New India Assurance Company Limited V. Odubanjo & Ors. (1971)
LawGlobal-Hub Lead Judgment Report
NEW INDIA ASSURANCE COMPANY LIMITED Appellant(s)
3. ABIODUN Respondent(s)
In Suit No LD/541/67 in the Lagos High Court the Plaintiff’s writ read:
“The first defendant is at all material times owner of car LK 9988, and the second defendant during the course of his employment with the first defendant is at all material times the driver of the said car.
The first defendant company is at all material times the insurer of the first defendant.
On October 1st, 1967 the second defendant negligently drove the said car LK9988 and collided with the plaintiff’s private car LK7733, whereby the plaintiff suffered damage.
The plaintiff therefore claims against the defendants jointly and severally the sum of two thousand and eleven pounds, eighteen shillings and six pence, 2,011.18s.6d) representing special and general damages suffered by the plaintiff as a result of damage done to the plaintiff’s private car LK 7733 by the collision caused on October 1st, 1967 by the first defendant’s car LK 9988 negligently driven by the second defendant during the course of his employment with the first defendant.
The third defendants are sued as the insurers of the first defendant.
pounds s d
Special 1,311 18 6
General 700 0 0
2,011 18 6
The defendants have refused to pay in spite of repeated demands.”
The plaintiff’s statement of claim read:
“1. The plaintiff is the managing director of Tommy Obey Commercial Press with its registered office at 52 Moshalasi Street, Obalende, Lagos.
- The first defendant resides at 32A Willoughby Street, Ebute-Metta.
- The second defendants a motor driver and he resides at 33 Onifade Street, Mushin.
- The third defendants are a limited liability insurance company with its registered office at 34 Balogun Square, Lagos.
- The plaintiff is the owner of a private car LK 7733 duly insured with the United
Nigerian Insurance Co. Ltd. and the policy Number is 204033/L.
- On October 1st, 1967 a car bearing the number LK 9988 negligently driven by the second defendant collided with the plaintiff’s car LK 7733 and thereby caused considerable damage to the plaintiff’s car, and rendered it useless.
- The first defendant is the owner of the said car LK 9988 and the collision occurred during the course of the second defendant’s employment with the first defendant.
- The third defendants are the insurers of the first defendant’s car LK 9988 which was negligently driven by the second defendant when the collision occurred on October 1st, 1967
- As a result of the said collision the second defendant was duly prosecuted and convicted of negligent driving.
- The plaintiff’s said car LK 7733 now lies unrepaired at Mandilas and Karaberis Motor Garage at Simpson Street, Lagos.
- By a letter date February 15th, 1968, the third defendants undertook to look into the plaintiff’s claim for damages.
- ln reply to the plaintiff’s letter of February 23rd, 1968 the third defendants requested the plaintiff to send them certain documents, namely a power of attorney given to the plaintiff’s solicitor and a copy of the proceedings and judgment against the second defendant.
- On April 10th, 1968 the Plaintiff’s solicitor, Mr. B.A Agusto, forwarded to the third defendants a power of attorney executed in his favour by the plaintiff and a certified true copy of the court proceedings and judgment.
- As a result of the foregoing the third defendants finally offered the sum of one hundred and fifty pounds “150 as damages for wrong done to the plaintiff, through his solicitor.
- The third defendants by another letter dated May 10th, 1968 refused to give any further consideration to the matter.
- The plaintiff has had to expend a lot of money on transport daily as a result of the negligence of the second defendant whose vehicle was at all material times duly insured with the third defendant company and has also been suffering a series of inconveniences.
- Whereupon the plaintiff claims from the defendants jointly and severally the sum of two thousand and eleven pounds eighteen shillings and six pence (2,011.18s 6d) being the total of special and general damages suffered by the plaintiff, the particulars of which are set out as follows:
pounds s d
Unused Licensing period (for 6 months) 6 3 6
Unused Insurance period (for 6 months) 2 10 6
The Man who watched the car (for 2 days) 1 10 0
Towing of car for (Mandilas) 0 0 0
Details of month-to-month expenses since the car had been damaged:
Month Year Days pounds s d
October 1967 1-31 162 10 0
November 1967 1-30 216 15 0
December 1967 1-31 203 0 0
January 1968 1-31 176 10 0
February 1968 1-29 191 15 0
March 1968 1-31 204 10 0
April 1968 1-22 134 15 0
1.291(p) 15s. 0d.
B: General Damages
A sum of 700(pounds) including estimated cost of repairs, Grand total of special and general damages: 2,011pounds. 18s. 6d.”
Mr. Sofola for the third defendants then filed a motion the following terms:
”Take notice that this honourable court will be moved on Monday, November 4th, 1968 at the hour of nine O’clock in the forenoon or so soon thereafter as counsel on behalf of the above named third defendants can be heard for an order that the above- mentioned action be dismissed on the grounds that:-
(a) it discloses no reasonable cause of action against the third defendants;
(b) there is no dispute between the first defendant and the third defendants;
(c) there is no privity of contract between the plaintiff and the third defendants; and
(d) the same is frivolous and vexatious, and that in the meantime all further proceedings against the third defendants be stayed and that the plaintiff do pay the costs of and occasioned by this application, and for such further and or other orders as this Honourable Court may deem fit to make in the circumstances.”
On November 4th, 1968, Mr. Sofola argued that motion before Adedipe, J. citing various authorities to the learned trial Judge, and according to the record Mr. Agusto for the plaintiff replied as follows:-
”The insurance company disputed the amount due to us. I refer to paras. 11, 12, 21, 13, 14 and 15 of the statement of claim. We brought in the third defendants because they denied liability as far as our claims were concerned. We are not saying that the insurance company is liable. There must be an end to litigation.”
Adedipe, J. then gave a very brief ruling as follows:-
”The circumstances of this case are such that I am of the opinion that the third party, the New India Assurance Company Limited was properly joined in the action. The motion is therefore struck out with three guineas costs.”
The third defendants have now appealed against that ruling, and before us the argument of Mr. Sofola for the appellants was based on the grounds of appeal that read:-
- ”The learned trial Judge erred in law and in fact in dismissing the third defendants’ motion without giving reason for doing so and without considering the various legal authorities cited before him.
- The learned trial Judge erred in law and in fact in dismissing the motion and holding that the third defendants are properly joined in the action when there is, on the statement of claim filed, no reasonable cause of action disclosed against the third defendants.”
It was his submission that both at common law and in equity a plaintiff could not sue the insurers for the tortious act of the person they had insured as there was no privity of contract between the insurers and a third party such as the plaintiff in those circumstances. In his submission a right to sue the insurers could only arise if there was statutory provision that so authorised it. It was further his submission that the only possible statutory provision here was the Motor Vehicles (Third Party Insurance) Act (cap. 126) and that s.10 was the material section, and in particular sub.ss (1) and (2) thereof, which read:
- “If after a certificate of insurance has been delivered under the provisions of subsection (4) of section 6 to the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy issued under the provisions of paragraph (b) of subsection (1) of section 6 of this Act, being a liability covered by the terms of the policy, is obtained against any person insured by the policy then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the persons entitled to the benefit of such judgment any sum payable thereunder in respect of the liability including any sum payable in respect of costs and any sum payable by virtue of any written law in respect of interest on that sum or judgment.”
- No sum shall be payable by an insurer under the provisions of subsection(1) :-
(a) in respect of any judgment unless before or within seven days after the commencement of the proceedings in which the judgment was given the insurer had notice of the bringing of the proceedings; or
35(b) in respect of any judgment so long as execution thereon is stayed pending an appeal; or (c) in connection with any liability if before the happening of the event which was the cause of the death or bodily injury giving rise to the liability, the policy was cancelled by mutual consent or by virtue of any provision contained therein and either;
(i) before the happening of such event the certificate of insurance was surrendered to the insurer or the person to whom the certificate of insurance was delivered made a statutory declaration stating that the certificate of insurance had been lost or destroyed and so could not be surrendered; or
(ii) after the happening of such event but before the expiration of fourteen days from the taking effect of the cancellation of the policy the certificate of insurance was surrendered to the insurer or the person to whom the certificate of insurance was delivered made a statutory declaration that the certificate of insurance had been lost or destroyed and so could not be surrendered or
(iii) either before or after the happening of the event or within a period of fourteen days from the taking effect of the cancellation of the policy the insurer had commenced proceedings under this Ordinance in respect of the failure to surrender the certificate of insurance.”
However, Mr. Sofola submitted that s.10(1) was in fact not material here, as the words of s.10(1) take one back to S.6(1)(b), which reads:
(1) A policy of insurance for the purposes of this Ordinance must be a policy which:-
(b) Insures such 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 of or bodily injury to any person caused by or arising out of the use of a motor vehicle covered by the policy: Provided that such 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) Save in the case of a passenger, vehicle or where persons are carried by reason of or in pursuance of a contract of employment liability in respect of the death of or bodily injury to persons being carried in or upon or entering or getting on to or alighting from a vehicle at the time of the occurrence of the event out of which the claims arise; or
(iii) any contractual liability.”
The plaintiff’s claim here, Mr. Sofola pointed out, was not in respect of liability for death or bodily injury referred to in s.6(1)(b), but was for liability for damage to the plaintiff’s car. He further submitted that even if s.10(1) had applied, then Post Office v. Norwich Union Fire Ins. Socy. Ltd (1967) 2 Q.B. 363; (1967) 1 All E.R. 577 shows that the plaintiff could not sue the insurers ab initio.
Mr. Agusto for the plaintiff (Now the first respondent) for his part submitted that whilst, prima facie, a third party could not sue the insurer of the wrongdoer, he could do so in certain circumstances and in particular when there was a dispute between the insurance company and a plaintiff over the extent of the liability when the liability itself was admitted. He submitted that such was the case here and also that on general grounds in order to put an end to litigation a plaintiff should be allowed to sue in such circumstances. He also relied on Sun Ins. Office v. Ojemuyiwa where Bairamian, J.S.C. delivering the judgment of the court, said (1965) ALR Comm. 20 at 24;  1 All N.L.R. 1 at 5):
“The remaining reflection is that as in Nigeria civil cases are tried by a Judge alone, there is no need to conduct these fatal accident cases in a world of make believe. At present, it is usual to name the owner of the vehicles and his driver as the defendants to a suit claiming damages, and to leave the insurers, who control the defence, formally out of the suit. We would ask the solicitors of the parties to consider whether in these third party insurance cases it would not be better to have the insurers also joined.”
We think Mr. Sofola is quite right in his basic submission that a third party cannot sue the insurer of a wrongdoer at common law or in equity, which are in force in Lagos by virtue of s.45 of the Interpretation Act (cap.89). In Vandepitte v. Preferred Accs. Ins. Corp. of New York (1933) A.C. 70 at 79, (1932) All E.R. Rep. at
527) where Lord Wright in the Privy Council said:
“No doubt at common law no one can sue on a contract except those who are contracting parties and (if the contract is not under seal) from and between whom consideration proceeds; the rule is stated by Lord Haldane in Dunlop Pneumatic Tyre Co. v. Selfridge & Co  A.C. 847, 853): ‘My Lords, in the Law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it. Our laws knows nothing of a jus quaesitum tertio arising by way of contract. Such a right may be conferred by way of property, as, for example, under a trust, but it cannot be conferred on a stranger to a contract as a right to enforce the contract in personam.’In that case, as in Tweddle v. Atkinson (1861) 1 B. 7. S.393), only questions of direct contractual rights in law were in issue..”
Lord Wright went on to deal with a possible equitable right in the following terms (ibid at 79-80; 532-533):
“But Lord Haldane states the equitable principle which qualifies the legal rule and which has received effect in many cases, as, for instance, Robertson v. Wait (1853) 8 Exch. 29): Affreteurs Reunis Societe Anonyme v. Leopole Walford (London), Ltd. 1919 a.c. 801); Lloyds v. Harper (1880) 16 Ch.D. 290) namely, that a party to a contract can constitute himself a trustee for a third party of a right under the contract and thus confer such rights enforceable in equity on the third party. The trustee then can take steps to enforce performance to the beneficiary by the other contracting party as in the case of other equitable rights. The action should be in the name of the trustees; if, however, he refused to sue, the beneficiary can sue, joining the trustee as a defendant. But, though the general rule is clear, the present question is whether R.E. Berry can he held in this case to have constituted such a trust. But here again the intention to constitute the trust must be affirmatively proved: the intention cannot necessarily be inferred from the mere general words of the policy.”
In our view, in no circumstances could such an equitable right arise out of the facts as pleaded in the present appeal before us. This passage which we have quoted from the judgment of Lord Wright was approved and followed in Green v. Russell  2 O.B. 226; (1959) 2 All E.R. 525 by Romer, LJ. at 240 – 531). In re Harrington Motor Vo. Ltd.  Ch. 105; (1928), 138 LT. 185, Atkin, L.J. (as he then was) said at 118 – 189):
“But the position in law seems to me clearly to be that a third party in a case like the present has no claim in law or in equity of any sort against the insurance company, or against the money paid by the insurance company, nor has he any claim against the person who injures him, the assured, to direct the assured to pay over the sum of money received under the insurance policy to him. The amount that the assured in fact received is part of his general assets. As a general rule the expediency of that, I think, cannot be disputed. It obviously would disturb the whole practice of insurance if the claimant against the assured who caused the risk had a direct right of recourse against the insurance company, and we know that in actual practice the assured receives the money – the parties being solvent – and does not pay over necessarily that sum of money to the third party who is injured, but, of course, pays his claim out of his own assets and uses the insurance money, so far as it goes, because it does not always completely meet his liability. Mr. Stable, in his interesting and able argument, admitted that apart from insolvency, the third party has no sort of right in equity against the insurance company under the policy. If that is so, that really seems to me to dispose of the case, because I find it impossible to see how a special right, arising out of circumstances which ordinarily occur in cases of solvency, could come into existence merely because the assured happened to be in difficulties or financial weakness, or to become bankrupt or, if a company, to have a winding-up order made against it.”
And In Windsor v. Chaleraft  11 KB 279 at 287; (1938) 2 All E.R. 751 at 754, Siesser, LJ. (albeit dissenting from the majority decision on another aspect of the case dealing with s.10 of the Road Traffic Act, 1934, which is similar to s.10 of the Motor Vehicles (Third Party Insurance) Act in Nigeria), said:
“The position, in my view, depends in part on the common law and in part on s.10 of the Road Traffic Act, 1934. The common law is clearly stated by Tomlin J. in Hood’s Trustees v. Southern Union General Insurance Co. of Australasia Ltd. ( Ch. 793, 802), a judgment which was expressly approved by this court in that case ( Ch. 808) following In re Harrington Motor Co. Ltd. ( Ch.105, 118) Tomlin J. said:- ”The position in law was quite clear, and it was that the appellant had no right or claim against the insurance company or against money paid by the insurance company.’ the appellant in that case being the third party. ‘The assured had a direct right of recourse against the insurance company, but a third party had no such right, because there was no privity between him and the insurance company. At common law, therefore, it is clear that the plaintiff in this case could not have obtained judgment against the underwriters. In strict law, the underwriters should have paid to the defendant so much money as the defendant became liable to the plaintiff.
We turn now to s.10(1) of the Motor Vehicles (Third Party Insurance) Act (cap.126), but to our mind it is not material to the facts as pleaded in the present appeal as the plaintiff here was not suing for damages for death or bodily injuries but for damage to his car. The passage in the judgment of Lord Denning, M.R. in Post Office v. Norwich Union Fire Ins. Socy. Ltd.  2 O.B. 363;  1 All E.R. 577 to which Mr. Sofola referred us (at 374-375; 580), while appropriate to an interpretation of the legal effects arising out of s.19(1), is not dealing with the situation that we in fact have here.
It is true that at one stage soon after the passing of the first English legislation in regard to third party insurance in motor cases it was thought wrong to join the insurers in jury cases as this might affect the mind of the jury, so that this was held to be a reason for non-joinder: see Carpenter v. Ebblewhite  1 KB 347;  4 All E.R 41. Nonetheless that had changed by 1967, as was shown by the words of Lord Denning, M.R. which appear in the passage referred to in Post Office v. Norwich Union Fire Ins. Socy. Ltd. (ibid.), because the practice of hearing such cases by a Judge and jury had changed to a hearing by a Judge alone. This had indeed been emphasised earlier in Harman v. Crilly  K.B. 168,  1 All E.R. 140 but it is important to note that this case was one wherein the defendants were seeking to join their insurers as third parties under a contract of indemnity between the defendants and the insurers, so that there was privity of contract between them and it was thought convenient to try that at the same time as the action by the plaintiff against the defendants, as Goddard, LJ. indicated when he said at 173-143):
It seems to me that the deciding question whether or not there is a contract of indemnity should be tried in the same proceedings as the action in which the liability of the defendants will be determined. There is no ground for saying this third party notice is in any way embarrassing or would lead to anything but a fair trial of the action.”
The action was not begun there by the plaintiff suing the insurers.
Returning now to the writ and statement of claim in this matter, it is clear that in the writ it is solely as insurers that the third defendants were sued, as the words ‘the third defendant company is at all material times the insurer of the first defendant and the third defendants are sued as the insurers of the first defendant” show. Paragraphs 8 and 10 of the statement of claim which we have already quoted above are to the like effect that the third defendants are insurers of the first defendant. On the authorities that we have already quoted it is clear to us that the plaintiff could not so sue the third defendants.
It remains to consider whether that position is altered by paras. 11 to 15 of the statement of claim, again which we have already quoted above, as Mr. Agusto sought to rely on them as showing that the third defendants admitted liability. To our mind the plaintiff cannot in any circumstances be said to be suing the third defendants here in tort, and he can therefore only be permitted to join the third defendants if he can establish their contractual liability. On the most favourable construction to the plaintiff of paras. 11 to 15 of the statement of claim we fail to see how he was alleging any contractual liability of the third defendants such as would make them legally liable to pay the sum to him. He alleged there was no contract with any consideration and all he did was to plead that the third defendants made an offer of 150 which the plaintiff rejected.
We cannot see that, as pleaded in the statement of claim, that offer by the third defendants was enforceable and indeed not only was it rejected according to the pleading, but Mr. Agusto in his argument in the High Court said: “We are not saying that the insurance company is liable. There must be an end to litigation.” Once he had admitted the insurance company were not liable, that should in our view have disposed of the matter. We further note from the record that the first and second defendant in their filed statement of defence denied liability, though in accordance with 0.XXVII of the Supreme Court (Civil Procedure) Rules (Laws of Nigeria, 1948, cap.211) they pleaded that they had paid money into court without admitting liability. Moreover the plaintiff was not suing the third defendants as principals of the first defendant nor was he suing them as being liable in the alternative to the first defendant. The dispute in issue as between the plaintiff and the first and second defendants as to liability for the damage to the plaintiff’s car could be completely and effectually disposed of without joining the third defendants, and there was no necessity to join the third defendants so as to make them bound by the decision as so far as the plaintiff was concerned he had shown no possible cause of action against them so there was no need to join them to bring litigation to an end. Dealing with joinder under 0.15, r.6 of the English Rules of the Supreme Court (with which we had cause to deal recently in Oriare v. Government of W. Nigeria Suit No. SC 275 , unreported in Supreme Court Practice at 169 (1970) it is stated:
”The Court has no jurisdiction under this Rule to order third parties to be added as defendants where the cause or matter is not liable to be defeated by the nonjoinder, where the third parties were not persons who ought to have been sued in the first instance, and where the third parties were not persons whose presence as defendants was necessary to enable the Court effectually to adjudicate on all the questions involved (Miguel Sanchez and Compania S.L. v. Result,  P. 174).”
There is no doubt, in our mind that under the English rules or under the rules applicable in the Western State which are similar the plaintiff would not be permitted to sue the third defendants here, but we have to consider whether this is different in Lagos because of the provisions applicable there of O.IV. r. 5 of the former Supreme Court (Civil Procedure) Rules (Laws of Nigeria, 1948, cap. 211), which reads:-
- “If it shall appear to the court, at or before the hearing of a suit, that all the persons who may be entitled to or who claim some share or interest in the subject-matter of the suit, or who may be likely to be affected by the result, have not been made parties, the court may adjourn the hearing of the suit to a future day, to be fixed by the court, and direct that such persons shall be made either plaintiffs or defendants in the suit, as the case may be. In such case the court shall issue a notice to such persons, which shall be served in the manner provided by the rules for the service of a writ of summons or in such other manner as the court thinks fit to direct; and on proof of the due service of such notice, the person so served, whether he shall have appeared or not, shall be bound by all proceedings in the cause. Provided that a person so served, and failing to appear within the time limited by the notice for his appearance, may, at any time before judgment in the suit, apply to the court for leave to appear, and such leave may be given upon such terms (if any) as the court shall think fit.
- The court may, at any stage of the proceedings, and on such terms as appear to the court to be just, order that the name or names of any party or parties, whether as plaintiffs or defendants, improperly joined, be struck out.”
In our view there was no application to allow the third defendants to be joined here as they were already sued, but the objection by the third defendants was that they had been improperly joined. It was not a case of non-joinder which would come under O.lV, r.5(1), but a case of misjoinder which would fall under O.IV, r.5(2). Therefore the question whether the third defendants” may be affected by the result” within the terms of O.lV, r.5(1) does not arise, though vis-a-vis the plaintiff we do not see that the third defendants could in any case “be likely to be affected by the result.” Here, as we have stated, in our view the third defendants could not as pleaded have been legally liable to the plaintiff directly, whatever their liability to the first defendant, and as it was not the first defendant here seeking to join them, when other considerations would arise, the third defendants objection to being improperly joined by the plaintiffs, the court in its discretion ought not to have allowed them to remain a party upon their objection. As this was not a case falling within s.10(1) of the Motor Vehicles (Third Party Insurance) Act (cap.126), there was not even any possible future legal liability that the plaintiff had the right to enforce against the third defendants, if the first and second defendants were found to be liable in damages, as whatever claim the first defendant might have as against the third defendants under the terms of his policy of insurance was not enforceable by the plaintiff against the third defendants as there was no privity of contract between them. It is incidentally to be noted that in Jia Enterprises (Electrical) Ltd. v. British Commonwealth Ins. Co. Ltd.  1 All NLR 363 Brett, F.J. Albeit dealing with an application to be joined as plaintiff under this same O.IV, r.5(1), said at 372):
‘The Bank has no claim whatsoever because it has suffered no loss in respect of the property damaged or destroyed. That property was pro tanto replaced by the claim under the policy which itself came under the floating charge. The Bank therefore has suffered no loss and has no locus standi at all to make a claim. The appeal in relation to the second application under Order IV rule 5, must also fail.”
Thus the Bank there was not “likely to be affected by the result” within the meaning of O.IV, 4.5(1). So here we think that the plaintiff had no Locus standi to make the third defendants parties to the action that he was bringing against the first and second defendants, though different considerations would arise, as we have stated, if the first defendant were seeking to join the third defendants.
We would only like to add, so far as the passage from Sun Ins. Office Ltd. v. Ojemuyiwa (Supra) is concerned upon which Mr. Agusto relied, that it was certainly obiter dictum in the appeal, as that appeal turned upon the interpretation of a statutory provision as to the right of appeal. In any case the remarks were not in our view directing any course of action but were observations made with reference to what was in fact a case falling within s.10(1) of the Motor Vehicles (third Party Insurance) Act (cap.126). In so far as the observations were directed to defendants’ counsel so that he could consider whether in any particular case it was desirable to bring in the defendants’ insurers as third parties we are in full agreement, as if there is any way that litigation and the costs incurred thereby can properly be reduced it should be.
We come to the conclusion therefore that Mr. Sofola was entitled to take the objection which he did to the joinder by the plaintiff of the third defendants as parties to the action when notrnng was pleaded in such a way as to establish any legal liability of the third defendants to the plaintiff, though in our view the main relief he ought to have asked for was for the matter to be struck out, not dismissed, having regard to O.IV, r.5(2) of the former Supreme Court (Civil Procedure) Rules (Laws of Nigeria, 1948, cap. 211, but the court could still have done this as he asked also for such other orders as the court thought fit.
We accordingly allow this appeal, set aside the ruling of Adedipe, J. together with his award of 3 guineas costs to the plaintiff, and order that the third defendants be struck out of the suit.