Eastern Caribbean Insurance Ltd Appellant v Edmund Bicar Respondent [ECSC]

• Jurisdiction: St Lucia
• Judge: GEORGE-CREQUE, J.A.,Justice of Appeal,Justice of Appeal [Ag.],Janice George-Creque,Paul Webster, QC
• Judgment Date: 03 May 2010
• Judgment citation (vLex): [2010] ECSC J0503-1
• Date: 03 May 2010
• Court: Court of Appeal (Saint Lucia)
• Docket Number: HCVAP 2008/014

[2010] ECSC J0503-1

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Janice George-Creque Justice of Appeal

The Hon. Mr. Davidson K. Baptiste Justice of Appeal [Ag.]

The Hon. Mr. Paul Webster, QC Justice of Appeal [Ag.]

HCVAP 2008/014

Between:

Eastern Caribbean Insurance Ltd.

Appellant

and

Edmund Bicar

Respondent

Appearances

Mr. Dexter Theodore for the Appellant

Mr. Mark D. Maragh for the Respondent

Civil Appeal – Insurance Law – insured person – person insured by the policy – permitted driver – authorised driver – right of indemnity – third party – right of recovery against the insurer where no finding of vicarious liability in respect of the policyholder – Motor Vehicles Insurance (Third-Party Risks) Act Cap. 8.02

The appellant ("the Insurer") issued a policy of insurance to John Noel in respect of his motor vehicle. The policy was issued pursuant to the Motor Vehicles Insurance (Third-Party Risks) Act Cap. 8.02 ("the Act"). The certificate of insurance provided that the persons or classes of persons entitled to drive were the policyholder and "any other person who is driving on the policyholder's order or with his permission".

During the period of coverage, one Mr. Monrose, expressed an interest in purchasing the motor vehicle but required the approval of his employers who were to assist with the purchase. With a view to facilitating the sale, Mr. Noel gave the motor vehicle to Mr. Monrose on Friday, 21^st September so that Mr. Monrose could obtain the required approval and complete the sale by Monday.

Mr. Monrose, whilst driving the motor vehicle at about 2:00 a.m. on Saturday morning, collided with a vehicle driven by the respondent, Edmund Bicar. Mr. Bicar sustained serious injuries and his motor vehicle was damaged. Mr. Bicar brought an action against Mr. Monrose, as the driver, and against Mr. Noel on the ground that he was vicariously liable.

Shanks J. held that Mr. Monrose was driving with the permission of Mr. Noel and was liable for the accident. The vicarious liability claim against Mr. Noel was dismissed on the ground that Mr. Monrose was not driving at the relevant time as the servant or agent of Mr. Noel. Judgment was given in favour of Mr. Bicar as against Mr. Monrose. Neither Mr. Monrose nor the Insurer paid the judgment debt, despite demand made by Mr. Bicar.

Mr. Bicar brought a second action against the Insurer in reliance on section 9 of the Act. The Insurer contended that they could not be liable as no judgment had been obtained against Mr. Noel, the insured; and, Mr. Monrose, who was legally liable to pay the judgment debt, was "not a person who is insured by the policy".

Cottle J. found, applying section 4(7) of the Act, that the Insurer had contracted to indemnify Mr. Noel and any authorised driver. Mr. Monrose was such an authorised driver so that the Insurer was liable to pay Mr. Bicar on account of the judgment debt. The Insurer appealed on the ground that Mr. Monrose was not an authorised driver. Mr. Bicar counter-appealed on the ground that the claim was based on breach of statutory duty under section 9 of the Act and not the indemnity provisions under section 4(7).

Held: dismissing the appeal and allowing the counter-appeal with costs to the respondent:

• 1. An "insured person" or "person insured by the policy" under section 4(1)(b) of the Act includes not only the policyholder but any other person or class or persons as specified in the policy.

• 2. The policy of insurance between the Insurer and Mr. Noel extended to the policyholder, to any other person driving on the policyholder's order (in essence, his servant or agent) and to any person driving with the policyholder's permission (although not as his servant or agent). Notably, the policy contained no qualifying provisions to restrict the extension of cover to persons driving on the policyholder's order or with his permission.

• 3. An "insured person" or "person insured by the policy" under Mr. Noel's policy of insurance would accordingly include persons driving his motor vehicle with his permission as this was so specified in the policy, as evidenced by the certificate. There is no distinction in principle between a driver who is "permitted" and one who is "authorised".

  English and American Insurance Co. Ltd. v Stanley McDermott and Motor and General Insurance Co. Ltd. (1974) 22 WIR 451 (Court of Appeal, Jamaica), distinguished.

• 4. Section 4(7) of the Act requires the Insurer to indemnify the person 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. Section 9(1) of the Act requires the Insurer to pay to the person(s) entitled to the benefit of the judgment any sum payable in respect of liability incurred "against any person who is insured by the policy". Section 4(7) therefore establishes the connecting factor on which the liability of the Insurer in respect of an injured third party is grounded under section 9(1) of the Act.

• 5. Section 4(7) of the Act creates the statutory exception to the normal rules of privity so as to take account of a liability arising in respect of a person who was permitted or authorised to drive other than the policyholder. The section ensures that an authorised driver is in the same position as the policyholder in respect of the right to an indemnity from the insurer.

• 6. The grounding of liability of the Insurer to pay a judgment debt in respect of which the authorised driver has become legally liable to pay is not dependant on a finding of vicarious liability on the part of the policyholder. The obligations may arise, though connected, quite separately and independently of the other once it can be shown that the driver falls within the category of persons specified under the particular policy as being covered thereunder.

• 7. Mr. Monrose, being a permitted driver, fell within the class of persons specified under the policy as being a "person insured by the policy". Accordingly, Mr. Monrose would be entitled to be indemnified by the Insurer in respect of the liability arising as against him in favour of Mr. Bicar in respect of the judgment debt, pursuant to section 4(7).

• 8. Section 9(1) of the Act gives fullest effect to the statutory exception to the rules of privity. Under section 9(1) of the Act, it is the right of the third party to recover from the Insurer in respect of a legal liability covered under the policy arising whether from the acts of the policyholder or from the policyholder's authorised or permitted driver. Accordingly, Mr. Bicar (the third party) is entitled to invoke section 9(1) of the Act to recover from the Insurer the judgment in his favour against Mr. Monrose, who, as a "permitted" or "authorised" driver, was a "person insured by the policy of insurance".

  Matadeen v Caribbean Insurance Ltd. [2002] UKPC 69 (Trinidad and Tobago), followed.

GEORGE-CREQUE, J.A.

1 This appeal raises two narrow construction points. One is on the meaning to be given to a provision contained in a policy ofInsurance issued by the appellant ("the Insurer") pursuant to the Motor Vehicles Insurance (Third-Party Risks) Act ("the Act") of Saint Lucia,1 and the other, the construction to be placed on section 9(1) of the Act in terms of who is to be treated as "any person who is insured by the policy" in relation to an injured third party who has obtained the benefit of a judgment seeking to recover payment from an insurer.

The Background

2 The matter arose in this way:

• (a) The Insurer issued a policy of insurance pursuant to the terms of the Act to one, John Noel, in respect of his motor vehicle. A copy of the certificate of insurance showed the period of coverage to be from 12^th April 2001, to 17^th March 2002.2 The certificate of insurance also carried this notation as item 5:

  "Persons or Classes of persons entitled to drive:

  (a) The Policyholder.

  (b) Any other person who is driving on the policyholder's order or with his permission."

  This was subject to a proviso which is not germane to this appeal. The certificate also contained a limitation as to user which is also not germane to this appeal.

• (b) Sometime in September 2001, Mr. Noel and one, Mr. Monrose, into negotiations for the purchase by Mr. Monrose of Mr. Noel's motor vehicle. Mr. Monrose's employers were to assist him in raising the purchase monies for the vehicle but he was to bring the motor vehicle to them for their approval whereupon they would give him a cheque for the purchase price. Mr. Noel gave his motor vehicle to Mr. Monrose on Friday, 21^st September 2001, so that he could take it to his employers for

  their approval with the hope that a sale of it would come about. Mr. Noel expected to receive word and hopefully the purchase money by Monday.

• (c) It transpired however, that Mr. Monrose, whilst driving the motor vehicle in the early hours of Saturday morning (around 2:00 a.m.) collided with a vehicle being driven by the respondent, Mr. Bicar. Mr. Bicar sustained serious injuries and his motor vehicle also sustained damage. Mr. Bicar brought an action against Mr. Monrose as the driver of the vehicle and also against Mr. Noel on the assertion that Mr. Noel was liable vicariously for the negligent acts of Mr. Monrose.

• (d) The trial judge, Shanks J., found that Mr. Monrose was liable for the accident and that he was driving the motor vehicle with the permission of Mr. Noel. He concluded however that Mr. Monrose was not driving at the relevant time as the servant or agent of Mr. Noel and thus Mr. Noel was not vicariously liable. He gave judgment in favour of Mr. Bicar as against Mr. Monrose in the sum of $79,719.003 but dismissed Mr. Bicar's claim against Mr. Noel. There was no appeal from Shank J.'s findings.

• (e) Mr. Monrose failed to pay the judgment debt. The Insurer also failed to pay the judgment debt despite demand made by Mr. Bicar.

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