STATE INSURANCE CORPORATION vs. MANSAH [1968] GLR 1127

CASES REFERRED TO

(1) Izzard v. Universal Assurance Co., Ltd. [1937] A.C. 773; [1937] 3 All E.R. 79; 106 L.J.K.B. 460;

157 L.T. 355; 53 T.L.R. 799; 81 S.J. 475; 42 Com. Cas. 352, H.L.

(2) Royal Exchange Assurance v. Owusu [1965] G.L.R. 490, S.C.

(3) Bright v. Ashford [1932] 2 K.B. 153; 101 L.J.K.B. 318; 147 L.T. 74; 96 J.P. 182; 48 T.L.R. 357;

76 S.J. 344; 30 L.G.R. 212; 29 Cox C.C. 455, D.C.

[p.1130] of [1968] GLR 1127

NATURE OF PROCEEDINGS

APPEAL by the appellants against the judgment of Francois J. at the High Court, Kumasi, wherein the appellants were adjudged liable to the respondent for the judgment and costs awarded against the appellants’ insured in a fatal motor accident case. The facts are fully stated in the judgment of the court delivered by Amissah J.A.

COUNSEL

H. P. Swaniker for the appellants.

L. B. Akainyah, Jnr. for the respondent.

JUDGMENT OF AMISSAH J.A.

Amissah J.A. delivered the judgment of the court. The respondent, Afua Mansah, brought an action against the appellants, the State Insurance Corporation, after she had obtained judgment against one Isaiah Sackey, an insured of the appellants, claiming satisfaction by the appellants of the judgment debt due from the insured. The first case arose out of a fatal motor accident. Akosua Agyakomah was killed as a result of an accident caused by the negligent driving of the servant of Isaiah Sackey, the appellants’ insured. Having. obtained the judgment against Isaiah Sackey and his servant, the respondent proceeded to sue the appellant in the High Court. The basis of her claim being section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), an Act which I shall for convenience refer to as the Third Party Act, and which enjoined insurance companies in certain circumstances to pay the judgment debts of their insured. The High Court, presided over by Francois J. gave judgment in the consequential proceedings on 9 December 1966, in favour of the respondent. It is from this latter judgment that the appellants have appealed to us here.

When confronted with the respondent’s claim, the appellants admitted that they had insured Isaiah Sackey in respect of the vehicle involved in the fatal accident but they pleaded in their defence that “the policy issued to the said Isaiah Sackey only covered the vehicle when being used in the carriage of goods only and not passengers or giving lift.” The appellants further gave notice that they will contend that, “in so far as the deceased was given a lift or was a passenger on the said vehicle, the policy did not cover any injury or death that was caused to her.” That the risk which occasioned the death of the deceased was one not covered by the insurance policy issued by the appellants was an issue raised on the pleadings. The respondent, as plaintiff, gave evidence which in the event turned out to be the only evidence taken in the case. And on this issue the relevant evidence given by the respondent was as follows: “My sister was the late Afua Agyakomah alias Akosua Agyakomah. She was killed while being

[p.1131] of [1968] GLR 1127 conveyed in a motor vehicle belonging to G. E. K. Ekuban. The vehicle No. SG 9448 was insured by the defendants.”

How the deceased came to be conveyed on the vehicle was not stated. Whether she was being given a lift or was on the vehicle as a fare-paying passenger or was on the vehicle by virtue of any contract of employment, was not made clear. The court was left to surmise. The learned trial judge, however, did not apparently think that a decision in the case depended on the resolution of this issue, because he took the view that the requirements of section 10 of the Third Party Act made it unnecessary. In his view:

“By section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, a third party is given a right to recover judgment against the insurer on obtaining judgment against the insured provided the following conditions are satisfied: (a) a certificate of insurance has been delivered to the policy holder; (b) judgment alluded to above has been obtained against an insured in respect of liability covered by the terms of the policy and (c) fourteen days’ notice is given to the insurers before or within the time of commencement of the proceedings in which judgment was given and provided the matter is not on appeal and no certificate has been surrendered or its loss established by a statutory declaration. It is quite clear that the provision of fourteen days’ fore-warning of the plaintiff ‘s contemplated action gives the insurance company opportunity to avoid the policy by taking the procedural steps laid down in the Act with the appropriate counter notice to the plaintiff. It also permits the insurance company to appeal against the judgment or take steps to quash it if the same is erroneous . . . In my view so long as a judgment subsists and the plaintiff has satisfied the statutory requirements above listed, the insurer is bound to pay him. The fact that the insurer is entitled to avoid or cancel or may have avoided or cancelled the policy is no defence against the third party if the statutory mode of registering this avoidance has not been adopted.”

Mr. Swaniker, counsel for the appellants, has attacked this conclusion of the learned judge on the ground that it overlooks one basic requirement, namely, that a plaintiff who seeks to recover under section 10 of the Third Party Act must show that the risk which caused the accident was one which, under the Act, had to be compulsorily covered by insurance. If the risk does not fall within those defined by the Act as requiring compulsory insurance, then recovery under section 10 is impossible. In the course of the argument this proposition was slightly confused with the related though distinct question

[p.1132] of [1968] GLR 1127 whether the particular risk in this case was or was not in fact covered by the particular insurance policy issued. I say that there was this slight confusion because if the argument advanced is correct, then it does not matter that a particular policy covers the risk which caused the accident under consideration. Once the risk is not one required by the Act to be compulsorily covered, then even though the insurer may be liable on the policy, he certainly is not liable by virtue of section 10 of the Third Party Act.

In the circumstances it is necessary to have a look at section 10 to see what it says., Section 10 (1) provides that:

“10. (1) If after a certificate of insurance has been delivered under the provisions of subsection (4) of section 6 to 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 issued under the provisions of paragraph (b) of subsection (1) of section 6, 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 such judgment any sum payable thereunder in respect of the liability including any sum payable in respect of costs and any sums payable by virtue of any written law in respect of interest on that sum or judgment.’

Quite a long and involved provision, but it does say, and this is most relevant to the point Mr. Swaniker was making, that the judgment under which the insurer shall pay is “a judgment in respect of any such liability as is required to be covered by a policy issued under the provisions of paragraph (b) of subsection (1) of section 6, being a liability covered by the terms of the policy.” It speaks of no other judgment. What then is the scope of liability which section 6 (1) (b) requires to be covered by insurance? That subsection provides that a policy of insurance for the purposes of the Act must be a policy which:

“insures such persons or classes of person as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of a motor vehicle covered by the policy:

Provided that such policy shall not be required to cover— (a) liability in respect of the death arising out of and in the course of his employment of a person in the employment

[p.1133] of [1968] GLR 1127 of a person insured by the policy or of bodily injury sustained by such a person arising out of and in. the course of his employment; or (b) save in the case of a passenger vehicle or where persons are carried by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from a motor vehicle at the time of the occurrence of the event out of which the claims arise; or (c) any contractual liability.”

As death resulted from the accident, the liability of the user of the vehicle had, under the terms of section 6 (1) (b), to be insured unless it was excluded from compulsory insurance under the provisoes. Thus, even though liability for death or personal injury must normally be covered, it need not be if the person who suffers death or bodily injury is an employee of the person insured by the policy and the death or bodily injury arose out of or in the course of the victim’s employment. Presumably, compensation for such death or injury would fall within the Workmen’s Compensation Act, 1963 (Act 174). Again the liability need not be covered if death or bodily injury is caused to a person being carried in or upon or entering or getting on to or alighting from the vehicle at the time of the accident unless the vehicle is a passenger vehicle as defined by the Act or the person is being carried by reason or in pursuance of a contract of employment. Finally, and this is not relevant to the present case, the policy is not required to cover contractual liabilities. The respondent claimed in her evidence that the deceased was killed while being conveyed on the motor vehicle. The appellants had stated in their defence that the deceased was being given a lift on the vehicle when the accident occurred. This issue immediately calls for a consideration of the reasons for the presence of the deceased on the vehicle in relation to proviso (b) to section 6 (1) (b). For this purpose two questions need to be posed and answered. The first is whether the vehicle was a passenger vehicle. If it was, then the risk arising from the presence of the deceased on it ought to have been covered. A “passenger vehicle” is defined in section 2 (1) of the Act as “a motor vehicle used for carrying passengers for hire or reward.” But this particular vehicle was one with a flat body designed for the haulage of cocoa, goods and general merchandise. The only persons that the insured in his proposal for insurance said it would carry were three, namely, the driver and his two mates. There was no evidence that,

[p.1134] of [1968] GLR 1127 the vehicle was ever used for the carriage of passengers for hire or reward. And even if there was, the appellants had never been asked to insure the vehicle against this risk. So that they can hardly be expected to be fixed with liability for a burden they had never contracted to bear.

If the vehicle was not a passenger vehicle, and in the circumstances of this case we have to accept that it was not, then the next question is whether the deceased was being carried by reason of or in pursuance of a contract of employment. Mr. Akainyah, counsel for the respondent, has argued that the deceased was on the vehicle in pursuance of such a contract because she was accompanying her goods which were being conveyed by it. He said on this point that the case of Izzard v. Universal Assurance Co., Ltd. [1937] A.C. 773, H.L. was on all fours with the present case. In Izzard’s case, provisions of an insurance policy almost identical with our section 6 (1) (b) came up for construction by the British House of Lords. The noble Lords held an insurance company liable in that case to meet the judgment debt of an insured for injury resulting in death caused to the deceased while he was riding on the vehicle of the insured. But we think that the similarity in the two cases does not go beyond the fact that in both, the deceased was on the vehicle of the insured and that in both, the death of the deceased was caused by negligence in the user of the vehicle. In Izzard’s case there was a contract of employment, though not between the deceased and the insured. The deceased had a contract of employment with a third person but it was in pursuance of that contract that he happened to be on the vehicle. The sole question for the consideration of their Lordships was whether carriage of persons in a vehicle “by reason of or in pursuance of a contract of employment” was to be construed as limited to the situation where the contract of employment was with the insured or whether the expression was wide enough to cover contracts of employment with others as well. Their Lordships accepted the latter interpretation because they thought it unjustifiable to interpolate the words “with the insured person” in the policy immediately after the words “contract of employment” which the acceptance of the alternative construction would have meant. But that there was a contract of employment in pursuance of which the deceased in Izzard’s case was on the vehicle there was no question. In the instant case, we have no evidence of any contract for the carriage of the goods of the deceased. There is not even evidence that the vehicle at the material time was carrying any goods and whether they belonged to the deceased or anybody else. We are therefore in no position, and for

[p.1135] of [1968] GLR 1127 that matter neither was the trial judge, to spell out from the facts on record that there was a contract of employment of any sort subsisting in pursuance of which the deceased went on the vehicle. And it is for this reason that we find the case of Izzard v. Universal Assurance Co., Ltd. (supra) of little assistance in the present case.

We are driven, from the above considerations, to the conclusion that the risk involved in the presence of the deceased on the vehicle was not one required by section 6 (1) (b) of the Act to be compulsorily covered. If that is so, then the provisions of section 10 of the Act do not provide the respondent with a springboard from which to attack the insurer. Section 10 caters for a limited class of insurance claims. There may be policies which cover risks for which judgment may have been obtained against the insured but if those risks are outside the ambit of section 6 (1) (b) of the Act, then the party with the judgment in his favour has to find other means of getting at the insurance company. He cannot proceed under section 10 of the Act.

It follows therefore that we think that the learned trial judge’s approach to the problem was wrong. He seemed to have proceeded on the basis that once the plaintiff in the action against the insured had given notice of his action to the insurance company in accordance with section 10 (2) (a), then the insurance company was bound to meet a judgment given against the insured, if the judgment involved a risk covered by the policy, unless the company had avoided the policy in accordance with section 10 (3) of the Act. In Royal Exchange Assurance v. Owusu [1965] G.L.R. 490, S.C. Mills Odoi J.S.C. reading the leading judgment of the Supreme Court gave the conditions for liability of an insurer under section 10 of the Third Party Act in the following words at p. 494:

“the first condition of the obligation of the insurers is that there is a judgment recovered by the person who seeks protection under section 10 (1) of the aforesaid Act. The second condition is that the judgment must be in respect of a liability which is required to be covered by compulsory insurance. In other words, the only person who can maintain a right of action against the insurers is a person falling within the limited class of third parties whose bodily injury or death is required to be covered by a motor policy. The third condition is that the liability is in fact covered by the terms of the policy or would be covered by the policy but for the fact that the insurers are entitled to avoid or cancel, or have avoided or cancelled the policy.”

The learned trial judge completely overlooked the second of the three conditions therein stated, namely, that the sum payable under

[p.1136] of [1968] GLR 1127 section 10 must be in respect of only those risks which must be compulsorily insured. If the risk is not included in this limited field, and we are of the opinion that the risk under consideration was not, then proceedings under section 10 cannot even begin. The insurance company’s alleged failure to cancel or avoid the policy in accordance with section 10 (3) does not, therefore, become an issue for the court’s consideration.

But this leaves the general question whether the respondent is entitled to recover against the appellants on the policy itself, still open. Mr. Swaniker, counsel for the appellants, argued on this that the policy was issued to cover the user of the vehicle in the haulage of cocoa, goods and merchandise. The only persons to be carried on the vehicle were the driver himself and his two mates and using the vehicle to carry a passenger was outside the terms of the policy and the appellants were therefore entitled, as they did, to repudiate this claim which arose out of the carriage of this passenger. We think there is much force in the argument advanced. Both Bright v. Ashford [1932] 2 K.B. 153 and Royal Exchange Assurance v. Owusu (supra) are authorities for the proposition that where a vehicle is used outside the scope of the policy covering it, then there being no policy of insurance covering such user; the insurer is not liable for any damage arising therefrom.

For the above reasons we think that the learned judge was wrong in his conclusions and this appeal must be allowed. We accordingly allow it.

DECISION

Appeal allowed.

D.R. K. S.