DIAFO vs. STATE INSURANCE CORPORATION [1973] 2 GLR 371

CASE REFERRED TO

Windsor v. Chalcraft [1939] 1 K.B. 279; [1938] 2 All E.R. 751; 107 L.J.Q.B. 609; 159 L.T. 104; 54 T.L.R. 834; 82 S.J. 432, C.A.

NATURE OF PROCEEDINGS

APPLICATION to sign final judgment in an action against the defendants, the insurers, to satisfy judgment previously obtained against an insured. The facts are stated in the ruling.

COUNSEL

Hughes for the applicant.

C. Cann for the respondents.

JUDGMENT OF CHARLES CRABBE J.

The plaintiff issued a writ on or about 1 March 1968 against a Mr. Alphonse Bullard, of Adisadel College, Cape Coast. This he did as the sole administrator of the estate of one Thomas Tawiah. By that writ he claimed, for himself and on behalf of the estate and other dependants of the late Thomas Tawiah, damages for the injuries caused to, and the subsequent death of, the said Thomas Tawiah by reason of the negligent driving of Mr. Alphonse Bullard (Bulliard).

In accordance with the provisions of paragraph (a) of subsection (2) of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), notice of the action was given to the defendant corporation. On 27 July 1971, the High Court of Justice gave judgment for the plaintiff against Mr. Alphonse Bullard in the sum of ¢6,400.00 inclusive of costs of ¢400.00. The plaintiff then gave notice, on 28 July 1971, to the defendant corporation of the judgment obtained against Mr. Alphonse Bullard, an insured of the said corporation. This judgment has not been satisfied. Thus on 22 May 1972 the plaintiff issued a writ against the defendants claiming the judgment debt and costs amounting to ¢6,400.00.

The defendants entered appearance to the writ issued on 22 May 1972. The plaintiff then applied under Order 14, rr. 1 and 2 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), for liberty to sign judgment against the defendants. In the words of the plaintiff’s affidavit “they have no good defence to the action on merits.” The defendants, through their lawful representative at Takoradi, deposed to an affidavit that on the receipt of the notice of the action between the plaintiff and Alphonse Bullard, the defendants had to wait on their insured, Alphonse Bullard, for the writ but the defendants never received that writ. It is contended that the judgment obtained against Alphonse Bullard was invalid and therefore voidable for the reasons that:

“(1) The writ of summons numbered 16/68 issued on 1 March 1968 ceased to be in force on 28 February

1969—and therefore at the time judgment was given no such action was pending in court.

[p.373] of [1973] 2 GLR 371 (2) Since the defendant was out of the country at the time of the issue and service of the writ, service of it on the defendant should have been effected out of jurisdiction and the substituted service effected by the plaintiff was therefore bad in law.

(3) If the true facts regarding the whereabouts of the defendant Alphonse Bullard at the time the application for an order to serve Alphonse Bullard by substitution had been known by the court, the court would not have granted leave to the plaintiff, Kweku Diafo to proceed by substituted service.”

In the circumstances the defendants caused a writ to be issued for the purpose of setting aside the judgment obtained by the plaintiff against Alphonse Bullard. Counsel for the plaintiff, in asking to sign final judgment against the defendants, stated that the defendants had failed to satisfy the judgment obtained against Mr. Alphonse Bullard, which by law, that is to say, according to the provisions of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, the defendants had to satisfy. He contended that the court had to go into the question as to whether any writ had been issued by the defendants to have the judgment set aside. If that had not been done then the judgment was of full force. He was not aware that any action had been taken to set aside the judgment. Neither was he aware that an appeal had been lodged. As such the judgment was valid.

Counsel for the defendants contended that his duty lay in satisfying the court, under the provisions of paragraph (a) of rule 1 of Order 14 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), that he had a good defence to the action on the merits. Equally it was his duty to “disclose such facts as may be deemed sufficient to entitle him to defend the action generally.” If he succeeded in that task then the court should not make the order empowering the plaintiff to enter final judgment “having regard to the nature of the remedy or relief claimed.” He said that the defendants had been called on in this case by virtue of the provisions of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958. The defendants therefore had an interest in this case. They were entitled to appeal and his choice was to seek to set aside the judgment obtained against Alphonse Bullard. His complaint was that the judgment which the defendants had been called upon to satisfy was no judgment at all. In all he relied on Windsor v. Chalcraft [1939] 1 K.B. 279, C.A. This case appears to be an authority for the proposition that the court has power to set aside a judgment by default on terms or to set aside a judgment on the ground that a party upon whom a liability had been imposed by statute had an actual interest and was injuriously affected by the judgment. In that case a policy of insurance provided that the underwriters should indemnify the defendant in respect of death or bodily injury to third parties caused by or in connection with the use of his motor car. That policy contained a condition that the insured should, immediately any occurrence which might give rise to a claim

[p.374] of [1973] 2 GLR 371

under the policy came to his knowledge, notify the underwriters of that occurrence; and that “The underwriters shall be entitled to take absolute control of all proceedings and negotiations and have full discretion to settle, prosecute or defend any claim in the name of the insured.” The defendant was involved in an accident in which a third party was killed. An action was brought against the defendant for damages and the relevant notices were duly given. Judgment was obtained against the defendant in default of appearance. An application was made by the underwriters. The master made an order that the judgment in default of appearance and all subsequent proceedings in the case should be set aside and that the underwriters be at liberty to enter appearance in the action in the name of the defendant and to deliver a defence.

The plaintiff appealed. The judge set aside the order of the master. The underwriters appealed. It was held by the Court of Appeal that the order of the judge be rescinded and that of the master restored since the underwriters, although not parties to the action, were liable under the relevant statute to pay the amount of the judgment debt to the plaintiff. And since under the policy they had to pay it to the defendant, they were persons aggrieved by the judgment and as such entitled to an order setting aside the judgment and giving leave to enter an appearance in the action in the name of the defendant or in their own name and to deliver a defence.

There is, it seems to me, some distinction between Windsor v. Chalcraft (supra) and the case before this court. It is true that a judgment has been obtained. It is true that the Motor Vehicles (Third Party Insurance) Act, 1958, imposes a liability on the defendants, such as was imposed by the Road Traffic Acts 1930 and 1934 in the Windsor case. It is true that the defendants are adversely affected by the judgment obtained against Alphonse Bullard, the insured of the defendants. It may, even, be true, as deposed to by the representative of the defendants, that the writ in the first action “ceased to be in force on the 28 February 1969,” that the substituted service was bad in law, and that had the true facts been known “the court would not have granted leave to the plaintiff, Kweku Diafo, to proceed by substituted service.”

The action before me now is an application that the plaintiff be at liberty to sign final judgment against the defendants. I am not being called upon to set aside the judgment obtained by the plaintiff against Alphonse Bullard. I am not being called upon to consider whether that judgment was obtained by default. I am not being called upon to determine, even, the locus standi of the defendants. The issue before me is whether, in the circumstances of this particular case, I should accede to the request of the plaintiff and order that final judgment be signed for the plaintiff against the defendants. The plaintiff relies solely on the fact of the judgment having been obtained. He calls in aid the provisions of subsection (1) of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958. The operation of subsection (1) of the said section is dependent upon certain conditions. Some of these conditions are that:

[p.375] of [1973] 2 GLR 371

(a) the liability concerned is covered by the terms of the policy;

(b) notice of the proceedings upon which the judgment was based had been given to the insurers before or within fourteen days after the commencement of the proceedings:

(c) the policy concerned had not been cancelled by mutual consent or by virtue of any provisions contained in the policy;

(d) a declaration had not been obtained to the effect that the insurer is entitled to avoid the judgment.

Whether these conditions had been satisfied or not has not been brought to my attention. I think I am entitled to assume that the court must have been satisfied before giving judgment against Alphonse Bullard. And on that ground that all those conditions or such of them as were pertinent to the judgment had been satisfied. But before this court the sole ground, as already indicated, is that a judgment had been obtained. It is, I believe, because of this stand taken by the plaintiff that the defendants have sought to rely on that part of rule 1 of Order 14 of L.N. 140A which relates to the disclosure of facts which may be deemed sufficient to satisfy the court and thus entitle them to defend the action, and arguments to show that they have a good defence to the action on the merits.

What then are the facts which the defendants have disclosed such as entitle them to defend the action generally? It is material here to determine to what the word “action” refers, as used in paragraph (a) of rule 1 of Order 14. Does it refer to the present action, that is, the application now before this court’, or to the action as between the plaintiff and Alphonse Bullard in respect of which the judgment was obtained? The word cannot, in my view, refer to the present action. For the right to defend the present action had not been called in question. No preliminary argument was advanced as to the locus standi, in this application, of the defendants. Indeed that could not have been done since the very wording of the said paragraph, especially the second sentence concedes the point. It must, refer, then, to the earlier action, the action between the plaintiff and Alphonse Bullard. If this interpretation is accepted, I must confess that all that I know of that case is that, by inference from the affidavit of the plaintiff in this present action, the late Thomas Tawiah had sustained certain injuries and had subsequently died “by reason of the negligent driving of the defendant” Alphonse Bullard.

On behalf of the defendants it is accepted that they are the insurers of Alphonse Bullard. Does that fact, per se, entitle them to defend the action generally? That would, indeed, depend upon the contract between Alphonse Bullard and the defendants. And yet the terms of the relevant policy, or that part of the terms of the relevant policy, which would satisfy the court on this vital issue, the issue whether the defendants are entitled to defend the action has not been disclosed to this court.

The policy in question in Windsor v. Chalcraft (supra) contained these words:

[p.376] of [1973] 2 GLR 371

“The underwriters shall be entitled to absolute control of all proceedings and negotiations and have full discretion to settle prosecute or defend any claim in the name of the insured.”

Subsection (2) of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, requires, as a condition to the operation of the provisions of subsection (1) of that section that notice of the bringing of the proceedings be given to the insurer before or within fourteen days after the commencement of the proceedings in which the judgment was given. For a purpose the statute imposes such a condition on a plaintiff. In my view, it has in contemplation such a provision in an insurance policy as was contained in the policy in the Windsor case. It is intended to enforce such a provision, as is already referred to, so that the insurers could step in from the very inception of the action. The benefit of such a provision will undoubtedly allow the insurers to take control of the proceedings.

Hence, in my view, the pertinence of the other provisions of section 10 of the Act limit or circumscribe the operation of subsection (1) of that section. No other facts have been disclosed on behalf of the defendants. In the absence of the disclosure of facts “such as may be deemed sufficient to entitle” the defendants “to defend the action generally,” what is there before this court which would satisfy the court that the defendants “have a good defence to the action on the merits”?

What the defendants have sought to do is to show that the judgment upon which the present application is based could be set aside on the ground already stated. The mere call to set aside a judgment is not a good defence to an action on the merits. The mere fact that a writ has been issued to set aside the judgment would not avail the defendants. What would help is the content, that is to say, the substance of what is to be relied upon to have the judgment set aside.

In this the affidavit of the representative of the defendants states that the writ of summons which originated the action upon which the judgment was obtained had “ceased to be in force on the 28th February, 1969.” In law, therefore, there was no action pending before the court on which a judgment could be based. This issue has not been satisfactorily dealt with by the plaintiff. It was raised in an affidavit in opposition to the application to sign final judgment. It has not been replied to. It has not been refuted either in an affidavit or in the course of argument before this court. I must, therefore, accept that part of that affidavit regarding the status of the original writ in the action against Alphonse Bullard. An affidavit is required to deal with facts not law. I must, therefore, ignore that part of the affidavit on behalf of the defendants which deals with whether service in the action against Alphonse Bullard ought to have been effected by service out of the jurisdiction or by substituted service.

I do not think I need go into the issue whether the notice given to the defendants as required by the provisions of paragraph (a) of subsection [p.377] of [1973] 2 GLR 371

(2)of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, had lapsed by virtue of the status, as alleged, of the writ on 28 February 1969. It would be sufficient only to observe that a notice is a notice. That notice brought to the attention of the defendants that an action had been brought against an insured of theirs. They were thus put upon their inquiry to do whatever lay in their power to do by virtue of the relationship that existed, at the date of the service of the notice on them, between them and their insured. Not only that. It warned them that they could be called upon to satisfy a judgment obtained against their insured.

The statement thus that “on receipt of the notice the corporation had to wait on their insured Alphonse Bullard for the writ” cannot be accepted. The defendants were not required to wait on their insured. The more is the pity that they did not seek, consequent upon that notice, to put “the true facts regarding the whereabouts of the defendant Alphonse Bullard” before the court in the first action. If a provision relating to the control of proceedings was part of the policy concerned as was the case in Windsor v. Charcraft (supra) I wonder whether the defendants would rely on such a ground.

The notice which is required to be given to the insurer under the provisions of paragraph (a) of subsection (2) of section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, is a notice that enures for the benefit and protection of the insurer. It would allow an insurer to prevent a compromise to his detriment by an insured or a judgment being obtained by default. The argument which is being raised now on this issue could not have been raised at the time the notice was given.

On the whole I am satisfied that if, as contended on behalf of the defendants, there was no valid writ before the court at the time the judgment was obtained, the insured Alphonse Bullard, whatever may have been his conduct otherwise in the case, could succeed in having the judgment set aside. If he could, so could the defendants, being parties liable to pay the judgment debt, being parties aggrieved by that judgment. In the circumstances I cannot make an order, as prayed for, empowering the plaintiff to enter final judgment.

In view of the fact that the defendants did not take, as demonstrated, the appropriate steps when they had notice of the commencement of the first proceedings, I will not award costs against the plaintiff, which otherwise I would have done.

DECISION

Application refused.

S. E. K.