IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 311 OF 2000S

Between:

D. GOKAL AND COMPANY LIMITED
Plaintiff

and

NEW INDIA ASSURANCE COMPANY LIMITED
Defendant

H. Lateef for the Plaintiff
H.K. Nagin for the Defendant

JUDGMENT

On 22 February 1994 Rajesh Prakash, a technician employed by Homelco Ltd. was travelling as a passenger in vehicle CK 588 owned by the Plaintiff (Gokals) and driven by one of its employees Kamlesh Ramesh Parmar. As a result of Parmar’s dangerous driving an accident occurred with the result that another passenger died while Rajesh Prakash was quite seriously injured.

On 24 July 1996 Rajesh Prakash commenced proceedings in the High Court (Civil Action No. 350 of 1996) against Parmar and Gokals. A copy of the writ and Statement of Claim is annexure D to the affidavit of Sharila Devi filed on 29 August 00. The cause of action was fully particularised negligence with an alternative general claim under the Workmen’s Compensation Act (Cap 94).

On 8 October 1996 Messrs Sherani and Co filed an acknowledgement of service in Action No. 350/96 on behalf of the Defendants Parmar and Gokals (see Annexure D to the affidavit of Deo Chand filed herein on 10 October 00).

On 5 September 1997 Judgment in default of Defence was entered by Rajesh Prakash against the Defendants Parmar and Gokals with damages to be assessed (see Annexure E to the affidavit of Rajesh Prakash filed herein on 29 August 00).

On 9 September 1997 Messrs Sherani & Co. wrote to Gokals. They suggested that “Dominion Insurance carries insurance in respect of Rajesh Prakash” and continued “we request you to deal with Dominion Insurance in respect of Rajesh Prakash’s case” (see Annexure G to Deo Chand’s affidavit).

On 20 August 1998 Rajesh Prakash’s solicitors (Messrs R.I. Kapadia & Co.) wrote to Messrs Sherani & Co enclosing a summons to fix a date for the hearing of the assessment of damages pursuant to the Judgment entered on 5 September 1997 (see Annexures H & I to Deo Chand’s affidavit).

On 26 August 1988 a notice of hearing of assessment of damages to take place on 3 November 1998 was sent by the Chief Registrar to both Messrs R.I. Kapadia and Sherani & Co (Annexure J to Deo Chand’s affidavit).

On 14 September 1998 Messrs Sherani & Co wrote to Gokals. This letter (Annexure K Deo Chand’s affidavit) may conveniently be set out in full:

“Dear Sir,

Re:	Rajesh Prakash v D. Gokal & Co Ltd & Anor
HCCA NO. 350 OF 1996 

We refer to our (Nagin/Vinod Gokal) telephone conversation of 11th September, 1998.

We also refer to our letter of 9th September 1997 (copy enclosed) wherein we had advised you that Dominion Insurance carries insurance in respect of the above claim.

Please note that you seem to have overlooked advising Dominion Insurance in respect of the above claim.

We have now received a Notice dated 26th August, 1998 from the High Court advising that the assessment of damages is listed for 3rd November, 1998. A copy of this notice is forwarded herewith.

Please note that the said Notice appears to have been served on us because we had initially entered an Acknowledgement of Service for the Defendants on instructions of New India Assurance. New India had since clarified that it is not the insurer in this case and in fact Dominion Insurance is the insurer.

Please refer this matter to Dominion Insurance and ask them to arrange for the filing of Notice of Change of Solicitors.

Please note that we will not be appearing in Court on the 3rd November, 1998. We are advising the High Court of this vide a copy of this letter.

Should you have any queries please do not hesitate to contact our Mr. Nagin.

Yours truly
SHERANI & CO”

On 3 November 1998 Messrs Sherani & Co did not appear and neither did Gokals either on their own or by other solicitors.

The hearing of the assessment of damages took place on 13 May 1999 before Pathik J. Gokals did not appear and were not represented. Judgment was delivered on 19 November and Rajesh Prakash was awarded a total of $121,224.50. On 15 February 2001 Pathik J dismissed an application by Gokals to set the judgment and the assessment aside. A copy of the ruling is attached to the written submission filed by counsel for the first Defendant herein (Mr. Nagin of Messrs Sherani & Co) on 26 April 2001.

By these proceedings Gokals seek a declaration that they are entitled to be indemnified by the Defendant (New India) against the amount of $121,224.50 awarded to Rajesh Prakash. Gokals say that they are entitled to look to New India since at all material times they were covered by a comprehensive motor vehicle policy issued by New India which extended both to vehicle CK 588 and to passengers travelling therein.

New India does not dispute the existence of the policy and indeed Mr. Deo Chand exhibited a copy of the policy issued by New India together with its extension to the relevant period as Annexures M1 and N to his first affidavit. Where the dispute lies is in the application of the policy to Rajesh Prakash. New India’s contention is that in the circumstances it is not liable to indemnify Gokals.

Mr. Nagin pointed out that under paragraph (3) to the proviso to “Passenger Risk” clause to the specification to the policy cover does not extend to a person injured while “engaged in and upon the service of the insured”. Mr. Nagin’s argument had two limbs. The first proposition was that Homelco and Gokals are “associated companies” and that accordingly passenger liability in respect of Rajesh Prakash was excluded. In support of his assertion that Homelco and Gokals were “associated companies” Mr. Nagin relied on the second affidavit of Deo Chand which was filed on 1 December 00. This affidavit exhibits copies of 2 insurance policy in which both Gokals and Homelco are covered. It also exhibits copies of annual returns filed by Gokals and Homelco for 1999 under the provisions of the Companies Act (Cap 247) which appeared to show that the two companies have a number of members in common.

Mr. Nagin’s second proposition was that since Rajesh Prakash was employed by Homelco he should look to Homelco and the insurers with which Homelco had workers compensation cover namely Dominion Insurance (Dominion). In support of this submission Mr. Nagin referred to Annexure E to Deo Chand’s first affidavit which appears to be a copy of a workers compensation claim form apparently submitted by Homelco to Dominion on 17 March 1994.

In my opinion both these arguments are unsound. As to the first, although the Companies Act does not define the term “associated company” I am satisfied that mere common membership or even regular cooperation between 2 companies does not in law amount to their being “associated”. The English Redundancy Payments Act 1965 contains a definition in Section 48 (4) which it seems reasonable to adopt:

“Two companies shall be taken to be associated companies if one is a subsidiary of the other or both are subsidiaries of a third company”.

There is no evidence at all before me as to the relationship between Gokals and Homelco in 1994 and certainly no evidence that either was a subsidiary of the other or they were both subsidiaries of a third.

As to the second argument, the claim upon which Rajesh Prakash entered his judgment against Gokals was quite plainly in negligence. Although the draftsman of the Statement of Claim included an alternative claim under the Workers Compensation Act that claim lapsed once Judgment was entered under the first cause of action. Furthermore, claims for Workers Compensation (which the Act expressly provides to be distinct from claims in negligence - Section 25) are not brought in the High Court but in the Magistrates’ Court and statutory compensation for injuries suffered at work is not at large but is determined by the scales set out in the Act.

The last argument advanced by Mr. Nagin was also raised in Mr. Deo Chand’s second affidavit. Mr. Chand suggested that Judgment was entered against Gokals as a result of Gokals negligence in failing to appear before Pathik J at the hearing of the assessment of damages. In these circumstances it is said that Gokals cannot now look to New India to be indemnified.

In my opinion this argument is also misconceived. As has been seen Messrs Sherani & Co filed an acknowledgement of service on behalf of Gokals on 8 October 1996. They thereby became Gokals solicitors on the record. There is nothing to suggest that any application was ever made by Messrs Sherani & Co under the provisions of RHC Order 67 r 6 and accordingly Messrs Sherani & Co must be considered to be Gokals solicitors in Action No. 350 of 1996 until its disposal or earlier withdrawal by them in accordance with the rules. In my opinion the letter of 14 September 1998 set out above was premised on the erroneous assumption that Messrs. Sherani & Co were, for the purposes of Action No. 350/96, solicitors for New India rather than solicitors for Gokals. Since Messrs. Sherani & Co were solicitors for Gokals on the record and New India were not even a party to Action No. 350/96 this was clearly not the case.

In my judgment Rajesh Prakash was covered by Gokals comprehensive insurance policy in respect of CK 588. Gokals having been adjudged liable I find that they are entitled to be indemnified by New India. I declare accordingly.

M.D. Scott
Judge

6 June 01