal or otherwise. A COVERNOTE SHALL NOT BE BACKDATED. This is a criminal offence.

(4) A motor cover note shall bear the signature of the agent, and shall be valid for a period of (30) thirty days.

(5) A cover note must be issued in the name of the person or parties under whose name the vehicle is registered.

(6) New business and renewals sold by the Agent must be forwarded to head office on their weekly bordereaux."

Becky Orio operated from her father's hardware shop. Around this time (June 1997) she was having personal problems and her agency was brought to an end in August, 1997. Mr. Flynn told me that normally agents had one book of 50 cover notes but they would request a new book when one was running out. He told me that Becky Orio requested the book containing cover note 38503 in late June, 1997 but it was clear that this date was not based on any record but on what he had been told by others in the office and was therefore hear say evidence, evidence which is, of course, inadmissible. This is apparent from the bordereaux report made by Miss Orio on 8th August, 1997 that she was around this period issuing cover notes without reporting them to head office and it was also likely that she was receiving premiums which she did not account for. The Defendant Company had records of a policy in respect of CZL C6651 issued to Vivas and Esquivel for the period 16th April, 1996 - 16th April, 1997 but no record of cover note 38503 or the receipt of any premium in respect thereof. That was the Defendant's evidence.

Mr. Dujon for the Plaintiff called Florencio Esquivel, one of the policyholders named in Certificate 38503. He is a papaya farmer in Corozal in partnership with Mr. Vivas. In April 1996 they were purchasing vehicle CZL C6651 from Mr. Quan on credit and he took out an insurance policy with the Defendant through Miss Orio. He produced a cover note No. 34231 in the same form as 38503 dated 16th April, 1996 showing a premium of $284.40 to have been paid. The name Mario Quan had been added to that cover note at a later date because Mr. Esquivel was told when he went to licence the vehicle that the registered owner, Mr. Quan, needed to be on the insurance; he had then explained this to Miss Orio who had added Mr. Quan's name. When the original policy expired in April, 1997 Mr. Esquivel told me the vehicle was off the road for a while; in late May he decided he needed the vehicle on the road again and he went back to Miss Orio on 9th June, 1997. He produced the cover note 34231, paid her $284.00 in cash and she issued cover note 38503. He had no receipt for the payment nor was it recorded on the new cover note but he explained that he was a regular in her father's store and had credit there and saw no need. Ms. Young put it to him that at the time of the accident on 5th July, 1997 the vehicle was not insured and that the cover note had been obtained later. He denied this and stated that the vehicle was insured at the relevant time and that it had a sticker in the windscreen to show this. That was the evidence. Neither party called Miss Orio who may have been able to assist.

Ms. Young takes in effect four points which were elaborated in her extremely helpful written and oral submission. I should say Mr. Dujon also put in extremely helpful written submissions.

I will deal with Ms. Young's points in turn:

(1) She says that although there is a cover note, there was no contract of insurance underlying it (and, though she does not need to go this far, the cover note is, in effect, a forgery). In the light of Mr. Esquivel's evidence, which I accept, it seems perfectly clear that he did effect a contract of insurance for this vehicle with the Defendants (acting through Miss Orio) on 9th June, 1997, so that this defence cannot succeed, though I should say that on the material they had it was a perfectly reasonable and proper point for the Defendants to take.
(2) In a related point she says that no consideration was given for any policy of insurance and she relies on the blank in the cover note and the fact that Mr. Esquivel has no receipt. I accept Mr. Esquivel's evidence that he paid cash to Miss Orio as agent for the Defendant, although I do not doubt she failed to pass it on. I do not find it particularly surprising that he has no receipt. The fact that the cover note does not record the payment is not relevant to its validity as far as I can see.
(3) She says that on the face of the cover note it was not valid at the date of accident because it should be read as a cover note from 16th April, 1997 for 30 days "from … am/pm on the above date." The above date is 9th June, 1997. The dates 16th April, 1997 - 16th April, 1998 appear at the bottom of the certificate. I do not think I need speculate as to why they are there but it seems probable that Miss Orio put them there to record that the previous policy had expired on April 16th, 1997 and that a full annual renewal would take the insurance through to 16th April, 1998. This does not affect the validity of the cover note for 30 days from 9th June, 1997. Of course, no policy document in respect of this insurance, whether commencing 16th April, 1997 or 9th June, 1997, was ever issued because Miss Orio never sent in the details to head office.
(4) She says the defendant is entitled to avoid the policy because there was a failure to disclose that Rivas and Esquivel were not registered owners of the vehicle in June, 1997. Assuming this was a material matter, it seems Miss Orio (who was Defendant's agent) knew the true position because, as I have said, Mr. Esquivel had told her that Quan's name needed to be on the policy because he (and he alone) was the registered owner. In any event, it is not open under Section 19 of the Act to Ms. Young to take the point in these proceedings. Section 19(3) provides:

"No sum shall be payable by an insurer under the foregoing provisions of this section against a judgment in respect of any liability required to be covered by section 4 (1) (b), if, in an action commenced before, or within three months after, the commencement of the proceedings in which the judgment was given, he has obtained a declaration that, apart from any provision contained in the policy, he is entitled to avoid it on the ground that it was obtained by the nondisclosure of a material fact, or by a representation of fact which was false in some material particular, or, if he has avoided the policy on that ground, that he was entitled to do so apart from any provision contained in it:

Provided that an insurer who has obtained a declaration as aforesaid in an action shall not thereby become entitled to the benefit of this subsection as respects any judgment obtained in proceedings commenced before the commencement of that action, unless before or within seven days after the commencement of that action he has given notice thereof to the person who is the plaintiff in the said proceedings specifying the nondisclosure or false representation on which he proposes to rely, and any person to whom notice of such an action is so given shall be entitled, if he thinks fit, to be made a party thereto."

Ms. Young did not comply with the requirements of Section 19 (3). Section 19 (1) provides that, subject to the rest of the section, the insurer shall pay the judgment creditor. It is not, therefore, open to her to take the point other than through the Section 19 (3) procedure.

I therefore reject all Ms. Young's points. There must therefore be judgment for the sum claimed ($50,000.00) plus interest at the rate of 6% on that sum from 26th January, 1999 and $5,000.00 costs of the original action No. 509/97. The first Defendant must pay the Plaintiff's costs of the action to be taxed if not agreed. The Plaintiff must pay the second Defendant's costs assessed at $600.00.