Liability Insurance II
Cases
Buckley’s Stores v. National Insurance
O’Higgins C.J.[1978] IR 351
S.C.
O’Higgins C.J.
6th October, 1977
This is an appeal brought by the first defendant against the judgment Mr. Justice Hamilton delivered in this action on the 10th April, 1975, and the order made thereunder. In his judgment the learned trial judge held that the first defendant was liable to indemnify the first plaintiff in respect of certain High Court proceedings brought against the plaintiffs by Noreen Bourke and Kathleen Cronin. These High Court proceedings arose from a road accident which occurred on the 9th October, 1967. The learned trial judge held that the first defendant was so liable pursuant to an employer’s-liability policy issued by the first defendant to the first plaintiff. An appeal has also been lodged by the plaintiffs which is, in part, dependent on the result of the first defendant’s appeal; in part it is a substantive appeal against certain provisions of the order made by the learned trial judge.
The following facts appear to be relevant in the consideration of this appeal. The first plaintiff is a company which was incorporated on the 20th February, 1958, and carried on the business of hardware, sawmilling, furnishers, undertakers, Calor Gas agents and haybarn erectors at Main Street, Millstreet in the county of Cork. Despite its somewhat confusing name, Millstreet is a town in the county of Cork; it is situate some 38 miles from Cork city. In connection with the said business the company had in operation an employer’s-liability policy which was issued by the second defendant; this policy covered those employed by the company in the Millstreet business. The policy provided the usual indemnity against liability and damages arising from injury suffered by any such employee arising out of and in the course of such employment. The policy had been arranged by the company’s brokers (O’Donnell’s Insurance Ltd.) and only applied to those employees of the company who were engaged in the Millstreet business. The cover provided by this policy was in operation on the 9th October, 1967, when the accident occurred. On that date the company also had in operation a road-traffic policy issued by the third defendant; this policy covered, inter alia, the Triumph car which was involved in the accident.
It appears that some time prior to the date of the accident the company acquired premises in Academy Street in the city of Cork for the purpose of developing a departmental store in Cork city on similar lines to the business which was carried on in Millstreet. This new store was opened on the 5th October, 1967. Prior to the opening, a number of the company’s employees in Millstreet had been working in the Academy Street premises for the purpose of preparing for the opening, and they assisted further in the early stages after the opening.
The company’s brokers took out a further employer’s-liability policy on behalf of the company in relation to the new business in Cork. This policy was taken out with the first defendant and provided for cover commencing on the 15th September, 1967, and extending to the 29th September, 1968. This policy was similar in terms to the policy taken out with the second defendant in respect of the Millstreet business. It provided an indemnity to the company against any liability for damages, etc., in respect of bodily injury which was suffered by an employee while so employed and which arose out of and in the course of such employment in the Cork business.
On the 9th October, 1967, the position was that the company had employer’s-liability cover with the second defendant in respect of the company’s employees at the Millstreet business, and a similar cover with the first defendant in respect of the company’s employees at the Cork business. In addition, the company had motor-insurance cover with the third defendant in respect of the motor vehicles described and specified in the motor-insurance policy.
As to the Millstreet employees who were working in the Cork premises, it appears that these continued to be paid by the Millstreet business but the amount of such payments was subsequently reimbursed by the Cork business.
With regard to the two employees who were involved in the accident which led to these proceedings, it appears that the practice was for the second plaintiff to drive them each morning from Millstreet where they lived to the city of Cork where they were directed to work. The second plaintiff was a director of the company and he so drove the two girls in a Triumph car which was the property of the company and which was specifically covered by the motor policy taken out with the third defendant. For these two girls to get to the premises of the Cork business each morning, some form of transport was obviously required since they lived 38 miles away. The lift so provided by the second plaintiff met this requirement; however I do not understand from the transcript that these girls were under any contractual obligation so to travel to work.
On the morning of the accident the second plaintiff drove the company’s Triumph car, with the two employees of the company as passengers, from Millstreet to Cork city. In the course of the journey the car was involved in a collision, which was due to the negligent driving of the second plaintiff; and both of the girl employees were injured.
One might have expected that this simple accident resulting in injury to two employees of a company which was well covered by employer’s-liability insurance involving, as it did, a motor vehicle which was fully insured for road-traffic purposes and was driven by the company’s authorised agent would have led to no problems with regard to insurance cover. Unfortunately, this was not to be so. A long period of controversy and dispute ensued during which various steps were taken in an unrewarding effort to discover under which thimble lay the pea or, in other words, to ascertain which of the three insurance companies was on cover in respect to the liability involved as a result of the collision. The third defendant, maintaining that the two employees had received bodily injury arising out of and in the course of their employment because they were being driven in their employer’s car to their place of work, asserted that the liability was covered by one or other of the employer’s-liability policies. Accordingly, the third defendant relied on condition 3 of its own policy, which stated: “If at the time any claim arises under this policy there is any other existing insurance covering the same loss, damage or liability the company shall not be liable except under section III of this policy to pay or contribute more than its rateable proportion of any loss, damage, costs and/or expenses provided always that nothing in this condition shall impose on the company any liability from which but for this condition it would have been relieved under proviso (a) to the cover granted to persons driving the insured vehicle.” It was also pointed out on behalf of the third defendant that the extension of the cover in its motor policy to the driver of the insured’s vehicle did not apply under its policy when the driver was entitled to be indemnified under any other policy.
At this stage, the two injured girls had initiated separate proceedings in the High Court in which they claimed damages against the second plaintiff, as the driver of the car in which they were injured. Whoever put forward these contentions on behalf of the third defendant, he ignored the fact that these two claims had been brought against the second plaintiff personally and not against the company. In respect of the second plaintiff’s liability for his own negligent driving, no possible cover existed under either of the two employer’s-liability policies. However, in pursuance of the contention so put forward, the third defendant asserted that the two employees were being carried in the company car by reason of their employment and that the accident caused injuries which arose out of and in the course of such employment. Accordingly, the third defendant maintained that the liability involved in the accident was covered by one or other of the two employer’s-liability policies. Therefore, in pursuance of the conditions mentioned in its own policy, the third defendant maintained that it should only meet 50% of the claim and that the other 50% should be met either by one of the two other insurance companies or by each of them contributing 25% of the claim. No agreement was reached with regard to this proposal, and so the plaintiffs sought arbitration under all three policies.
The second and third defendants agreed to the arbitration proposal, but the first defendant declined to have anything to do with such arbitration proceedings and maintained that its policy was with the company, and that no question or dispute had arisen with regard to such policy. The attitude of the first defendant was that the claims of the company’s employees were road-accident claims against the second plaintiff personally, in relation to which the first defendant had no interest. While these arguments were proceeding, the two employees appear to have held their hands and, instead of pressing ahead with their actions against the second plaintiff, they took no positive steps.
The late Mr. John A. Costello was appointed arbitrator by all the parties who were willing to proceed to arbitration and he entered upon the arbitration. Since the first defendant declined to appear, the arbitration proceedings were adjourned. It appears that at this stage a new move was made with the obvious intention of involving the first defendant. The two employees, obviously at the suggestion of one or other interested party, applied to the High Court to add the company as a defendant, and this was done. The employees claims were settled for £1,870 in respect of Kathleen Cronin and for £4,000 in respect of Noreen Bourke. Subsequently, the arbitration was resumed without the first defendant being present or taking any part. While this arbitration resulted in a finding that the second defendant was not liable but otherwise left the issue unresolved as between the first and second defendants, it does not appear to me that this award can now have any bearing on the issues involved in these proceedings in so far as they relate to the first defendant. Since the first defendant took no part in the arbitration proceedings and did not submit thereto, that defendant cannot be bound in any way by the findings of the arbitrator. In any event the arbitration did not result in a solution of the problems which had been raised.
Accordingly, the plaintiffs discharged the amounts due to the two injured employees and then commenced this action for the purpose of obtaining a court declaration as to what policy applied to the liability involved in the accident in question. The learned trial judge, having held that the two girls suffered bodily injury arising out of and in the course of their employment in the Cork business, decided that the first defendant was liable, and the first defendant has appealed against that decision. In my view, the first defendant is entitled to succeed.
I do not think that it is necessary to consider in which business these girls were employed. In my view, the accident in which they were involved was not one arising out of and in the course of their employment. The question is whether these girls were under an obligation by the terms of their employment to travel in the vehicle in question. This was the test applied by Lord Denning M.R. and by Sachs L.J. to the construction of similar words in an employer’s-liability policy in Vandyke v. Fender. 1 I respectfully agree with the views expressed by both those learned judges in their judgments in that case. As already indicated, I cannot find anything in the transcript which would indicate that the travelling in the car was anything more than a matter of mutual convenience. It is not in issue that the girls were in the car and were travelling to Cork because they were employees of the company. However, that does not mean that they were so travelling because they were obliged by the terms of their employment to do so. It appears to me to have been quite permissible for these girls, or for other employees from Millstreet, to travel in any vehicle of their choice provided, of course, they arrived in Cork at the premises of the Cork business in time to do their work.
Therefore, in my view, neither of the two employer’s-liability policies applied to the accident in which these girls were involved. This being so, it seems to me that this case ought to end as it started. It started, and should end, as relating to a simple road accident covered by the usual motor policy issued by the third defendant. In my view, the third defendant is and always was liable to indemnify the first plaintiff in respect of that accident.
Therefore, the order of the learned trial judge should be set aside and, in lieu thereof, an order should be made declaring that the third defendant is liable to indemnify the first plaintiff in respect of the damages and costs in the two claims brought by the two employees. As to the appeal brought by the plaintiffs it follows from what I have said that I would make the order sought1at paragraph I of the plaintiffs’ notice of appeal. I would also allow the plaintiff’s appeal and make the order sought at paragraph 2 with regard to the costs of the arbitration proceedings. It seems to me that the first and second defendant are entitled to their costs against the plaintiffs in the changed order that I would make. In view of the attitude adopted by the third defendant, I do not think the plaintiffs had any alternative to suing all three defendants. For this reason it seems just and proper that the third defendant should indemnify the plaintiffs in respect of the costs the plaintiffs may have to pay to the first and second defendants and, accordingly, I would make the appropriate order with regard to costs over.
The question of the recovery of the interest payable to the bank by the first plaintiff on the money which it borrowed to discharge the claims made by the two employees was not discussed and may be argued at a later date.
Kenny J.
I entirely agree with the judgment which has been delivered by the Chief Justice.
Parke J.
I also agree.
In the Matter of the Arbitration Act 1954, and of an Arbitration between
Gaelcrann Teoranta v Michael Payne and Others, Underwriters at Lloyds
1983 No. 360 SS
High Court
20 December 1983
[1985] I.L.R.M. 109
(Gannon J)
GANNON J
delivered his judgment on 20 December 1983 saying: Pursuant to the provisions of a policy of insurance, described in the policy as contractor’s liability insurance, under which the above-named underwriters contracted to indemnify the above-named insured (therein and hereinafter described as ‘the assured’) against claims in respect of employer’s liability a dispute thereunder was referred to arbitration. In the course of the arbitration a question arising out of interpretation of the conditions of the policy was raised for determination and on this the arbitrator Mr Frederick Morris, SC requests the advices of the court by this case stated.
The policy which is a Lloyd’s policy contains under the heading ‘General Conditions attaching to this Insurance’ a paragraph in the following terms:
5. Claims procedure.
The assured shall give to O’Leary’s Insurances Ltd, 7, South Mall, Cork immediate notice in writing, with full particulars of the happening of any occurrence which could give rise to a claim under this insurance, or of the receipt by the assured of notice of any claim and of the institution of any proceedings against the assured. The assured shall not admit liability for or offer or agree to settle any claim without the written consent of the underwriters who shall be entitled to take over and conduct in the name of the assured the defence of any claim and to prosecute in the assured’s name or underwriters’ benefit any claim for indemnity or damages or otherwise against any third party and shall have full discretion in the conduct of any negotiations and proceedings and the settlement of any claim. The assured shall give to the underwriters such information and assistance as the underwriters may reasonably require.
A sub-heading in relation to the conditions in this section of the policy states ‘All conditions are precedent to liability under this insurance’. Two claims *111 were made by one of the employees of the assured in relation to personal injuries on two different occasions in the course of employment with the assured. The injured employee instituted proceedings in the High Court against the assured by the issue and service in 1977 of two plenary summonses, one alleging injury in June 1975 and the other alleging injury in August 1975. The assured notified the underwriters of these claims and transmitted to them the two plenary summonses on 15 November 1977 and claimed indemnity under the policy. The underwriters disclaimed liability by reason of the alleged breach of condition 5 of the general conditions of the policy and claimed to be prejudiced by the failure of the assured to comply with that condition. To determine whether or not the assured is entitled to recover the amounts of indemnity claimed under the policy the arbitrator wishes to be advised:
(a) On the true interpretation of the said contract of insurance, has the assured, by giving notice of a claim and of the institution of proceedings against the assured and the institution of the proceedings against him, complied with clause 5 of the agreement or in the alternative was he obliged, notwithstanding the aforesaid notice, to give full particulars in writing of the happening of an occurrence which could give rise to the claim?
(b) Is the claims procedure as set out in clause 5 a condition precedent to the liability of the underwriters particularly having regard to the heading ‘all conditions are precedent to liability under this insurance?’
(c) In the event of there being a finding of fact that the underwriters were in no way prejudiced by the failure on the part of the assured to give immediate notice in writing with full particulars of the happening of the occurrence which could give rise to a claim under the insurance, are the underwriters entitled to nevertheless rely upon this clause to avoid liability on the policy?
The questions as submitted in the case stated are expressed in a manner which would seem to require findings of fact by this Court.
For the underwriters Mr Hill SC, argues that the word ‘or’ where it first appears in condition 5 of the general conditions is used in a conjunctive and not a dis unctive sense so as to impose on the assured the obligation of giving immediate notice in writing of all three matters. He submitted that failure on the part of the assured to give notice of the happening of an occurrence which could give rise to a claim in relation to which notice of institution of proceedings is later given releases the underwriters from liability because the conditions as to giving notice are included in those under the heading ‘All conditions are precedent to liability under this insurance’. He contended that because the condition as to giving notice is a condition precedent to liability the question of prejudice to the underwriters by the non-compliance of the assured with such conditions is irrelevant. In presenting his argument for the assured Mr O’Driscoll SC emphasised at the outset that because the policy document was a contract drawn by the underwriters which the assured had to adopt without alteration it should be construed strictly against them. He pointed out that in condition 5 of the general conditions the word ‘or’ is used throughout in a disjunctive sense and that it should not be given a conjunctive meaning where first used as if the word ‘and’ had been intended at that point only but was not used where it could have been used if so intended. He argued *112 that unless all of the conditions described as being precedent to liability can be treated as conditions precedent none should be so read, and he referred to the wording used in some of the conditions which he submitted is inconsistent with such interpretation. He contended that the requirement of giving immediate notice in writing relates only to particulars of the happening of an occurrence which could give rise to a claim but not to the receipt by the assured of notice of a claim nor to the institution of proceedings against the assured. He submitted that the purpose of the requirement of giving immediate notice is to avoid any prejudice, caused by loss of time, to investigation of facts, and, where the facts are ascertained without reference to the assured there is no prejudice and liability cannot be avoided.
Some helpful observations on the principles to be applied in the construction of statutes and documents and in particular on the interpretation of the words ‘or’ and ‘and’ which are capable of different use according to context are to be found in the opinions expressed in the House of Lords in Reg. v Federal Steam Navigation Company Ltd [1974] 1 WLR 505; [1974] 2 All ER 97; 59 CAR 131. The provisions of s. 1 (1) of the English statute the Oil and Navigable Waters Act 1955 which creates an offence of pollution for which a ship owner or master could be liable was under consideration. The word ‘or’ was given a conjunctive meaning, rendering both the owner and the master liable to prosecution, on the ground that the alternative interpretation with disjunctive meaning would be absurd or unintelligible. Lord Reid in the course of a dissenting opinion says at page 508 of the reports of [1974] 1 WLR:
In my judgment the question here is whether there is anything in the Act or in surrounding circumstances which it is permissible to consider, which could justify striking out the word ‘or’ and substituting the words ‘and … each’. It would be necessary to put in the word ‘each’ because otherwise ‘owner and master’ could suggest a joint offence — a result for which no one contends.
There is a multitude of cases where courts have considered whether it is proper to substitute one word for another, and in particular whether it is proper to substitute ‘and’, for ‘or’ or vice versa. There may be some difference between commercial or informal writings, on the one hand, and deeds and statutes on the other. One is entitled to expect greater skill in drafting deeds and statutes. A great number of different words have been used in stating the criteria, and I do not think it would be useful or indeed possible to examine them all.
Cases where it has properly been held that a word can be struck out of a deed or statute and another substituted can as far as I am aware be grouped under three heads: where without such substitution the provision is unintelligible or absurd or totally unreasonable; where it is unworkable; and where it is totally irreconcilable with the plain intention shown by the rest of the deed or statute. I do not say that in all such cases it is proper to strike out a word and substitute another. What I do say is that I cannot discover or recall any case outside these three classes where such substitution would be permissible.
In stating his opinion supporting the majority Lord Salmon states at page 523 in the same report [1974] 1 WLR as follows:
My Lords, I do not suppose that any two words in the English language have more often been used interchangeably than ‘and’ and ‘or’. However unfortunate or incorrect this practice may be, many examples of it are to be found in all manner of documents and statutes. There are many reported cases which turn upon whether, in its particular context, the word ‘or’ is to be read conjunctively or the word ‘and’ disjunctively.
*113
There is high authority for the view that the word ‘or’ can never mean ‘and’ although it is sometimes used by mistake when ‘and’ is intended: See Sir George Jessel MR in Morgan v Thomas 9 QBD 643, 645 and MacKinnon, J in Brown & Co v T. & J. Harrison (1927) 43 TLR 394. On the other hand, there is also the high authority of Bankes and Aitken L.JJ. on appeal in Brown & Co v T. & J. Harrison 96 LJKB 1025 that ‘or’ is quite commonly and grammatically used in a conjunctive sense. In Southerland Publishing Co Ltd v Caxton Publishing Co Ltd [1938] Ch 174 MacKinnon, LJ, was able pungently to re-state the contrary view which he had expressed eleven years previously. The Oxford Dictionary seems to support Sir George Jessel, MR and MacKinnon, LJ. I do not, however, attach any real importance as to whether the one school of thought or the other is right on this interesting grammatical point. In Brown & Co v T. & J. Harrison the Court of Appeal agreed with MacKinnon J, as to the effect of the relevant statutory provision. MacKinnon J, reached his conclusion by holding that the word ‘or’ should be substituted for the word ‘and’. The Court of Appeal reached their conclusion by holding that the word ‘or’, on its true construction meant ‘and’. The result was the same.
There is certainly no doubt that generally it is assumed that ‘or’ is intended to be used disjunctively and the word ‘and’ conjunctively. Nevertheless, it is equally well settled that if so to construe those words leads to an unintelligible or absurd result, the courts will read the word ‘or’ conjunctively and ‘and’ disjunctively as the case may be; or, to put it another way, substitute the one word for the other. This principle has been applied time and again even in penal statutes; see for example Reg v Oakes [1959] 2 QB 350.
A number of cases are cited by the law Lords in their opinions in that case illustrating the application of the principle of the construction in circumstances in which the conjunctive use of the word ‘or’ was rejected or accepted. It is implicit in these and many other judgments on the construction of statutes and documents and on the interpretation of words used therein that the court of construction will always credit the draftsman of the document with the degree of care and skill to be expected of him. In one of the cases cited in argument by Mr O’Driscoll SC in Re Diplock, Wintle v Diplock [1941] 1 Ch 253 the English Court of Appeal refused to give the word ‘or’ a conjunctive meaning as its use as a disjunctive is its primary use and was suitable and made sense in the context notwithstanding that its effect was to defeat a charitable purpose indicated in the Will. The court will not look for ambiguities or inadvertences or doubtful alternative meanings. A particularly high degree of care and skill will be presumed and attributed to the drafting of a penal statute on the one hand whereas allowance for lack of skill or inadvertence may be made in the construction of a will drawn by a testator.
Adopting and applying the principles stated in the cited and other cases it seems to me that the word ‘or’ where first used in condition 5 of the general conditions of the policy can be used in its prima facie ordinary and most common sense consistently with the rest of that condition and with all the other provisions of the policy. An examination of the scope of the policy shows that liability could arise, for example, for damage to property from faulty or insufficient workmanship, materials or design, in respect of which it might not be possible to give notice with particulars of the happening of an occurrence which might give rise to a claim. The wording of the general conditions is intended presumably to comprehend in their application a wide variety of circumstances. Consequently, the use of disjunctives more probably expresses truly the intentions and purpose of the parties. The use of the punctuation commas in the first sentence of condition 5 may contribute to the difficulties of *114 interpretation which have arisen. Had the second comma been placed after the word ‘particulars’ or after the word ‘happening’ or after the word ‘claim’ where it secondly appears in that sentence the meaning of the sentence would be less difficult to ascertain. The expression ‘to give notice’ is almost invariably followed with the word ‘of’ in relation to the objective matter but this is not so here with the second comma after the word ‘insurance’. I can find nothing in the expressed purpose of the condition or in the sense to be derived from other terms or expressions to be found anywhere in the policy from which I should find an unintelligible or absurd meaning in the use of that word ‘or’ in its primary disjunctive sense where it first occurs in the first sentence of condition 5. I accept that condition 5 could also bear an intelligible and sensible meaning if the word ‘or’ where first used were to be given a conjunctive use, but, the mere existence of an acceptable alternative is not a sufficient reason for rejecting the prima facie disjunctive meaning and use of the word.
Having regard to the range of cover afforded by the policy and the variety of the nature and circumstances of the possible claims to which the general conditions are expressed to apply it seems to me the obligations imposed in condition 5 are expressed in the alternative in order to provide for the varied types of the alternatives which might be presented by the circumstances giving rise to and the nature of the claims. I think that the true and correct interpretation of condition 5 are expressed is that it imposes on the assured one or other alternative obligation with respect to notice of claims and in addition an obligation in respect of the institution of proceedings. The use of the conjunctive ‘and’ which introduces the reference to the institution of proceedings joins this obligation, to give immediate notice in writing thereof, to whichever of the alternatives in respect of notice of claim may be applicable in the circumstances. Upon this construction of condition 5 as expressed in the policy the interpretation which I advise should be applied in relation to the obligations imposed on the insured is that:
(1) In every instance in which to the knowledge of the assured an occurrence happens which he recognises could give rise to a claim under the policy he must give to the nominated agent of the underwriters immediate notice in writing of the happening of such occurrence, or alternatively give them the like immediate notice of his receipt of the claim if such be made;
(2) In the event of a claim being made or received which arises from no identifiable occurrence as a happening, or of the happening of which the assured was unaware, he must give the nominated agent of the underwriters immediate notice in writing of his receipt of notice of such claim;
(3) In every case he must give to the nominated agent of the underwriters immediate notice in writing of the institution of proceedings.
The remaining two questions govern the entitlement of the assured to indemnity under the policy and the liability of the underwriters thereunder in the event of non-compliance with the condition as to notice of claim and they are inter-related. It was recognised in the course of argument that a distinction must be made between a condition expressed in a contract to be a condition precedent and one which is not so described in the contract. Counsel referred *115 to In Re Coleman’s Depositories Ltd [1907] 2 KB 798 and in particular to the judgment of Fletcher Moulton, LJ from which it would appear that upon non-compliance with the condition that is stated to be a condition precedent performance of the obligations of the contract cannot be enforced by the party in default. Nevertheless, Fletcher Moulton, LJ says in reference to what he calls a trifling default at page 807 of the report:
The courts have not always considered that they are bound to interpret provisions of this kind with unreasonable strictness, and although the word ‘immediate’ is no doubt a strong epithet I think that it might be fairly construed as meaning with all reasonable speed considering the circumstances of the case.
In the event of non-compliance with a condition not described as a condition precedent the party in default may be able to establish a right to the benefit of the contract subject to an assessment in damages for the consequences of the default or may be unable to enforce the contract. It was also accepted in the course of argument that compliance with a condition expressed in either form could be waived by the party to benefit by it either expressly or impliedly from conduct. But a difficulty has been created by some observations of Lord Justice Denning, MR in his judgment in Lickiss v Milestone Motor Policies at Lloyd’s [1966] 2 All ER 972 also reported as Barrett Bros. (Taxis) Ltd v Davies [1966] 1 WLR 1354. In that judgment Denning, MR stated at page 975 of the All ER report:
First, it was unnecessary for the motor cyclist to send the documents to the insurers. They had all the relevant facts, and that absolved the motor cyclist from doing more. The police headquarters at Blackpool by their letter of 18 January 1964 gave to the insurers all the material information. The insurers would be entitled, if they so wished, to send their own representative to the Magistrates’ Court and watch the proceedings or, indeed, to take such other steps if any, as they were entitled to take. Seeing that they had received the information from the police, it would be a futile thing to require the motor cyclist himself to give them the self-same information. The law never compels a person to do that which is useless and unnecessary.
In that case the motor cyclist was obliged under the terms of his policy to notify immediately the insurers of intended prosecution and had failed to do so. Towards the end of his judgment Lord Denning adds the following observation at page 976:
Condition 1 was inserted in the policy so as to afford a protection to the insurers so that they should know in good time about the accident and any proceedings consequent on it. If they obtain all the material knowledge from another source so that they are not prejudiced at all by the failure of the insured himself to tell them, then they cannot rely on the condition to defeat the claim.
When a similar point was taken before McKenna, J in Farrell v Federated Employers Ltd [1970] 1 All ER 360 those observations of Denning, MR were cited to him. In his judgment McKenna, J says at page 363 of the report:
Counsel for the plaintiff in his able argument contended that there could be no breach of a condition entitling the insurers to repudiate liability unless the breach had caused actual *116 prejudice to the insurers. For this surprising proposition he cited Lickiss v Milestone Motor Policies at Lloyd’s [1966] 2 All ER 972. In that case the insurers relied on a failure of the insured to inform them of the receipt by the insured of a notice of intended prosecution. The insurers had received information of this matter from the police. There was also some evidence that they had waived the condition entitling them to such notice.
McKenna, J, then quotes the passage which I have quoted above from the judgment of Lord Denning, MR in the cited case. McKenna, J then went on at page 364:
I distinguish that case from the present. There the insurers had contemporary knowledge from another reliable source of the matter which the insured failed to notify. Here the insurers had no knowledge from any source of the issue of the writ until they received the letter of 2 March 1966. I do not regard Lord Denning, MR’s judgment as authority for the wider proposition that an insurer cannot rely on a breach of condition unless he has suffered actual prejudice.
An appeal from the decision of McKenna, J came before the Court of Appeal in England over which Lord Denning, MR presided. That court in upholding unanimously the decision of McKenna, J, carefully avoided expressing any approval or acceptance of the proposition advanced by Lord Denning, MR in 1966. To the extent that any of the observations of Lord Denning, MR as stated in the 1966 case seem to be at variance with the statements of the law as expressed by Fletcher Moulton, LJ In Re Coleman’s Depositories Ltd I would not be prepared to adopt them.
In the policy under consideration by the arbitrator condition 5 is expressed to be a condition precedent to liability under the policy. Non-compliance with the provisions of that condition, if such there be, may be waived by the underwriters or they, the underwriters, may be found to have waived impliedly their right to rely on non-compliance. If they were found to have led the assured by their conduct to believe that their right to rely on the non-compliance was being waived by them the matter of prejudice might possibly arise for consideration. Save in the investigation of such matters of fact it seems to me there is no onus on the underwriters to show that they are prejudiced by a non-compliance with condition 5. That is to say in the absence of waiver the underwriters are entitled without the obligation of proof of prejudice to their position to rely on non-compliance with condition 5 as releasing them from liability to meet a claim under the policy.
Instead of replying to the queries submitted in the case stated in the form in which they are posed I would advise the arbitrator as follows:
1. Compliance with condition 5 is a condition precedent to liability of the underwriters.
2. Unless the non-compliance with condition 5 is trivial or has been waived expressly or impliedly by the underwriters they are not obliged to show that they are prejudiced by the non-compliance.
3. The assured is obliged by condition 5 to give to the nominated agent of the underwriters immediate notice in writing either of the happening of an *117 occurrence likely to give rise to a claim or of the receipt by the assured of such a claim.
4. The assured is obliged by condition 5 to give to the nominated agent of the underwriters immediate notice in writing of the institution of proceedings in every case.
In advising the arbitrator in this manner I have left the arbitrator free to make all findings and inferences of fact. As the hearing before the arbitrator has not concluded he may require to hear further evidence on facts pertinent to the issues arising in view of the foregoing advices on the interpretation of the policy constituting the contract between the parties.