Vandepitte v Preferred Accident Insurance Corporation of New York
| Jurisdiction | UK Non-devolved |
| Judge | Newcombe, J.,Duff, J. |
| Judgment Date | 06 October 1931 |
| Court | Privy Council |
| Date | 06 October 1931 |
Supreme Court of Canada
ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA
Present: Duff, Newcombe, Rinfret, Lamont and Cannon JJ.
and
Insurance, accident — Automobile driven by insured's daughter — Judgment obtained against her for negligent driving — Action defended by insurance company — Action against insurance company to recover amount of judgment — Liability — Estoppel — Insurance Act, B.C., 1925, c. 20, s. 24.
APPEAL from the decision of the Court of Appeal for British Columbia[2], affirming the judgment of the trial judge, Gregory J.[3] which had maintained the respondent's action for $5,000 and allowing, on a cross appeal, a further sum of $648.70.
The material facts of the case and the question at issue are stated in the above head-note and in the judgments now reported.
B, the owner of an automobile, was insured against loss in the appellant company. The respondent was injured while riding in a car driven by her husband which collided with B's car driven by his daughter with B's permission and recovered judgment against her for damages, the appellant company taking charge of the defence on the trial. The respondent then brought an action against the appellant insurance company under section 24 of the Insurance Act (B.C.) 1925, c. 20, to recover the amount of the judgment rendered against B's daughter. That section provides: ‘24. Where a person incurs liability for injury or damage to the person or property of another and is insured against such liability and fails to satisfy a judgment awarding damages against him in respect of such liability, and an execution against him in respect thereof is returned unsatisfied, the person entitled to the damages may recover by action against the insurer the amount of the judgment up to the face value of the policy, but subject to the same equities as the insurer would have if the judgment had been satisfied.’ Under the policy, the indemnity to the owner was also ‘available in the same manner and under the same conditions as it is available to the insured to any person or persons while riding in or legally operating the automobile *** with the permission of the insured ***.’
Held, reversing the judgment of the Court of Appeal (43 B.C. Rep. 161), that the respondent was not entitled to recover judgment against the appellant company for the amount recovered in the judgment against B's daughter as the latter was not ‘insured’ within the meaning of s. 24 of the Insurance Act. Section 24 of the Insurance Act is a provision in aid of execution and in the nature of a garnishee proceeding. The action thereby authorized lies only if the judgment debtor, in this case B's daughter, is insured or has a right to recover indemnity from the insurer. The policy being between B. and the appellant company, B's daughter is not a party to it and there is no consideration moving from her to the insurer for the covenant upon which the respondent relies to establish that B's daughter was insured within the meaning of section 24. While it may be that B, according to the covenant, may recover from the insurer, presumably for the benefit of a person driving his car with his permission, it cannot be said that the insured can be compelled to exercise such a right of recovery or to undertake the duties and responsibilities of a trustee, unless by his consent or by reason of his having become a custodian of indemnity belonging to his daughter. Section 24 does not confer upon the licensee of the car a right of action upon the policy to recover against the insurer or to compel the insured to exercise his remedies for the recovery and the insured cannot be compelled to become a trustee for a stranger for no other cause than that he had permitted the stranger to drive his car or to ride in it at a time when that stranger negligently caused an accident in which a third party suffered bodily injuries.
Held, also, that the appellant company, by its conduct in defending the respondent's action against B's daughter, was not estopped from denying liability under the insurance policy on the ground that she was not ‘insured’ within the meaning of section 24[1].
— I agree with the conclusion of my brother Newcombe and in substance with his reasons.
The action out of which the appeal arises was instituted under s. 24 of the B.C.Insurance Act of 1925 c. 20, which reads as follows:
24. Where a person incurs liability for injury or damage to the person or property of another and is insured against such liability and fails to satisfy a judgment awarding damages against him in respect of such liability, and an execution against him in respect thereof is returned unsatisfied, the person entitled to the damages may recover by action against the insurer the amount of the judgment up to the face value of the policy, but subject to the same equities as the insurer would have if the judgment had been satisfied.
The respondent was injured in a motor accident, the car in which she was a passenger having come into collision with a car owned by the defendant, R. E. Berry, and driven by his daughter, Jean Berry. The judgment was against Jean Berry for $4,600 damages and costs taxed at $780.25. In the action Jean Berry was the sole defendant, and she was defended by solicitors appointed by the appellants, professing to act in pursuance of the policy, her father, R. E. Berry, having given notice of the accident pursuant to the policy.
The B.C. courts held that by virtue of this policy, Miss Jean Berry was ‘insured’ within the meaning of s. 24 in respect of any liability attaching to her by reason of automobile accidents while driving a car belonging to her father, and consequently that the respondent was entitled to recover from the appellants the amount of her judgment up to the sum named in the policy.
I agree that the insurance contemplated by s. 24 is one which confers a right of indemnity, that is within the protection of the law, that is to say, one which the person incurring the liability has the legal means, direct or indirect, of enforcing. I think this is so for two reasons. First, unless it is so restricted in its operation, it is difficult to assign any certain limits to the scope of the section. Second, the section does provide for a method by which the liability of the insurance company to the person responsible for the injuries may be made available for the benefit of the person injured. In many cases, no doubt, the same result might be achieved through a receiver by way of equitable execution — perhaps in all cases; but the legislature has seen fit to give to the person injured a direct action against the insurance company in his own name, and there may have been very good reasons for doing so. So long as the enactment is limited to enforcing against the insurance company a right which could have been enforced through the courts by the person responsible for the injury, the insurance company, so far as one can see, can have nothing to complain of, especially in cases in which the same object could have been effectuated by a more circuitous method. It would, however, be an obvious injustice to establish by legislation a right of recourse against the insurance company in respect of which no person having a right of indemnity enforceable against the insurance company, is in any way responsible. Here the father, R. E. Berry, was responsible for his daughter's act under s. 12 of c. 44 of the British Columbia statutes of 1926 and 1927, but the respondent elected to proceed against the daughter. No judgment having been recovered against the father, the conditions never arose, under which, alone, by the terms of the policy, the insurance company could be called upon to indemnify him in respect of his liability to the respondent. It would, I repeat, be a monstrous injustice to impose upon the insurance company, by statute, a liability to the daughter or to persons injured by the act of the daughter, which the daughter could not enforce directly, or indirectly, in the absence of some such enactment, and a construction leading to that result ought not to be accepted unless the language employed is so clear as to leave no reasonable way of escape.
The respondent bases her claim upon two alternative contentions. The first is that Miss Berry was entitled to require the insurance company to indemnify her in respect of the judgment recovered against her, either directly or indirectly, by calling upon her father to take proceedings under the policy. The second ground is that in consequence of the steps taken by the insurance company in defence of the action, they are estopped from denying Miss Berry's right to indemnity under the policy, as against both Miss Berry and the plaintiff.
It will be convenient to consider these contentions in the order in which I have stated them. I agree with my brother Newcombe, that there is no ground for holding that the policy was effected by R. E. Berry as trustee for Miss Berry.
The clause relied upon, by which the indemnity under section E becomes available for the benefit of the classes of persons mentioned in it, does not, I think, disclose an intention to declare that the named insured is contracting as trustee. That clause is in these words:—
The foregoing indemnity provided by section D and/or E shall be available in the same manner and under the same conditions as it is available to the insured to any person or persons riding in or legally operating the automobile for private or pleasure purposes, with the permission of the insured, or of an adult member of the insured's household other than a chauffeur or domestic servant; provided that the indemnity payable hereunder shall be applied, first, to the protection of the...
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Table of cases
...No 54 (QB) ......................................................... 207 Vandepitte v Preferred Accident Insurance Co of New York (1932), [1933] AC 70, [1932] 3 WWR 573, [1933] 1 DLR 289 (PC) ........................ 602 Veno v United General Insurance Corp, 2008 NBCA 39 .........................
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