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Q.B.E Insurance Co. Ltd v Singh [1979] FJSC 57; Civil Action 88 of 1979 (22 October 1979)

IN THE SUPREME COURT OF FIJI
(WESTERN DIVISION)
AT LAUTOKA
CIVIL JURISDICTION

Action No. 88 of 1979

BETWEEN

Q.B.E. INSURANCE CO. LTD.
Plaintiff

AND

JITENDRA SINGH f/n Sher Singh
1st Defendant

PARMA NAND f/n Pardeshi
2nd Defendant

RAM SUMARI f/n Shiu Prasad
3rd Defendant

GYAN CHAND f/n Bal Chand
4th Defendant

Mr. S.D. Sahu Khan, Counsel for the Plaintiff
Mr. B.C. Patel, Counsel for the Defendants.

JUDGMENT

The Queensland Insurance Co. Limited seeks to determine the extent of its liability to defendants 1 & 2 the owner and driver respectively of a taxi under a 3rd party policy for injuries suffered by fare paying passengers, defendants 3 & 4 in a road accident.

Damages were awarded against defendants 1 & 2 in Civil Appeal 74/76 in the Lautoka Supreme Court for $5000 and $5,500 in favour of defendants 3 & 4 respectively.

No oral evidence was led in these proceedings before me and counsels' submissions were very helpfully made in writing and appear as part of the record. To them are attached copies of the proposal form, certificate of insurance and policy of insurance.

The plaintiffs contend that their liability to indemnify the defendants 1 & 2 under the policy is limited to $4,000.00 in respect of each of the passengers namely defendants 3 & 4.

Although defendant No.1 was not the person to whom the policy was issued no objection is taken by the plaintiffs by reason thereof. The proposal form was filled in and signed by Mohammed Saheed and the Certificate of Insurance and the insurance policy are made out in his name and not that of defendant No.1.

I refer to the copy policy appearing as annex C to the 2nd affidavit of Jitendra Dattan dated 19.7.79 who is the manager of the plaintiff's Lautoka branch.

The insurance proposal form annex. A to the aforesaid affidavit describes itself as a request for,

"insurance under the provisions of the Motor Vehicles (3rd Party Insurance) Ordinance against liability in respect of or bodily injury to any person caused by or arising out of the use of the motor vehicle referred to in the schedule hereto."

It takes the usual form of a list of questions to be answered by the proposer as to use of the vehicles, and information regarding the drivers. Apart from the statement that it is a taxi carrying 5 passengers and the extract above quoted no further information appears in the proposal which is relevant to these proceedings.

The policy itself has a preamble stating that the plaintiff company agrees to insure "the proposer"

".....subject to the terms limitations exclusions and conditions contained herein........"

Following that preamble appears the sub-heading "EXCLUSIONS" which contains 3 clauses setting out conditions under which liability is not incurred by the insurer but these proceedings are only concerned with clause (1)(b) thereof the relevant parts of which read:-

"(1) The insurer shall not be liable in respect of any claims by any person who at the time of the accident was:-

(a)....................................................................

(b) driving or being carried in ........................... the said motor vehicle except insofar as the indemnity granted hereby must apply by reason of subsection 6 of the Ordinance when the liability of the insurer shall be limited to the minimum amounts referred to in the proviso to the said subsection of the said Ordinance."

According to the preamble and the exclusion clause set out above the insurance company will not be liable for injury to the driver or to any fare paying passenger in the insured car except in accordance with S. 6(1) of the Ordinance.

S. 4 of the Ordinance requires the owner, driver, etc. to be insured against third party risks.

S. 6(1)(b) requires him to have a policy which covers him in respect of any liability arising from the death of or injury to any person caused by use of the motor vehicle. However, the apparently unlimited size of the third party group is reduced under a proviso to S. 6(1) which reads:-

"Provided that

(a) such policy shall not be required to cover...........................

(i) .....................................................................

(ii) save in the case of a passenger carried for hire or reward in a passenger vehicle ........................ liability in respect of the death of or bodily injury to persons being carried in ................................. the motor vehicle ....................

(iii) ..................................................................

(iv) .................................................................."

Under that proviso a third party policy does not have to include liability for injury to passengers in a taxi, bus, etc. However, the insured's liability to cover his fare paying passengers is limited to $4000 under para (b) of the proviso which reads:-

"(b) such policy shall not be required to cover liability in excess of £2000 for any claim made by or in respect of any passenger in the motor vehicle ....................."

It is apparent from the wording of S. 6(1) that it does not forbid the insured to cover himself for liability for injuries to passengers; it simply provides that there is no legal compulsion to be covered against such a liability; likewise in the case of fare paying passengers although the insurer is bound to cover them he is not, by the terms of para (b) to the proviso, obliged to cover them for more than $4000.00.

The defendants argue that it should be apparent from the contents of the proposal form that the insurance policy will restrict the liability of the company in accordance with the aforesaid proviso. They content, that since the proposal form is part of the agreement for insurance it should allude to any intended restrictions on the insurance company's liability. I do not accept that an omission to refer in the proposal to the admissible statutory limitations prevents them from being included in the policy.

Third Party insurance is compulsory. It was not enacted for the benefit of the insured but for persons whom he may injure as is demonstrated by the fact that it is a criminal offence under the Ordinance to fail to be insured for third party risks. Clearly there is an onus upon motor vehicle drivers and owners to be aware of the kind of cover which the statute says they must have in case of injury to third parties. Some vehicle owners will opt for the narrowest and therefore cheapest third party insurance and others will prefer the widest cover even though it means obtaining insurance beyond the limits required of them by the Ordinance.

The defendants contend that the insurance company has an option to restrict their liability in the terms of the proviso to S. 6(1)(b). They say that if the insurer intends to exercise that option this should be indicated in the proposal form so that the insured is fully aware of this. I am not sure that the word "option" describes the function of the proviso. It is not expressed in the form of an option; it does not say the company may issue this kind of policy or that kind of policy or that it can provide any of several different limits of pecuniary liability at its option. Surely the insurance company or reject the proposal. I think it is not so much a matter of the insurer limiting his liability as of the insured limiting his coverage to the extent permitted by the Ordinance. The Ordinance is for the benefit of third parties as stated in its title and preamble and in general parlance third parties comprise all persons other than the insured and the insurer. I think that the intention of the proviso is to show, among other things, that in spite of the wide terms of S. 6(1)(b) the legislature does not regard certain persons or classes as third parties for the purposes of compulsory insurance under the Ordinance. Therefore a policy does not have to cover those classes in order to keep within the law. The proviso, has I think, been very carefully worded to avoid pitfalls. Thus if it had said -

"The following shall not be regarded as third parties" and then listed the limitations set out in the proviso those classes could not be covered under a third party insurance even if the proposer wanted such cover. In its present form the proviso does not prevent their inclusion it simply places no obligation on the insured to include them.

The defendants contend that any limitations to be included in the policy should be indicated in the proposal form because it is not until after the premium has been paid that the policy is received. Frequently a "cover note" is issued to acknowledge that the proposal has been accepted and the premium paid and that a policy is to be supplied in due course. In such circumstances the insured is not aware of any limitations which may be imposed in the policy until some days after he has paid his premium.

One answer to that argument is that on receipt of the policy the insured can take steps to have it adjusted to the kind of policy he wants. If he wants his cover widened then he would have to pay a higher premium. The price charged in the first place will no doubt be for a policy which covers the insured to the extent required by the Ordinance.

It is the duty of the vehicle owner or user to obtain insurance cover which complies with S. 6 of the Ordinance. The third parties whom he is obliged to insure are those referred to in S. 6(1)(b) as limited by the proviso thereto. The insurance company has assumed that all he requires in the way of third party insurance is cover to the extent that is legally compulsory and the proposal form is worded accordingly. What the proposer asks for, according to the printed proposal form is, "insurance under the provisions of the Ordinance against liability for injury to any person arising out of the use of the motor vehicle." The present policy answers that request by supplying cover against liability to persons whom he is required to insure under the Ordinance. The defendants are not required to be covered for more than $4000 per fare paying passenger under the terms of the proviso. One appreciates that injuries to 4 fare paying passengers could give rise to a liability for more than $100,000 but the law does not require him to insure them for more than a total of 4 x $4000 = $16,000. His proposal form asks for cover to the extent of his legal liability under S. 6(1) and he has received it.

The 1st defendant is a taxi-driver. He is one of the classes specially referred to in the proviso to S. 6(1), namely, one who carries passengers for hire or reward. He should be aware of that part of the Ordinance which affects him. On finding that his cover did not extend beyond the statutory requirements he could have taken the precaution of extending or procuring separate insurance cover for that type of risk. I read the proviso as meaning that the policy taken by the insured shall not be required to cover the persons described in paras (a) (i)(ii)(iii) or (iv) of the proviso. It does not mean that the insurers at their option shall not be required to cover those persons. My reason for that interpretation is that it is not the insurance company's statutory duty to insure third parties; it is the duty of the insured. Why should the insurance company go out of its way to provide a car owner with a more extensive form of cover than the Ordinance requires unless he specifically asks for it? If there is an option to be exercised under the Ordinance regarding coverage it must surely be exercised by the person who obliged to be covered.

I declare that the insured received the kind of cover which is compulsory required by the Ordinance being one which indemnifies him against liability to his fare paying passengers to a limit of $4000 per passenger. The liability of the plaintiffs is limited accordingly.

The defendants will pay the costs hereof.

(Sgd) (J.T. Williams)
JUDGE

LAUTOKA
22nd October, 1979