FACTS:-

The Claimant was a passenger in the rear seat of a motor car being driven by the First Defendant westwards along the A30 road in Cornwall. The First Defendant turned right across the path of an oncoming vehicle, and the result was a collision in which the Claimant suffered serious injuries. In due course the First Defendant was convicted of driving without due car and attention.

The motor car had been insured by the First Defendant’s mother with the Second Defendant. The First Defendant was an uninsured driver- either because he was not a named driver or because he was under 25 years old. The Claimant bought a claim against the Second Defendant as the insurer involved “pursuant to section 151 and 152 of the Road Traffic Act 1988”. In broad terms section 151 requires insurers who have issued a certificate f insurance to meet judgements in respect of liabilities which would have been covered had the vehicle been properly insured as required by law, and section 152 sets out certain exceptions to that statutory extension of liability. It begins;

            “(1) no sum is payable by an insurer under section 151 of this Act

(a) in respect of any judgement unless, before or within seven days after the commencement of the proceedings in which the judgement was given, the insurer had notice of the bringing of proceedings…”

The matter continued to proceed towards trial in the normal way until June 1999 when the Second Defendant’s solicitors changed track. They woke up to the possibility of relying on section 152 (1).

In his undated Reply counsel for the Claimant joined issue with the Second Defendant on his defence, and averred that the Second Defendant is estopped from relying on the lack of notice by reason of the history of the litigation, which included an oral offer of settlement in the sum of £50,000 allegedly made on 8 August 1997 in a telephone conversation confirmed by an open later dated 18^th November 1997

Arrangements were made for the application for a declaration to be heard as a preliminary issue before Judge Thompson. Judge Thompson dismissed an application by the Second defendant for a declaration;

That pursuant to section 152 (1)(a) of the Road Traffic Act 1988 no sum is payable by the Second Defendant to the Claimant in respect of any judgement for the Claimant against the First Defendant in these proceedings”   

This is the Second Defendants appeal in the Court of Appeal (Civil Division) before Kennedy LJ, Laws LJ and Rix LJ

HELD:-

There are two main issues, firstly, whether the insurer “had notice of the bringing of proceedings” for the purposes of section 152 (1) (a) of the 1988 Act, and if not, secondly, whether the Second Defendant is estopped from raising that issue by reason of the matters referred to in the Reply.

Kennedy LJ addressed a number of authorities in dealing with the first issue. He drew the following conclusions from these authorities;

(1)   To show that the insured had notice of the bringing of the proceedings there must be more than evidence of a casual comment to someone who at times acted as an agent for the insurers (Herbert v Railway Passengers Assurance Company [1938] 1 All ER 650)

(2)   Any notification relied upon must not be subject to a condition which may or may not be fulfilled but if the only condition is one which requires action from the recipients which they choose not to take then by making that choice they render the notice unconditional and thus effective (Ceylon Motor Insurance Association Ltd v Thambugala [1953] AC 584)

(3)   The notice can be oral, and it need not even emanate from the claimant (Harrington v Pinkey [1989] 2 Lloyd’s Rep 310).  It can be given before proceedings have commenced, and it need not be specific as to the nature of the proceedings (Desouza v Waterlow [1999] RTR 71) or the court (Ceylon and Harrington)

(4)   Whether in any given case it is shown that the insurer had notice of the bringing of the proceedings (as opposed to the making of a claim) is a matter of fact and degree (Desouza)

(5)   The essential purpose of the requirement of notice is to ensure that the insurer is not  suddenly faced with a judgement which he has to satisfy without having any opportunity to take part in the proceedings in which that judgement was obtained (Desouza)

Kennedy LJ accepted that the object of section 152 (1) was satisfied. The insurers were kept in the picture from the start, and were never in danger of being faced with a judgement which they had to satisfy without having had an opportunity to take part in proceedings but that does not entitle the Claimant or the court to ignore statutory requirements which makes it a condition precedent to liability that:

“Before or within 7 days after there commencement of the proceedings… the insurer had notice of the bringing of the proceedings”

Counsel for the Second Defendant pointed out that a significant feature of the present case was the fact that the statutory period of limitation expired on 29 December 1996. For months prior to that date, and for about five weeks after the Claimant’s solicitors were not in contact with the insurers at all. A prudent solicitor would be well advised to ensure that the insurer received written notice within 7 days after the commencement of proceedings. There can be no room for argument.

In addressing the second issue, Estoppel or waiver, Kennedy LJ

The appeal was allowed and the declaration sought made. He stated that the insurers and their solicitors should have been aware of section 152 and taken action on it sooner, but the unattractiveness of their behaviour cannot be determinative of the outcome of the case.

Laws LJ and Rix LJ both agreed.

Related posts:

1. Harrington and Another v Link Motor Policies at Lloyd’s;Sub Nom. Harrington v Pinkey [1989]
2. Nawaz And Hussain v Crowe Insurance Group [2003]