SHELL COMPANY OF GHANA LTD. vs. SARPONG [1973] 1 GLR 249

CASES REFERRED TO

(1) Monk v. Warbey [1935] 1 K.B. 75; 104 L.J.K.B. 153; 152 L.T. 194; 51 T.L.R. 77; 78 S.J. 783;

[1934] All E.R. Rep. 373, C.A.

(2) Williamson v. O’Keeffe [1947] 1 All E.R. 307; 176 L.T. 274; 111 J.P. 175; 63 T.L.R. 152; 45 L.G.R. 128, D.C.

(3) Goodbarne v. Buck [1940] 1 K.B. 771; [1940] 1 All E.R. 613; 109 L.J.K.B. 837; 162 L.T. 259; 56 T.L.R. 433; 84 S.J. 380; 31 Cox C.C. 380, C.A.

(4) Lloyd v. Singleton [1953] 1 Q.B. 357; [1953] 2 W.L.R. 278; [1953] 1 All E.R. 291; 117 J.P. 97; 97 S.J. 98; 51 L.G.R. 165, D.C.

[p.251] of [1973] 1 GLR 249-258

NATURE OF PROCEEDINGS

APPEAL against a judgment of the High Court that the appellant company were in breach of their statutory duty to insure a vehicle. The facts are adequately set out in the judgment of Apaloo J.A.

COUNSEL

B. Kwaw Swanzy (Joe Reindorf and Miss Solomon with him) for the appellant.

U.V. Campbell for the respondent.

JUDGMENT OF APALOO J.A.

Apaloo J.A. delivered the judgment of himself and Amissah J.A. The respondent is a young woman who in 1966 was employed as a pump attendant at an Agip petrol filling station in Kumasi. She was then aged 22 and was in receipt of income at the rate of N¢13 per month. At about 12 noon on 27 October 1966 she was sitting under a tree close to the kerb at the station when a Bedford tanker No. AT 6897 driven by one James Marfo collided with her. Her right leg was almost completely crushed under the lorry and she received a number of injuries to other parts of her body. She lost consciousness as a result of her injuries. She regained it at the hospital a fortnight afterwards.

The action which culminated in this appeal was accordingly brought to recover damages for her injuries and such income as she lost by reason of the accident. In addition to James Marfo the actual tortfeasor, two other persons were sued, namely, a P. K. Nsiah and Shell Company of Ghana Ltd. The former was the master of the driver Marfo and the latter was the legal owner of the tanker. These two were joined to the action, apparently because the respondent conceived that they were both vicariously liable for the tort of the said Marfo. The action was at first instituted in the circuit court where the respondent obtained interlocutory judgment against Marfo and his master Nsiah for their default in entering appearance. Shell Company of Ghana Ltd. resisted the action in the circuit court and in the High Court to which the suit was later transferred. We shall refer to it subsequently in this judgment as the appellant. It filed a statement of defence in which it denied vicarious liability for the tort of James Marfo. It averred that the tanker which Marfo drove in committing the tort was on 23 August 1966 sold on hire-purchase terms to the said Nsiah. It averred further that the tanker was thereafter delivered to Nsiah who had complete control of it and that not only was the driver Marfo not its servant but his existence was completely unknown to it. The appellant made good these averments at the trial and the learned judge rejected the respondent’s claim that the appellant was liable to her on the basis of vicarious responsibility.

It became obvious to the respondent’s solicitor on receipt by him of the appellant’s statement of defence, that the claim against the appellant on the principle of respondeat superior might run into difficulties. Accordingly, he sought and obtained leave to amend the writ and the statement of claim to prosecute the claim against the appellant on the alternative limb that, “the defendants caused or permitted another

[p.252] of [1973] 1 GLR 249-258 person to drive the said vehicle in Kumasi without a valid insurance policy covering third party risks.” It was therefore urged that the appellant was in breach of section 3 of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958), and as that breach resulted in damages to the respondent, the appellant was liable in damages to the former under the well-known principle in Monk v. Warbey [1935] 1 K.B. 75, C.A. The appellant denied it caused or permitted either Marfo or Nsiah to drive the said vehicle in contravention of the said Act or “any law in force relating to such user or driver.” In the result, whether or not the appellant was in breach of statutory duty became the only serious issue on which the judge’s decision was invited. There were some other minor supplementary questions on which issues were joined, namely, first whether or not the driver was solely to blame for the accident or whether the respondent was guilty of contributory negligence and secondly whether the said Marfo and Nsiah were without means of satisfying the judgment in order to attract the application of Monk v. Warbey (supra).

These two latter questions did not appear to have presented any problem to the judge (Mensa Boison J.). He disposed of them clearly against the appellant. The main issue whether or not the appellant was in breach of statutory duty however gave the judge some trouble and after relating the facts and citing and examining a number of decided cases, he concluded that, “there can be no clearer case of permitting as defined in Houston v. Buchanan [1940] 2 All E.R. 179, H.L. than the act of the third defendants [meaning the appellant] in this case.” Having held also that Marfo was solely to blame for the accident and that both he and his master were without means to satisfy any judgment that may be passed against them, the learned judge concluded that the respondent brought herself under Monk v. Warbey (supra) and was entitled to damages against the appellant. This he assessed in the aggregate sum of ¢16,979.90. It is this judgment that the appellant invites us to reverse.

As we see it, only three serious complaints were made against the judgment, namely, first that the judge was in error in holding that the respondent was not guilty of contributory negligence; secondly, the judge was wrong in holding that both Marfo and Nsiah were without means to satisfy the judgment; and thirdly, that the judge was in error in finding that the appellant permitted Marfo or Nsiah to drive the vehicle without insurance, this finding being against the weight of evidence.

In our opinion, on the evidence, the judge was entitled to find and was right in finding that Marfo was solely to blame for the accident. The respondent was entitled to relax under the pawpaw tree near the kerb. She was not unreasonable in not expecting a strange kerosene tanker to invade their filling station. It was broad daylight and if the driver had been keeping a proper lookout he could not possibly have failed to notice a human being sitting near where he was driving to.

[p.253] of [1973] 1 GLR 249-258

We agree therefore that Marfo was wholly and solely negligent and that the respondent was in no way part author of her own misfortune.

It was also complained that the judge ought not to have found that both Marfo and Nsiah had no means to satisfy the judgment. We think the evidence that they were both impecunious was rather slight. The respondent was content to say that they had disappeared since being served with the writ. There is evidence provided by the appellant which suggests that Nsiah, at least, could not have been in a good way with money. He could not pay for repairs on the vehicle and was unable to keep up his instalments with the result that the appellant felt obliged to repossess the vehicle. We think, on balance, that there is evidence, albeit slight, on which a reasonable jury could come to a conclusion that both Marfo and Nsiah were impecunious. We decline to disturb the judge’s conclusion of this point.

That brings us to the really serious question submitted for our consideration, namely, whether the judge was right on the facts or in law in holding that the appellant “permitted” Marfo to drive the vehicle without a policy of insurance. Mr. Reindorf who appeared for the appellant, submitted that neither the evidence nor the law justified the learned judge’s conclusion and he referred us to pp. 325 and 523 of Halsbury’s Statutes of England (3rd ed.), Vol. 28 dealing with the Road Traffic, Act 1960 (8 & 9 Eliz. 2, c. 16), and the Road Traffic Regulations Act, 1967 (c. 76), and to the cases of Williamson v. O’Keeffe [1947] 1 All E.R. 307, D.C., Goodbarne v. Buck [1940] 1 All E.R. 613, C.A. and Lloyd v. Singleton [1953] 1 All E.R. 291, D.C.

We have looked at these decisions. None of the cases is really in point and in so far as they can be said to decide any point which throws any light on the problem with which we are confronted, it is that “to permit” is usually a question of fact and often involves knowledge either express or imputed on the part of the person “permitting.” Looking at the evidence in this case, we find it difficult to justify any factual finding that the appellant “permitted” the driver or his master Nsiah to drive the tanker in question without third party insurance. The tanker was the subject of a hire-purchase agreement. It was delivered to the hirer who employed Marfo. The former drove the vehicle for his own purposes. He did not only have a right of possession under the hire-purchase contract but he in fact had actual possession. In the factual situation revealed in this case, the only person who could “permit” the driving of this tanker is the one person who could forbid its use, namely, the hirer Nsiah. There is no evidence that in actual fact the appellant permitted Marfo to drive the tanker on the day in question. On the contrary, there is evidence that that person was unknown to it.

That apart, Nsiah contracted with the appellant in the hire-purchase contract (exhibit 3) to “insure and keep insured the vehicle under a full comprehensive policy” and also “Not to drive the vehicle or permit it to be driven while uninsured.” The evidence is really all one way. To hold that the appellant “caused or permitted Marfo to drive the

[p.254] of [1973] 1 GLR 249-258 vehicle in Kumasi without a valid insurance policy” would be to fly in the face of the facts.

It seems the learned judge equated owner with user for the purpose of this legislation for he says, “But by the terms of sections 3 (1) of the Act, the owner is only liable as user without the requisite insurance or if he caused or permits another so to use the vehicle.” In another passage, he says, “Section 3 (1) prohibits an owner to cause or permit the user of a vehicle on the road if uninsured.” The learned judge also seems to have considered that the statutory duty to insure was cast on the owner. But the ipsissima verba of the legislation reads as follows: [His lordship here read the provisions of the section as set out in the headnote and continued:] We think it plain from this provision that the legal duty to insure is cast on the user and he commits an offence if he drives it himself or permits another person to drive the vehicle without discharging his duty of insuring it against third party risks. True, the owner of a motor vehicle is often its user but this is not invariably so. The facts of this case where the legal owner contracts itself out of its right of user prove the exception. In our view, on the facts of this case, the statutory duty to insure was cast on Nsiah. He hired this vehicle to use for the purpose of peddling kerosene. To achieve this end he employed Marfo. He would commit an offence against section 3 (1) of the Act if he drove the motor vehicle himself or permitted his driver to do so unless before doing so, he insured the vehicle against third party risks. On the evidence, this is what happened. We cannot accept that the statutory duty to insure was cast on the appellant on the only ground that the bare legal title was vested in it. The policy objective of the legislation is to protect third parties against risks arising out of the use of motor vehicles, not against their ownership. An index to legislative intent is provided in the marginal notes to section 3 (1) to wit “Users of motor vehicles to be insured against third party.” (Emphasis is mine.)

If the appellant was under no statutory duty to insure, it must stand to reason that it cannot be held responsible for its breach.

A factual circumstance which seemed to have weighed with the judge in his adverse conclusion against the appellant is this: The appellant itself bought the tanker in question from Messrs. Moukarzel and Sons. It finished paying for it on or about 23 August 1966. Moukarzel themselves seemed to have insured it under comprehensive cover and the appellant erroneously thought it would be permissible for Messrs. Moukarzel to transfer to itself the unexpired period of the insurance and wrote to the insurance company to so request. This was turned down by the latter which proceeded to terminate the insurance. It appears the appellant itself did not effect any other insurance of its own on the vehicle before the accident took place in October 1966. The learned judge concluded from this fact that, “When the third defendants [meaning the appellant] handed the vehicle to the second defendant [meaning Nsiah] it was as much as saying to him. ‘Here take this vehicle it is fully insured and you can use it on the road’.”

[p.255] of [1973] 1 GLR 249-258

We cannot accept this as a legitimate conclusion on the evidence. In the first place, there is no evidence that the appellant’s negotiations either with Messrs. Moukarzel or the insurance company for the transfer of the formers’ insurance to the appellant was brought to the knowledge of Nsiah. As far as the evidence goes, the latter had contracted to insure the vehicle fully and there is nothing to suggest that the appellant led him to believe that the vehicle was already insured and that the obligation he assumed to insure under the hire-purchase contract was no longer binding. Secondly, it must be borne in mind that the appellant itself had an insurable interest in the vehicle. It received from Nsiah only ¢2,000 out of a total hire-purchase price of N¢5,313.83 and it was eminently reasonable that it should insure itself against the unpaid balance. We cannot see that the fact of the appellant’s negotiations to obtain the transfer of Moukarzel’s insurance can have had the effect of shifting the statutory duty to insure against third party risks from Nsiah the potential user to the appellant, the bare legal owner. The learned judge also expressed himself as follows:

“The instant case of permitting arises from the relationship created by the hire-purchase of the vehicle. The second defendant (Nsiah) for that matter was using the vehicle for purposes of his own. But the evidence as I have found shows he was handed the vehicle by the third defendants [i.e. appellant] to use in circumstances when there was no third party insurance.”

With respect we find this a curious piece of reasoning. As the judge himself found that Nsiah bought the vehicle on hire-purchase to use and did use it for his own purposes, the fact that he might use it without complying with the statutory duty imposed on him by section 3 (1) of the 1958 Act, does not fix any duty on the sellers. All vendors of motor vehicles cannot but be aware that the purchasers of the vehicles intend to use them. The law imposes on the buyers as the potential users the duty to insure not the sellers. The breach by the buyers to insure can found no liability against the vendors. We find ourselves unable to share the judge’s view that the appellant as seller of the vehicle transgressed the Act merely because it handed over to Nsiah the hire-purchaser the vehicle without first ensuring that the tanker was previously insured.

Having given this matter the best consideration we can, we find ourselves constrained to differ from the learned judge’s conclusion. Our judgment is that the statutory duty to insure against third party risks was cast on Nsiah and it was he who was in breach of that duty. We are also satisfied that on the evidence made available to the judge, it was not open to him to find as he did that the appellant permitted Marfo or Nsiah to drive the offending tanker on the date in question. It follows that no case based on the principle enunciated in Monk v. Warbey (supra) was properly made against the appellant and the judgment condemning it to pay damages to the respondent must be vacated.

[p.256] of [1973] 1 GLR 249-258

The result of our decision is that the respondent who has suffered very serious injuries may perhaps get no compensation. We naturally regret it and it ought not to be thought that we are unfeeling. But this court is governed by principles of law and not the hardship of any individual case. In any event, we ought to resist the temptation of allowing our feelings to get the better of our judgment.

In Britain, the home of Monk v. Warbey, the right of action for breach of statutory duty itself is now not of much importance. This is because by a contract with the English Minister of Transport, the Motor Insurers Bureau would, subject to certain conditions, have satisfied the judgment delivered in the circumstances of this case. We think it is not too much to hope that a similar institution will be established in this country to cater for hard cases such as this.

But in view of what we have said in the foregoing paragraphs of this judgment, this appeal must succeed.

JUDGMENT OF SOWAH J.A.

The facts of this case have been lucidly given in the learned judgment delivered in which I concur entirely; consequently I do not propose to go over them. I wish however to add a few words of my own.

There was in this action a two prong attack against the defendant company; first on the rather slim ground that the company was liable vicariously for the negligence of Marfo, the driver of the tanker, and secondly that the company was allegedly in breach of its statutory duty to insure the vehicle.

The learned judge had no difficulty in disposing of the first arm of the attack, for he held that on the facts the company was not the master of the driver and there was no legal basis for imputing vicarious liability. The learned trial judge, however, had considerable sympathy for the second arm and held that the company being the owners of the tanker were legally bound to insure under the Motor Vehicles (Third Party Insurance) Act, 1958. He held further that inasmuch as the tortfeasor Marfo and his master Nsiah were men of little substance, the plaintiff was entitled to rely on the principle in Monk v. Warbey (supra) and proceed against the company. It is from this holding that an appeal has been lodged.

Section 3 of the Act under which the company was being assailed imposes a negative duty on any person not to use “or cause or permit any other person to use a motor vehicle unless there is in force in relation to the user of that motor vehicle by such person or such other person, as the case may be, such a policy of insurance or such security in respect of third party risks as complies with the provisions of this Act.”

What constitutes a valid policy under the Act is set down in section 6.

In the instant case there appears to be no dispute that the provisions of the Act had been breached or infringed and that at the time of the

[p.257] of [1973] 1 GLR 249-258 accident there was no valid policy. The question which arose for determination was, whose duty, in accordance with section 3 of the Act, it was to insure the vehicle. The learned judge thought it was the company’s. It is explicit from his judgment that he completely misconstrued the provisions of section 3 for he stated: “Section 3 (1) prohibits an owner to cause or permit the user of a vehicle on the road if not insured. It is therefore immaterial whether his conduct was reasonable or negligent, once it is shown that he did permit such a user.” With great respect the section does not impose any obligation upon an owner to insure his car or vehicle. It prohibits any person from using a motor vehicle unless he is insured against third party risk in accordance with the Act. True, if an owner causes or permits the user of his car without a policy he will be guilty of an offence under the Act and can be proceeded against by any third party suffering injury consequent upon the breach. It is equally true that if any other person, whether he be an owner or not, causes or permits such user that other person would equally be guilty.

This confusion of thought in equating “an owner” with “person” in section 3 permeates the whole of the judgment. In yet another passage in his judgment the learned judge states:

“But by the terms of 3 (1) of the Act the owner is only liable as a user without the requisite insurance or if he causes or permits another so to use the vehicle. That in my opinion means the owner may escape liability even though the vehicle is used by another if the owner establishes that he did not cause or permit its use.”

As already stated the section merely prohibits the use of vehicle unless it carried with it a valid policy. This prohibition affects two categories of persons, first those who actually use a motor vehicle on the road and secondly those who permit or cause a vehicle to be so used. Ownership may call for an explanation as to how the vehicle happened to be on the road. It raises the question whether the owner caused or permitted his vehicle to be on the road. This is an issue of fact determinable from a consideration of all the circumstances relating to the user.

In the present case the learned trial judge wholly overlooked the purport and effect of the hire-purchase agreement between the hirer of the vehicle and the company which regulated the conduct of the parties. Under the terms of the hire-purchase agreement the company surrendered full possession, control and management of the vehicle to Nsiah. What remained in the company was property in the vehicle as legal owners thereof.

Nsiah was not in any way restricted as to the lawful use of the tanker and nothing in the agreement prohibited Nsiah from purchasing petroleum products even from rival petrol companies. But Nsiah having obtained such possession, control and management was prohibited by the law of the land from causing or permitting the use of the vehicle

[p.258] of [1973] 1 GLR 249-258 unless there was a valid policy in force. He ought not to have permitted Marfo to drive that vehicle without a third party insurance policy.

It has been argued that the company was aware of its duty to insure and endeavoured either unsuccessfully to insure the vehicle or delegated such duty by stipulating that Nsiah should insure it. This argument overlooks the company’s interest in the vehicle which is quite unrelated to the requirement of section 3 of the Act. If that vehicle should be destroyed, e.g. by an act of God or by negligence not attributable to any third party, the company would lose that interest unless the vehicle carried a comprehensive policy coverage. It was for that reason that the company, like any prudent businessman, insisted in the agreement on Nsiah providing for such coverage and specifically forbade the use of the vehicle unless so covered.

I am of the view that it is not a fair interpretation of language for the learned judge to hold that the company did permit the use of the vehicle when in express terms it had forbidden its use in the circumstances of this case.

DECISION

Appeal allowed.

S. E. K.