102-NLR-NLR-V-65-FREE-LANKA-INSURANCE-CO.-LTD.-Appellants-and-A.-E.-RANASINGHE-Respondent.pdf
Free Lanlca Insurance Co., Ltd. v. Ranamnrjhe
481
-tr
[2>sr the Petty Council]
1963 Present: Lord Evershed, Lord Morris of Borth-y-Gest,
Lord Guest, Lord Devlin, and Lord Pearee
FREE LANKA INSURANCE CO., LTD., Appellants, and A. E.RANASESTGHE, Respondent
Pbivy Council Appeal No. 46 op 1962
S. 0. 1M/1959—D. G. Colombo, 42073
Motor vehicle—Lorry—Insurance against third party rislcs—Action instituted byinjured third party against owner of lorry—Notice of action given to insurerin terms of s. 134 of Motor Carr Ordinance, No. 45 of 2938—Repeal, pendingaction, of Ordinance No. 45 of 1938 by Motor Traffic Act of 1951—Effect onliability of insurer in a later action—Maximum amount payable by insurer—Motor Car Ordinance, No. 45 of 1938, as. 127-149—Motor Traffic Act of 1951,as. 99-121—Interpretation Ordinance {Cap. 2), g. 6 (5) (6).
By section 6 (3) (6) of the Interpretation Ordinance it is provided :
“ (3) Whenever any written law repeals either in whole or part a formerwritten law, such repeal shall not, in the absence of any express provisionto that effect, affect or be deemed to have affected—
(«)
(6) any offence committed, any right, liberty or penalty acquired orincurred under the repealed written law ;
(c)”
An msurance policy against third party risks was issued in respect of a lorryfor one year from the 22nd February, 1948. The liability of the insurancecompany to the assured (owner of the lorry) in respect of any one accident waslimited to the aum of Us. 20,000. On the 29th March 194S an accident occurredin consequence of the negligent driving of the lorry, and the respondent, who wasdriving the motor car with which the lorry collided, suffered substantial bodilyinjuries. On the 27th March 1950 the respondent instituted action against theassured for recovery of damages end, two days later, gave the insurance companynotice of action in terms of section 134 of the Motor Car Ordinance, No. 45 of1938. On the 24th September 1951 he obtained judgment from the DistrictCourt for Its. 15,000 damages, which sum was increased on the 27th May 1955by the Supreme Court, on appeal, to Rs. 30,000. On the 17th September, 1957the respondent commenced the present action against the appellants (theinsurance company) and, in due course, obtained judgment for Rs. 30,000 andcosts.
Shortly before the decree of the District Court was obtained by the respondentagainst the assured, the Motor Car Ordinance No. 45 of 1938 was repealed onthe 1st September 1951 and replaced by the Motor Traffic Act of 1951. Thelatter Act contained no transitional provisions designed to preserve or capableof preserving the rights or claims originating under the 1938 Ordinance.
It wag contended on behalf of the appellants (1) that having regard to therepeal of the Ordinance in force at the time of the accident and before the decreesin favour of the respondent in the action brought by him against the assured,the appellants were not under any liability to the respondent; and (2), that ifthe appellants were liable to the respondent, then their liability was limited tothe sum of R3. 20,000.
LXV—21
?S 150S1—1,555j&jbij
482LOBD BVBRSKETD—Free Lanka Insurance Go~, Ltd. *. Sana^mghe
Held, (i) that the respondent had, prior to the date when the 1951 Act camsinto force, “ acquired a right ” against the appellants within the meaning ofsection 6 (3) (6) of the Interpretation Ordinance. The respondent was tonne-diatetv after the accident an injured third party entitled to recover damagesagainst the assured. His service upon the appellants of the notice of his claimpursuant to section 134 of the 1938 Ordinance was an assertion by bim of bisstatutory right against she appellants ; and nonetheless effectively so becausethe quantum, of his claim was dependent upon the finding of the court in adecree made in his favour in his action against the assured.
(ii) that, under sections 128 and 133 of the Ordinance of 1933 (sections 100and 105 of the Act of 1951), the liability of the appellants to the respondentshould be limited to Ba. 20,000.
Appeal from a judgment of the Supreme Court reported in{1961) 63 N. L R. 529.
Michael Kerr. Q.C., with. R. A. MacCrindle, Q.C.. and ChristopherOwen, for the defendants-appellants.
No appearance for the plaintiff-respondent.
Cur. ado. vult.
December 16. 1963. [Delivered by Lord EvebseedJ—
This appeal arises out of a road accident in Ceylon which took placemore than lo-^ years ago. On 29th March 1948 a lorry driver, being anemployee of one A. M. Appuhamy, collided with a motor car driven byMr. A. E. Banasinghe (the respondent before the Board) as a result ofwhich the respondent suffered substantial bodily injuries. It is not nowin doubt that the collision was occasioned by the negligence of the lorrydrivei’ and the damages eventually awarded by the Supreme Court ofCeylon against Mr. Appuhamy amounted to Be. 30,000. Their Lordshipscannot but feel a considerable sympathy for the unfortunate respondentwho (so far as their Lordships know) has so far received nothing whateverin respect of the damage whioh he suffered and who, whether for financialreasons or otherwise has not been represented before the Board on thisappeal.
It was at the relevant date and is the law in Ceylon (&b it was and is inEngland) that the user of a motor vehicle must be insured as regardsinjuries resulting to third parties from accidents of the kind which occurredin this case—what are generally called third party risks. At the date inquestion Mr. Appuhamy was so insured with the appellant insurancecompany for one year from 22nd February 1948 by virtue of a policydated loth March of that year; but the liability of the appellants to theassured in respect of any one accident of the kind whioh in this esseoccurred was, in due accordance with the terms of the relevant Ceylonlegislation, limited to the sum of Be. 20,000.
LOKQ. EVER-SHED—Free Lanlta Insurance Co., Ltd. v. Ranasinghe 483
Under tile relevant Ceylon legislation (as under the correspondingEnglish legislation) a third party injured by the insured person is givenupon certain terms and conditions the right to claim payment of theamount of his damages direct from the insurance company concerned andthe claim in the action from which the present appeal arises was such aclaim by the respondent. Before the Board, as in the courts below, twodistinct points were taken by the appellants, namely (1) that havingregard to the repeal of the relevant Ceylon legislation in force at the timeof the accident and before the decrees in favour of the respondent of theDistrict Court and the Supreme Court in the action brought by himagainst Mr. Appuhamy, the appellants were not under any liability to therespondent; and (2), that if the appellants were liable to the respondentthen their liability was limited to the sum of Rs. 20,000. Both thesequestions were decided adversely to the appellants by the District Courtand also by the Supreme Court in Ceylon.
It becomes now necessary to refer to the relevant provisions of theCeylon legislation. At the date of the accident there was in force theMotor Car Ordinance No. 45 of 1938, Part VlXI of which (sections 127 to149 inclusive) related to insurance against third party risks. ThisOrdinance was replaced by the Motor Traffic Act of 1951, the date uponwhich the repeal of the Ordinance took effect and the 1951 Act came intooperation being the 1st September 1951. The subject of insuranceagainst third party tasks was covered by Part VI of the 1951 Act (sections99-121 inclusive). The language of the relevant sections in the 1951Act was however, for all practical purposes., identical with that of thereplaced sections in the 1938 Ordinance. It will therefore only benecessary for their Lordships to refer to the sections in the 1938Ordinance giving where necessary the number of the correspondingsection in the 1951 Act. It may be noted—and the point is of somerelevance upon the second of the questions above formulated—that therelevant language of the Ceylon legislation followed closely that of theEnglish Road Traffic Act 1934.
Section 127 of the 1938 Ordinance (section 99 of the Act of 1951)required users of motor cars to be insured against third party risks. Bysection 128 of the 1938 Ordinance as amended at the relevant date(section 100 of the 1951 Act) it was provided (subsection 1) that “ inorder to conform with the requirements of this Part a policy of insurancein relation to the use of a motor car must be a policy which …(b)
insures in accordance with the provisions of paragraph (c) [the insuredperson or persons] … in respect of any liability which may beincurred by him or them in respect of … bodily injury to any
person caused by or arising out of the use of the motor car on a highway ;and (c)… (ii) in the case of a lorry covers any liability which is
referred to in paragraph (6) and which may be incurred in respect ofany one accident up to an amount which shall not be less than Es. 20,000 ”.The proviso 'to the subsection excepted from the requirements of thesection liabilities'in respect of employed persons, contractual liabilities
4S4 LORD EXHEBSHED—Free Lanka Insurance Co., Ltd. v. Banasinghs
and (save as stated) liabilities for injury to persons getting in or out ofthe motor car. Subsection 4 of the section provided that for the effective-ness of a policy there must be issued by the insurers to tire assured “ acertificate in the prescribed form ” containing inter alia particulars of anyconditions to which the policy was subject. It may here be observedthat so far as is known no regulations were ever made under either the1938 Ordinance or the 1951 Act prescribing the precise form of thecertificate last mentioned but it is not in doubt that in the present casethe appellants had in 194S issued to Mr. Appuhamy a certificate in theform which was accepted in Ceylon as proper and appropriate.
It was section 133 of the 1938 Ordinance (section 105 of the 1951 Act)which imposed liability upon insurers direct to injured third parties. Inthe circumstances the section should be set out in full :
“ 133.(1) If after a certificate of insurance has been issued under
section 12S (4) to the persons by whom a policy has been effected, adecree in respect of any such liability as is required by section 12S (1) (b)to be covered by a policy of insurance (being a liability covered by theterms of the policy) is obtained against any person insured by the policy,then notwithstanding that the insurer may be entitled to avoid orcancel, or may have avoided or cancelled, the policy, the insurer shall,subject to the provisions of sections 134 to 137, pay to the personsentitled to the benefit of the decree any sum payable thereunder inrespect of that liability, including any amount payable in respect ofcosts and any sum payable in respect of interest on that stun undersuch decree.
In this section ‘liability covered by the terms of the policy’means a liability which is covered by the policy or which would be socovered but for the fact that the insurer is entitled to avoid or cancel,ox* has avoided or cancelled, the policy. ”
By section 134 of the 1938 Ordinance (section 106 of the 1951 Act) theinsurers were not liable to an injured third party in respect of the decreeunless within seven days after the commencement of the action in whichthe decree was entered notice had been given to the insurer by a partyto the action.
There follow two sections absolving the insurer from liability to thirdparties in certain events. Section 138 of the 1938 Ordinance (section 110of the 1951 Act) must also be set out in full:
138. If the amount which an insurer becomes liable under section 133to pay in respect of a liability of a person insured by a policy exceedsthe amount for which he would, apart from the provisions of thatsection, be liable under the policy in respect of that liability, he shallbe entitled to recover the excess from that person. ”
Finally, by section 140 of the 1938 Ordinance (seotion 112 of the 1951Act) provision is made in the event of the assured becoming insolvent orcompounding with his creditors whereby the rights of the assured againstthe insurer should vest in an injured third party.
LORD EYERSHED—■Free’ixtnka Insurance Co., Ltd. v. Ranasinqhe 485
Their Lordships turn now to the first point taken by the appellants.As already stated the accident occurred on the 29th March 194S. Ou the27th March 1950 the respondent began his action against Mr. Appuhamyand two days later (viz., on the 29th March 1950) he gave formal notice tothe appellants of that fact enclosing a copy of his plaint in the action. Adefence to the respondent's claim was put in by Mr. Appuhamy on the 4thAugust 1950 but it may be observed that there is nothing to show thatMr. Appuhamy’s defence was handled in fact by the appellants. On the24th September 1951 the respondent obtained judgment from the DistrictCourt for Es. 15,000 damages. The respondent appealed against thequantum of damages awarded and on the 17th May 1956 the SupremeCourt allowed his appeal increasing his award to Es. 30,000. It appearsthat in January 1957 the respondent obtained leave to levy executionfor his damages against Mr. Appuhamy but it is not known whether any-thing has ever in fact been recovered thereunder. On the 17th Septem-ber 1957 the respondent commenced his action against the appellantsobtaining judgment for Es. 30,000 and costs from the District Court on the6th March 1959 ; and the appellants3 appeal to the Supreme Court againstthat judgment was dismissed on the 27th September 1961.
From the dates which their Lordships have been given it will be observedthat shortly before the decree of the District Court was obtained by therespondent against Mr. Appuhamy, namely on the 1st September 195Li the Ordinance of 1938 was repealed and replaced by the Act of 1951 andand it is upon this fact that the appellants’ first point is founded.
It has been strenuously contended on their pant that the only right■ which the respondent has to claim direct against the appellants for the.'damage he has suffered is one exclusively based on statute ; that at thetime of the accident and at the time when he gave notice of his action
against Mr. Appuhamy the matter was governed by the Ordinance of1938 ; that since the 1938 Ordinance had been repealed (and was repealedbefore any decree was obtained by him against Mr. Appuhamy) he cannotnow assert any statutory right under that Ordinance : and that he must
therefore claim exclusively under the Act of 1951 the terms of whichcannot upon the fair meaning of the words used in the relevant sectioncover his claim. The relevant section for the purposes of the respondent’sclaim is s. 105 of the 1951 Act which replaced s. 133 of the 1938 Ordinance.and, it is claimed, by the terms of that section the essential condition of aclaim is that a certificate of insurance should have been issued unders. 104 (1) ” of that Act; whereas in fact the only relevant certificate in thepresent case was one issued in 1948 and therefore in no sense “ under ” theAct of 1951 which did not come into force until 34 years later. Finally itis (with truth) pointed our on the appellants’ part that the 1951 Actcontains no transitional provisions designed to preserve or capable ofpreserving the /ights or claims of the kind involved in the present caseoriginating under tjie 1938 Ordinance.
2*-It 159S1 (2/64)
4S6 LORD EVERSHED—Free Lanka Insurance Co., Ltd. v. Ranaainghs
Their Lordships would indeed he sorry if they were compelled to holdthat the terms of the Ceylon Legislation were such as to deprive the respon-dent in the present case of any right to claim against the appellants;but notwithstanding the arguments addressed to them" they axe satisfiedthat the Supreme Court (and the District Court) were entitled to rejectthe appellants'- claim by an invocation of the terms of section 6 (3) of theCeylon Interpretation Ordinance (Cap. 2) of 1900. By that subsectionit is provided :
“ (3) Whenever any written law repeals either in whole or part aformer written law, such repeal shall not, in the absence of any expressprovision to that effect, affect or be deemed to have affected—
(a) the past operation of or anything duly done or suffered under therepealed written law;
fb) any offence committed, any right, liberty, or penalty acquired orincurred under the repealed written law ;
■(c) any action, proceeding or thing pending or incompleted when therepealing written law comes into operation, but every suchaction, proceeding or thing may be carried on and completedas if there had been no such repeal.”
The Board respectfully agrees with the Supreme Court in thinking thatthe respondent had on the 1st September 1951 c: acquired a right ” againstthe appellants within the meaning of para. (b) of that subsection. Theattention of their Lordships was cu-awn to a number of cases includingthose referred to in the judgment of Gunasekara J. in the Ceylon SupremeCourt and including also the case in the House of Lords of the CentralElectricity Board v. Halifax Corpn. 1 The distinction between what is-and what is not “ a right ” must often be one of great fineness. But theirLordships agree with Gunasekara J. in thinking that on the 1st September1951 the respondent had as against the appellants something more than amere hope or expectation—that he had in truth a right, within the contem-plation of section 6 (3) (b) of the Interpretation Ordinance, under section-133 of the Ordinance .of 1938 although that right might fairly be calledinchoate or contingent. In the case of Director of Public Works v. Ho Po■Sang 2 the Board was concerned with an analogous problem under the lan-guage (closely approximating to that of the Ceylon Interpretation Ordi-nance) of the Interpretation Ordinance of Hong Kong. Their Lordshipsare well content to accept and adopt the language used by Lord Morris ofJBorth-y-Gest in the judgment of the Board in that case (see page 922 ofthe Report). iC It may be . . . that a right has been given but that inrespect of it some investigation or legal proceeding is necessary. Theright is then unaffected or preserved. It will be preserved even if a pro-cess of quantification is necessary. But there is a manifest distinctionbetween an investigation in respect of a right and an investigation which !is to decide whether some right should or should not be given ”. In the.present case, as it seems to the Board, the appellants cannot now be
1 1962 3 W. L. R. 1313.* fmi] A. C. 90L
LORD EVERSEED—Free Lanka Insurance Co… Ltd. v. Ranasinghe 487
heard to say that the respondent was not immediately after the accidentan injured third party entitled to recover damages against Mr. Appuhamyand, as they think, his service upon the appellants of the notice of hisclaim (together with a copy of his plaint) pursuant to section 134 of the193S Ordinance was an assertion by him of his statutory right against theappellants; and nonetheless effectively so because the quantum ofhis claim was dependent upon the finding of the court in a decree made inhis favour in his action against Mr. Appuhamy.
Their lordships are therefore of opinion that, for the reasons given byGunasekara J. the Supreme Court was justified in holding as it did uponthe first of the questions raised by the appellants that the case fell within.the terms of section 6 (3) (b) of the Interpretation Ordinance and they donot find it necessary to express any view whether, as the District Judgeheld, the service by the respondent of his notice upon the appellantsmight not also fairly be treated as constituting a “ proceeding ” withinthe terms of section 6 (-3) (c) which was “ incompleted ” when the repeal- of the 1938 Ordinance took effect. Their Lordships add that even if thecase were not covered hy section 6 of the Interpretation Ordinance it doesnot necessarily follow that the appellants should succeed upon this point.The vital words of section 105(l)of the Act of 1951 (section 133 (1) of the, 1938 Ordinance) are “ if a certificate of insurance has been issued under^.section 100 (4) ”, The latter subsection however does no more (as didnot the corresponding subsection (4) of section 128 of the 1938 Ordinance)-than require the issue of a certificate in "the prescribed form”. Asalready stated there appear never to have been any regulations under either: piece of legislation prescribing the form to he used. It may thereforev well be said that the words “ under section 100 (4) ” should be construedas meaning no more than “as contemplated by” that subsection and, if•'•so, that the relevant certificate issued by the appellants in 1948 satisfied- the statutory requirement under the 1951 Act. Indeed, unless it were so,-■"the remarkable result would seem to flow from the coming into force of■"the 1951 Act that all motor car users would be instantly disqualified by.virtue of section 99 of the Act from using their motor cars because there-v was not in force a policy of insurance in respect of third party risks in.. conformity with the requirements “ of this Part ” of the Act. But in–the circumstances it is unnecessary for their Lordships to express a finalconclusion upon this point.
Upon the second question—whether the liability of the insurers should. .be limited to Rs. 20,000—their Lordships have felt much greater diffi-culty and have in the end come to the condusion that in this respect the.appellants’ argument is well founded. True it is that the terms ofsections 133 and 138 of the 1938 Ordinance (sections 105 and 110 of the1951 Act) seem at first sight to provide the answer; for the latter•section undoubtedly contemplates a payment by the insurer to a thirdparty in excess of the insurer’s liability to the person insured and section• 133 requires thitt the insurers “ shall . . . pay to the persons entitled to-the benefit of the decree any sum payable thereunder ” (that is under
4S3 LORD EVERSHBD—Fret Lanka Insurance Co., Ltd. v. Ranasinghe
the decree) ‘'in respect of the liability ” ; and it may be forcibly con-tended that the Be. 30,000 awarded by the Supreme Corot was awarded
cc in respect of the liability ’’ of Mr. Appuhamy to the respondent. Then-Lordships have not had the advantage of hearing any argument on thepart of the respondent but in the end have felt compelled to reject thisview. In approaching the problem their Lordships are impressed bythe redaction that it would appear as a matter of principle unlikely thata third party having no contract with the insurers should yet be entitledto recover from the insurers a sum greater than the limit imposed bythe insurer, properly in accordance with the Ordinance, in the policy ofinsurance. Second they note that the “ liability ” referred to in section133 is by the terms of subsection (1) a " liability required by section 12S
(b) to be covered by a policy of insurance.” It is therefore necessaryto turn back to section L2S and it is to be observed that the terms ofparagraph (6) of sub-section (1) expressly incorporate the succeedingparagraph (c). It therefore follows that in the case of a lorry the liabilitye; required ” to be covered is a liability which shall not be less thanRs. 20,000 but need not exceed that figure—so that any liability in thepresent case (having regard to the terms of the policy) in excess ofRs. 20,000 was not one “ required ” to be covered by the policy.
There remains however the language of section 13S ; and if it wereshewn that a payment by the insurer to a third party cannot withinthe contemplation of the provisions of Part VUI of the Ordinance of1938 (Paxt YI of the 1951 Act) be in excess of the insurers’ liabilityunder his policy of insurance save in a case such as the present it wouldbe a very strong, if not a conclusive, argument against the view for which,the appellants contended. But in truth there are undoubtedly othercases which might arise under the relevant Part of the Ordinance (or?of the Act) where the insurer's statutory obligation to a third party imight exceed his contractual liability under the Policy. One suchinstance may be found to arise from the proviso already noticed to sec;~>tion 12S of the Ordinance itself (section 100 of the Act) which exempts';:from what is “ required ” by the section to be covered, liability in res- %pect of persons in the employment of the insured, contractual liabilities "and certain liabilities in respect of persons getting in or out of the motorcar. Another instance may be derived from section 130 of the Ordi-nance (section 102 of the Act) which provides that certain conditions'^may be made in policies effectively limiting the insurers’ liability to the (assured under section 128 of the Ordinance (section 100 of the Acfcjsnamely the conditions indicated in subsection (4) thereof; for example^by excluding the use of the motor car for certain business purposes.'^One effect of the subsection therefore is that liability which may be^jexcluded by the conditions therein mentioned is not liability “ requiredto be covered by section 128 of the Ordinance. In their Lordships’ view 5it would be strange—and indeed capricious—if though in cases arising^under section 137 th* insurer may limit his liability to the third parfcygto the amount of his liability to the assured, there were no correspoxuScgfl
"fj•»ii? iiTfrrlB
escape for the insurer in cases 3uch a3 the present or in cases
LORD EVERSHED—Free Lanka Insurance Co., Ltd. v. Ranasinghe489
under the proviso to section 12S. In. their Lordships’ opinion theseanomalies are avoided if proper effect be given to the essential word“ required ” in section 133 of the Ordinance and the corresponding useof the word “ requirements ” in section 128. A third instance may hefound in section 137 of the Ordinance (section 109 of the Act) whichexcuses the insurer from liability to a third party (for example) if he haswithin a stated period of time given notice of a declaration duly obtainedby the insurer from a court of competent jurisdiction that there has beena breach by the insured of one of the conditions above mentioned insection 130 (4); for the case may well occur where an insurer has failedto give notice in due time. Finally their Lordships observe that para-graph (b) of the proviso to subsection (3) to section 140 already referredto (relating to the vesting in the third party of the rights under his policyof an assured who is insolvent) in terms contemplates the case where. the resulting liability of the insurer to the third party is greater than hisliability under the policy.
Their Lordships add to what they have already said one further con-sideration. As already observed the language of the Ordinance of 1938(and of the Act of 1951) generally follows closely that of the EnglishEoad Traffic Act of 1934; and this is clearly true of section 138 of theOrdinance (section 110 of the Act) the general purpose and sense of whichare identical with those of section 10 (1) of the English Eoad Traffic Act. of 1934, the language being also closely followed. Yet in the English Actthere is no power conferred for limiting the liability of the insurer to theinsured person under a contract of insurance as regards third partiesto some specific figure for any one accident corresponding to the powercontained in section 128 (1) (c) of the Ordinance (section 100 (1) (c) of' the Act).
From the examples given (and their Lordships do not think they areexhaustive) it seems to the Board clear that circumstances may wellarise, apart altogether from the case of limitation of liability in respect. of a lorry, in which the insurer might be ordered to pay to a third partysums in excess of the insurer’s liability to the assured. It is then neces-sary to look again at section 128 of the Ordinance—the vital section forthe purposes of the present argument; and having regard to the use ofthe words “required to be covered” in section 133 of the Ordinance(section 105 of the Act) their Lordships find it impossible to reject theappellants’ argument that the latter section does not render in such‘ a case as the present the insurer liable to the third party for a greatersum than that for which he is liable (in due accordance with section 128of the Ordinance) to the assured.
Their Lordships therefore while rejecting the appellants’ argumenton the main point presented on their behalf think that the appeal shouldbe allowed to the extent of reducing the amount payable by theappellants to the respondent to Es. 20,000 and they will humbly adviseHer Majesty accordingly. In the circumstances of the case no order ismade as to the costs of this appeal.
Appeal partly allowed.