New India Assurance Ltd v Heeralall
| Jurisdiction | Guyana |
| Judge | Crane, C.,Gonsalves-Sabola, J.A. |
| Judgment Date | 13 January 1984 |
| Neutral Citation | GY 1984 CA 1 |
| Docket Number | Civil Appeal No. 8 of 1981 |
| Court | Court of Appeal (Guyana) |
| Date | 13 January 1984 |
Court of Appeal
Crane, C., Gonsalves-Sabola, J.A.; Massiah, J. A.
Civil Appeal No. 8 of 1981
J. A. King, S.C. for appellants.
J. B. Lindner for respondent.
Insurance law - Arbitration clause — Whether the respondent (the assured) on a true construction of the Scott v. Avery provision in clause 9 (the arbitration clause) of the insurance contract, possessed the status to institute an action in the High Court without prior invocation of arbitration proceedings — As a result of instituting proceedings in Court, it is clear that the respondent had no locus standi in court, for not having taken the matter to arbitration — There can be no question of a right of action until an award has been made at arbitration — Scott v. Avery [1843] ALL E.R. 1 — Trial judge had no jurisdiction to entertain the matter and ought to have dismissed the claim on the submission made in limine — Appeal allowed.
The question that arises for determination in this appeal is a composite one. It may be formulated in this way: Where an assured person has, by writ of execution, been forced to pay to a third party the judgment and costs awarded against him in an action for damage done to the third party's motor-car, can he insist on being reimbursed by his insurers when there exists for resolution an arbitrable difference a condition of his policy stipulates should first be taken to arbitration, but has not been so taken because of his misconception of the doctrine of waiver?
If indeed, as is contended there is a onus on the assured to take the difference to arbitration and he has refrained from so doing, can the authorised insurers for their part be faulted for dilatory conduct in standing by and, in like manner, taking no steps whatever to have the matter arbitrated, although there were positive steps they could have taken to have an arbitrator appointed? This is the central question to which we must address ourselves. We shall see it arises directly on the pleadings and that an answer has been attempted in the last three paragraphs of the judgment under review as follows:
“The defendants pleaded and argued that this matter should go to arbitration in accordance with the terms of the policy. This is a Scott v. Avery term, which is a condition precedent to action.
I think, however, that the defendants by their conduct have waived this condition, and for this reason: The insurers had notice of action by the third party against the plaintiff. They also had notice from the plaintiff. They stood by and took no part in the proceedings, leaving the plaintiff to his own devices. The insurers are required by law in the first place, to pay the third party's judgment. They have not done so. The plaintiff seeks to recoup from the insurers. The insurers ask that the matter go to arbitration. This is unnecessary. The insurers are required to pay the judgment in the first place and may seek, later, to recoup froth the plaintiff. By failing to pay the amount of the judgment, which they are required by law to do the insurers are estopped from seeking, compliance with the arbitration clause.
There will be judgment for the plaintiff for $4,536.00 plus $500.00 and costs $1,200.”
(Emphasis mine.)
However, the first thing to have settled is whether the conditions of the policy impose any onus on the assured Heeralall (the plaint/respondent) or the authorised insurers to refer to arbitration any difference arising thereunder. In their statement of defence the authorised insurers have averred that the plaintiff/respondent action is not maintainable because there is a breach of Condition 9 of the policy. They say those differences, which arose between then ought to have been taken to arbitration by the assured, and because they were not so taken by him, a time-bar has rendered this claim against them abandoned and so not maintainable. Condition 9 is in the following terns:
“All differences arising out of this Policy shall be referred to the decision of an Arbitrator to be appointed in writing by the parties in difference or if they cannot agree upon a single Arbitrator to the decision of two Arbitrators one to be approved in writing by each of the parties within one calendar month after having been required in writing so to do by either of the parties or in case the Arbitrators do not agree of an Umpire appointed in writing by the Arbitrators before entering upon the reference. The Umpire shall sit with the Arbitrators and preside at their meetings and the making of an award shall be a condition precedent to any right of action against the Company. If the Company shall disclaim liability to the insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration under the provisions herein contained then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder.”
(Emphasis mine.)
On the other hand, the plaintiff/respondent has also pleaded “lapse of time and waiver by the insurers” in reply to the latter's contention that his action is not maintainable. In his reply he insists he does have a maintainable cause of action against his insurers. Such differences as are alleged between him and his insurers, he says, never arose under Condition 9, for the reason that they have allowed time to lapse and so must be deemed to have abandoned their right to avoid the policy. This plea, as it seems to me, is in the nature of a concession by the assured - that whereas under Condition 9 above, there is indeed an onus on him as a claimant initially to proceed to arbitration within the time-frame of twelve months from his insurers' disclaimer of ability, no difference has in fact arisen under the policy because his insurers were themselves under an obligation to join in appointing an arbitrator and bet on with the arbitration before it became time-barred. They have, however, refrained from so doing and therefore cannot justly complain of his not having done so. Now that time for arbitration has been long prescribed by lapse of time, he contends, his insurers by reason of their own inaction and compromise must be regarded as having “waived” and abandoned their right to avoid the policy.
It is evident in the respective pleadings of the insurers and the assured (see below), there are contrasting viewpoints: whereas the insurers in their statement of defence are asserting and relying on the assured's failure to comply with Condition 9 of the policy by in effect saying, “You are out of court; you have no right to bring this action against us for a claim which is ‘deemed to be abandoned’ you having delayed seeking an arbitrator's award for more than twelve months,” the assured, on his part, is contending there is indeed a cause of action; that the arbitration clause in Condition 9 is no longer operative because the insurers have waived it by compromise, and by their inactive and dilatory conduct are barred by “lapse of time” from pursuing their rights. This plea seems to me to mean the assured is contending that during his admitted inactivity in arbitrating the differences, his insurers had a duty to be active in jointly being concerned in the appointment of an arbitrator so as to keep the arbitration moving, and not having done so cannot justly complain of his delay. It is evident on the pleadings both parties are therefore complaining of each other's delay as constituting a time-bar to the pursuit of their respective rights under the policy (for pleadings see below).
So the question arises in neat form whether, the assured not having resorted to arbitration, as he ought to have done, the insurers can properly be put, in terms of Condition 9 of the policy, under a mutual obligation to do so. On whom then, is the obligation to keep the arbitration moving so as to prevent it from becoming time-barred after twelve months of the disclaimer - the assured or the authorised insurers? Later on, I will be considering an analogical extension of the ratio decidendi of their Lordships' House in the recent decision of Bremer Vulkan v. South India Shipping, [1981] 1 All E.R. 239. This case, I believe, is quite helpful in resolving the question of mutuality of obligation to refer to arbitration, and hence whose default it was to proceed to arbitration as alleged in the pleadings by both sides; although that case is not factually on all fours with the facts of the present.
The point about the onus of proof in initiating arbitration proceedings is not novel with us; it has arisen and has been previously dealt with on at least four occasions in both our local and West Indian Law Reports - thrice at the lower level of the old Supreme Court of British Guiana, and once in the defunct Federal Supreme Court of the West Indies. There, a definitive but negative answer was given when a condition similarly worded to Condition 9 in an insurance policy was considered. It was there held there was no such onus on an authorised insurer; rather, it was on the assured as claimant to take the matter to arbitration. But, so far as I am aware, the point has never been dealt with at the level of the Guyana Court of Appeal, and bearing in mind we in Guyana now sit as a court of final instance and superior to the jurisdiction abovementioned [See Glen v. Sampson, (1972) 19 W.I.R. 237], I think it is well we finally settle it for ourselves once and for all.
By a policy of insurance dated 23rd April, 1976, issued by the New India Assurance Company Ltd. (hereinafter called “the insurers”) as authorised insurers within the meaning of s. 2 of the Motor Vehicles (Third Party Risks) Act, the plaintiff/respondent in consideration of a premium of $17.60 was afforded cover for the...
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