Matadeen v Caribbean Insurance Company Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Scott of Foscote |
| Judgment Date | 19 December 2002 |
| Neutral Citation | [2002] UKPC 69 |
| Court | Privy Council |
| Docket Number | Appeal No. 46 of 1999 |
| Date | 19 December 2002 |
[2002] UKPC 69
Present at the hearing:-
Lord Bingham of Cornhill
Lord Hobhouse of Woodborough
Lord Millett
Lord Scott of Foscote
Lord Rodger of Earlsferry
Privy Council
[Delivered by Lord Scott of Foscote]
This appeal is brought against a judgment of the Court of Appeal of Trinidad and Tobago delivered on 16 December 1998. It raises questions about the meaning and effect of sections 10 and 17 of the Motor Vehicles Insurance (Third Party Risks) Act (chap 48:51) ("the Act") of the Laws of Trinidad and Tobago. The questions arise out of attempts by the victim of a car accident to recover from the insurers of the vehicle responsible for the accident, the damages, interest and costs due to him.
The original appellant before the Board, Mr Suresh Matadeen, was the victim. He suffered severe personal injuries in the accident, which took place in 1982. The respondents, Caribbean Insurance Co Ltd, are the insurers. Mr Matadeen died while this appeal was pending. His widow, Mrs Shanti Matadeen, has been substituted for him. But, for convenience, references in this judgment to "the appellant" are references to Mr Matadeen.
On 25 February 1988, at the trial of the appellant's damages action against Industrial Sawmilling and Pallet Manufacturing Ltd, the employer of the negligent driver, the appellant was awarded damages of $1,596,669.94, together with interest and costs. The appellant had already been paid $200,000 by the respondent insurers under an interim damages order.
Industrial Sawmilling appealed the damages award that had been made against it but the appeal was not prosecuted and was dismissed with costs on 24 November 1988. The appellant's costs of that appeal were taxed at $16,351 under a certificate dated 25 October 1990.
In the meantime, on 11 April 1988, Industrial Sawmilling had gone into receivership and, on 29 May 1991, was ordered to be wound up.
It is now necessary to refer in more detail to some of the provisions of the Act and to the litigation pursuant to those provisions.
Section 3 of the Act prohibits the use of a motor vehicle on a public road unless there is in force in relation to the vehicle a policy of insurance in respect of third party risks that complies with the requirements of the Act. Section 4 sets out the statutory requirements. Subsection (1)(b) requires the policy to insure, inter alia, against any liabilities arising out of death or bodily injury caused by the use of the vehicle on a public road. But subsection (2) expresses a number of qualifications to that requirement. One of these is that the policy is not required to cover liability in excess of $200,000 arising out of any one claim by any one person (see subsection (2)(e)). $200,000 is the sum that was specified at the time the appellant's accident took place. It is now very considerably higher.
Under section 4(8) of the Act a policy cannot comply with the statutory requirements unless the insurer issues the insured with a certificate of insurance in a prescribed form and containing prescribed particulars. Section 10(1) of the Act provides as follows:-
"(1) If, after a certificate of insurance has been delivered under section 4(8) 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 section 4(1)(b) (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 written law relating to interest on judgments."
So, in short, section 10(1) of the Act makes the insurer liable to meet any judgment obtained by an injured party "in respect of any such liability as is required to be covered by a policy under section 4(1)(b) …". The only condition precedent to the right of the injured party to claim under section 10(1), apart from the obtaining of the judgment, is that the requisite certificate of insurance has been delivered to the insured.
The meaning and effect of a Bermudan statutory provision in exactly the same terms as section 10(1) was considered by the Privy Council in Suttle v Simmons [1989] 2 Lloyds Rep 227. In Bermuda the equivalent to the $200,000 specified in section 4(2)(e) was $24,000. The injured party had recovered judgment for $100,000. The question at issue was whether, where the amount covered by the policy exceeded the statutory minimum, an injured third party could recover from the insurers a sum above the statutory minimum but within the amount generally covered by the policy (see Lord Keith of Kinkel at pp 231-232). The Board held that the injured party's right of recovery under the statutory provision in question, the section 10(1) equivalent, was limited to the statutory minimum. Lord Keith said, at p 232:-
"… the words in section 6(1) -
'… such liability as is required to be covered by a policy under paragraph (b) of subsection (1) of section 4 …'
do not include liability in respect of any sum in excess of $24,000 arising out of any one claim by any one person, since by virtue of proviso (iii) to section 4(1)(b) such a liability is not required to be covered. It is, in their Lordships' opinion nothing to the point … 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. The effect of section 6(1) is to limit the amount which the injured third party can recover directly from the insurers."
It is of some relevance to notice that the contrary view had been reached by the Bermudan Court of Appeal and that the Privy Council decision allowing the appeal was given in May 1989. The relevance of this is that there appears to have been a general view in the Caribbean courts that an injured party's right of recovery under a statutory provision in the terms of section 10(1) was not limited to the statutory minimum but extended to the whole amount of the damages award obtained by the injured party against the insured, provided the amount was within the cover provided by the policy.
It is not, therefore, a matter for surprise that in the section 10(1) action commenced by the appellant against the respondent insurers on 25 March 1988, recovery was sought of the full amount outstanding under the judgment he had obtained against Industrial Sawmilling. Nor is it surprising that in their defence dated 15 April 1988 the respondent insurers did not contend that their section 10(1) liability was limited to the statutory minimum of $200,000, a sum that they had already paid the appellant, but instead pleaded that their liability to him was limited to $250,000, which, they contended, was the contractual limit of their liability under the policy held by Industrial Sawmilling. The significance of Suttle v Simmons only emerged at trial.
A further point of construction arising under section 10(1) that needs to be mentioned relates to the words "including any amount payable in respect of costs and any sum payable in respect of interest …". The words are inherently ambiguous. They might mean that the $200,000 statutory minimum is inclusive of any such costs and interest. Or they might mean that the injured party's right of recovery against the insurer is to include costs and interest as well as the statutory minimum. The latter construction seems to their Lordships to make much more sense than the former.
The appellant's section 10(1) action against the respondent was heard by Hosein J on 25 April 1990. There was an issue between the parties as to whether the policy under which the vehicle which had caused the accident was insured contained the $250,000 limit for which the respondent insurers contended. In his notes of evidence the judge observed, correctly in their Lordships' opinion, that:-
"… the factual issue would appear to have been made irrelevant by a 1989 decision of the Privy Council which held that the amount which the 3rd party can recover under the Act is limited to the amount in respect of which the Act required the owner to be insured in respect of 3rd Party claims" (see p. 334 of the record).
Nonetheless, despite its irrelevance, the judge did, in his judgment, address the factual issue. He referred to the considerable muddle in the respondent's evidence as to which policy the vehicle in question had been insured under and said that:–
"… the defendant had not discharged the onus of proving that there was a limitation under the relevant policy in force at the time."
He went on, however, to refer to Suttle v Simmons and, on the authority of the Privy Council decision in that case, held that:-
"the limit of the defendant's liability for damages would be the statutory amount which is required to be covered by a policy issued under section 4(2)(e) …"
The judge then turned to the interest and costs point and held that:-
"… the word 'including' in section 10(1) of the Act is a word of extension and means 'as well as' or 'in addition to' or simply 'and'"
and that:-
"… costs and interest are additional to the liability limit imposed under the policy and the defendant must pay whatever those amounts are without any reference to any limit."
Accordingly, Hosein J made an order that the...
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