IN THE MALAWI SUPREME COURT OF APPEAL
(Being High Court Civil Cause No. 717 of 1999)
THE NATIONAL INSURANCE
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M MZIMU……………………………………….1ST RESPONDENT
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G O MANDO…………………………………..2ND RESPONDENT
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S S MATAMBO………………………………..3RD RESPONDENT
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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
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:
(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.
L E UNYOLO, JA
D G TAMBALA, JA
A S E MSOSA, JA