Motor Insurance
Cases
Zurich General Accident and Liability Insurance Co Ltd v Morrison
GODDARD LJ
I cannot believe that if they are willing to insure inexperienced drivers, one, for instance, who has never driven a car in his life, they would refuse to insure one who had received instruction but had not got through his test the first time. It is common knowledge that many would-be drivers have failed several times. One result would be, if this were held material, that if a learner took out a policy admittedly as a learner with the £5 excess clause in it, and had failed to pass a test before he applied for a renewal, he would have to disclose that fact, although all he was seeking was a renewal of the inexperienced driver class of policy. I do not think it would ever occur to anyone in such circumstances to do so; yet if it is material, he has got only a voidable policy. I am well aware that if a fact is material and so ought to be disclosed, it is no answer to say that the assured did not think it was material. Nor is it of itself a good answer to say, ‘If it was material, why did you not ask?’ Underwriters cannot frame their questions so as to include everything that may affect any particular proposer, and the fact which ought to be disclosed may well be something peculiar to an individual case. But whether or not a person has failed in his test must, I should think, affect a very large number of proposers. The underwriter exhibits to them a long catechism in which he puts questions on matters which may affect any proposer, such as whether the car is to be used for hire, whether the person who will drive has any infirmity, or whether he has been convicted of any motoring offence, and I cannot help thinking that if it is material for the underwriter to know whether or not the proposer has failed in a test, he would ask the question.
The fact is that what the plaintiffs really regard as material is the conviction, and that if they had known that the assured had failed in the test, that would have led them to find out that which was material but on which they cannot rely in the present case. For myself I am not prepared to hold, on this evidence, that the mere fact that the assured had failed in his test was material to underwriters who were issuing an inexperienced driver’s policy. In any case, I am convinced, as was the learned Judge, that had the fact been disclosed, the assured would have got exactly the same policy that was issued in this case, and consequently that it was not obtained by non-disclosure of a material fact.
Dunn v Ocean Accident and Guarantee Corporation Ltd
(1933) 47 LI L Rep 129
LORD HANWORTH MR
She knewt her husband was a dangerous driver and had had a number of accidents. Could anybody suppose that that was not a material fact to know? Any person, any business person, with sufficient knowledge and common sense must know that there is a greater risk in insuring a person who is likely to have an accident because of the way he drives a car. It appears to me that if we have to measure it by any standard, this lady failed to disclose material facts. It is said that she only had to disclose what a reasonable person would have to disclose in all the circumstances, but as has been pointed out by Romer U, what was to be disclosed was what any reasonable man would think was relevant to the contract. Any person who was taking up a contract of that kind ought to disclose such facts as were before this lady.
Revell v London General Insurance Co Ltd
(1934) 50 LI L Rep 114
MACKINNON J
I think that a reasonable person reading this question might quite reasonably regard the purpose of the question as being directed to the carefulness of the driver who is likely to be driving cars under this policy. The most expert and careful driver in the world, who has never been convicted of any offence of careless driving, who never for a moment has departed from the most perfect standard of good and careful driving, could still become liable to a conviction of an offence under these two sections for being in a stationary motor car which had not got a reflecting mirror, and for being out on the road in a stationary motor car which did not have in regard to it a third-party insurance policy in existence.
The real offence, taking these two types of offence, is using a car without a reflecting mirror or without an insurance policy. In itself the offence has nothing to do with the careful or skilful manner or the careless or unskilful manner in which the car is being driven on the road, or its danger as a moving object. I think that the ordinary reasonable man in the street, asked this question, not only might quite honestly say: ‘No, neither I nor my driver has ever been convicted of an offence in connection with driving this motorcar,’ butwhen the questioner says, ‘Well, but were not you convicted of not having a mirror?’ he might quite reasonably say: ‘Yes, butl never thought of that. l do not call that an offence in connection with the driving of the car. As a matter of fact the mirror had fallen off and I had not noticed it and l had not appreciated it, and it happened when the car was stationary at the side of the road.’ However, I do not know that l need go into illustrations of that sort. I am not satisfied that reading this question as a reasonable person would and ought to have read it that it was untrue or in accurate to reply ‘No’ and to omit to say ‘Yes’, by reason of these two convictions, one about the reflecting mirror and the other about the insurance policy.
That being so, I do not think that the insurance company can rely upon this negative answer to the question as a breach ofa condition of this policy thereby entitling them to avoid the policy.
Brewtnall v Cornhill Insurance Co Ltd
(1931) 40 LI L Rep 166
CHARLES J
She makes her claim-she originally made it in the High Court-and to that claim a variety of defences was set up. Among other defences the defence was set up that the cost price to her of the car was said to be £145, whereas the plaintiff did not pay that sum for the said car. Further, the plaintiff concealed the fact that on the purchase by her of the said car she gave to the vendor another car in part exchange. Divers other defences are raised, but that is the defence which was the principal defence in the County Court. Further. it is said that the cost price to the proposer here is not £145 at all, it is £45; so that if the outstanding £100 which was the value of the Morris Cowley car was to be taken into consideration, it ought to have been shown by the proposer in full.
Now, the proposal form does not say: ‘What is the consideration given for the car?’ It says: ‘What is the cost price to the proposer?’; and, speaking for myself, the answer given-£145—in these circumstances is not untrue. It is not an untrue statement at all. Ido not think it conceals a material fact. … If the insurance company really wish, and if their intention really is, in asking the question as to the cost price to the proposer, to have all the ingredients of the costs-not only the cash but all the ingredients-set out in their proposal form, then they should frame thei.r question in such a way as will show to the proposer what it is that is expected of her, and just what is intended.
Dent v Blackmore
(1927) 29 LIL Rep 9
McCARDIE J
I quite agree that there may be force in ….submission that a man is not bound as a rule and normally to mention an insurance policy of a generation ago which can have no bearing at all upon the position at the present time.
What are the facts here? I have mentioned the Sun Insurance Company policy which ran from the spring of 1924 to the spring of J 925, and resulted in the seven claims I indicated, but immediately before that policy Mr Dent had been insured with the Car & General Insurance Corporation under a policy which again was substantially in the same form as the one in this case. That policy ran from the spring of 1922 to the spring of 1923-a policy not in remote times, but a policy which Mr Dent held in the immediate past, anda policy which it is important to remember becausea significant series of accidents took place during the period that that
policy was running. There were no less than five accidents atleast, possibly six, while the Car & General Insurance Corporation policy was running, and the total of the claims against the insurance company under that policy was no less than£107. To my mind, the answer of Mr Dent was wholly untrue when he mentioned the Sun Insurance Company. He kept back the fact that in 1922 and 1923 he had been insured with the Car & General Insurance Corporation, and in my opinion he kept back that fact because if he had mentioned the Car & General Insurance Corporation, the Lloyd’s gentlemen who underwrote this policy would at once have inquired and most probably have refused to issuea policy at all. There is no ambiguity in my view in this
question at all; and the answer, as I have said, was untrue.
Trustee of G H Mundy (a Bankrupt) v Blackmore
(1928) 32 LI L Rep 150
TOMLIN J
It was suggested that there was some practice at Lloyd’s by which when one underwriter declines the risk, he has got to disclose his refusal to the next underwriter with whom you want to place it. I
am not in a position to express my opinion as to what the practice at Lloyd’s may be. It is not an issue that has been directly raised. It is enough for me to say that I am satisfied that in this case therehas been a prior refusal of this risk by an underwriter whichought to have been disclosed to the ‘Red Star’ underwriter before he accepted the proposal of the assured. So far as this case is concerned the answer to this question was a false representation, and upon that the underwriter was entitled to repudiate the claim.
Holt’s Motors Ltd v South East Lancashire Insurance Co Ltd
(1930) 37 LI L Rep 1
SCRUITON LJ
When the period in the original ‘Lion’ policy was drawing to an end, the ‘Lion’ wrote to the brokers acting for the plaintiffs, stating the particulars of the risk; ‘The underwriters regret that they cannot invite the renewal of this policy,’ which is, of course, a polite means of saying, in insurance language: ‘You cannot go on with us; we shall not renew your insurance,’ and they also sent a
letter which was passed on by the brokers to the plaintiffs, the proposers:
‘We beg to advise you that this insurance will expire at noon 31 inst, and enclose herewith notice received from the “Lion” Underwriters’ Association, from which you will see that owing to the claims experience they cannot invite renewal.’
That clearly, to underwriters who had shown that they regarded heavy claims followed by refusal to renew or to insure as a material matter, was a material matter, and the proposer knew it, because there is the letter giving him the information.
In that case I think there was a concealment of a fact which should have been disclosed. The proposer says he forgot it or did not think much of it, but ‘owing to the claims experience’ as a reason for not renewing is a very substantial matter.
A further question arises as to the ‘Lion’ assurance as to whether the question is answered truthfully: ‘Has any company or underwriter declined to insure?’ They have said they did not invite renewal ‘owing to the claims experience’ and [Counsel’s] answer on behalf of the plaintiff is ‘Well, they were never asked to, and you cannot decline a thing you were never asked to do.’ That may be so in ordinary life, but I am quite clear, with such knowledge and experience as I have, that in the underwriting world and the insurance world a transaction like that, though expressed in polite terms, would be treated by everybody as a declining to insure; and, if so, the question has been answered wrongly.
Norman v Gresham Fire and Accident Insurance Society Ltd
(1935) 52 LI L Rep 292
LEWIS J
Then … has said something with regard to the materiality of the facts which were concealed, as I find they were, from the defendants, namely, the question of the cancelled policies. I find as a fact, paying the greatest respect to what [Counsel) has said, that the question as to whether or not a would-be assured or a person who is proposing to seek insurance has had policies cancelled is, in my view, material. It seems to me-and I have heard evidence with regard to it-that it must be material for an insurance company to know whether or not the person whose risk they are accepting is (to put it quite broadly) a person of substance who can not only pay his premiums but also, as was pointed out to me by one of the witnesses, particularly in motor insurance, a person who does not get his policies cancelled for non-payment of premiums, because that shows that they are persons who are, without putting it too high, impecunious, and therefore are not likely to be able to spend money in order to give care and attention to their motor vehicles being insured. I hold that the fact that the policies had been cancelled is a material fact which was concealed, and wilfully concealed, from the defendants, if it is ever necessary to decide that point for the purposes of this case.
Jester-Barnes v Licenses and General Insurance Co Ltd
(1934) 49 LI L Rep 231
MACKINNON J
… says that by applying to the Court to stay the action under the arbitration clause, that asserted the validity and effectiveness of the arbitration clause and incidentally asserted and affirmed the validity and effectiveness of the whole of this policy, and having an order of the Court that it is an effective policy, the respondents are estopped from asserting that the policy is not valid and not effective, and that they can seek to set it aside. There is no suggested authority about this. [Counsel] said the point was raised, but not decided, by the House of Lords in the case of Macaura v Northern Assurance Co Ltd,4and it is therefore one of first impression of a matter of principle.
I think this is quite an impossible contention. If there is an arbitration clause of this type, which has always been called the Scott v Avery5 clause, in a policy, and an assured starts an action, it is a common thing for the insurance company to apply for a stay, and it is inevitable that it should be granted, because not only is it an essential result of the contract he entered into that it should be stayed, butin the assured’s own interest it must be stayed, because if it were allowed to go on, the only result would be that the insurance company could plead that he has not got an award, and that therefore he cannot possibly recover anything in an action which may be brought. Therefore, at the earliest possible stage an action, brought either by forgetfulness or mistake or something, on a policy which contains that type of arbitration clause, has to be stayed, the parties going to arbitration. The proposition that that having happened, the insurance company are then in the arbitration precluded from
asserting any breach of condition in the policy, or any failure to disclose, or anything of that sort, I think, is quite an impossible proposition. The application to stay is made under one clause in the policy and is directed to one purpose only; it is not an affirmation that it is a good policy, or by implication an affirmation that they admit the validity of the policy and that they disclaim any intention to rely, if the facts prove it possible, upon a breach of condition express or implied in the policy.
Farr v Motor Traders Mutual Insurance Society Ltd
(1920) 123 LT 765
BANKES LJ (at 7€15)
The question is whether we are to construe these questions and answers, as [Counsel] contends, as warranties, the effect of which would be that in August, when the car ceased to be run for one shift, but was run for two shifts per day, the policy came to an end, or whether we are to construe them, as Rowlatt J has construed them, as words descriptive of the risk, indicating that whilst the car is driven in one shift per twenty-four hours the risk will be covered, but that if in any one day of twenty-four hours the car is driven in more than one shift, then the risk will no longer be covered, and will cease to attach until the owner resumes the practice of driving the car in one shift only. In my opinion, having regard to the nature of these questions, it is quite impossible to construe them as warranties.
Provincial Insurance Co Ltd v Morgan and Foxon
(1932) 44 LI L Rep 275
LORD RUSSELL OF KlLLOWEN
It is contended by the appellants that the statement above referred to constituted a statement: (a) that during the currency of the policy the vehicle would never be used for any purpose other than the delivery of coal; and (b) that during the currency of the policy coals, and coals only, would be carried in the vehicle. They then say that these statements are incorporated into the policy as contractual provisions relating to something to be done or complied with by the insured, the due and faithful observance of which is under condition 6 a condition precedent to any liability on the part of the insurance company: the vehicle having, in fact, been used during the currency of the policy for the purpose of carrying timber, no liability can attach to the insurance company. Alternatively, it is said that the answer given in the statement was not true, correct or complete because the vehicle had in fact subsequently carried timber, with the result of freedom from liability of the insurance company under the second part of condition 6.
This argument, in my opinion, breaks down at the outset. I cannot read the above statements in the proposal form as being more than statements by the proposers of their intentions as to the use of the vehicle and the goods to be carried in it, and so as descriptive of the risk. If it had really been the intention of the insurance company that the carrying of goods other than coal at any time should free them from liability in respect of an accident happening subsequently, it was incumbent on them to make that abundantly clear to the proposers. On the construction which I give to the statement there is no scope for the operation of condition 6 in favour of the insurance company. It is not shown that there has been any failure of the insured to observe any provision relating to anything to be done or complied with by them, or that their answers were not true, correct and complete.
Lloyds Bank Ltd v Eagle Star Insurance Co Ltd
[1951] 1 Lloyd’s Rep 385
JONES J
It is argued by [Counsel], on behalf of Lloyds Bank, the executors of Mr Rush, that the proviso must be confined to cases of personal injury, and must not be extended to the case of death; and he relied particularly, in support of that argument, on the fact that in the latter part of the proviso the distinction is drawn between death, and injury and disablement; and that is a circumstance to which very close regard must be paid. On the other hand, the clause is headed ‘Personal Accidents’ and the effect of the clause is to make the insurance company liable, subject to the proviso, to pay compensation to the executors of the insured person in the event of the insured sustaining personal injury which results either in death (sub-para (a) of clause 4), or in certain disablements as set out in sub-para (b), or in the disablements set out in sub-para (c) of that clause; and it seems to me that the expression ‘Personal injuries’ should be taken to mean personal injury which results in death, or personal injury which results in disablement, and that the true construction of this proviso is that the company is not to be liable to pay compensation in respect of personal injuries which result in death, or personal injuries which do not result in death, in the case of an insured person who is under the age of 16 or over the age of 65. I therefore decide the first question in the affirmative, holding that on the true construction the words ‘personal injuries’ as contained in this proviso include death.
Cases Damage
Seaton v London General Insurance Co Ltd
(1932) 43 LI L Rep 398
Du PARCQ J
It is contemplated by the policy that a man shall still be insured though he is doing necessary repairs. I think there is no doubt that if he had taken the whole of the vehicle into his yard or any other place to repair it, and then had taken out the engine for the purpose of repair, he would still have been insured in respect of the motor vehicle, as he was still using it for his own business, and any damage to it would have been covered. But he left the vehicle bereft of its engine in the garage and took the engine to another part of the premises, and that gave rise to a difficult situation. The engine was burned in the early morning of 19 September while it was in his own carpenter’s shop.
It is said with some force by [Counsel] that this seems very hard on the company if they are liable for that, and that they did not insure against loss of two vehicles, and that if he is going to be allowed to divide up his vehicle into two or more sections, it seems hard on the company. The answer is that one must look against what risks the company have insured him, and it seems to be almost beyond dispute that the mere fact that he has taken the engine out of the vehicle does not prevent the vehicle as a whole from being insured. I agree that, the moment you take a thing into two pieces, in one sense the risk is increased, but the mere fact that it may be possible for the assured under the policy to do things which mean that at one time the risks undertaken by the company are greater than at another time does not mean that if the assured does any of these things, he ceases to be insured. It may be that under the terms of the policy and with the latitude allowed the company at times would find themselves under a heavier liability at one time than another.
Therefore, it comes to this, in my opinion, that at the time when the fire occurred Mr Seaton still had a motor vehicle although it was in two pieces.
I think, therefore, it is impossible to say that Mr Seaton was not covered by his policy because he divided the lorry into two and took the engine to another part of the premises.
Webster v General Accident, Fire and Life Assurance Corporation Ltd
[1953] 1 All ER 663
PARKER J
I find myself unable to accept the test suggested by Counsel for the insurers. I agree that where a chattel is handed over voluntarily by the owner to another, it may make it difficult for him thereafter to prove a loss; it may be that in such a case what is lost is, not the chattel, but the proceeds if the chattel was handed over for sale. No one would suggest, I think-to take a concrete example-that, if the owner of a chattel handed it to X for sale, X honestly representing (if you like) that he had a buyer, and the chattel was duly sold, but X misappropriated the proceeds and never paid them over, there had been a loss of the chattel. What had been lost there was the proceeds of sale, but equally it seems to me that, if a chattel is handed over to an agent, whether as a result or not of a fraudulent misrepresentation, and the agent proceeds to deal with the chattel in a way which amounts to a conversion of the chattel, there may be a loss.
Eisinger v General Accident, Fire and Life Assurance Corporation Ltd
[1955) 2 All ER 897
Where the insured is induced by fraud to part with the possession of the insured vehicle in exchange for a worthless cheque, this does not amount to a
LORD GODDARD CJ
The question here is whether or not there has been a loss, within the meaning of that word in the policy of insurance under which the claimant insured his motor car. The policy provides:
‘The corporation will indemnify the policyholder against loss of or damage (including damage by frost) to any motor car described in the schedule hereto …’
Has there been a loss of the motor car?
The claimant sold his motor car to a man who did not pay for it. The man obtained the car by false pretences. Having possessed himself of the car, he gave the claimant a cheque for £745. The claimant’s wife did not want him to accept it. She thought that the cheque might be worthless, as it turned out to be. Nevertheless, the claimant went on with the transaction and sold the car. It is a clear case of obtaining a car by false pretences. That transaction passed the property in the car. The claimant did not lose the car; he lost the proceeds of sale. He has lost the price which the man promised to pay him, and purported to pay him by means of a worthless cheque. I cannot hold that that is a loss within the meaning of the policy.
Cases Extension of Cover
Browning v Phoenix Assurance Co Ltd
[1960] 2 Lloyd’s Rep 360
PILCHER J
Mr Battersby gave the statement to the defendants’ representa tive, which I have read, as early as 10 December and in that statement it will be remembered that he said he had authorised the plaintiff ‘to drive the car at his convenience to get it thoroughly warm before draining off the oil’. He said nothing about authorising the plaintiff to drive it for any other purpose. I accordingly determine that the request made or the permission
given by Mr Battersby on 1 December 1957, was a request made or I a permission given to drive the car for a longish run at his convenience, taking the family as passengers, for the sole purpose
of getting the transmission oil warmed up before it was drained. It is now clear that the plaintiff was not driving the car for this purpose when he met with the accident and consequently was not driving it ‘on the insured’s order or with his permission’ and that
the car was therefore not at risk under the policy at the time of the ‘
accident.
Digby v General Accident, Fire and Life Isurance Corporation Ltd
(1942) 73 LIL Rep 175
LORD ATKIN (at 184)
It isnecessary, however, to consider the second argument for the insurers, which, as I understand it, is that the indemnity given in s 2 (3) to the person driving ‘on the order or with the permission of the policyholder’, whom I will call the authorised driver, is in termsa promise to indemnify ‘in like manner’. This refers back to
s 2 (1), the indemnity to the policyholder; and as that clause does not indemnify the policyholder against a claim by the policyholder,
so, it is said, the authorised driver receives no indemnity againsta claim by the policyholder.
Section 1 (3) begins anew with a fresh promise of indemnity.
‘The insurance under this section shall also extend to indemnify in like manner any person whilst driving’ etc. The subject of indemnity is to be ascertained by reference. To me it seems clear that on making the necessary reference the words should read ‘extend to indemnify [an authorised driver] against all sums which he shall become liable to pay in respect of any claim by any person’ etc. ‘Any person’ must receive its ordinary meaning: on this occasion the policyholder is plainly ‘any person’; the authorised driver is excluded because as before he can be under no liability to himself.
Peters v General Accident, Fire and Life Assurance Corporation Ltd
(1938) 60 LIL Rep 311
SIR WILFRED GREENE MR (at 313)
At the date when the accident took place the entire property in this car was vested in Pope. He had bought the car. On the sale of the car the property passed to him, and although [Counsel] at one stage of the argument appeared to suggest that it had not, when his attention was called to the evidence, felt himself constrained to give up that point. The property, therefore, passed to the purchaser long before this accident took place. The circumstance that he had not paid the whole of the purchase price is irrelevant for that purpose, because that circumstance does not leave in the vendor, Mr Coomber, any interest in the car. There is no vendor’s lien, or anything of that sort. The car had become the out-and-out property of Pope. Now, when Pope was using that car, he was not using it by the permission of Coomber. It is an entire misuse of language to say that. He was using it as owner and by virtue of his rights as owner and not by virtue of any permission of Coomber.
Kelly v Cornhill Insurance Co Ltd
[1964] 1 All ER 321
LORD DILHORNE LC
In the majority of cases the question whether a person is driving a car with the permission of the insured is simply a question of fact. In this case it was argued that as a matter of law it was not possible for Michael Kelly to give permisssion to drive his car which would be effective eight months after his death. It was argued that it was inherent in the grant of permission, that the permittor should have power during the period covered by the permission to revoke or to cancel it. On this basis, it was contended that any permission given by Michael Kelly during his lifetime ceased on his death, or alternatively within a reasonable time thereafter, or in the further alternative when the person to whom permission had been given had notice of the death. No authority was cited to your Lordships in support of this proposition. There is, in my view, nothing in the policy which supports the argument that the word ‘permission’ in the policy meant and only meant permission which during its currency the insured had power to revoke. The word ‘permission’ by itself cannot be construed as implying that the permission must be one which there is power to revoke, or can endure only so long as the grantor is in a position to revoke it.
In support of their contention the respondents sought to derive some assistance from the law of mandate. In my view, the relationship of principal and agent is in no way analogous to the relationship between the owner of a car and a person driving with his consent. I do not consider that the effect of death on the relationship of principal and agent affords any guidance to your Lordships as to the proper determination of this case. There is nothing so personal in the relationship between the owner of a car and someone using it with his consent as to lead to the conclusion that the consent is withdrawn automatically by operation of law on the death of the owner. Permission to drive a car is consent to the use of a chattel. If a man consents to the use by another of a chattel of his, for a period say of six months, the use of the chattel for that period is lawful during that period, and does not, in my opinion, become unlawful in consequence of the death of the permittor in the course of the six months. If it did become unlawful on death, then a person driving a car with the knowledge that he had obtained the owner’s permission to do so, would under the terms of such a policy as that issued in this case, nonetheless be driving un insured. This would have the consequence that not only would he be liable to prosecution, and, if convicted, to a fine and imprisonment and disqualification from driving; but also any person injured as a result of the negligent driving of the car by him would be deprived of the very protection which the introduction of compulsory insurance for drivers of motor vehicles was intended to provide.
In my opinion, the respondents have failed to establish that
the meaning to be given to the word ‘permission’ in the policy is permission which the insured was at all relevant times in a position to cancel or revoke’ and have failed to establish that, by operation of law, any permission given by Michael Kelly before his death and of unlimited duration, was revoked or cancelled on his death.
Rogerson v Scottish Automobile and General Insurance Co Ltd
(1931) 41 LI L Rep 1
LORD BUCKMASTER
The contention for the appellant is that any car which, during the period of the insurance, is in fact taking the place of the insured car is within the meaning of the phrase, and that an accident caused by its use is an accident the liability in respect of which is covered by the policy. That is not my view of the matter. To me this policy depends upon the hypothesis that there is, in fact, an insured car. When once the car which is the subject of this policy is sold, the owner’s rights in respect of it cease and the policy so far as the car is concerned is at an end. It is perfectly true that in regard to two respects this policy covers matters that are not or may not be strictly applicable to the continuance of the possession of the car. I say ‘may not be’ because with regard to the private motor house the car that is ‘usually stored’ in that house might not be satisfied by another new car. But whether that be so or not, it makes but little difference, because that condition and the condition with regard to the chauffeur are completely outside the questions of the insurance relating to the third party risks, and their introduction into the policy throws no light whatever upon what is the meaning of the car that is used instead of ‘the insured car’ under clause (A). It is my opinion that that clause assumes that there is ‘the insured car’, the use of which, if an accident arises, would entitle the assured to the benefit of the policy. If, instead of the car that could be so used, another is used in its place, then the car that is used in its place is entitled to the same privilege as the original car. But if it be assumed that the original car be sold and another car taken in its place, the result would be, if the appellant’s contention were correct, that it might be possible to shift the insurance from car to car during the whole period of twelve months for which the policy runs, and that although there is
no express limitation on the nature of the car that may be regarded as a substitute.
Cases Cover Exceptions
Clarke v National Insurance and Guarantee Corporation Ltd
[1963] 3 All ER 375
HARMAN LJ
This car was grossly overloaded; that was agreed by everybody. That it could be driven safely the experts agreed, but not over twenty-five miles an hour. Its steering was affected, it was liable to go out round the corners, and so on, and the experts generally agreed that though one could, by keeping to the side of the road and di:iving with very great precautions, perform a journey, and even this trip which the plaintiff was on, in safety, yet looked at in the ordinary way for ordinary purposes and going at an ordinary sort of pace, this car was unsafe. There are two views about this matter, and one of them is this. It was not, says the plaintiff through his Counsel, the condition of the car which caused the trouble but the misuse of the car by him, and that is not a matter which comes within the exception. On the other hand, Counsel for the defendants says that when looking at this car standing at the kerb loaded up with nine persons just before it started, anybody would say that that car in that condition was unroadworthy, unsafe, and that, when it drove off and proceeded down Highgate Hill, it was being driven in an unroadworthy condition.
I think that, on the whole, this exception did apply. I think that one must regard the car as it was as it proceeded along the road, not look at it empty before it was loaded up and say: ‘This was a safe and mechanically sound car.’ The words which are important for this purpose are ‘being driven’, and, when it was being driven, it was, by reason of overloading, just as in the ship cases, rendered unsafe and unroadworthy.
Houghton v Trafalgar Insurance Co Ltd
[1953] 2 Lloyd’s Rep 503
SOMERVELL LJ
It is said that the load here was in excess of that for which the car was constructed in that one passenger was seated on the knees of another and the seating accommodation was all occupied.
If there is any ambiguity, it is the defendants’ clause and the ambiguity will be resolved in favour of the assured. In my opinion, the words relied on, ‘any load in excess of that for which it was constructed’, only clearly cover cases where there is a weight load specified in respect of the motor vehicle, be it lorry or van. I agree that the earlier words in the clause obviously are applicable to an ordinary private car in respect of which there is no such specified weight load We have to construe the words in their ordinary
meaning, and I think those words clearly only cover the case which I have put. If that is right, they cannot avail the insurance company in the present case.
I would only add that the present suggestion of their application is, to me, a remarkable one. I think it would need the plainest possible words if it were desired to exclude the insurance cover by reason of the fact that there was at the back one passenger more
than the seating accommodation. All sorts of obscurities and difficulties might arise.
Lloyds Bank Ltd v Eagle Star Insurance Co Ltd
[1951] 1 Lloyd’s Rep 385
JONES J
Now, these two cases, although helpful, are by no means conclusive of the point which I have to decide. I have to look at the proviso and form my view as to what I think is the proper construction of these words, as to whether the proviso applies to the case of a man who has attained his 65th birthday, or whether it only applies to a man who has attained his 66th birthday; in other words, do the words ‘over the age of 65 years’ mean ‘after the attainment of the 65th birthday’, or do they mean ‘when the 66th birthday has been attained’?
It seems to me that the proper construction of the proviso is to say that the words ‘Over the age of 65 years’ are words which include a person aged 65 years and 7 months. I think that in the proviso there are two limits stated, one of which is the insured’s 16th birthday, and the other is the insured’s 65th birthday, and that the proper construction is that the proviso applies to anyone who has lived beyond the attainment of his 65th birthday.
Wood v General Accident Fire and Life Assurance Corporation Ltd
(1948) 82 LI L Rep 77
MORRIS J
The words that are used in this policy are well-known and well-used words. It seems to me that, on the facts as found, it would not be reasonable to say that this was a journey that was for social, domestic and pleasure purposes. I asked [Counsel] to state which were the words that he said were applicable, and his submission was that, on the facts of the present case, the purpose for which the car was being used was both pleasure and social in its nature. So far as the ‘pleasure’ was concerned, [Counsel] limited it to the pleasure of the policyholder, Mr Thomas. So far as
‘social’ was concerned, [Counsel] said that it was a social purpose so far as concerned both.
On the facts as found, the situation here was that somebody in the employment of the policyholder, it connection with his work, during time for which he was paid, on•the order of his employer, drove the car to Oxford Street. That journey to Oxford Street was undertaken by the employer because, as is found, the employer hoped and intended, at the end of the journey, to negotiate a contract in connection with his garage business with Messrs Francis & Pearse Ltd. It seems to me that it would be to give an unnatural meaning to words if it were to be held that that journey was for either social or domestic or pleasure purposes.
Levinger v Licenses and General Insurance Co Ltd
(1936) 54 LIL Rep 68
Eve J
I can well imagine that many persons in Mrs Levinger’s position would treat the business as hers. But though one must not be too strict in reading this language, one must not disregard language of which the construction is plain; and, after the formation of the company and the transfer of the assets of the business to the company, language which would attach to that the expression ‘Mrs Levinger’s business’ would be quite inaccurate. It is an abuse of words. From the moment when the company’s title was complete it was the business of the company only.
Unfortunately, not appreciating possibly the dangers which lie in these matters of insurance, the parties have allowed this policy to be issued in terms, or the proposal form to be framed, so as to debar the company from any relief. The company has no interest in this policy. The company is not insured nor is the business which is insured that of the company. The business insured is that of the lady and that ceased to exist in every respect when the company was formed. It is not therefore a policy which gives the company the protection they claim, and in those circumstances, attaching as I must do to the very simple and plain language ‘the business of the assured’ its proper and only reasonable meaning, I must hold that this action is misconceived and must be dismissed, with costs.
Passmore v Vulcan Boiler and General Insurance Co Ltd
(1936) 54 LIL Rep 92
Du PARCQ J
The first thing that occurs to one as one looks at this policy is, I think, that a case might arise where the person insured under the policy would extend a courtesy to a friend or acquaintance, or it might be to a stranger, who was, in fact, carrying on some business and was assisted in carrying on that business by the facilities which were given to him by the insured. In such a case, if the facts found were that the insured, as a matter of kindness, courtesy or charity, gave a lift-to use a colloquial phrase-to someone who happened to be on business of his own, I have no doubt that the proper view ‘to take would be that the car was, for the time being, being used for a social purpose, and it would not the less be used for a social purpose because the person benefiting by the courtesy was on business.
But that is not what happened here. The arbitrator has excluded any considerations of that kind. Miss Passmore did not say to Mrs Cooke, ‘I shall be pleased to give you a lift as a friend.’ The car was being used first for the purpose of Miss Passmore’s business, and secondly, and in addition, for the purposes of Mrs Cooke’s business. If the policy only said that Miss Passmore was to benefit by it so long as the car was being used for the purposes of her business, I think her position would be unassailable, because it was being used for the purposes of her business; but that is not what the policy says, and though it is true that when words are ambiguous, they must be construed contra proferentem against that party to the contract who is responsible for the drafting of it, that principle cannot be prayed in aid unless the words are of real ambiguity. If looking at the policy, the meaning appears to be clear, there is no room for the application of that doctrine.
The words of the policy are that the insurers shall not be liable in respect of any accident caused while the insured motor vehicle is being used otherwise than in accordance with the ‘description of use’. Was it being used otherwise-than in accordance with the description-otherwise than for social, domestic and pleasure purposes and use for the business of the insured? It was not being used for social, domestic or pleasure purposes. Was it being used otherwise than for the business of the insured? I do not think one can answer that question otherwise than in the affirmative. It was. It was being used for the business of Mrs Cooke. I see no escape from that, It is immaterial to consider whether Mrs Cooke’s business is similar to or identical with the business of Miss Passmore. The insurers are entitled to know what the business is for which a car is going to be used, and they are entitled to say that before they cover a risk they must have an opportunity of judging what the risk is. [Counsel] says quite truly that the principle would be the same if Mrs Cooke had been travelling in some quite different goods. There may be cases where the nature of the goods and the district to be covered may be of vital importance. I think, therefore, that I should be doing an injustice to the insurance company in coming to any other conclusion than that there is no escape from the words of the policy.
Cases Conditions
Conn v Westminster Motor Insurance As.wciation Ltd
[1966] 1 Lloyd’s Rep 407
DAVIES LJ
Did the plaintiff take reasonable steps to maintain the vehicle in an efficient condition? He took no steps at all; that is admitted. Admittedly he knew that the near-side tyre had no tread. He says that he did not know that the off-side tyre had no tread and was down to the canvas. But it seems to me quite impossible to imagine that, with knowledge of the condition of the near-side tyre, he would not look at and observe the condition of the off-side tyre. Did he know, or ought he to have known, the condition of those two tyres? Again, it appears that the answer to that is inevitably ‘Yes’. It was staring him in the face. He must have known the condition of both tyres. He must have known, as any car driver and particularly someone who has been driving a taxi-cab for very many years would know, that front tyres in that condition are unroadworthy and, indeed, unsafe.
National Farmers Union Mutual Insurance Society Ltd v Dawson
(1941) 70 LI L Rep 167
LORD CALDECOTE CJ
I think it is possible to give effect to these words without straining them. First of all, take the part of condition 3, as it is called, which is an obligation or undertaking to use all care and diligence to employ only steady and sober drivers. If the assured chose to employ a number of drunken drivers, or one drunken driver, why should he not be held to have broken his contract, and if damage results from the employment of the drunken driver, why should he not be liable to pay the damages which ensue as a result of that, for a breach of his undertaking? So, if the assured does not use all care and diligence to avoid accidents, because he sends the car out with no brakes or no horn or no lamps, or utterly unfit in some way or other for use upon the road, I think he has broken his contract, and this case provides, perhaps, a better example than any I have given. It would seem astonishing to say that he has used all care and diligence to avoid accidents if he, when in a drunken state, or, at any rate, in a state of having consumed so much alcoholic liquor as to be unfit to have proper control over a vehicle on the road, goes upon the road. I think he has not used all care and diligence to avoid accidents if that is what he does. I think it is an unsafe guide to a proper interpretation of this clause to look solely, or indeed to look at all, at the marginal note upon which [Counsel] strongly insisted. It quite obviously deals with something more than the employment of steady drivers; indeed, the marginal note itself says ‘Selection of Drivers and Cars’, and I can see no reason why, in the language of the section, the assured should be excused from using care and diligence to avoid accidents, quite apart from anything he may do in the course of driving the car. There is no repugnance, I think, to the first part of the policy. The assured might use all care and diligence in accordance with the condition, and yet be guilty of an act of negligence, or he might fail to use all care and diligence without being found guilty of negligence on the road and so liable to pay damages.
Cases Claiming
The Administratrix of Mary Madge Verelst v Motor Union Insurance Co Ltd
(1925) 21 LIL Rep 227
ROCHE J
It is said that ‘as soon as possible’ is a matter of construction in this case and means ‘as soon as anybody could give notice’. Reliance is placed on certain expressions in the case of Hydraulic Engineering Co v McHaffie.10 The words which most aptly summarise the view of the Court and illustrate the contention of the company are the words in the judgment of Cotton U ,II where he says that by the words ‘as soon as possible’ the defendants must be taken to have meant that they would make the gun as quickly as it could be made in the largest establishment with the best appliances.
The other view suggested on the other side as to what this clause means is that it means as soon as possible to the legal representa I tive under the existing circumstances which prevailed and applied.
In support or in illustration of that view of the meaning of the condition the case of Hick v Raymond and Reid12 was cited in support of this contention that Condition 1 had no reference to the case of death. [Counsel] referred me to Globe Accident Co v Gerisch.13 The arbitrator obviously from his decision adopted the construction of the clause which the claimant has contended for; and I am quite unable to hold that he was wrong. On the contrary,
I think and hold that he was right in putting that construction on the clause.
Lickiss v Milestone Motor Policies at Lloyd’s
[1966] 2 All ER 972
LORD DENNING MR (at 975)
The letter of 23 June 1964, was a waiver of the condition. The principle of waiver is simply this: that if one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him so to do see Plasticmoda Societa per Azioni v Davidsons (Manchester) Ltd 4). When the insurers got the letter from the police on 18 June, they could have asked for the notice of prosecution and the summons if they had wanted them. Instead of doing so, they merely wrote to the motor cyclist on 23 June saying: ‘It would be appreciated if you would let us know why you have not notified us of these proceedings.’ By not asking for the documents, they as good as said that they did not want them. So he did not send them. I do not think that they should be allowed now to complain of not receiving them. I think that they waived the condition.
Dickinson v Del Solar Mobile and General Insurance Co Ltd,
(1929) 34 LI L Rep 445
LoRD HEWART LJ
In my opinion, diplomatic agents are not, in virtue of their privileges as such, immune from legal liability for any wrongful acts. The accurate statement is, I think, that they are not liable to be sued in the English Courts unless they submit to the jurisdic tion. Diplomatic privilege does not import immunity from legal liability, but only exemption from local jurisdiction. The privilege is the privilege of the sovereign by whom the diplomatic agent is accredited, and it may be waived with the sanction of the sovereign
or of the official superior to the agent (Taylor v Best;15 Re Suarez, Suarez v Suarez16).
In the present case the privilege was waived and jurisdiction was submitted to by the entry of appearance (Re Suarez, Suarez v Suarez/7 Duff Development Co Ltd v Kelantan Government18), and, inasmuch as the defendant had so submitted to the jurisdiction, it was no longer open to him to set up privilege. If privilege had been pleaded as a defence, the defence could, in the circum stances, have been struck out. The defendant, I think, was bound to obey the direction of his Minister in the matter.
In these circumstances it does not appear to me that there has been, on the part of the defendant, any breach of the conditions of the policy, and the judgment clearly creates a legal liability against which the insurance company have agreed to indemnify him.
Morley v Moore
(1936) 55 LI L Rep 10
Scorr LJ
I entirely agree with the terms of the judgment of the County Court Judge. I think he was right in saying that even although the plaintiff’s insurers may have told him that they did not want to be handed over any part of his recovery from the defendant to the extent of the £28 which they were interested in, although they may have told him not to sue for it, and although there was a ‘knock for knock’ agreement between them and the defendant’s insurers, in my view none of those facts gives rise to any defence known to the law or the principles of equity, so far as I know them. My view is that there is no right whatever in an insurer to dictate to his assured as to whether he shall or shall not abstain from enforcing his remedies against a third party which go in diminution of the loss against which the policy is issued; they have an absolute right to require him to enforce his remedies, but, in my opinion, they have no right to prevent him enforcing them. Their right is a right purely consequential on the nature of the contract of indemnity, and it arises because of it being a contract of indemnity, and nothing more, namely, if the assured obtains payment, whether by enforcing an action at law or by obtaining an ex gratia payment, the underwriters or the insurers are entitled to be paid the amount paid by them to him by way of strict indemnity, and no more. To my mind that is the remedy of the insurers, and that is the only remedy they have in respect of the assured’s rights of recovery at Common Law.