Yeboah and Another V. The Republic [1999-2000] 1 GLR 149 Holding @ 154, CA.

Page 1139

Amissah J.A. delivered the judgment of the court. This is a tragedy of errors. The real appellants in this case are the Norwich Union Fire Insurance Society Ltd. who shall henceforth be referred to simply as the insurance company. They complain of a judgment given against them, as insurers of a vehicle which was involved in an accident, by Bannerman J. Just as in the case of State Insurance Corporation v. Mansah [1968] G.L.R. 1127, C.A. which we have disposed of this morning, the claim against the insurance company was brought pursuant to a judgment obtained in a previous action brought by the present respondent against the insured of the insurance company. But several features of this case set it apart from that other.

The respondent brought his original action against one J. K. Yeboah and J. & G. Sarkis for damage done to his vehicle, not for personal injury either by itself or resulting in death. According to the respondent, his vehicle was parked at a workshop off the road when it was hit and damaged by another vehicle. This latter vehicle had the distinction of being in the name of J. K. Yeboah and insured in the name of J. & G. Sarkis, a fact which, we shall presently see, was to present its own peculiar problems. The respondent alleged that Yeboah and J. & G. Sarkis were negligent in allowing the use of a defective motor vehicle, and that this was the cause of the accident. The respondent got judgment for £G620 with £G84 costs. But, and

Page 1140

here the difficulty arising out of the separation of ownership from insurance already begins to assert itself, the award was made against the owner of the offending vehicle, namely, Yeboah, and not J. & G. Sarkis, who were absolved of all responsibility. Although it is not clearly stated in the judgment, it nevertheless appears that Yeboah was fixed with liability because he was vicariously responsible for the action of the driver of his vehicle. But the case of J. & G. Sarkis was that they had owned the vehicle some three years prior to the accident but they sold it to Yeboah and had had nothing to do with the vehicle since. Contrary to what appeared in the current insurance policy covering the vehicle the time of the accident, they had not insured the vehicle since they sold it to Yeboah. The learned judge must have been impressed by this case because he found that the claim against J. & G. Sarkis must fail.

It is obvious that a judgment in these terms would present almost insuperable difficulties for the one in whose favour it is made if he were to pursue his victory against the insurers. But quite undaunted by the odds, the respondent, on the basis of this judgment brought a motion on notice before the court praying for an order that the execution of the judgment be levied on the insurance company. That company in an affidavit in opposition resisted the course taken by the respondent on two grounds: first, that the judgment was obtained against Yeboah who was not their insured and secondly, that in any event, to enforce a judgment of this nature against insurers by motion was quite novel, and therefore presumably improper. The insurance company stated that in respect of the particular vehicle, the insured were J. & G. Sarkis, but upon learning that they had not made any proposals for insuring the vehicle, they repudiated the policy.

The notes of the argument of counsel on this motion are rather sketchy. But it seems that learned counsel for the insurance company assumed, and I use the word “assumed” advisedly as will presently become quite clear, that the motion was brought under section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958 (No. 42 of 1958). And he made his reply on the basis of that assumption. The burden of his argument was that proceedings could be brought under section 10 only if the risks insured against were of the limited class required to be compulsorily insured under section 6 (1) of the Act. We have had occasion to explain at some length in the judgment just read in State insurance Corporation v. Mansah (supra) the limited sphere of operation of section 10 of the Act. It is sufficient here to mention that it deals with the compulsory insurance of risks resulting in personal injury and death. Whatever be the doubts and difficulties besetting this case, one fact is clear beyond question and that is that

Page 1141

no personal injury or death resulted from this accident. It was simply a case of damage to property, that is a vehicle, no more.

Not only did counsel for the insurance company assume that the respondent’s motion had been brought under section 10 of the Motor Vehicles (Third Party Insurance) Act, 1958, hereafter referred to as the Third Party Act, but the learned judge surprisingly based his ruling on the motion on that same section of the Act. The meat of his decision appears in the following passage:

“In this case the owner of the vehicle at the time when the accident occurred is the first defendant. This is admitted by the second defendant and not disputed by the insurance company; the insurance policy is in the name of the second defendants. The second defendants deny that they were so insured. It is not the plaintiff’s case either that the second defendant was insured. The insurance company do not deny that the first defendant is the owner of the vehicle AS 8714, the subject-matter of this action. The onus is therefore on the insurance company to rebut the presumption that the vehicle AS 8714 was insured by and on behalf of the first defendant. This they have failed to do. Since the vehicle was insured at the time of the accident, the first defendant alone falls within the purport of section 3 of the Act for purposes of insurance. That being the case, under section 10 (1) of the Act, the insurance company are entitled to pay to the plaintiff such sums payable in respect of liability under section 6 (1) of the Act. Under section 6 (3) the insurance company are liable to indemnify the plaintiff in respect of any liability which the policy purports to cover.”

The first matter of surprise is that the learned judge should himself have referred to sections 6 (1) and 10 (1) of the Third Party Act, 1958, without noticing that they deal exclusively with personal injury and death, and consequently are wholly inappropriate as bases of a decision on a claim founded on damage solely to property. In so far as the ruling on the liability of the insurance company to pay the damages awarded by a court on a claim for damage to a vehicle was based on sections 6 and 10 of the Third Party Act, 1958, there cannot be any question that it was wrong and we so hold.

But Mr. Akainyah for the respondent has argued that his motion was not made pursuant to section 10 of the Act at all but that it was brought under Order 42, r. 24 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), and that this was made plain to that court. According to him that rule read together with section 5 of the Contracts Act, 1960 (Act 25), provided the machinery for the respondent going against the insurance company in this summary

Page 1142

manner by way of motion. As to whether the court below was informed that the proceedings were being taken under Order 42, r. 24 of L.N. 140A and not section 10 of the Third Party Act, 1958, we prefer not to express an opinion, except to say that neither the notes of the argument nor the ruling of the court makes any reference to this rule or Act 25 and besides in argument before us Mr. Akainyah has frequently drawn inspiration from sections 6 and 10 of the Third Party Act, 1958.

Even though the learned judge ignored Order 42, r. 24 of L.N. 140A and the Contracts Act, 1960, the argument founded on those provisions before us are no less deserving of consideration and we shall accordingly consider them. The rule referred to provides that:

“Any person not being a party to a cause or matter, who obtains any order or in whose favour any order is made, shall be entitled to enforce obedience to such order by the same process as if he were a party to such cause or matter; and any person not being a party to a cause or matter, against whom obedience to any judgment or order may be enforced, shall be liable to the same process for enforcing obedience to such judgment or order as if he were a party to such cause or matter.”

The argument therefore runs thus, if it is at all possible to enforce a judgment, in an action brought against an insured, against the insurers then the same method of enforcement may be used against the insurers as could have been used against the insured. By section 5 (1) of the Contracts Act, 1960,

“Any provision in a contract made after the commencement of this Act which purports to confer a benefit on a person who is not a party to the contract, whether as a designated person or as a member of a class of persons, may, subject to the provisions of this Part, be enforced or relied upon by that person as though he were a party to the contract.”

It has been strenuously urged upon us that a third party whose claim against an insured is to be eventually met by the insurers is a person for whose benefit the contract of insurance is made, within the meaning of this subsection. Although not a party to the contract, he may enforce it as if he were a party to it. Any judgment obtained against the insured by the third party may consequently be enforced against the insurers. The method of enforcement by way of motion to levy execution being one open to the third party in whose favour a judgment is given against the insured, that method, which was adopted in this case, was equally open against the insurers.

Page 1143

Two flaws, at least, can be found in this argument. The first is that a contract of insurance of the kind under consideration is not a contract for the benefit of a third person. It is a contract to indemnify the insured. Whether or not the insurers pay up on the policy, a third party is entitled to his damages as against the insured if the third party had suffered injury as a result of the negligence of the insured. The injured party’s right to be compensated for his injury is against the negligent person and is wholly independent of the existence of a contract of insurance between that person and an insurer. Of course legislation in the nature of the Third Party Act, 1958, may give the injured party a more or less direct recourse against the insurer. But that is on the basis that the loss incurred by the negligent person will ultimately be borne by the insurer. And even there, judgment has to be obtained first against the negligent person. If the argument advanced is accepted it would mean that not only in this small class of cases but in all cases of negligence involving a vehicle covered by some insurance policy, action need not even be taken against the party at fault or his employer or principal at all, recourse may be had directly against the insurers.

The other fault with learned counsel’s argument on this point is that Order 42, r. 24 of L.N. 140A contemplates a situation where the order of the court by its nature or content can be enforced without more against a person who was not a party to the suit. Very few examples have occurred under the equivalent rule, Order 45, r. 9 (1), in the High Court in England. The commentator in the Supreme Court Practice, 1967, says at p. 611 that. “By its very nature, this Rule is of very limited application.” The cases on the rule deal with orders made upon a dissolution of marriage that certain payments be made by the trustees of the marriage settlement. In Blackett v. Blackett (1884) 51 L.T. 427, for example, it was held that such an order may be summarily enforced, so that when the guardians of the child for whose benefit the order was made brought a fresh action to enforce compliance with the order, they were deprived of their costs, the court taking the view that though not parties to the original suit, they could have enforced the order in a summary manner. In such a case the enforcement at any time by the person who is for the moment responsible for the child, of an order for the payment of money for the maintenance of a child of the dissolved marriage, ought to be possible. And it is therefore understandable that a summary procedure for its enforcement should be available to the guardians. But, is an order against a party guilty of negligence one which by its nature or content may without more be summarily enforced against the defendant’s insurers? In an action on the policy between the insured and the insurers claiming his indemnity, all sorts of defences may be

Page 1144

open to the latter. For instance the insurer may say in his defence that the user of the vehicle was outside the scope of the policy; he may alternatively say that the insured is in breach of some other condition in the policy which relieves the insurer of liability to indemnify. The insured may have facts in rebuttal to raise. All these are matters which have to be decided in a substantive suit after the taking of evidence. If the fact of liability to a third person does not make the insurer automatically answerable to the insured, the third party himself should be in no better position to proceed summarily against the insurers for enforcement only because he had obtained a judgment establishing the liability of the insured. Order 42, r. 24 does not appear to us to justify proceedings by way of motion against insurers to enforce a judgment against their insured.

One further complication in this case was presented by the fact that though ownership of the vehicle was with Yeboah, the insurance for it was taken in the name of J. & G. Sarkis. The insurance company claimed to have repudiated the policy once they got to know that it was not taken out by J. & G. Sarkis. Mr. Akainyah’s answer to this was that the policy could be validly repudiated only in accordance with theprocedure laid down in section 10 (3) of the Third Party Act, 1958. But we find this argument unacceptable because repudiation in the manner set out in section 10 (3) of the Act is necessary only where the proceedings are taken under section 10. And as Mr. Akainyah himself told us, he was not proceeding under that section. He further argued that the insurance company was not in any event entitled to repudiate the contract because though the policy was in the name of J. & G. Sarkis, nevertheless it was with the person who actually made the proposal that the insurance company intended to contract, and that was Yeboah. Quite apart from the fact that insurance contracts are of such a character that the utmost disclosure ought to be made by the proposer to the insurer, there was this one added difficulty with which the respondent had to contend, namely, that according to the proposal form the person who appeared to the insurer as the proposer was not Yeboah, but one Mensah. No one now knows who this Mensah is. There was no evidence of any connection between him and Yeboah. If Mensah was an agent, as far as the insurance company knew, he was an agent of the firm of Sarkis. Thus the insurance company never knew that it was contracting with Yeboah whether in person or not. The line of authorities on misrepresentation exemplified by Phillips v. Brooks Ltd. [1919] 2 K.B. 243, which were cited to us, are therefore not relevant.

Viscount Haldane, in Lake v. Simmons [1927] A.C. 47, H.L. dealing with the question whether a contract is of any effect if one of the parties mistakes the identity of the other, said this at p. 501:

Page 1145

"Jurists have laid down, as I think rightly, the test to be applied as to whether there is such a mistake as tothe party as is fatal to there being any contract at all, or as to whether there is an intention to contract with a de facto physical individual, which constitutes a contract that may be induced by misrepresentation so as to be voidable but not void. It depends on a distinction to be looked for in what has really happened. Pothier (Traite des obligations, section 19) lays down the principle thus, in a passage adopted by Fry J. In Smith v. Wheatcroft (1878) 9 Ch.D. 223, 230): ‘Does error in regard to the person with whom I contract destroy the consent and annul the agreement? I think that this question ought to be decided by a distinction. Whenever the consideration of the person with whom I am willing to contract enters as an element into the contract which I am willing to make, error with regard to the person destroys my consent and consequently annuls the contract . . . On the contrary, when the consideration of the person with whom I thought I was contracting does not enter at all into the contract, and I should have been equally willing to make the contract with any person whatever as with him with whom I thought I was contracting, the contract ought to stand’.”

It is unfortunate that the mystery surrounding the circumstances in which Mensah came to give the firm of Sarkis instead of Yeboah as the insured to the insurance company was never resolved. But one can hardly imagine a contract of insurance of a vehicle in which it can be said with certainty that the consideration of the person of the proposed insured is of no relevance to the insurer. In this particular case, after all is said and done, the real question is whether a judgment against one identifiable person for negligence in the user of a car can be enforced against an insurer on an insurance policy insuring a totally different person with whom the judgment debtor has no connection whatsoever against risks arising out of the user of that same car. We have no doubt that the answer must be in the negative.
For the above reasons, this appeal must, in our opinion, be allowed.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button