Fachi v Stella Maris Secondary School and Commercial Union Assurance Company Ltd (Civil Cause 1481 of 1992) [1993] MWHC 17 (5 April 1993)

I IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY CIVIL CAUSE NUMBER 1481 OF' 1992 BETWEEN: MATANDA FACHI and PLAIN TIFF STELLA MARIS SECONDARY SCHOOL .... 1ST DEFENDANT and COMMERCIAL UNION ASSURANCE COMPANY LTD. . . . . . . . . . . . . . . . . . . . . . 2ND DEFENDANT Coram: D F MWAUNGULU, REGISTRAR Mrs. Kanyongolo, Counsel for the Plaintiff Mr Kaphal e , Couns e l for the 2nd Defendant ORDER This i s a summons by an insurance company, Commerci al Union to be struck off an action commenced by Assurance PLC, Matanda Fachi, for negligence on the part of Stella Maris Secondary School, the The plaintiff, a student at the School, first defendant. the school's driver negligently managed a was injured whe n motor vehicle owned by the school. This motor veh icle is insured by the second defendant. the plaintiff, recover damag es to took out The plaintiff the first defendant as owners of the motor vehicle and employe r of the driver who caused insurers, because there was no privity of contract with the victim, could not be sued directly. introdu ced in 1988, makes this possible. this action against Section 65 (A), the accident. Before 1988 a policy of ( l) Any person having a claim against a person insured in respect of any liability in regard to which insurance ha s been issued for the purposes of this Part shall be to recover directly entitled in his own name from the insurer any amount, not exceeding the amount covered by the policy, for which the person insured is liable to the person having the claim: Provided that: 2/ ..... _ j - 2 - (a) ( b) ( C) the rights of any such person claiming directly against insurer shall, except as provided in subsection (2), be the not greater person insured against such insurer; rights of than the the shall to recover directly from the the right insurer the expiration of a period of two years from the date upon which the claimant's cause of action against insured arose; the person terminate upon in paragraph is the expiration of mentioned this proviso shall not affect the validity of legal proceedings commenced during any such period for the purpose of enforcing a right given under this section; such period as ( d) of ( 2) respect of the claim of the any person In insurer by claiming directly against virtue of subsection ( 1) any condition 1n a policy purporting to restrict the insurance of the person insured thereby shall be of no effect: or towards Provided that nothing in this section shall require an insurer to pay any sum in respect of the liability of any person otherwise than in that liability, and any sum paid by an insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue this subsection may be recovered by the insurer from that person. the operation of discharge only the of of The second defendant is sued under this section. The defendant January 1993. ·this summons party . filed a notice of intention to defend on 13th On 15th February 1993, the defendant took out insurer struck off as a wrong to have the the . In the affidavit in support of the application it is deponed insurer of motor vehicle that registration is The policy number 303901591. The deponent has The policy is not exhibited. exhibited the proposal form which has this statement: second defendant is 2840. number BH "I/We hereby agree that this proposal form shall be held to be promisory and be a basis of the contract between we/us and the Company". 3/ ..... > ., ... , ::.,'. ".· - 3 - It is conceded in the affidavit that the plaintiff was a passenger on the plaintiff was not carried for hire or reward. the motor vehicle. It is avered th a t There is no affidavit from the plaintiff. The plainti ff in in argumen t affidav it , the r ~ sult of the application. this has a bearing, albeit tangential have not been facts which swo rn t o raised taken for the second defendant to be Th e cardinal point struck off is that an insurer can only be sued di rect l y under s e ction 62 {A) where there is compulsory third party i nsurance under part V of I t was contended very strongly that there is no obligation t o have third party insurance cover for passengers except for motor vehicl e s in which passengers are carried for hire or reward. the Road Traffic Act. th e defendant that t he pl a intif f was a It was a rgued for passeng e r not for reward or hire. It is contended f or the plaintiff that sh e paid a certain amount of money at the the school motor beginning of vehicl e . therefore, a passenger for reward and covered by the insu r ance. the She was, to cover use of t e rm in ( 1969) 3 All E . R. 572. Mr. Kaphale relied heavily on two decisions of the Co u rt of Appeal the United Kingdom: Coward vs. Motor In surers Bureau (1962)1 All E. R. 531 and Connell. vs. Motor In surers The ratio decidendi of these Bureau is the Road Traffic Act two ca se s compuls o ry to insure for injuries to third parties. It is not compulsory to insure for passengers on motor vehi cles in which passengers ar e not carried for hire or reward. Lord Denning s aid in Conn el l vs. Motor Insurers Bur e au 57 3 : that under it is Jaw is using a vehicl e on a road is "Eve ryon e who compelled by to insure against third party liability; but there is this important exception: he is not compelled to insure against inju ry to passengers But there is a provi so to this exception in this respect: although a driver is not usually bound to insure his passenger s, yet he is bound to do so in the case of vehic les in which passengers are carried for hire or r e ward." . . . . . . . . It is also significant that th~ insurance is related to the use of t he motor veh i cle and not whether the passenge r is or is not for reward. If it was the latter then in ea ch case the court would be called upon to decide wheth e r a pas senger was for hire or reward. There are statements to this effect Lord De n ning, in Cowa rd vs. Motor however, in Connell vs. Motor Insurers Bureau at pa ge 574 said: Insurance Bureau. "At any rate, decide the point we have here". the court in Cowards Case d id not 4/ . .... O f:~~~:A .;,\t •' .. ; . - 4 - The magical words "motor vehicles If the motor vehicle is not one in which passengers are carried for hire or reward it does not matter whether the a particular occasion or a serr ies of passenger paid on occasions. in which reward" have been passengers are carried construed to mean vehicles that as a matter of course are used to carry passengers for hire or reward. (per Branson, 1J:f in Wyatt vs. Guildhal Insurance Company (1937)1 All E. R. 792, 796. In Connell vs. Motor Insurers Bureau Lord Denning M: R. said: i~' ,I ~ -: :-· for hire or a motor coach, that the owner of a "Th e result is, therefore, taxi, and a such as vehicle, insure his private hire passengers. the owner of private car is not bound to ins ur e his passengers, even though they may make a co n trib ution towards the petrol or pay a sum of money in return for a lift". bound a to car, But is to passengers. There is no obligation on privately owned cars that arc not ha,bitually used for hire or reward to be insured against it_1.juries In this particular case it is insignifca nt that, al though there was no affidavit to the effect, The motor vehicle is not used to carry passengers for hire or reward. the students paid the use of cars. towards in this insuring all passengers. The effect of the l egis lation as it stands now is that there is no obligation to insure for injury to passengers except for vehicles for hire or reward. Consequently, passengers get on private cars at their peril if the motor vehicle owner turns to be a man of straw or impecunious. In England legislation by Judges who there was criticism of A subsequent advocated legisl ation to insure passengers. legislation left the provision intact. I think the position of the English Parliament is understandable. There is great wisdom Insurance, however, involves risk and spreading of risk. The greater the risk If fewer people are is spread the profitable the portfolio. covered road If more people are covered high premiums could accidents. i"nsurance companies out of business; motor very well get vehicle owners would not be The injured, who insurance was supposed to assist, would be hurt The spirit. of both Parliaments, Malawian without re me dy. and English, has been third to make it compulsory for parties ot h er than passengers and leave it to the insurer and insured to agree about whether to cover passengers or even himself. the strains of their cars. cope with insuring insurers can It is This leads me to the er i tical matter in this case. contended for the defendant that the defendant should be struck out because the defendant is excluded from liability 5/ ..... - 5 - because cover for pass e ng e rs is e xclud ed by section 6 2 of th e Road Traf fic Act . Th e sectio n sho u ld b e r eproduced: ( b) " A policy of insurance shall not b e requir ed to e xcept in the ca se of motor v ehi c l e co ver - or trai ler c arried for in which passengers ar e hir e or reward or by reason of or in pu rsuanc e of l iabi l ity in respec t of a contract of emp l oyme n t , th e , the death of or bodi l y inj u ry to persons b e ing carr ied in or upo n or entering or g etti n g on to or alighting from the vehicle or trailer at th e t ime the event out of which th e of c l aims arose . " the occ ur e nce of Th e s e co nd d efe ndant a rgu es as if the Road Tr af f ic Act has decreed that you s h all not h ave cover for passengers if yo ur motor ve hicl e is not u sed for carrying passengers for hir e or reward . i n th e circumstances of the se cond defendant would b e e n titl e d to b e struc k o ff becau se h e ca nnot be sued under Th e section , h o wev e r , pr ovi d es section 62(A) of the !\ct . t ha t for p u rpo ses of t h e part i t shall n ot b e a requir e me nt. Section 61 pr ovi d es : then: was a proser iption , no doubt, this case I f " In order to comply with the requirements of t his Par t p o licy whi ch :- insura n ce must be a policy of a (a) (b) is issued by an insurer approved by the Minister ; and insures s u ch persons or classes of p e rson a s may b e specified in t h e policy in r espect of any lLability whic h may b e incurred by h i m or t h e m i n respect of : ( i ) the death of or bodily inju r y to a ny p er son ; ( ii ) da mage to property ca u sed by or arising out of the use of t h e motor vehicle or trailer o n a ro ad . the sectio n l ea v es it to th e In my opi rn o n insured and insurer to d et e rmine the pe r sons or cla ss of p ersons t o be covered by the policy for comp ul sory third party insuran ce . Sec t i on 6 2 excl ud es th o s e wh ere it is not compulsory. My unde r sta nding of Sec tio n 62 is that it is not pr oscriptiv e . i n surance shall not be t hat It only It is not saying that compul sory f or those in (a) and (b ) . you cannot cover passengers . insu re d t h e At the e nd of the day i t can agree to cover s uch risks . turns o ut on the t h e policy work e d by It may mea n h eavy pr e miums but th e insurer a nd th e insured. the agr ee me n t or The insurer and t hird party say s 6/ . .... - 6 - Th at the question turns on insurer and insured can agr ee . the terms of agree ment oi po l icy see ms to have been acc e pted by Lord J u stices De n ni n g a n d Kar mi n s k in Connel l vs. Motor Insurers i n Coward vs . Motor Lord Ju stice De nnin g said in Co n nell vs. Insurers Bu reau . Motor Insurance Bureau 573 : J u stice UpJo hn a n d Lord " The plaintiff wanted his injuries . But insurance did not His policy conta i ned a claus e which cov e r it . exclu0ded " a ny legal liability to passengers", and also a clause exc lu di n g " a n y liability whil e the car was being u sed for hire or reward ." compensation En glish ' s for Later in the passage the Master of Rolls continued : " Th e insurance company did n ot pay . bound to. Th e ins u rance did not cov Th e y wer e not r it . the statements for Both provided notwith sta nding section 62 of Justice Karmiski said : i mply pass e ng e rs it that t h e the insurance policy if compensat ed would be Lord Road Traffic Act . " As things sta n d , it is or may be difficult for a passenger in a car to ascertain whether or not the a policy of owner or driver insurance if t h ey meet wit h an accident . Indeed to come to any safe concl u sion whether or not he is protected a wise passe n ger would , suppose hav e , first of all , i n spect the driv er's or owner ' s policy of ins u rance , and it may ther eafer be wise for hi m to co n s u lt h is solicitor ." is covered by to I All then tur n s out on t h e ter ms of t h e insurance policy. i n surer a n d to be struc k o u t becaus e think in dealing wi t h a sit u ation li k e I the present where i n suring a the def e ndant seeks passeng er is not compulsory u nder the Road Traffic Act, and I would thi nk in e very case wh ere t h e insurer is avoiding liability to a passenger i n a motor vehicle , recourse should In all not be had to the general provisio n s of section 62 . fairnes s recourse should be h ad to the policy agreed between the t h e policy provides that liability for passengers or a certai n class of passeng ers is covered t h e court will enforce t h e agree ment notwithstand ing section 62 of the Road Traffic Act . In the present case if the policy of insurance was si l ent or sp ec ifically excluded liabili ty for passengers o n t h e motor vehicle the second defendant could not have b ee n sued u nder section 62A of the Th e agree me n t or t h e insurance polic y has Road Traffic Act . not been proferred. The defe n dant h as exhibited a prop osal form which specifica l ly looks forward to an actual contr act. In the abse n ce of the policy or agree me n t it is con j ecture i n s u red . Wh ere 7/ .. ... t,; . ' ~-:: - 7 - wheth er passengers li k e the plaintiff are not covered for liability. This omission cannot be resolv e d by the gen era l provisions in s ec t io n 62 . I would dismis s th e appl ication to str ike th e s e cond d efe ndant with costs . . ~he second d ef endan t ca n appeal to a Judge in c ham ber s. Made in chambers th is 5t h day of April 1993 . ( D F Mwau REG I STRAR OF