British Caymanian Insurance v Dawson

• Jurisdiction: Cayman Islands
• Judge: (Douglas, Ag. J.)
• Judgment Date: 10 June 1997
• Date: 10 June 1997
• Court: Grand Court (Cayman Islands)

Grand Court

(Douglas, Ag. J.)

BRITISH CAYMANIAN INSURANCE COMPANY LIMITED

and

DAWSON and CARTER

D.M. Murray for the plaintiff;

C.H. Allen for the first defendant;

R.D. Alberga, Q.C. and A.J. Taylor for the second defendant.

Cases cited:

(1) Dextra Bank & Trust Co. Ltd. v. Bank of Jamaica, Supreme Court of Jamaica, Case N. 1993/D046;on appeal Civ. App. No. 61/94, unreported, dicta of Carey J.A. applied.

(2) Jefferson Ltd. v. Bhetcha, [1979] 1 W.L.R. 898; [1979] 2 All E.R. 1108, distinguished.

(3) T Ltd. v. Att. Gen., 1994-95 CILR 280, distinguished.

(4) Zurich Gen. Accident & Liability Ins. Co. Ltd. v. Morrison, [1942] 1 All E.R. 529; on appeal, [1942] 2 K.B. 53; [1942] 1 All E.R. 529, dicta of Atkinson J. applied.

Legislation construed:

Motor Vehicle Insurance (Third Party Risks) Law, 1990 (Law 12 of 1990), s.15(3): The relevant terms of this sub-section are set out at page 306, line 37 – page 307, line 10.

Road Traffic-insurance-third party risks-no stay of insurer”s proceedings under Motor Vehicle Insurance (Third Party Risks) Law, 1990, s.15(3) for declaration that entitled to avoid policy pending outcome of proceedings determining liability of insured-in interests of justice and in accordance with legislative intention for indemnity issue to be decided first

The plaintiff insurer sought a declaration under the Motor Vehicle Insurance (Third Party Risks) Law, 1990, s.15(3) that it was entitled to avoid the first defendant”s insurance policy.

The second defendant, as the administratrix of her deceased husband”s estate, brought an action for negligence against the first defendant (the alleged owner of the vehicle) and her son (the driver) to recover damages for the death of her husband in a road accident.

In criminal proceedings, the driver had pleaded guilty to a charge of causing death by dangerous driving and faced a further charge of driving without insurance. The first defendant was charged with permitting him to drive without insurance.

In the present proceedings, the plaintiff sought a declaration under s.15(3) on the basis that when the first defendant took out the policy she had failed to disclose or had misrepresented material facts relating to her son”s use of the insured vehicle. It now sought a stay of those proceedings pending the outcome of the action by the administratrix and the criminal proceedings against the first defendant.

It was submitted that (a) the issue of indemnity under the policy of insurance would not arise until it had been established whether the first defendant or her son were liable to the administratrix; (b) since there were issues of fact and law relevant to the present proceedings which would be determined in the related proceedings, it would not be possible to determine the issue of indemnity until liability had been established in them; (c) if the present proceedings went ahead without a prior determination of liability, the first defendant might prejudice her interests or incriminate herself in the other proceedings unnecessarily; (d) accordingly, the present proceedings should be stayed in the interests of justice; and (e) a stay would save the plaintiff the considerable cost of a declaratory hearing which, if the first defendant and her son were successful in the related civil proceedings, would have been wasted.

Held, refusing to stay the proceedings:

(1) It was in the interests of justice and in accordance with the legislative intention behind the Motor Vehicles Insurance (Third Party Risks) Law, 1990, s.15(3) that the administratrix should have the benefit of knowing whether the first defendant and/or her son were covered by insurance before deciding to pursue them for damages (particularly since they were likely to declare bankruptcy if found to be liable without indemnity). The first defendant could suffer no prejudice from this course of action and could only benefit from having the issue decided in advance (page 309, lines 31–42; page 310, lines 27–36).

(2) Furthermore, there was no question of law or fact which required the determination of the liability issue before that of the plaintiff”s entitlement to avoid the insurance policy. Since the first defendant”s son had pleaded guilty to causing death by dangerous driving and appeared to have no defence to the administratrix”s action for negligence, it was unrealistic to suggest that indemnity was not yet a ‘live’ issue. On the contrary, it would assist the magistrate”s court, in the criminal proceedings, to know whether the first defendant”s son was in fact insured at the time of the accident and the plaintiff”s costs of the declaratory action would not be wasted, given the likelihood that the administratrix would ultimately obtain judgment at least against the driver of the vehicle (page 308, lines 33–41; page 309, lines 10–20; page 309, line 43 – page 310, line 19).

(3) For these reasons and because there was apparently no authority for a plaintiff who was not a party to the related proceedings to apply for a stay of his own action, the court would refuse to order a stay (page 308, lines 6–14).

5	DOUGLAS, Ag. J.: On April 24th, 1997 I dismissed this application
by the plaintiff, British Caymanian Insurance Co. Ltd. (‘BCI’), for an
order that all further proceedings in this action be stayed under the
inherent jurisdiction of the court until after the determination of Cause
No. 29 of 1996 and R. v. Dawson (collectively ‘the other proceedings’).
10	At the request of the applicant, I promised to give this written ruling.
The application was based on five grounds which were as follows:
(a) The question of whether the plaintiff herein should be

...