UKPC 33
Privy Council Appeal No 0062 of 2011
The Presidential Insurance Company Limited (Appellants) v Resha St. Hill (Respondent)
From the Court of Appeal of the Republic of Trinidad and Tobago
JUDGMENT DELIVERED BY
16 August 2012
Heard on 30 April 2012
Alan Newman QC
Shastri V C Parsad
(Instructed by Simons Muirhead & Burton)
Andrew Goddard QC
(Instructed by William Sturges)
"(7) Notwithstanding anything in any written law, rule of law or the Common Law, a person issuing a policy of insurance under this section shall be liable to indemnify the person insured or persons driving or using the vehicle or licensed trailer with the consent of the person insured specified in the policy in respect of any liability which the policy purports to cover in the case of those persons."
"(7) Notwithstanding anything in any written law, rule of law or the Common Law, a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons."
"Notwithstanding anything in any enactment, a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons."
The opening wording of s.4(7) of the unamended Trinidad and Tobago statute made it perhaps even better fitted than the English wording to fulfil the section's purpose - since this was to address the common law obstacle (deriving from the doctrines of privity of contract and consideration) which stood in the way of enforcement of an insurance in favour of persons who were purportedly insured under it but were not the policy holder taking out the policy. Some judges had found ways around this obstacle, for example by using the concept of trust, but these were of uncertain reliability.
"Before the Road Traffic Act, I930, the provision in a policy for extended insurance was of very doubtful value. That extended provision conferred no benefit on the policyholder, and the persons it purported to benefit, not being parties to the contract, could not claim under it, That, I think, was finally decided in Vandepitte v Preferred Accident Insurance Corporation of New York.  AC 70".
Atkinson J then cited with approval Branson J's analysis of s.36(4) in an earlier case, to the effect that:
"The section does not, in my opinion, impose any statutory liability upon the insurer. It only gives to 'persons specified' a statutory right to sue upon the contract which, apart from statute, they did not possess."
Atkinson J concluded:
"I entirely agree with that view. It means that an authorised driver claiming by virtue of s.36 is claiming on the contract contained in the policy. Although not a party to the contract, he is given by the statute the rights of a party".
"In any case, any person driving another's car at that other's request would desire and expect to be covered by insurance. It was to meet this desire and expectation that the extended insurance was introduced and was made available to such drivers by sub-s. 4 of s. 36 of the Act, which imposes on the insurer the extended liability in favour of other parties if the policy purports to cover them, as this policy does."
The qualification "if the policy purports to cover them, as this policy does" is important. The purpose of s.36(4) was not to impose on any insurer a liability which it had not purported to undertake. On the contrary, it was to facilitate enforcement of the indemnity which insurers had undertaken to the policyholder to provide to other persons.
"insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of any death of or bodily injury …."
"4A. Notwithstanding any other law, the owner of a motor vehicle licensed to ply for hire and insured under this Act is deemed to be the employer of any person driving the motor vehicle at the time of an accident as a result of which a person has suffered death, bodily injury or damage to property unless it is shown that at the time of the accident that the vehicle was the subject of larceny."
This new provision clearly expanded the scope of insurers' liability, by deeming the insured owner of any vehicle licensed to ply for hire to employ any person driving it at the time of the accident, unless the vehicle had been stolen. This avoids any arguments about vicarious liability, but only in respect of motor vehicles licensed to ply for hire. Since the provision only applies if the vehicle has not been stolen, its primary application must be to situations where the vehicle was being driven with the owner's consent, but arguments could arise as to whether it was being driven on the owner's behalf as an employee, rather than, for example, in the course of an activity carried on as independent contractor. Accordingly, if s.4(7) had the effect accepted by the courts below of covering any situation in which an insured owner had consented to anyone else driving the insured vehicle, regardless of any limitation in the policy of the persons authorised to drive, then s.4A would seem to have been largely if not entirely unnecessary.
(para 20 of judgment)
(Hansard, 20 September, p.423)
(A) "Mr. Speaker, the purpose of this Bill is to seek to redress the difficulties and injustices which are suffered by persons who are injured, or suffered damage, as a result of motor vehicular accidents."
(B) This Bill is going to make it very difficult for insurance companies to avoid liability for accidents for which they are responsible, but which they have, in the past, used construction of principles to say that the insurance policies do not cover the particular accident. Quite apart from the provision that the court would have a discretion to hear matters in which there is an action filed both against the tortfeasors and against the insurance company, the Bill attempts to redress other injustices which some insurance companies have caused to victims of motor vehicular accidents.
(C) Some of the clauses, in effect, would place statutory restrictions on insurance companies being able to avoid insurance liability. As a matter of fact, one of the reforms is that in cases where the vehicle is being driven by a person whom the owner knows as the driver of that vehicle, the driver would be deemed to be the agent of the owner. Under the present law, many owners and insurance companies avoid liability for accidents, although the owners know who was driving the vehicle and, in effect, consented to the person driving the vehicle. However, because of the principles of common law, the fact that a person knows that someone is driving his vehicle does not necessarily mean that at the time of the accident, the person was acting as a servant and/or agent of the owner. Some insurance companies have used that loophole to avoid claims in favour of victims."
(Hansard, 11 October, pp.539-542)
(D) " Now if I may go to clause 5(f) which is deleting subsection (7) and substituting a new clause [s.4(7) in the Act]. I am doing this in order to show how this Government has decided to take these areas of law to try to see how the ordinary person can benefit from the spirit and intention of legislation and to prevent, as in this case, insurance companies from trying to contract out of the intention of the Act.
(E) The new subclause (7) [s.4(7) in the Act] says:
"Notwithstanding anything in any written law, rule of law or the Common Law, a person issuing a policy of insurance under this section shall be liable to indemnify the person insured or persons driving or using the vehicle or licensed trailer with the consent of the person insured specified in the policy in respect of any liability which the policy purports to cover in the case of those persons."
(F) What has happened in the past is that when the time came for some insurance companies to pay, there would be all sorts of allegations that the facts do not make the company liable because the person who was driving the vehicle was not the servant or agent, or was not driving with the consent of the owner. The way the law was drafted and the way the law had developed, there were many esoteric submissions, questions and even judgments to the effect that if one did not have the consent of the owner one could not be liable, and even if the person may know that someone was driving the vehicle, that person was not the servant and/or agent of the owner.
(G) So what this clause attempts to do is to prevent insurance companies from saying, "well, we insured the owner or his servant or agent and the name of the driver is not on the policy." An insurance company would say, "listen, if you are the owner, you must say who is going to drive this vehicle and we are going to put the name of that person on the policy." When an accident occurs, the owner would say, "well, that person who was driving, a person who is not named in the policy, was not driving with my consent." Therefore the insurance company would say, "that person who was driving the car, his name was not on the motor insurance policy."
(H) This piece of legislation is saying that the person who is driving the vehicle would be deemed to be the person driving with the consent of the owner. So that many of those insurance companies which avoided people who were injured and who became vegetables and who could not work again and could not get any moneys from the insurance companies, in the future when those situations occur, people would be able to get compensation from the insurance companies.
(I) I do not think I need to tell you, Mr. Speaker, because you have been involved in the practice of law and you have seen the two sides of the coin and people who have seen two sides of the coin can be considered to be fortunate. In private practice one sees, as a lawyer, that there are so many people who are injured in motor vehicular accidents and who should have received compensation from the insurance companies, having regard to the spirit and intention of the ·legislation, but who did not receive because some of the companies argued that their names were not on the policies; that when the person was driving the vehicle he was not the servant and/or agent. For example, in respect of a maxi taxi, the owner of the vehicle would say, the person was driving for his own purposes at the time and, in effect, he would not be regarded as driving with the authority of the owner. These amendments, really, are to try to get away and to finish with all those arguments, to have the full intent of the law delivered to the injured party.
(J) Clause 7 of the Bill really deals with the question of security and it is related to section 3 of the Act, because under section 3, it says:
" .. .it shall not be lawful for any person to use, or to cause or permit any other person to use, a motor vehicle on a public road unless there is in force in relation to the user of the motor vehicle by that person or that 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 requirements of this Act."
So this is to amend the security provision io order to increase it to $300,000.
(K) Clause 8 might seem to be a very small amendment, but it has caused a lot of difficulties and has deprived many people of compensation over the years.
Section 8 says:
"Any condition in a policy or security issued or given for the purposes of this Act, providing that no liability shall arise under the policy or security, or that any liability so arising 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 be of no effect in connection with such claims as are mentioned in section 4(l)(b)."
(L) This section 8 was intended to try to prevent insurance companies from contracting out of the Act. The words, "such claims as are mentioned" have been construed, used, misused and abused. It has given redress in favour of insurance companies because they said that claims did not mean liability, therefore the insurance company could have contracted out of liability.
(M) So that the word "liability" instead of "claims" is an important amendment in order to try to give redress. This simple amendment would, in effect, provide a lot of redress for injured parties.
(N) I did not mention clause 6 [s.4A in the Act as passed], but it is another clause which is intended to fill the loopholes in respect of some of these matters. Clause 6 states:
"For the purposes of this Act owner of a motor vehicle licensed to ply for hire and insured under this Act is deemed to be the employer of any person driving the said motor vehicle at the time of an accident as a result of which a person has suffered death, bodily injury or damage to property."
(O) What used to happen is that a maxi taxi driver owner would have some independent arrangement with the driver of the vehicle and when the maxi taxi gets into an accident, the owner says that the driver is not employed by him; he is an independent contractor; it is an independent contractor relationship; it is not servant or agent relationship.
(P) What we are saying, in respect of those kinds of vehicles, the person is deemed to be the employer of any person driving the vehicle, so that there can be no question when a maxi taxi vehicle gets into an accident and people are injured, the passengers of the vehicle will be able to sue the owner, the driver and the insurance company, and the insurance company would not be able to say that it is not liable because the person who was driving the vehicle was not a servant or agent, but was an independent contractor. Similarly, the owner would not be able to say that the person was not driving as his employee.
(Q) In summary, it is a Bill which intends to reform the law of insurance in the area where persons are injured in motor vehicular accidents and where they would have claims against insurance companies. It is a law which would make it more difficult for insurance companies to avoid liability. It is a law which would, in effect, give an option to an injured party to sue in one action the insurance company and the tortfeasor so that much time would be saved in not having to go through two sets of actions.
(R) It is a law which will, in effect, expand the meaning of "road" and include "trailers". It is a law which would, in fact, provide relief for persons who have to undergo emergency operations; it is a law which would ensure that claims which have to be paid by insurance companies, whether they be property damage claims, personal injuries claims or a series of claims, it would also make the insurance company liable to pay the cost that the injured party has to pay to the lawyers. It is a maximum amount, plus the legal cost which the injured party has to pay for fighting the case, if I may use that expression."
(Hansard, 5 November 1996, Senate, committee stage, p.440)
(S) [In relation to the clause which became s.4(7):] "The purpose of this clause is to prevent some insurance companies from taking the point that the person who is driving the vehicle did not have the consent of the insured and therefore is making it very difficult, if not impossible, for that point to be taken in order to ensure that the victim gets coverage. Therefore, in my view it expands the range of persons required to be indemnified under third-party insurance coverage.
(T) It will mean that not just persons specified in the policy shall be indemnified as is now the case, but persons who are driving or using the vehicle with the consent of the person insured specified in the policy. Normally what could have happened was that some insurance companies could have said that the driver's name is not mentioned in the policy, although the driver was driving with the consent or with the permission of the insured, points used to be taken that since he was not a specified driver in the policy there was not coverage for it, and this is an attempt to remedy that kind of situation."