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.

At common law, it s a firmly established principle that only a person who is a party to a contract can sue on it. This is the doctrine of privity of Contract. In Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. (1915) A.C. 847 at 853, at the House of Lords (in England) Lord Haldane L.C. said of the position: “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 law knows nothing of a jus quesitum 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.” See also Scrutfons Ltd. v. Midland Silicones Ltd. (1962) A.C. 446.

In so far as the common law doctrine relates to a contract of Insurance (in Nigeria) the decision of the Supreme Court in Andrew O. Ajufor v. Christopher Ajabor & Ors. (1978) 6-7 S.C. 39 at 52 is instructive. There the Supreme Court said;
“Even if it were established that an identifiable person i.e. the 3rd defendant took up the policy of Insurance (Exhibits G & H) with the appellant, we are satisfied that a third party such as the respondent could not sue the appellant ab-initio. This must be so as there would be no privity of contract between the parties and even if such a right were conferred by a statute such as section 10 of the Motor Vehicles (Third Party) Insurance Act, Cap. 126 Laws of the Federation of Nigeria, it would still be inappropriate to bring in the insurer as a party, except, perhaps, by way of third party proceedings based on contract of indemnity if any. See Post Office v. Norwhich Union Fire Insurance Society Ltd. (1967) 1 All E.R. p.577 and Odubanjo v. New India Assurance Co. Ltd. – SC./69 (Unreported, delivered on 8/10/71 (References not supplied in the judgment but supplied by me).
“We think it was an error on the part of the learned trial Judge to have joined the appellant in these proceedings and to have proceeded to record a verdict against it when at the end of hearing no issue was joined on the pleadings between the respondent and the appellant.”

Under the common Law, the plaintiff in this matter, could not have joined the appellant as a party to the suit brought against the persons said to be responsible, for the plaintiffs’ injuries. However, Section 11 of the Insurance (Special Provisions) Decree No. 40 of 1988 altered the position. The section provides:
“11. Where a third party is entitled to claim against an insured in respect of a risk insured against, he shall have a right to join the insurer of that risk in an action against the insured in respect of the claim: provided that before bringing an application to join the insurer, the third party shall have given to the insurer at least thirty days notice of the pending action and of his intention to bring the application.”

The relevant questions to ask are: When a third-party joins an insurer to a suit brought against the insured, what does the third party claim from or against the insurer? And what is the basis of that claim? In the present suit brought by the plaintiffs against the persons responsible for their injuries, they have pleaded and relied on the negligence ascribed to the driver of vehicle No. LA. 2225 S (i.e. the 6th respondent).
The plaintiffs on the existing statement of claim have not pleaded any negligence or wrongdoing against the appellant. Therefore on the established principles governing pleadings, no issues could have been joined between the plaintiffs and the appellant, when one allows oneself to be guided by the facts pleaded in the statement of claim. The plaintiff on those facts could not establish negligence against the appellant. The correct position is that the law i.e Section 11 of Decree No. 40 of 1988 only allows the appellant to be brought in as an indemnifier for any judgment obtained against 6th to 8th respondents on the claim against them. However Section 11 of Decree No. 40 of 1988 did not state specifically the purpose why an insurer may be joined in an action against the insured.

It needs not have done so. Because that has been stated in Section 54 of the Insurance Act, Cap. 183, Laws of the Federation, 1990. The Section provides:
“54(1) Where Civil proceedings are taken in court in respect of any claim under a policy of insurance and judgment is obtained against any person insured by a policy of insurance, 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 this Section, pay to the persons entitled to the benefit of any such judgment the sum payable (including costs and interest on such sum) not later than thirty days from the date of delivery of such judgment.
(2) No sum shall be payable by an insurer under the provisions of subsection (1) of this Section – (a) in respect of any judgment unless or 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.”
The right to join an insurer to a suit as given by Section 11 of Decree No. 40 1988 is only to enable a third party reach directly the insurer instead of just waiting for judgment to be given before asking the insurer to settle as provided in Section 54(1) of Cap. 183 above. If section 54(1) of Cap. 183 (reproduced above) were not in existence before the promulgation of Section 11 of the Insurance Decree 1988, the right conferred by Section 11 would be incomplete and barren for there would have been no prize to claim for a third party who brings a claim against an Insurer.
However, under section 54(2)(a) of Cap. 183 (1990 Laws,) a third party cannot claim against an insurer “unless before or within seven days after the commencement of the proceedings in which judgment was given” a notice of the bringing of the proceeding has been served on the insurer. It seems to me that a third party who wants to join an insurer to a suit brought against the insured must first show that the insurer has been served with the requisite notice under Section 54(2)(a) or Cap. 183. To hold otherwise is to allow the third party reap a benefit given by the statute without first fulfilling or satisfying the condition precedent attached to the realization of that benefit.
In the appellant’s brief, Professor G.A. Olawoyin of Counsel argued at pages 7 to 8 thereof thus:
“It is contended that whilst it is true that by virtue of Section 11 of the Insurance (Special Provisions) Decree of 1958, the Insurer can now be made a defendant in an action against the insured at the instance of the third party, compliance with Section 43(2)(a) of the Insurance Act, 1976 is still mandatory.
This is because in the absence of any clear indication to the contrary, parliament can be presumed not to have altered the common law further than is necessary. See Black-Clawson International Ltd. v. Papier Werke Waldh of Aschaffenburg A.G (1975) 1 All E.R. 810 at 814(e) per Lord Raid.
There is also no presumption that by legislating parliament intended to change the law. See Planmouth Limited v. Republic of Zaire. (1981) 1 All E.R. 1110 at 1114.”
I am entirely in agreement with the views of appellant’s counsel reproduced above. It has not been necessary for me to interpret the provisions of either Section 54 of Cap. 183 (1990 Laws of the Federation) or Section 11 of the 1988 Decree. It is only necessary to consider and relate the provisions in both Sections one to the other. The provisions of each of both Sections are clear and require no interpretative effort on my part.
The argument of respondents’ Counsel in the main is that the court should take Section 11 of Decree No. 40 1988 on its own as complete and independent of Section 54 of Cap. 183. Further it was the submission of the respondent that the court had the duty to just join the appellant and not concern itself with the question whether or not at the end of the day the plaintiffs would be able to get a satisfaction of the judgment. I need to say that on the present situation, the plaintiffs would not be able to get judgment against the appellant nor compensation against it. That being the position why should the court assist the plaintiffs in a futile exercise that can only waste time and money. The court does nothing in vain. See Odufuwa v. Johnson (1971) 1 All NLR 142 and Agbaje v. Agboluaje (1970) 1 All NLR 21.
The approach of the trial Judge was that as Section 11 of Decree 40 of 1988 provides that an insurer could be joined to the suit, he would join the appellant; and that the appellant was free later in the proceedings to raise special defences including one founded on non compliance by the plaintiffs with section 54(2)(a) of Cap. 183 (1990 Laws). I think that the learned trial Judge adopted a rather simplistic approach which failed to recognize that the plaintiffs could not get the compensation provided under section 54(1) of Cap. 183 without complying with section 54(2)(a) of the same Act.

It was undisputed that the plaintiffs brought their suit on 30/12/85. It was undisputed that they had not given a notice before they brought their suit or within seven days after bringing the suit to the appellant. Clearly there was nothing to be gained by making the appellant a party to the suit.

Before I finally conclude, I must thank counsel for the briefs prepared for this appeal. The briefs were concise and lucid. More than that the language was very agreeable. I wish we can have more of such briefs in this court. A good brief makes the work of an appellate Judge so much the easier.

This appeal succeeds. The order of Odubiyi J made on 2nd May, 1990 joining the appellant as a co-defendant in Suit No. HCS/68/85 is struck out. In its place, I make an order dismissing the application by the plaintiffs for the joinder of the appellant. I award N750 costs in favour of the appellant against the plaintiff/1st – 5th respondents.

Other Citations: (1994)LCN/0190(CA)