Cole v Smith

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 30 March 2010
• Court: Grand Court (Cayman Islands)
• Date: 30 March 2010

Grand Court, Civil Division

(Smellie, C.J.)

COLE

and

SMITH and WATLER

COLE

and

N.E.M. (WEST INDIES) INSURANCE LIMITED

H.G. Robinson and M. Ram for the plaintiff;

Ms. K. Houghton for the second defendant;

The first defendant and the insurer did not appear and were not represented.

Cases cited:

(1) Burton v. Road Transp. & Gen. Ins. Co. Ltd.UNK(1939), 63 Ll. L. Rep. 253, applied.

(2) Cayman Hotel & Golf Inc. v. Resort Gems Ltd., 1992–93 CILR 372, referred to.

(3) Evans Constrs. Co. Ltd. v. Charrington & Co. Ltd., [1983] Q.B. 810; [1983] 2 W.L.R. 117; [1983] 1 All E.R. 310, referred to.

(4) Gale v. Superdrug Stores Plc, [1996] 1 W.L.R. 1089; [1996] 3 All E.R. 468, applied.

(5) Grupo Torras S.A. v. Bank of Butterfield Intl. (Cayman) Ltd., 2001 CILR 9, applied.

(6) Omni Secs. Ltd. v. Deloitte & Touche, 2000 CILR 102, referred to.

Civil Procedure-pleading-amendment-allowed if fair and not prejudicial-not prejudicial if original claim no prospect of success, e.g. because named incorrect defendant

Estoppel-estoppel by representation-ultra vires representation-no estoppel by representation if situation represented beyond powers of representor, e.g. no estoppel raised by employer”s representation that work permit holder employed by different employer, since ultra vires representor to contradict legal situation stated in work permit

The plaintiff brought an action for damages against the estate of the deceased to recover damages in respect of personal injury caused to him by the deceased”s negligent driving.

In 2005, the plaintiff was seriously injured by the deceased”s negligent driving, the deceased being killed in the incident. In his proceedings claiming damages, he joined the second defendant as the deceased”s employer and owner of the vehicle he was driving. The plaintiff had initially identified the second defendant as ‘Watler”s Metal Products Co. Ltd.,’ but, upon being informed that this was a non-existent entity, named the second defendant in person. In fact, the second defendant”s company, ‘Watler”s Metal Products Ltd.,’ was the authorized employer of the deceased according to his work permit. Having established liability on the part of the deceased, the plaintiff sought an order declaring, inter alia, that the deceased was insured under the contract between the second defendant and his insurer, the defendant in the second action brought by the plaintiff.

The second defendant, having initially accepted that the deceased had worked for him, applied to amend his defence to the effect that, legally, the deceased had not been his personal employee, but the employee of his company. He submitted that he had made a genuine mistake and, since his application was made in good faith, leave to amend the defence should be granted.

The plaintiff submitted in reply that (a) the court should not grant leave to amend the defendant named in the defence as doing so would unfairly prejudice his case since an action against the company was already time-barred; and (b) the second defendant was estopped by his original

representation from denying that the deceased had been his personal employee (and the estoppel also operated against the insurer, who was subrogated to his position).

Held, granting the application:

(1) The second defendant would be allowed to amend his defence. Allowing the amendment would not be prejudicial to the plaintiff”s claim to make the second defendant vicariously liable for the deceased”s actions (regardless of the fact that a claim against the company was already time-barred) as the claim could not be regarded as ever being valid since, legally, it was not the second defendant who had employed the deceased but his company. Though the second defendant may have been the deceased”s de facto employer, it was clear from his work permit that legally he was only employed by the company. Whether two parties were in a relationship of employment was a question of law to be determined by the court, and could not be answered solely by reference to the factual admissions by the second defendant. Moreover, it was not the case that allowing the amendment would necessarily be unfair to the plaintiff: he might still be entitled to indemnity from the second defendant (and hence the insurer) on the basis of the deceased”s de facto relationship of employment with the second defendant, or the possibility that the deceased was driving with the second defendant”s permission. As permitting the amendment would be neither prejudicial nor unfair to the plaintiff, and as refusing the amendment would require the second defendant to plead facts that were false as a matter of law, leave to amend would be granted (paras. 14–15; para. 21; paras. 23–25; paras. 30–32).

(2) Neither the second defendant nor the insurer was estopped from denying that the deceased had, legally, been the second defendant”s employee. Though a representation had originally been made by the second defendant to the effect that he was the deceased”s employer, which the plaintiff now sought to rely on-and therefore the requirements for estoppel by representation appeared to have been made out-such an estoppel would create a state of affairs which the second defendant was legally unable to create. The only entity that could have employed the deceased (having regard to the terms of his work permit) was the second defendant”s company and as the second defendant could not change that situation by his representation, no estoppel could arise (paras. 27–30; para. 32).

1 SMELLIE, C.J.: These two causes involve claims arising from a tragic motor vehicle accident in which the plaintiff, who was the passenger, sustained very serious injuries and in which the driver, Dwight Diedrick, was killed.

2 I now have before me an application by Mr. Robert Watler, the second defendant in Cause 313 of 2007 (‘the main action’), for permission to amend his defence to plead that Mr. Diedrick (whose estate is sued as the first defendant) was at the time of the accident not his employee but the employee of Watler”s Metal Products Ltd. (‘the company’).

3 The proposed amendment arises against the background of there having already been a written admission on his behalf, by his lawyers, that Mr. Watler was in fact the employer of Mr. Diedrick. A difficulty which Mr. Watler”s application presents is that, the statutory limitation periods having expired, the plaintiff would now be statute-barred from suing the company in respect of any vicarious liability it might have for Mr. Diedrick”s negligence. That is, liability such as might be proved to ground the claim against Mr. Diedrick”s employer and for which the employer”s insurers may be obliged to provide an indemnity.

4 The accident in question occurred at about 8 p.m. on January 19th, 2005. The plaintiff, now paraplegic as the result of the injuries he sustained, sues Mr. Diedrick”s estate for damages. That suit is the subject of the main action in which the...