General Omnibus Ltd, v London General Insurance Company Ltd

Judgment Date01 June 1936
Date01 June 1936
CourtSupreme Court (Irish Free State)

Supreme Court.

General Omnibus Co., Ltd. v. London General Insurance Co., Ltd.

Insurance - Policy of indemnity in respect of omnibus - Exclusion of "loss, damage and/or liability to the vehicle" when overloaded - Condition precluding payment by insured without consent of insurer - Condition as to commencing action against insurer within three months of rejection of claim in respect of "accident or loss" - Accident causing injury to passenger when omnibus overloaded - Repudiation of liability by insurer on ground of overloading - Action by passenger against insured - Settlement of action without consent of insurer - Action by insured against insurer to recover amount paid in settlement - Action commenced within three months of settlement but more than three months after prior repudiations of liability by insurer - Liability of insurer.

Witness Action.

The action was commenced by summary summons indorsed with a claim for £1,027 17s. 2d. alleged to be due and payable by the defendants to the plaintiffs on foot of a policy of insurance whereby, in consideration of premiums paid and to be paid by the plaintiffs to the defendants, the defendants agreed to indemnify the plaintiffs against certain liability as set out in the summons. The said sum was alleged to have become payable by the plaintiffs and to have been paid in respect of damages and costs arising out of an accident in which a vehicle of the plaintiffs, covered by the said policy, was involved and against which the plaintiffs were indemnified by the said policy.

By order of the High Court the action was sent for plenary hearing and a defence and a reply were delivered.

The action was heard, with oral evidence, by Hanna J. without a jury.

The further facts have been summarised in the headnote and appear sufficiently from the judgment of Kennedy C.J.

The plaintiffs (an omnibus company) took out a policy of insurance with the defendants (an insurance company) whereby the defendants undertook to indemnify the plaintiffs against certain loss, damage or liability, including compensation for injury to passengers, in respect of a motor vehicle. The policy excluded indemnity in respect of "loss, damage and/or liability to the vehicle caused or arising whilst such vehicle . . . is conveying any load in excess of that for which it was constructed." The policy was also subject to certain endorsed conditions which included the following two:—"2. No admission, promise or payment shall be made by the insured without the written consent of the Company which shall be entitled if it 80 desires to take over and conduct in the name of the insured the defence and settlement of any claim . . ." "5. . . . if a claim be not made within seven days after the accident or loss has occurred or, if made and rejected by the Company, an action or suit be not commenced within three months after such rejection, all benefit under this policy shall be forfeited and the Company will not be in any way liable thereunder."

Injury was caused to a passenger in the vehicle at a time when, as the trial Judge found, the vehicle was conveying a load in excess of that for which it was constructed. The plaintiffs within seven days gave notice to the defendants of the accident and of the injury to the passenger; and the defendants replied repudiating liability on the ground of the excessive load. The passenger brought an action for damages against the plaintiffs who kept the defendants informed of the commencement and subsequent stages of the action. The defendants on each occasion repeated their repudiation of liability. The passenger's action was settled on the day of trial, without the consent or concurrence of the defendants, by the plaintiffs consenting to judgment for a sum of money and costs. The defendants were informed within seven days of the result but again repudiated liability. The plaintiffs then commenced the present action against the defendants to recover this sum of money, and their own and the passenger's costs of the passenger's action, which they claimed to be due on foot of the policy. The action was commenced within three months of the settlement of the passenger's action, but more than three months after the last repudiation by the defendants prior to that settlement. The defendants relied on the exclusion and on the two conditions, referred to above, in the policy as absolving them from liability.

Held, by the Supreme Court (Kennedy C.J., FitzGibbon and Murnaghan JJ.) that the defendants could not rely on the exclusion, as the passenger's claim was not within the phrase "loss, damage and/or liability to the vehicle"; nor could they rely on condition 2 because (per Kennedy C.J. and Murnaghan J.) the condition was inapplicable where the insurance company had refused to take any part in defending the action; (perFitzGibbon J.) the defendants had waived the condition by their repudiation of liability.

Held further, by the Supreme Court (Kennedy C.J. and FitzGibbon J., Murnaghan J. dissenting) that the defendants could, however, rely on condition 5, as the term "loss" in that condition referred to other heads of indemnity in the policy and the present case came within the term"accident" and, accordingly, the action had not been commenced within three months after the claim in respect of the accident had been rejected. The plaintiffs could have instituted an action for a declaration of their right to indemnity, as in Tinline v. White Cross Insurance Association, Ltd.,[1921] 3 K. B. 327, without awaiting the result of the passenger's action.

Decision of Hanna J. reversed on the second point and judgment entered for the defendants.

Hanna J.:—

The facts that are relevant to this case are as follows:—

The plaintiffs insured, under a policy of insurance, dated July 11th, 1929, four buses in general terms in respect of accidents from April 4th, 1929, to April 4th, 1930. One of them met with a collision on September 14th, 1929, when running from Dublin to Maynooth, and on that occasion it was carrying at least ten persons in addition to its legitimate seating complement of thirty-four, for which it was originally licensed.

Now, I find as a fact that the bus ran into a turf cart and injured the driver, a man called Roche, and also a passenger in the bus, called Lynch, who was standing on the step of the bus alongside the driver's partition. Lynch seems to have been in this dangerous position in consequence of the over-loading of the bus, and if he had been seated the accident to him would not have occurred.

Notice of the accident was given on the same day, or the next day, by the Bus Company to the Insurance Company, and on September 16th, a report of the facts was obtained from the driver, and on 16th December the Insurance Company wrote repudiating all liability, as the bus was carrying more passengers than it was entitled to carry, and, that being so, they did it at their own risk. Prior thereto Roche had issued a plenary summons against the Omnibus Company to recover damages, but the Insurance Company repudiated all liability and refused to defend. This action was remitted to the Circuit Court, and on June 20th, 1930, Roche recovered judgment for the sum of £31 7s. 11d., including costs of the proceedings, which, with the present plaintiffs' costs, amounting to £28 3s. 0d., makes a total of £59 10s. 11d. Lynch subsequently brought an action against the Bus Company who, on the advice of their counsel, and having regard to the facts proved in Roche's case, consented to judgment, on the case being opened in Court, for £650 damages and costs, taxed to £206 19s. 7d. This sum, in addition to £111 6s. 8d. the present plaintiffs' costs, makes in all £968 6s. 3d. The defendants, the Insurance Company, having refused to pay the amounts, the plaintiffs have now brought this action to recover these two sums amounting in all to £1,027 17s. 2d.

The defence as argued before me was as follows:—

That under the terms of the policy, exemption (e), no risk was undertaken by the Insurance Company in respect of passengers where the bus was over-loaded; that, as regards both claims, they were out of time by reason of the fact that, under condition 5 of the policy, there is a limitation of three months from the date of the repudiation of liability by the Insurance Company within which the insured should make his claim; and thirdly that, as regards the claim in Lynch's case, the policy did not cover the insured in respect of the sum paid by way of compromise without the consent in writing of the Insurance Company under condition 2 endorsed on the policy.

The first defence depends upon the interpretation and construction of the exclusions or exceptions as stated in exemption (e). The policy starts by giving an indemnity in general terms and then imposing exceptions. The law is that the Insurance Company must bring their case clearly and unambiguously within the exception under which they claim benefit, and, if there is any ambiguity, it must be given against them on the principle contra proferentes.The general indemnity is in clause 4 in the following terms:—

"Liability at law for compensation (including law costs awarded and taxed, or agreed, of any claimant) for death of, or bodily injury to, any person not being a passenger in, or driver of such vehicle . . ."

This, prima facie, covers Roche's case.

The same indemnity is given in the next sentence in respect of any person being a passenger travelling on a bus where the number of persons carried does not exceed 131 passengers in one accident or occurrence. Prima facie,this would cover Lynch's case.

This general indemnity is subject to the following exclusion:—

"Loss, damage and/or liability to the vehicle, caused or arising while such vehicle . . . is conveying any load in excess of that for which it was constructed...

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