Mecheck Willis v Globe Insurance Company of Jamaica Ltd

• Jurisdiction: Jamaica
• Judge: Panton P,Phillips JA,McDonald-Bishop JA
• Judgment Date: 19 June 2015
• Neutral Citation: JM 2015 CA 64
• Docket Number: CIVIL APPEAL NO 84/2012
• Court: Court of Appeal (Jamaica)
• Date: 19 June 2015

Between

Mecheck Willis

Appellant

and

Globe Insurance Company of Jamaica Limited

Respondent

[2015] JMCA Civ 36

Before:

The Hon Mr Justice Panton P

The Hon Miss Justice Phillips JA

The Hon Mrs Justice McDonald-Bishop JA (Ag)

CIVIL APPEAL NO 84/2012

JAMAICA

IN THE COURT OF APPEAL

SUPREME COURT

INSURANCE LAW - Motor vehicle accident - Unlicensed driver - Uninsured driver - Whether appellant had statutory entitlement to recover from insurance conpany - Whether a third party entitled to recover from the insurer a judgment obtained against the insured in situations where circumstances contravene terms of insurance policy - Whether respondent liable to idemnify third party - Can respondent rely on contractual defence to escape liability arising under policy - Motor Vehicle Insurance (Third-Party Risks) Act, s. 18(1)

Mrs Marvalyn Taylor-Wright and Anwar Wright instructed by Taylor-Wright and Co for the appellant

David Johnson instructed by Samuda and Johnson for the respondent

Panton P

1 On 29 May 2015, we made the following order in this matter:

‘Appeal dismissed.

Costs to the respondent to be agreed or taxed.’

We promised then to put our reasons in writing, and this we now do.

2 This appeal was from the judgment of Mangatal J who refused certain orders sought by the appellant against the respondent. The issue for our determination (as it was for Mangatal J) was whether the appellant, who was injured in a motor vehicle accident, had a statutory entitlement to recover from the respondent insurance company the fruits of a judgment awarded against the owners of the motor vehicle. This determination depended on the interpretation of section 18(1) of the Motor Vehicles Insurance (Third-Party Risks) Act (hereinafter referred to as ‘the Act’).

3 On 27 January 2001, the appellant while driving his Mazda motor vehicle along the Phoenix main road in the parish of Saint Ann was involved in an accident with a Nissan Sunny motor car owned by Yvonne and Patrick Flynn, and driven by Devar McFarlane, aged 16 years. Due to McFarlane's negligence, the appellant was seriously injured. He filed suit against the Flynns and McFarlane's estate. There was no acknowledgment of service so a default judgment was entered against the Flynns on 29 July 2010, for damages to be assessed. Those damages were assessed and ordered by Fraser J on 23 June 2011 as follows:

• ‘1. Special damages are awarded in the sum of $17,456,574.65 with interest at the rate of 6% form [sic] January 27, 2001 to June 21, 2006 and at the rate of 3% from June 22, 2006 to June 23, 2011.

• 2. General damages are awarded for pain and suffering loss of amenities in the sum of $9,500,000.00 with interest at the rate of 3% from July 13, 2007 to June 23, 2011.

• 3. Costs of [sic] the Claimant to be agreed or taxed.’

4 Consequent on his failure to recover from the Flynns, the appellant filed a fixed date claim form against the respondent on 6 September 2011 seeking a declaration that the respondent is liable to pay to the appellant ‘the maximum sum payable under the Contract of Insurance in existence on the 27 ^th day of January, 2001 in respect of [the] motor vehicle…’. The appellant also sought an order that the respondent do pay interest at the statutory rate of six per centum per annum from 23 June 2011 until payment.

5 Evidence was received by Mangatal J confirming the age of the driver of the motor vehicle at the time of the accident, and the existence of an insurance policy between the Flynns and the respondent Globe Insurance Company. The respondent's stance has been that it is not liable due to the fact that the driver of the motor vehicle had no driver's licence and was not qualified to obtain or hold one, due to his age. The insurance policy did not cover the situation, according to the respondent.

6 Mangatal J refused the orders sought. She did so, reasoning as follows:

• • the driver of the motor vehicle, being 16 years old at the time, was not permitted by law to drive a motor vehicle on a public road;

• • in determining whether liability is covered for the purposes of section 18(1) of the Act, the paramount consideration must be whether on a proper construction of the terms of the insurance policy, the liability arose from a risk that was covered by the express terms of the policy, and in respect of persons entitled to indemnity at the time of the incident;

• • the driver was not insured under the policy, and so the respondent had no duty to provide indemnity in respect of the judgment against the Flynns, the owners of the vehicle;

• • the law does not require an insurer to provide insurance coverage in respect of third parties' claims arising in respect of the driving of a motor vehicle by a person who is not licensed, permitted or authorized to drive under the law;

• • the insured in the instant case, having breached the policy, are not entitled to be indemnified;

• • there is no coverage at all in the instant case as the driver was not licensed to drive; and

• • the loss suffered by the appellant was not one that was contemplated or covered under the policy of insurance, hence the respondent is not liable to provide indemnity or to satisfy the judgment of 23 June 2011.

7 In his grounds of appeal, the appellant complained as follows:

• a. The learned trial judge erred in failing to pay sufficient regard to the legislative scheme of the Motor Vehicles (Third-Party Risks) Act, which is aimed at protecting innocent third parties.

• b. The learned trial judge erred in deciding the case on the basis of the breach of contract relied on by the insurer, namely, permitting the car to be driven by an unlicensed driver.

• c. The learned trial judge erred in holding that the right to indemnity does not arise unless the loss occurred at a time when the motor vehicle was being operated by persons covered by the policy.

• d. The learned trial judge erred in holding that cover under the insurance policy does not apply where the driver is not licensed to drive, and there is no exception evident on the policy to restrict the insurer's liability to a third party.

8 Mrs Marvalyn Taylor-Wright, in written submissions dated 14 November 2014 and in oral arguments before us on 11 February 2015, said that the appellant's main contention was that the insurer had a statutory, as distinct from a contractual, liability to honour the judgment sum or the policy limit whichever is the lower. According to her, the intention of the legislature, given the scheme enacted in the Act, was to protect innocent third parties against the risks to which they are exposed by the use of motor vehicles on the public roadway. She argued that the learned trial judge erred in emphasizing that the driver was not covered at the time of the accident. That, Mrs Taylor-Wright said, was an irrelevant consideration. Other common law jurisdictions, she said, have interpreted legislation similar to ours in a manner ‘protective of the rights of the third party and preventing an insurer from relying on contractual defences’. In that regard, she referred to the cases: National Insurance Co Ltd v Nicolletta Rohtagi And Ors [2002] Supp (2) SCR 456, Eastern Caribbean Insurance Ltd v Edmund Bicar HCVAP 2008/014, delivered 3 May 2010, and Matadeen v Caribbean Insurance Co Ltd [2002] UKPC 69.

9 Mrs Taylor-Wright also submitted that there is nothing in the legislation that restricts the liability of the insurer in respect of third parties in circumstances where the vehicle is not being operated by persons specified in the policy of insurance. As long as the persons against whom judgment was obtained were specified in the policy as being insured, then payment by the insurer is compulsory under the contract, she said. Further, she submitted that ‘the important consideration for the learned judge was not whether the [a]ppellant had a valid claim to be indemnified but whether the [a]ppellant had a right to be compensated by the [r]espondent insurer under section 18(1) of the Act’.

10 It is necessary to set out the provisions of section 18(1) of the Act, and also to see what was determined in the cases on which Mrs Taylor-Wright relied. The section reads thus:

‘18. – (1) If after a certificate of insurance has been issued under subsection (9) of section 5 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 subsections (1), (2) and (3) of section 5 (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 the provisions of this section, pay to the persons entitled to the benefit of the judgment the amount covered by the policy or the amount of the judgment, whichever is the lower, 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.

(1A) The right of payment under subsection (1) shall not be limited by reference to –

• (a) the minimum liability coverage required under subsection (1), ( 2) or (3) of section 5;

• (b) any limitation of liability to claim specified in subsection (4) of section 5.

(2) Subject to subsection (1A), 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 subsection (4) of section 5; …’

11 Given the reference in the section to the ‘liability as is required to be covered by a policy’, it is important to see what was in fact covered. In this regard, the certificate of insurance issued to the Flynns names...