Coen v Employers Liability Assurance Corporation Ltd

CourtHigh Court
Judgment Date24 May 1962
Date24 May 1962
Docket Number(1959. No. 1288 P.)
(1959. No. 1288 P.)
Coen v. Employers Liability Assurance Corporation

Insurance contract - Arbitration - Condition of contract that disputes under policy be referred to arbitration - Condition making reference to arbitration a condition precedent to liability on part of insurers - Failure to refer claim to arbitration not an abandonment of claim - Insurable interest - Extent of cover.

Plenary Summons.

The plaintiff, James Coen, brought proceedings in the High Court, claiming inter alia a declaration that the defendants, the Employers Liability Assurance Corporation Ltd., were liable to indemnify him in respect of his liability to pay damages for personal injury suffered by a third party by reason of alleged negligence of the plaintiff in the driving of a motor car.

The following statement of the facts is taken from the judgment of Budd J.:—

"The plaintiff, James Coen, was at all material times in the year 1956 employed as an assistant in the licensed premises, known as the West End bar, in Galway, and also in a garage adjoining these premises, known as the West End garage, both owned by his brother-in-law, Patrick Smith. His sister, Mrs. Angela Smith, acted as secretary to the garage business and also ran a car hire self-drive service in the garage premises.

It is alleged by the plaintiff that on a date early in June, 1956, he purchased from his brother-in-law a Hillman car, registered number IZ. 7238, for the sum of £90. Questions have been raised as to the genuineness of this transaction.

Mrs. Smith apparently dealt with the insurance of motor cars, both in connection with her husband's business and her own, and, according to the plaintiff's case, it was arranged that she should arrange for the insurance of the car in question for her brother, the cover to be on a third party, fire and theft basis, with open driving. Mrs. Smith accordingly got in touch with Connaught Insurance and Allied Services, insurance brokers, to arrange the necessary cover. The brokers wrote to Mrs. Smith two letters, dated respectively the 8th and 11th June, 1956, which are as follows:—

Dear Mrs. Smith,

This note is to confirm that we have arranged to have the above numbered car covered from to-day on a third party, fire & theft basis, open driving. It will be necessary to have the enclosed proposal form completed and I shall be glad if you will see that each question is read carefully, answered and the form signed. Since Mr. Coen was not previously insured in his own name the Company will require a letter from someone in authority to the effect that he has been driving regularly for the past three years, the type of vehicles he has driven and the approx, mileage. If you would let us have a letter under your letter heading it would meet the case. We look forward to receiving the completed form as soon as possible. A certificate will be sent you tomorrow.

Assuring you of our best attention.

Yours sincerely,

C. Connaughton."

11th June, 1956.

Re: Insurance for James Coen IZ. 7238

Dear Mrs. Smith,

I now enclose herewith temporary certificate in this case covering up to the 23rd inst., and I trust it will be found in order. I shall be glad if you will kindly let us have the completed proposal form as soon as possible. The cover is third party, fire & theft, open driving.

Assuring you of our best attention.

Yours sincerely,

C. Connaughton."

"The cover referred to was in fact arranged with the defendant Company and as indicated in the second letter what is termed a temporary certificate was issued by the Company and handed over to the plaintiff. The document in question was in fact a certificate of insurance of the type required to be held by the driver of a mechanically propelled vehicle pursuant to the provisions of the Road Traffic Act, 1933, and in the form prescribed by the Act and regulations made thereunder. It described the insured as James Coen and the period of cover as from 3.05 p.m. on the 8th June, 1956, to 3.05 p.m. on the 23rd June, 1956. It contained the usual clauses as to limitations as to use, person or classes of persons whose liability it covered, the vehicle covered, which was the motor car with the index number and registration IZ. 7238, and the driver or classes of drivers whose driving it covered, which included any person driving on the insured's order or with his consent the said motor car. At the bottom was a certificate in the following terms:—'I HEREBY CERTIFY that an approved policy of insurance has been issued by me to the person named above, that the particulars stated above are correct, and that, within such particulars and subject to the provisions of the Road Traffic Act, 1933, the policy of insurance covers all liabilities which are required by Part V of the said Act to be the subject of either an approved policy of insurance, an approved guarantee or an approved combined policy and guarantee.'

The certificate was duly authenticated by the signature of an official on behalf of the defendant Company and is dated the 9th June, 1956. Opposite to the words on the certificate, 'No. of the policy of insurance,' there were typed in the words, 'Cover Cover.' The meaning of these words is somewhat obscure but it was suggested by the defendants that the insertion of the letter 'C,' in the second word was a typing error and that the words should have been 'Cover Over.' In any event the words referred to some type of cover and there appears on the back of the certificate the following endorsement signed by the same official on behalf of the defendant Company:—

The Insured described on the certificate hereon having proposed for insurance in respect of a motor vehicle described in the Schedule below bearing the index mark and registration number stated on such certificate and having paid the sum of £………the risk is hereby held covered in terms of the Corporation's usual form of third party fire & theft policy applicable thereto for the period shown on such certificate unless the cover be terminated by the Corporation by notice in writing, in which case the insurance will thereupon cease and a proportionate part of the annual premium otherwise payable for such insurance will be charged for the time the Corporation has been on risk.


Make of Vehicle


Year of Make



10 h.p.



For the Employers Liability Assurance Corporation Ltd."

"This endorsement has been variously referred to as a cover note or policy of insurance, but however it be properly described it constituted, together with the relevant portions of the certificate, the contract of insurance existing between the plaintiff and the defendant at the date of the certificate.

The proposal form referred to in the letter of the 8th June, 1956, not having been then completed, a further document, to use a neutral word, on the face of it emanating from the defendant Company, was sent by the brokers to Mrs. Smith by letter, dated the 22nd June, 1956, which was handed over to the plaintiff. This document, dated the 21st June, 1956, and similarly authenticated on behalf of the defendant Company was also in the form of a certificate of insurance in similar form to the first certificate save that the period of cover was from 3.05 p.m. on the 23rd June, 1956, to 3.05 p.m. on the 8th July, 1956, and there appeared opposite to the words, "No. of the Policy of Insurance,"the typewritten words, "Cover Note," which are of great importance in this case. There was no endorsement on the back of the certificate, but a certificate similar in terms to that on the first certificate appears also on the document.

Early on the morning of the 1st July, 1956, the motor car in question was involved in an accident. The plaintiff having, as he alleged, paid for and taken possession of the car prior to that date, lent it on the night of the 30th June to a friend of his, named Arthur Ward, to drive to Woodford to see a friend. Ward took with him two passengers, one of whom was Michael Kavanagh, who, as he put it, 'went for a spin' with Ward. He was injured in the accident and subsequently sued the plaintiff for damages in respect of his injuries. He obtained judgment for damages for personal injuries against the plaintiff on the 1st July, 1958, the order providing that the assessment of damages be had before a judge with a jury and that matter is still pending.

Meantime a proposal form, dated the 25th June, 1956, was sent in to the Company by the brokers. This was filled in and signed on behalf of the plaintiff by his sister. It stated the form of insurance required to be third party, fire and theft. Some official of the defendant Company added some particulars to the bottom of the form, dealing with the calculation of the premium and including the words, "Excluding Passenger Indemnity (Occupants).' By letter, dated the 11th July, 1956, addressed to Mrs. Smith, the brokers informed her that they had received a communication from the defendant Company, which they quoted, stating that the Company were only prepared to issue a third party, fire and theft policy at a premium of £17 19s. 3d. excluding passenger indemnity. The premium was later paid, but no question turns on that. Later the Company issued a policy, dated the 31st August, 1956. For some unexplained reason this was not sent on by the brokers to Mrs. Smith until the 27th November, 1956. The policy by its terms excepted indemnity in respect of death or personal injury to passengers, the endorsement to that effect purporting to have been affixed on the 8th June, 1956, which of course it could not have been, as the policy only came into existence on the 31st August, 1956.

After the date of the accident the Company repudiated liability to the plaintiff in respect of the plaintiff's liability to Michael Kavanagh, the letter of repudiation relied on in the...

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