Unity Life & Fire Insurance Company Limited V. D. A. Ladega & Ors (1994)

LawGlobal-Hub Lead Judgment Report

OGUNTADE, J.C.A. 

O

n 30 December, 1985, the 1st to 5th respondents as plaintiffs, before the High Court, Sagamu, issued a Writ of Summons against 6th to 8th respondents, as defendants, claiming against them jointly and severally pecuniary damages in Negligence arising out of an automobile accident that occurred on 14th January, 1983 along Lagos – Ibadan Expressway. The accident involved vehicle No. LA 6979 AL driven by 5th defendant and in which all the 1st to 5th respondents were travelling and another vehicle No. LA 2225 S driven by the 6th respondent.

The 6th respondent was sued as the driver of vehicle LA 2225 S whilst the 7th and 8th respondents were sued as being vicariously liable for the negligence of the 6th respondent. The 1st to 5th respondents as the plaintiffs, filed their statement of claim; and the 6th respondent filed his statement of defence.

On 20th March, 1990, the 1st to 5th respondents (hereinafter referred to as the plaintiffs) brought an application praying for the joinder of the Unity Life Insurance Company Limited (hereinafter referred to as the appellant) as co-defendant in the suit.

The 1st plaintiff deposed to an affidavit in support of the application and paragraphs 1 to 6 thereof read:
“1. I am the first plaintiff in this suit as well as the Solicitor to the 2nd – 5th plaintiffs.
2. The plaintiffs’ claim against 1st, 2nd and 3rd defendants in this suit is predicated on the negligent driving of a Bedford lorry registration No. LA 2225 S by the 1st defendant resulting in a ghastly motor accident on the 14th January, 1983 in which the five plaintiffs suffered severe injuries and loss of properties.
3. At all material times the 1st defendant was the servant and agent of the 2nd and/or 3rd defendants who were the owners of the said Bedford lorry.
4. The aforesaid lorry was, at all material times insured with Unity Life & Fire Insurance Company Ltd., Lagos by the 2nd and/or 3rd defendants covered by Policy No. CV 014560/11. Attached hereto and marked as exhibit “DAL 1” is a true copy of the Police document headed “Particulars of Vehicle and Licence” covering the accident and which was issued by Motor Traffic Director of the Nigeria Police, Sagamu.
5. Pursuant to Section 11 of the Insurance (special Provisions) Decree 40 of 1988, a formal thirty days notice dated 25th January, 1990 was sent to Unity Life and Fire Insurance Company Limited. Attached hereto and marked as exhibit “DAL 2″ is a true copy of the notice.
6. I swear to this affidavit Bonafide and in support of the plaintiffs’ application for an order joining the Insurance Company as a codefendant in this suit.”

On 30th March, 1990, one Mr. Felix Idowu, a law clerk in the Chambers of Messrs. Olawoyin and Olawoyin, solicitors for the appellants deposed to a counter-affidavit. Paragraphs 4 of 7 thereof read:
“4. The Writ of Summons in this action was filed on 30 December, 1985.
5. The plaintiff/applicants notified the 4th respondent of this action in 1988 by their letter dated 10 June, 1988. A photocopy of the said letter is herewith attached as Exhibit ‘A’.
6. The 4th respondent through their Solicitors Messrs. Olawoyin & Olawoyin responded to exhibit’ A’ by a letter ref. OLA/88/034/32 of 4 July, 1988 wherein the 4th respondent repudiated liability in the light of the circumstance of the case. The said letter is attached hereto and marked exhibit “B”.
7. I am informed by Professor G.A. Olawoyin, counsel to the fourth respondent and I verily believe him that the provisions of the Insurance (Special Provisions) Decree No. 40 of 1988 do not apply to this case.”

Odubiyi J, on 30th March, 1990 heard arguments for and against the application for joinder. On 2nd May, 1990, he delivered his ruling on the application. He granted the prayer. His reasoning is apparent on page 2 of the ruling where he said:
“Section 11 of the Insurance (Special Provisions) Decree 1988 is very clear and precise. The plaintiff/applicants have applied for leave to join the Unity Life and Fire Insurance Co. as a codefendant.
I do not see any reason why the Insurance Co. cannot be joined at this stage. The Insurance Company when joined may raise many issues as its defence.”

The party sought to be joined (now appellant was aggrieved by the ruling of Odubiyi J and has brought this appeal. In the notice of appeal filed on 4 May, 1992, the appellant raised two grounds of appeal which read:
“1. The learned trial Judge erred in law and exercised his discretion in a wrong manner when he granted the plaintiffs’ application asking that the fourth defendant/respondent be joined as a defendant in this action.
Particulars Of Error
(a) The joinder of the fourth defendant/respondent is dependent upon the existence of a cause of action in law against it.
(b) Neither the plaintiffs nor the first and third defendants gave the necessary statutory notice pursuant to Section 43(2)(a) of the Insurance Act, 1976.
(c) Compliance with the provisions of Section 43(2)(a) of the Insurance Act, 1976 is a condition precedent to the liability of an insurer under Section 43(1).
(ii) The learned trial Judge committed an error of law in failing to consider and pronounce on the effect of non-compliance with the provisions of Section 43(2)(a) of the Insurance Act, 1976 in considering the plaintiffs’ application”

In the appellants brief filed the issues for determination were stated to be the following:
“1. Whether non compliance with the provisions of Section 43(2) of the Insurance Act, 1976 is fatal to the joinder of the appellant under section 11 of the Insurance (Special Provisions) Decree No. 40 of 1988.
2. Whether the learned trial Judge was right to have joined the appellant as a co-defendant to the action.”

The respondents in their brief formulated an alternative issue for determination thus:
“Whether it was proper for the learned trial Judge to have joined the appellant having regard to the provisions of S.11 of the Insurance (Special Provisions) Decree 1988.”

In the appellant’s brief it was submitted that, at common law, a third party is precluded from joining an insurer in an action for wrongs committed by the insured. That position was however alleviated by Section 43(1) of the Insurance Act, 1976 which allows the third party to claim from the insurer the sum awarded in a judgment against the insured provided that the third party had before suing or within seven days after suing given notice of the bringing of the suit to the Insurer. Counsel submitted that section 11 of the Insurance (special provisions) Decree No. 40 of 1988 which confers the right to join the insurer to the Suit against the insured has not repealed Section 43(1) and 43(2)(a) of the Insurance Act, 1976. A third party wishing to take advantage of Section 11of the Insurance (special Provisions) Decree No. 40 of 1988 must show that he had previously complied with Section 43(2)(a) of the Insurance Act, 1976.

The respondents in their brief have argued that Section 43 of the Insurance Act, 1976 and Section 11 of the Insurance (special Provisions) Decree No. 40 of 1988 are independent of one another. It was argued that the two sections related to different aspects of the Insurance Law. Section 43 relates to settlement of claims whilst Section 11 relates to the rights of a third party against the insurer. The third party has a choice to join the Insurer under Section 11 of the 1988 Decree or to prosecute the claim without the insurer being joined in which event the third party could rely on Section 43 of the Insurance Act, 1976. Counsel submitted at page 4 of his brief that:
“…..If the third party has complied with the provisions of this section of the law, the court should not enquire as to whether or not the judgment if eventually obtained would be enforceable against the Insurer but to so join the insurer. It is even not necessary for the third party to make out a case why it is necessary to join the insurer but it is sufficient if the conditions stipulated by the said Decree for the joinder have been complied with. The question of whether the third party would eventually be able to obtain judgment against the insured and the insurer is a different consideration which would only be resolved at the conclusion of the case.”

In this judgment, I think it is important to bear in mind the position of the law before the enactment of the Motor Vehicles (Third Party) Insurance Act, Cap. 126, Laws of the Federation, 1958; and the Insurance Act. 183, Laws of the Federation, 1990. With such background, it will be so easy not only to understand but also appreciate and see clearly the intention of the lawmaker in the promulgation of the Insurance Decree No. 40 of 1988. Section 10 of Cap. 126 of the 1958 Laws and Section 54 of Cap. 183 of the 1990 Laws are in pari materia. In the parties’ briefs of argument, the relevant section of the Insurance Act, 1976 was stated as 43. But I think that the Insurance Act. 1976 was re-arranged in its sections with the result that Section 43 thereof has now become Section 54 of Cap. 183 of the 1990 Laws of the Federation. Reference in this judgment to Section 54 of Cap. 183 of the 1990 Laws is therefore as good as reference to section 43 of the Insurance Act, 1976 on which parties based their briefs.