Thomson v Thomson and Colonial Insurance Company Ltd

• Jurisdiction: Bermuda
• Judgment Date: 14 June 2013
• Date: 14 June 2013
• Docket Number: Civil Jurisdiction 2012 No 6
• Court: Supreme Court (Bermuda)

[2013] Bda LR 48

In The Supreme Court of Bermuda

Civil Jurisdiction 2012 No 6

Between:

Kate Thomson

Plaintiff

and

James Thomson and Colonial Insurance Company Limited

Defendants

Mr P Harshaw for the Plaintiff

Mr J Pachai1 for the 1st Defendant

Mr C Rothwell for the 2^nd Defendant

The following cases were referred to in the judgment:

Froom v ButcherELR [1976] QB 286

Veralst's Administratrix v Motor Union Insurance Co LtdELR [1925] 2 KB 137

Crown Life Insurance Co v MilliganUNK (1939) 1 DLR 737

TD Radcliffe & Co v National Farmers Union Mutual Insurance SocietyUNK [1993] CLY 708

Gray v BarrELR [1971] 2 QB 554

Marcel Beller Ltd v HaydenUNK [1978] 3 All ER 111

Churchill Insurance v CharltonUNK [2001] EWCA Civ 112

Royal and Sun Alliance Insurance plc v Dornoch LtedUNK [2005] 1 All ER (Comm) 590

Chew (Police Inspector) v Gray [1985] Bda LR 1

Re HELR [1996] AC 563

Owens v BrimmellELR [1977] 1 QB 859

Booth v WhiteUNK [2003] EWCA Civ 1708

Lomas v SmithBDLR [2008] Bda LR 23

Argus Insurance Co Ltd v DuclosBDLR [2008] Bda LR 26

Kosmar Holidays plc v Trustees of Syndicate 1243UNK [2008] EWCA Civ 147

Personal injury — Liability — Contributory negligence — Whether injured party was wearing a seatbelt — Notification requirements in insurance policy — Drink driving charge but not convicted — Exclusion clause — Speeding — Waiver

JUDGMENT of Kawaley CJ

Introductory

1. At approximately 12:30 am on Sunday January 15, 2006, the Plaintiff was seriously injured in a motor accident involving a car driven by her husband and in which she was a front seat passenger. Her husband, the 1st Defendant (“the Insured”) was insured under a Private Car Insurance Policy (“the Policy”) issued by the 2nd Defendant (the Insurer”).

2. The Insured formally filed a claim under the Policy on March 31, 2006 although it was common ground that he had verbally put the Insurer on notice of a possible claim roughly two weeks after the accident occurred. The Insured informed the Insurer that he was likely to be charged with a drink driving offence before he was first charged in Court on March 14, 2006. He denied the charges of impaired driving and driving with excess alcohol and at his trial on June 7, 2006, the charges were dismissed seemingly because the Prosecution offered no evidence.

3. Thereafter, in the course of 2006 and 2007, the Insurer made various payments in respect of the Insured's direct claim under the Policy and the Plaintiff's third party claim. The first payment made in respect of the Plaintiff's claim was expressly made without admission of liability; thereafter payments described as “interim payments” were made without any such express reservation of rights. The Plaintiff and the Insured left Bermuda and returned to South Wales and attempts to finally settle the Plaintiff's claim bore no fruit. On December 20, 2011, just under a month before the limitation period expired, the Plaintiff's attorneys warned the Insurer that it was proposed to issue a writ in respect of her claim.

4. By way of response to this communication, the Insurer for the first time expressly denied liability under the Policy by letter dated December 21, 2011 on the grounds that:

i. the Insured was found to be above the drink/drive limit after the accident;

ii. the Insured had failed to report the accident within the time mandated by the Policy.

5. The Insurer also pointed out in the same letter that it was not satisfied that the Plaintiff was wearing a seat belt at the time of the accident and that it was accepted that, even if it was entitled to avoid the Policy as against the Insured, it was required by Bermuda law to pay the Plaintiff up to $125,000. Because of the conflict between the Insured's obvious interest in having his wife's claim met under the Policy and the Insurer's interest in avoiding such liability, the Insurer did not propose to follow the usual course of instructing lawyers to conduct the Insured's defence of the threatened claim. After the commencement of the present proceedings, the action has advanced with due despatch.

6. The Plaintiff's Generally Indorsed Writ, filed the previous day accompanied by her Statement of Claim, was issued on January 6, 2012. The Insured was the only named Defendant. However, on March 8, 2012, Ground CJ joined the Insurer to the action as Second Defendant. On September 12, 2012, Hellman J gave directions for a split trial on liability and quantum. The Insured entered the matter for trial on April 4, 2013 and a Notice of Hearing for the effective trial date was issued by the Registrar on April 5, 2013.

7. The Insurer accepted that the Plaintiff's injuries were caused by the Insured's negligence. At the commencement of the trial, it was common ground that the following issues fell for determination by the Court:

i. whether the Plaintiff was wearing her seat-belt at the time of the accident (even though this issue strictly went to quantum rather than liability);

ii. whether the Insurer was entitled to avoid liability under the Policy because the Insured failed to give timely notice of his claim;

iii. whether the Insurer was entitled to avoid the Policy because the Insured at the time of the accident was driving in breach of Bermuda's Road Traffic Act 1947 by:

(a) exceeding the speed limit, and/or

(b) driving with excess alcohol in his blood;

iv. whether the Plaintiff's damages are liable to be reduced by reason of her contributory negligence in allowing the Insured to drive her when she knew he was over the limit;

v. whether the Insurer is estopped from avoiding liability on either of grounds (2) or (3).

8. At the end of the trial I invited counsel to file supplementary written submissions on the question of whether or not it was open to a civil court to make findings that a Road Traffic Act offence had been committed in circumstances where the relevant charge had been actually laid before a competent court and dismissed. This issue appeared to me to be potentially relevant, if not as a free-standing point, to the Court's assessment of the Insured's submissions that either (a) the Insurer had waived the right to avoid the Policy on the stated grounds, or (b) as a matter of public policy, the general words of the exclusion clause relied upon should be construed narrowly with a view to amplifying rather than limiting the scope of protection provided to third parties under the Policy.

Findings: credibility of the Plaintiff and the Insured as witnesses

9. The Plaintiff and the Insured have a significant financial interest in the outcome of the present litigation and their evidence was in many significant respects inconsistent with independent contemporaneous documents. It was obvious to me that that they were both generally honest and decent people. However, the content of their evidence combined with their manifest interest in recalling events in a way which supported rather than undermined their claims causes me to approach the controversial aspects of their evidence with some care.

10. In short, neither party's evidence (in particular the Insured's) was easy to accept at face value in its entirety and it is entirely understandable if the Insurer flip-flopped between seeking to assist a sympathetic couple and having grave doubts about certain aspects of the Insured's claim. The Insured appeared to me to be devoted to his wife and determined at all costs to put right a situation in which she had been seriously injured as a result of his own negligence. In addition, his carelessness when completing two insurance application forms (which under cross-examination he was forced to admit contained serious inaccuracies) created the impression that he was not a witness with a refined appreciation of the importance of the objective truth.

Factual findings: was the Plaintiff wearing a seatbelt at the time of the accident?

11. On a balance of probabilities, I find that the Plaintiff was not wearing her seat-belt at the time of the accident. The Plaintiff and the Insured agreed that the passenger seat she was in as the couple drove home in stormy conditions was inclined backwards and she had her left foot on the dashboard as she removed her right boot, which had filled with rainwater as she walked from the restaurant to the car. Even if the Plaintiff ordinarily fastened her seatbelt, it would be entirely understandable if she undid her seat belt to carry out the unusual manoeuvre with her brand new footwear that she felt compelled to undertake. By her own admission and as confirmed by her hospital records, she had consumed around four drinks in the course of the evening.

12. Most significantly, the documentary records closest to the time of the accident are unanimous that the Insured initially stated that the Plaintiff's seatbelt was not on when the accident occurred. The most contemporaneous record is the notes of the Surgical Officer, Dr Joseph, apparently recorded at around 3.45 am. After describing various symptoms and before proceeding to list the Plaintiff's medical history, he recorded: “Was not wearing a seat belt.” The Plaintiff denied saying this at all; however she added that by this time (nearly two hours after her arrival at the Hospital), she had been given morphine; implying that she might have said anything without being aware of what she was saying. She did not point to any other inaccuracies in this medical record which she conceded contained other information she could have supplied.

13. The Insured gave a witness statement to the Police on January 24, 2006, nine days after the accident. The statement records in very clear terms the following:

“Kate had her seat reclining back and was taking off her boot. She did not have her seat belt on at the time. And I had mine over my shoulder.”

14. The Insured could offer no convincing explanation as to why he would have said the Plaintiff's seat belt was not fastened...