IN THE MALAWI SUPREME COURT OF
APPEAL
AT BLANTYRE
(Being High Court Civil Cause No. 717 of 1999)
BETWEEN:
THE NATIONAL INSURANCE
COMPANY
LTD…………………………………………APPELLANT
- and -
M MZIMU……………………………………….1ST
RESPONDENT
-
and –
G O MANDO…………………………………..2ND
RESPONDENT
-
and –
S S MATAMBO………………………………..3RD
RESPONDENT
-
and –
YOYO CHAMANGWANA (MRS)……………4TH RESPONDENT
BEFORE: THE HONOURABLE MR JUSTICE UNYOLO, JA
THE HONOURABLE MR JUSTICE TAMBALA,
JA
THE HONOURABLE JUSTICE MRS MSOSA, JA
Masumbu, Counsel for the Appellant
Msungama, Counsel for the Respondents
Chingana (Mrs), Official Interpreter/Recorder
J U D G M E N T
Unyolo, JA
This is an appeal
against the judgment of Mkandawire, J on a preliminary point of law.
The relevant facts in
this case have been fully and lucidly set out in counsel’s written submissions,
and are these.
The appellant is an
insurance company. In its normal course
of business the appellant issued a policy of insurance against third party
liability to Chenic Investments in relation to a minibus Registration Number NB
510. On 17th December 1998
the minibus was travelling along the Blantyre/Zalewa Road and, due to the
negligent driving thereof by the driver who was employed by the said Chenic
Investments, it overturned near Matindi.
Six people travelling in the minibus died while others sustained
injuries. The respondents are relatives
of the six deceased passengers and they brought the proceedings in this matter
on their own behalf and on behalf of
all the other dependants of the deceased. They sued both Chenic Investments, as the owner of the minibus,
and the appellant, as the insurer. The
action against the appellant was grounded on the basis of section 148 of the
Road Traffic Act which empowers third parties to sue insurers directly. At the time the accident occurred the driver
did not have an appropriate driving licence, namely, a class I driving licence,
which would have legally authorised him to drive minibuses.
The parties agreed
that the only pertinent issue in this case was whether the appellant was liable
to the respondents in view of certain exclusion clauses in the policy issued by
the appellant to the said Chenic Investments having regard to the fact that, as
pointed out above, the driver of the minibus did not have an appropriate
driving licence. The relevant
exclusionary clause reads as follows:
“The company shall not be liable in respect of any accident loss
damage or liability caused sustained or incurred…whilst (on the insured’s order
or permission or to his knowledge) any
motor vehicle in respect of which indemnity is provided by this Policy is…being
driven by any person other than an Authorised Driver or is for the purpose of
being driven by him in the charge of such person.”
The preliminary issue
for determination by the court below was whether in view of the provisions in
Part XIV of the Road Traffic Act, the insurance policy in question was rendered
null and void by the fact that at the time of the accident the minibus was
being driven by a person who did not possess a class I driving licence.
After considering the
submissions made by counsel the court below held that a third party has a
right, pursuant to section 148(1) of the Road Traffic Act, to sue an insurer
directly and that once such a claim had been brought then under section 148(2)
any condition in a policy purporting to restrict the insurance of the person
insured thereby would be of no effect.
Ultimately, the Court below held that in view of the said section
148(2), the insurance policy issued by the appellant in respect of the minibus
was not rendered null and void by the fact that the driver of the minibus did
not possess a class I driving licence at the time of the accident. In other words,
the court below held that the exclusion clause, reproduced above, was not valid
vis-à-vis the respondents and that
accordingly the respondents could claim damages from the appellant.
It is against that
decision that the appellant now appeals to this court. Three grounds of appeal
were preferred. The main point taken
there is that the court below erred in law in basing its decision only on
sections 141 and 148 of the Road Traffic Act, to the exclusion of the other
provisions of the said Act and, in particular, section 147(1) thereof.
It may be necessary
to reproduce the sections cited by counsel in order to have a full picture and
appreciate the arguments made thereon.
First, section 141 reads as follows:
“(1) Subject to this Act, it shall not be lawful for any person to use or
cause or permit any person to use a motor vehicle on a public road unless there
is in force in relation to the use of such motor vehicle by that person or that other person, as the case may be, such a policy of insurance or such a
security in respect of third party risks as complies with the requirements of
this Part.
(2) Any person who contravenes subsection (1) shall
be guilty of an offence and upon conviction shall be liable to a fine of
K10,000 or to imprisonment for a period not exceeding two years or to both fine
and such imprisonment.”
Section 147 provides as follows:
“(1) Save as in this Act expressly provided any condition in a policy
under this Part providing that in the event of some specified thing being done
or omitted to be done after the happening of the event giving rise to a claim
no liability shall arise under the policy or that in any such event any
liability so arising shall cease to be of no effect in connection with any
claim in respect of which the policy holder is required to be insured by virtue
of this Part:
Provided that nothing in this section shall be taken to render void any provision in a policy requiring the person insured to repay to the insurer any sums which the latter may have become liable to pay under the policy and which have been applied to the satisfaction of the claims of third parties.
(1) Where a certificate of insurance has been
issued under this Part in favour of the person by whom a policy has been
effected, so much of a policy as purports to restrict the insurance of the
person insured thereby by reference to:-
a)
the age or physical or mental conditions of the person driving the vehicle;
b) the condition of the vehicle;
c) the number of persons that the vehicle carried;
d) the weight or physical characteristics of the
goods that the vehicle carries;
e) the
time at which or the areas within which the vehicle is used;
(f) the horse power or value of the vehicle;
g) the carrying on the vehicle of any particular
apparatus; or
h) the carrying on the vehicle of any particular
means of identification other than any means of identification required to be
carried by or under the laws from time to time being in force relating to motor
vehicles, shall as respects such liabilities as are required to be covered by
this Part be of no effect:
Provided
that nothing in this subsection shall require an insurer to pay any sum in
respect of the liability of any person otherwise than in or towards the
discharge of 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 only of this subsection shall be recoverable by the insurer from that
person.”
And, finally, section 148
provides as follows:
“(1) Any person having a claim against a person insured in respect of any
liability in regard to which a policy of insurance has been issued for the
purposes of this Part shall be entitled in his own name to recover directly
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:-
(a) the rights of any such person claiming directly
against the insurer shall, except as provided in subsection (2) be not greater
than the rights of the person insured against such insurer;
b) the right to recover directly from the insurer
shall terminate upon the expiration of a period of two years from the date upon
which the claimant’s cause of action against the person insured arose; or
c) the expiration of such period as is mentioned
in paragraph (b) of this proviso shall not affect the validity of any legal
proceedings commenced during such period for the purpose of enforcing a right
given under this section.
“(2) In respect of the claim any person claiming directly against the insurer by virtue of subsection (1), any condition in a policy purporting to restrict the insurance of the person insured thereby shall be of no effect:
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 or towards the discharge of
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 only of
the operation of this subsection may be recovered by the insurer from that
person.”
There is not really much to be said about section 141. In a nutshell, the section prohibits the use
of a motor vehicle on a public road unless the person using the motor vehicle,
or causing or permitting any other person to use the same, is insured against
third party risks. In other words, the
owner of a motor vehicle is required under this provision to have insurance
cover for the use of the motor vehicle either by himself or by any other person
he may cause or permit to use the same.
Counsel for the
appellant dwelt at length, in argument, on the provisions of section 147.
Counsel submitted that it is important to bear in mind that section 147(1) uses
the words “any condition in a policy…providing that in the event of some
specified thing being done or omitted to be done after the happening of the
event giving rise to a claim…”. Counsel argued that the section cannot be taken
to refer to just “any condition” which purports to restrict the insurance of
the person insured but relates only to those conditions which purport to
restrict liability after a claim has arisen.
Further, counsel for
the appellant submitted that where a policy purports to provide to the person
specified in the policy a general cover but there is a condition which ab initio excludes liability from
arising, such as a provision that the insurer is not liable if the person
specified in the policy as covered by the insurance is disqualified to hold a
licence or not licensed to drive, then the provisions of section 147(1) do not
nullify such a condition because the same takes effect before the event
giving rise to liability, whileas section 147(1) applies only to events that
happen after liability has arisen.
Counsel argued that on this analysis the provisions of section 147(1) do
not invalidate or nullify the clause in the policy in the present case since
the said clause was circumscribed in the policy right from the beginning and
not after the accident that gave rise to the claim in this case.
Counsel for the
appellant referred the court to section 147(2). This sets out the restrictions
which would be ineffectual to render a policy of insurance null and void. As will be seen from the provision, the
restrictions relate to such things as the age or physical or mental condition
of the person driving the motor vehicle, the condition of the motor vehicle,
the number of persons the motor vehicle carried, et cetera. Counsel argued that
the fact that section 147(2) only avoids certain specified restrictions shows
conclusively that restrictions in a policy other than those so specified in the
said section are permissible provided that they do not negative liability when
it relates to anything done after the happening of the event giving rise to
liability. Counsel submitted that the
restriction imposed by the appellant in the present case was permissible since
it did not relate to anything being done after the accident nor was it one of
the restrictions specifically annulled by section 147(2).
With regard to
section 148(1), counsel for the appellant submitted that while the provision
enables a third party to sue an insurer directly, the third party’s rights are
dependent upon those of the insured except as provided by section 148(2). Counsel argued that if the insured has no
rights under the policy, the third party will also have no rights under the
policy when he claims directly against the insurer.
Counsel further
submitted that insurance contracts, as other contracts, are made subject to
certain conditions which may be either conditions precedent or conditions
subsequent. Counsel submitted that in
insurance law conditions precedent may be conditions precedent to validity of
the contract or conditions precedent to liability. He submitted that the former, namely conditions precedent to
validity of the contract, impose continuing obligations on the insured, such as
an obligation in a policy to ensure that the motor vehicle is not driven by a
person who is disqualified. Counsel
submitted that upon discovering a breach of such a condition the insurer is
legally entitled to treat the contract as repudiated. Counsel submitted that the present case fell full square in this
category, since the driver of the minibus did not fulfil the condition in the
policy requiring that the driver thereof should at all material times possess
an appropriate class I driving licence, which condition, so counsel submitted,
was a condition precedent to the validity of the insurance policy in this
matter.
Responding to the
above arguments, counsel for the respondents dealt with sections 147 and 148
together. Counsel submitted that while
the arguments counsel for the appellant has made with regard to the provisions
of section 147 might be reasonable, the said arguments, nonetheless, cannot be
valid in the light of section 148 which he said actually “seals any loopholes
left unplugged by section 147”. Counsel for the respondents submitted that
section 147 is a general provision whileas section 148 is specific, intended
only for those third parties who claim directly against the insurer. Counsel submitted that the words in section
148(2) “any condition in a policy
purporting to restrict the insurance of the person insured thereby shall be of
no effect” are plain and clear. Counsel argued that the “Authorized Driver”
clause contained in the policy in the present case was valid perhaps only as
between the appellant and the insured, Chenic Investments, but not as against
the respondents, in the light of the provisions of section 148(2).
That sums up
counsel’s submissions. At this juncture
we would like to mention that we are obliged to counsel for their skilful
presentation of the case and for the cases they cited in argument.
We will consider
section 147, first. Here we would agree
with counsel for the appellant that section 147(1) cannot be taken to refer to
just “any condition” which purports
to restrict the insurance of the person insured. On the contrary, as the provision clearly shows, the section only
relates to those conditions which purport to restrict liability after
the happening of the event giving rise to a claim. In other words, the section refers only to those conditions which
purport to restrict liability after a claim has arisen. Actually, counsel for
the respondents subscribes to this interpretation of the section. As we have
seen, the clause which is the subject matter of the present case is of a
different kind. It relates to a
restriction of liability arising before a claim arises.
We have considered
the other argument made by counsel for the appellant, namely, that the clause
we are dealing with in the present case amounts to a condition precedent to the
validity of the policy the appellant issued, and that since the insured was in
breach of the said condition, in that he permitted an unqualified person to
drive the minibus, then the policy was at an end. As we have shown, counsel argued that in the circumstances
neither the insured nor the respondents, as third parties, had any rights under
the said policy. With respect, we are
unable to accept counsel’s argument all the way. In our view, the case of a third party must be different.
This brings us to
section 148, which we have reproduced in full above. It will be noted that section 148(1) gives a third party a right,
in his own name, to sue or proceed directly against an insurer. And section 148(2) provides that where a
third party proceeds thus, in accordance with section 148(1), any condition in
a policy purporting to restrict the insurance of the person insured shall be of
no effect.
Counsel for the
appellant has urged the court not to read section 148 in isolation of the other
provisions of the Act, in particular section 147.
In our judgment,
section 148 is plain and unambiguous.
The golden rule in statutory interpretation is that the words of a
statute must, prima facie, be given
their ordinary meaning. Another rule is
that where words of a statute are unambiguous it is not necessary to look
elsewhere for their meaning, and if a state of facts comes fairly and squarely
within the plain meaning of those words, then effect must be given to such
words. In our view, the facts of the
present case fall full square in this
scenario. Therefore plain, clear and unambiguous as section 148 is, there is no
cogent reason or justification for the court to go outside the provisions of
the section, on a voyage of discovery, as it were. Indeed, it is significant to
note that section 148 does not include the words “Save as in this Act expressly
provided” as in section 147(1), or words like “Subject to the other provisions
of this Act”, or words to that effect.
Section 148 stands complete on its own. Indeed, it will be noted that
the words “any condition” in section
148 are without any qualification unlike the same words in section 147(1),
which are qualified.
Looking at the matter
as a whole, it appears that the Legislature put in section 148 advisedly and
deliberately in order to give poor and innocent third parties due protection
against risks arising out of the use of motor vehicles on the public roads.
The result is that
the judgment of the court below cannot be assailed, and the appeal must
accordingly fail and it is dismissed with costs.
DELIVERED in open Court this 30th day of December 2002,
at Blantyre.
Sgd …………………………………….
L
E UNYOLO, JA
Sgd …………………………………….
D
G TAMBALA, JA
Sgd …………………………………….
A S E MSOSA, JA