The Judicial Committee of the Privy Council Decisions

Privy Council Appeal No. 61 of 1997

 

(1) Toolsie Goberdhan and

(2) Bisham Dave Toolsie Appellants

v.

Caribbean Insurance Company Limited Respondent

 

FROM

 

THE COURT OF APPEAL OF TRINIDAD

AND TOBAGO

 

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 21st May 1998

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Present at the hearing:-

Lord Slynn of Hadley

Lord Steyn

Lord Clyde

Lord  Hutton

Sir Andrew Leggatt

  ·[Delivered by Sir Andrew Leggatt]

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1. Over 20 years ago on 23rd December 1977 the second appellant, Bisham Dave Toolsie, whilst driving a motor car belonging to the first appellant, Toolsie Goberdhan, was involved in an accident with a motor car driven by Sarran Sampath.  Although the damage to the first appellant's car was comparatively slight, the second appellant sustained personal injuries which rendered him paraplegic.  The writ in the action against Mr. Sampath was issued on 30th October 1978 in the Trinidad and Tobago High Court of Justice.  On 17th November 1987 judgment was given for the appellants with damages to be assessed; and on 31st January 1989 damages were assessed by a Master.  He awarded to the first appellant $7,000 with interest and costs, and to the second appellant general damages of $175,000 with interest, and special damages of $188,150.88 with interest, together with further sums of $224,000 and $28,800 without interest.  On 23rd October 1989 the appellants issued a writ in the High Court claiming to recover from Mr. Sampath's insurers, Caribbean Insurance Company Limited, all the sums awarded against him in the previous action, less the sum paid of $31,965, which was said by counsel to represent the total of the amounts awarded to the first appellant.  Alternatively, they claimed the amount pleaded by the defence to be the maximum amount of the respondents’ liability under the policy, namely $250,000. 

 

2. At trial before Razack J. it was contended on behalf of the respondents that their liability to the second appellant was limited by the terms of the policy to $250,000 per person per claim, or alternatively that it was subject to a statutory limit of $50,000.  The judge upheld the latter argument.  On 26th July 1991 he gave judgment for the first appellant for $7,000 together with interest at 3% per annum from 31st January 1989 to 26th July 1991 and thereafter at 6% until payment, and for the second appellant for $50,000 together with interest at 6% per annum from 31st January 1989 to the date of payment.  He also ordered the respondents to pay the whole of the appellants’ costs in the first action and 75% of the appellants’ costs in the second action.  

 

3. The statute in force at the date of the accident was the Motor Vehicles Insurance (Third-party Risks) Ordinance, Ch. 16, No. 4 ("the Ordinance").  That statute was replaced by the Motor Vehicles Insurance (Third-Party Risks) Act, Ch. 48: 51 ("the Act"), which by clause 4 and the Schedule of the Law Revision (Revision Date) Order 1980 was brought into force on 31st December 1979.  The purpose of the Ordinance was to make provision for the protection of third parties against risks arising out of the use of motor vehicles.  Section 8(1) provided that:-

 

"(1)  If after a certificate of insurance has been delivered under subsection (4) of section 4 to the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under paragraph (1)(b) of section 4 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability, including any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."

 

4. By section 4 it was provided, so far as material, that:-

 

"(1) In order to comply with the requirements of this Ordinance, a policy of insurance must be a policy which -

 

(a)     is issued by a person who is an insurer, and

 

(b)    insures such person, persons, or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle on a public road:

 

Provided that such a policy shall not be required to cover -

...

 

(v)   liability in respect of any sum in excess of $4,800 arising out of any one claim by any one person;..."

 

5. It was common ground before their Lordships that this figure was increased by Act 24 of 1966 to $50,000; and it was further increased to $200,000 by the Law Reform (Miscellaneous Amendments) (No.1) Act 45 of 1979, with effect from a date in 1979.  Meanwhile by Act 34 of 1974 liability under section 4(1)(b) had been extended to damage to property.

 

6. Following review by the Law Revision Commission ("the Commission") the Ordinance was replaced by the Act with effect from 31st December 1979.  The Commission was acting under the Law Revision Act which, while giving power to alter Laws, expressly provides by section 17(1) that:-

 

"Nothing in this Act, except in section 23 and the Second Schedule, shall be construed to confer power on the Commission to alter the substance of any written law."

 

7. For present purposes those exceptions are immaterial.  By section 18:-

 

"The Laws shall not be held to operate as new laws, but shall be construed and have effect as a consolidation and as declaratory of the written laws that have been revised and published therein."

 

8. Though section 8 of the Ordinance became section 10 of the Act its language remained substantially the same.  But the original form of section 4(1) of the Ordinance had been amended so as to refer to “damage to the property of” any person; and the subject-matter of the proviso to the subsection was transferred to a new subsection which, so far as material, read as follows:-

 

"(2)    In the case of death or of bodily injury, a policy of insurance shall not be required to cover -

...

 

(e)     liability in respect of any sum in excess of two hundred thousand dollars arising out of any one claim by any one person;..."

 

9. It appears that this may have been thought more appropriate than that amendment to the proviso, also made by Act no. 34 of 1974, which had had the effect of confining the proviso to death or bodily injury.

 

10. Before their Lordships and in both Courts below the principal argument was as to whether or not the respondents' liability was limited by statute to the sum of $50,000.  Although by the re-amended defence the respondents pleaded that a limit of $50,000 was imposed by the Act, it was in fact introduced, as has been seen, by amendment of the Ordinance.  For the appellants Dr. Ramsahoye S.C. argued that the relevant statutory provision is that which was in force when judgment was given against the other driver and the cause of action against the insurers accrued, or alternatively, when judgment was given against the respondents.  Either approach would have resulted in a statutory limit of $200,000.  For the respondents Mrs. Oldham argued that the relevant legislation was that in force at the date of the accident.  It seems that the point was not taken before the judge, and in the Court of Appeal counsel asserted that the Act came into force in 1975 or 1976, that is, before the accident.  But giving the principal judgment Ibrahim J.A. concluded by saying:-

 

"We have since discovered that this is not so.  The new Act came into force on 31 December 1979 [sic] ….  The liability of the respondent falls to be determined under the Ordinance Ch. 16 No. 4 which Dr. Ramsahoye had conceded in any event limited the liability of the respondent to the statutory amount of $50,000.00 with interest and costs."

 

11. The question is one of construction.  Although the Act was in force at the date of trial, the reasoning of the Board in Free Lanka Insurance Co. Ltd. v. Ranasinghe [1964] A.C. 541 might suggest that the applicable statutory provision is section 8 of the Ordinance on the ground that the appellants acquired an inchoate or contingent right under it.  But as is to be expected since the Act merely consolidated the Ordinance without alteration of its substance, the question is academic, because on this point the same result would be reached by construction of section 10 of the Act.  Like section 10 of the Act section 8 of the Ordinance refers to “judgment in respect of any such liability as is required to be covered by a policy” under section 4(1)(b). That subsection provides that to comply with the Ordinance a policy of insurance must insure a person "in respect of any liability which may be incurred by him" of the relevant kind: "Provided that such a policy shall not be required to cover" liability in excess of $50,000.  It is evident that liability "required to be covered by a policy" relates to liability which is covered by the terms of a policy that insures the holder in respect of liability for bodily injury, and which need not exceed $50,000.  In short, the insurers' liability to a third party is determined, subject to the permissible limit of liability, by reference to what that policy which rendered the insurer liable to his insured in respect of the accident was required to cover.  Because the policy in question was not required to cover liability in excess of $50,000, that is the applicable limit. 

 

In Harker v. Caledonian Insurance Co. [1980] 1 Lloyd's Rep. 556 the House of Lords held that the wording of the similarly worded Honduran Ordinance was clear and free from ambiguity, and affirmed the judgment of the Court of Appeal upholding the decision of Donaldson J. that in a direct action under that Ordinance the insurers were entitled to limit in accordance with that Ordinance their liability to a driver killed in a collision with the assured.  Under the Honduran Ordinance sections 4(1)(b) and 20(1) corresponded with sections 4(1)(b) and 8(1) of the Trinidad and Tobago Ordinance respectively.  Of the Honduran Ordinance Lord Diplock said at page 558:-

 

"In a sentence the question of construction is: Is ‘liability in respect of any sum in excess of four thousand dollars arising out of any one claim by any one person' which by provision (v) to sub-s. (1)(b) of s. 4 a policy is not required to cover, nevertheless included in `such liability as is required to be covered by a policy under paragraph (b) of subsection (1) of section 4' where that expression is used in s. 20(1)?  So stated, the only possible answer is, in my view, ‘no'."

 

The Harker case was followed by the Board in Suttle v. Simmons [1989] 2 Lloyd's Rep. 227, holding that the effect of section 6(1) of Bermudan legislation corresponding with section 8(1) of the Ordinance was to limit the amount which the injured third party could recover directly from the insurers.  The amount covered by the policy was greater than the statutory minimum and the action by the respondent against the insurers was for a sum within the amount so covered.  The reasoning of Lord Diplock was nevertheless held to be applicable, Lord Keith of Kinkel saying at page 232:-

 

"It is, in their Lordships' opinion, nothing to the point, so far as the construction of section 6 is concerned, that the insurers might under the terms of the policy be bound to indemnify the insured in respect of any excess over the statutory minimum for which an injured third party might have obtained judgment against the insured."

 

12. Although before their Lordships Dr. Ramsahoye did not in terms reiterate the concession which the Court of Appeal recorded him as making, there can be no doubt that the cases of Harker and Suttle provide authority for the propositions that the insurers are liable for no more than such liability as is required to be covered under section 4(1)(b); that because the proviso is part of section 4(1)(b), no liability is required to be covered in excess of the amount prescribed by paragraph (v); and that the effect of section 8(1) is therefore to limit the amount which the third party can recover directly from the insurers.

 

13. Since the subsection provides that "the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment any sum payable thereunder in respect of the liability", it is arguable that "thereunder" refers not to the section but to the judgment. But that would not avail the appellants because the right to payment is only to any sum payable "in respect of the liability".  "The liability" is that which is identified earlier in the subsection namely “any such liability as is required to be covered by a policy” under section 4(1)(b).  For the reasons earlier given, that liability was limited in the present case to $50,000.  The appeal therefore fails.

 

14. Exceptionally, because different arguments engaged the Courts below, their Lordships will refer briefly to them, notwithstanding that they will not form part of the ratio decidendi of this appeal.  Dr. Ramsahoye advanced as his principal argument the contention that the Act applied to the claim and that the alteration of the Ordinance, as reproduced in section 4 of the Act, was intended to remove the limiting effect of the proviso.  He contended that when section 10(1) is relied on, the insurer is liable for all the kinds of liability required to be covered by a policy under section 4(1)(b), but, because section 10(1) does not refer to any other provision, the limit imported by section 4(2)(e) is not incorporated, and so is not applicable.  In the absence of any such limitation, it follows that the whole amount insured is recoverable, namely the maximum of $250,000.  He did not dispute that, because the alterations to the Ordinance were made by the Law Revision Commission, the provisions of the Law Revision Act apply.  So under section 17 powers of alteration did not extend to the substance of the Ordinance; and by section 18 the Act was not to be held to operate as a new law but as declaratory of the Ordinance.  This negatives any inference that the change in the language of section 4 was intended to affect its meaning.  Again the key words of section 10(1) are "such liability as is required to be covered by a policy under section 4(1)(b)".  The nature of the liability required to be covered is identified by section 4(1)(b) without regard to quantum.  For the extent of the liability required to be covered under that subsection reference has to be made to section 4(2), and in particular to paragraph (e), which, by stipulating that an excess over $200,000 is not required, directly impinges on section 4(1)(b) and assists in defining its scope.  Section 4(1)(b) cannot properly be construed outwith its context.  Viewed in the round, the liability required to be covered by a policy under section 4(1)(b) is not required to exceed $200,000. 

 

15. Dr. Ramsahoye also invoked section 10(4) of the Act, which provides that:-

 

"If the amount which an insurer becomes liable under this section to pay in respect of a liability of a person insured by a policy exceeds the amount for which he would, apart from the provisions of this section, be liable under the policy in respect of that liability, he shall be entitled to recover the excess from that person."

 

16. He submitted that this subsection gives to an insurer a right of recourse against the assured where, as here, the amount covered by the policy exceeds the statutory limit.  But the subsection relates exclusively to cases where the insurers' liability under the policy is less than the statutory limit, not where it is greater.  His proposition that in the absence of the policy, which was not produced at trial, the appellants were entitled to recover from the respondents the whole amount of the sum admitted by the defence to be covered is unarguable, because it is for the amount of the liability which the policy is required by statute to cover that the insurer is liable to the third party, not for the amount of the cover contractually afforded to the assured under the policy. 

 

17. Their Lordships consider that the conclusions of the Court of Appeal of Trinidad and Tobago were correct in law, and accordingly dismiss the appeal with costs.

 

© CROWN COPYRIGHT as at the date of judgment.