Harker v Caledonian Insurance Company

• Jurisdiction: Belize
• Court: Supreme Court (Belize)
• Judge: Donaldson, J.
• Judgment Date: 24 June 1977
• Date: 24 June 1977

Supreme Court

Donaldson, J.

Harker

and

Caledonian Insurance Company

Insurance - Motor Insurance — Limited Liability

Facts: Judgment obtained against person insured by policy in sum of $175,000.00 — Insurer's liability arising out of any one claim by any one person limited to $4000.00 — Whether defendant insurer liable for balance of $171,000.00 — Interpretation of section 20(1) British Honduras Motor Vehicles Insurance (Third Party Risks) Ordinance, 1958

Held: Provisions of section 20 clear — No liability of insurer to pay plaintiff a claim in excess of $4000.00 — Claim dismissed — Judgment for defendant.

Donaldson, J.

1 The late Mr. James Harker was a soldier in the British Army. He was involved in a motor accident in British Honduras and suffered grave injuries. The car driver responsible was Mr. Earl Young. An action in the Supreme Court of Belize, British Honduras, ended with a consent judgment for 175,000 Honduran dollars with interest and costs. Mr. Young is unable to pay any part of that judgment. However, he was insured by the defendants under a motor insurance policy, which purported to limit their liability to 4,000 dollars in respect of any one claim by any one person. This sum has been paid to the plaintiff. The issue is whether the defendants are liable for the balance of 171,000 dollars, which is the equivalent of about £42,750.

2 The issue turns upon the construction of the British Honduras Motor Vehicles Insurance (Third Party Risks) Ordinance, 1958. The long title proclaims that it is “an Ordinance to make provision for the protection of third parties against risks arising out of the use of motor vehicles on public roads.” Its purpose is thus similar to that of the British Road Traffic Acts, 1930 and 1934, to which it bears a family resemblance.

3 The scheme of the Act is as follows. Section 3 imposes an obligation on vehicle owners to hold an insurance policy, which satisfies the requirements of the Ordinance. Section 4 sets out the requirements of such a policy. Section 6 deals with policy conditions which purport to relieve the insurer of liability should something be done or omitted after the event giving rise to the third party's claim, e.g., the assured admitting liability or failing to notify the underwriters of the occurrence. In such cases the policy condition is avoided, without prejudice to any provision of the policy that the insured shall repay to the underwriters any sums, which they have been required to pay in satisfaction of the third party's claim. Section 10 provides for a transfer of the insured's rights under the policy to the third party in the event of the bankruptcy of the insured. This is the same concept as that of the British Third Parties (Rights against Insurers) Act, 1930. In the nature of such a provision, the third party's rights are no greater than those of the insured. Although it might well be possible to procure the bankruptcy of Mr. Young, this section would not assist the plaintiff as, whatever the plaintiff's rights against the defendants, Mr. Young's rights were certainly limited to 4,000 dollars. Section 11 deals with policy conditions which restrict the cover provided by reference to certain specified criteria, such as the age of the driver or the mechanical state of the vehicle. Such conditions are rendered of no effect in relation to liabilities which are compulsorily insurable under Section 4, subject to a statutory right in the underwriter to recover from the insured any sums for which he would not have been liable, but for the section. Section 20 imposes a duty on underwriters to satisfy judgments in respect of third party risks, notwithstanding that the underwriter may have been entitled to avoid or cancel the policy. The section thus gives the third party greater rights than those of the insured, whilst giving the underwriters rights over against the insured. Its operation is subject to the third party giving notice of his claim to underwriters before or within seven days of beginning proceedings against the insured. This was done in the present case. It is also subject to underwriters not obtaining a declaration of their right to avoid or to cancel the policy in an action begun within three months of the beginning of the third party's action. This section is thus similar to section 10 of the British Road Traffic Act, 1934. In the present case no question of avoidance or cancellation has arisen.

4 I am concerned with sections 4 and 20 and, in the last analysis, my decision must depend upon the true construction of part of section 20(i).

5 Section 4(1) is in these terms: –

• “4. -(1) In order to comply with the requirements of this Ordinance, a policy of insurance must be a policy which-

  • “(a) is issued by a person who is an insurer, and

  • “(b) insures such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death or bodily injury to any person caused by or arising out of the use of the motor vehicle on a public road:

  ‘Provided that such a policy shall not be required to cover –

  • “(i) liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment: or

  • “(ii) except in the...