British India General Insurance Co. Ltd V Alhaji Kalla (1965)
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Following the judgment of the Court on their earlier application, the Insurers have applied for leave to appeal in their own name from the decision of the Lagos High Court awarding Alhaji Kalla damages against Jarmakani Transport Ltd. (hereafter referred to as Jarmakanis) which was given on 20th November, 1961; and they have also applied for extension of time within which to appeal. The Insurers state in their affidavit that when the claim arose, they repudiated it because in their view Jarmakanis had broken a condition of their policy, and kept aloof from the litigation; that afterwards, in the second half of 1962, there was an arbitration; that at the arbitration Jarmakanis said that if they were paid the damages they would pursue the appeal they had lodged with vigour, and in fact they completed a bond for the costs of appeal on the 9th July, 1962; that in consequence of the arbitration award, on the 15th September, 1962 the Insurers paid Jarmakanis the amount decided by the High Court; that they obtained a letter of subrogation, which has been mislaid; and that it was only in January, 1965 that they came to learn of the agreement made between Jarmakanis and Alhaji Kalla on the 8th January, 1962 settling the case out of court on certain terms.
The terms were that Jarmakanis would pay a portion down and the balance in four monthly installments and their vehicles were to be released from attachment and not be seized so long as the agreement was not violated. Alhaji Kalla’s solicitor states in his counter affidavit, based on the information given him by Alhaji Kalla, that Jarmakanis made that settlement because they failed to obtain a stay of execution; that they said, when making the agreement, that they would no longer pursue their appeal; and that they finished payment in or about May, 1962.
In our view the Insurers are tied down to the argument of subrogation as giving them a right to step into the shoes of Jarmakanis when they paid the amount of the judgment debt on 15th September, 1962.
The Court rejects the argument that upon payment the Insurers’ interest related back to the date of the judgment against Jarmakanis in spite of their repudiation of liability. It will be enough to cite from para. 513 (on the nature of the right of subrogation) at p. 261 of Halsbury’s Laws of England (3rd ed.) Vol. 22, the last sentence, which reads:-
“The right does not arise until the insurers have admitted their liability to the assured, and have paid him the amount – of the loss.”
The argument of subrogation was advanced in the first application of the Insurers for leave to carry on the appeal lodged by Jarmakanis against Alhaji Kalla in November, 1961. In its judgment of 5th March, 1965 the Court said as follows:
“But Jarmakanis do not wish to prosecute their appeal against him: in fact they gave it up in January, 1962.”
Thus there were no longer any rights of appeal which could have been subrogated, and the Insurers cannot ask for leave to appeal in their own name.
The present motion is dismissed with fifteen guineas costs to the respondent, Alhaji Kalla.
Other Citation: (1965) LCN/1228(SC)