Court allows employee injury claim against insurer where permitted driver clause covers liability despite fellow servant exclusion.

[*41] 1979 Feb. 26

(BOYIADJIS, S.D.J.)

IN THE DISTRICT COURT OF NICOSIA

Nicos Themistokleous,

Plaintiff,

v.

Atlas Assurance Company Limited,

Defendants.

(Action No. 4009/76).

Insurance - Motor insurance - Third party risk - Injury to employee excluded - Permitted driver extension clause - Fellow employee injured by negligent driving of employee - Accident “arising out of and in the course of the employment” - Employee travelling “by reason of or in pursuance of his contract of employment” - Judgment against employers and employee remaining unsatisfied - Whether employee entitled to indemnity under the policy - Sections 4(1)(b) and 10(1) of the Motor Vehicles (Third Party Insurance) Law, Cap. 333.

Estoppel - Issue estoppel - Res judicata - Principles applicable.

St. Erotokritou (Mrs.) for the plaintiff.

G. Pelayias for the defendants.

JUDGMENT

The following judgment was delivered by:-

BOYIADJIS. S.D.J.: In this action the plaintiff [*42] Nicos Themistokleous, a travelling salesman, sues the Atlas Assurance Co. Ltd., to recover from them the amount of the judgment obtained in Action No. 7521/71 which he brought against his co-employee Naso Eliadou and his employers Messrs. Mousoulides & Son (Successors), in respect of the injury and damage which he had suffered by reason of the negligence of the former whilst driving in the course of her employment a Triumph Herald Station Wagon under Reg. No. CR942, the property of the latter. In that last-mentioned action, he recovered damages against both defendants, jointly and severally, to the amount of £1,200.- with 4% interest per annum from 10.9.1975 until final payment,, and his costs have been taxed at the sum of £283.650 mils. Copy of the judgment in Action No. 7521/71 of the District Court of Nicosia has been produced by consent and is before us as Exhibit 1. His efforts to execute the judgment through the issue of a writ of movables against the defendants proved totally unsuccessful.

The way in which the plaintiff puts his claim is that during all material times there was in existence a policy of insurance issued by the defendants insurers, which by its terms covered the liability in respect of which judgment was given against the defendants in the said action. A policy of insurance effected by Messrs. S. Mousoulides & Son in respect of motor vehicle CR.942, issued by the present defendants, has been produced by consent and is before me as Exhibit 2. Counsel on both sides made a statement in Court to the effect that the [*43] certificate of insurance has been delivered to the person who has effected the policy Exhibit 2 in accordance with the law. I shall refer later to the several terms of this policy of insurance in so far as they are material in deciding the several issues raised in the present case.

The facts of this case, relating to the circumstances under which the plaintiff received the injuries in respect of which compensation was given to him in Action No. 7521/71 are fairly simple. They are to be found in the evidence of the plaintiff, the only witness in these proceedings. The history of the matter is this. Both the plaintiff and Naso Eliadou were travelling salesmen in the employment of Messrs. S. Mousoulides & Son (Successors). Their duties included the promotion all over Cyprus of the sales of linguaphone apparatus imported by their said employers. On the morning of the 23rd September, 1971, the plaintiff and Naso Eliadou were in the ordinary routine travelling together from Nicosia to Larnaca in their employer’s Station Wagon CR.942 carrying with them a number of linguaphone apparatus for demonstration purposes to prospective purchasers. Naso was driving the car. On their way to Larnaca an accident occurred by reason of her negligence and the plaintiff was injured.

Being a person entitled to the benefit of the judgment - Exhibit 1 - the plaintiff says that he may sue the defendants insurers directly for the payment to him of the amount of the said judgment under S.10(1) of the Motor Vehicles (Third Party Insurance) Law, Cap. 333. The defendants [*44] pleaded and/or argued that in the circumstances of the present case the plaintiff cannot avail himself of the direct remedy provided by S. 10(1) of Cap. 333, mainly for the following three reasons:-

(1) Liability for bodily injury to any person where such injury arose out of and in the course of the employement of such person by the insured, is expressly excepted by the terms of the policy of insurance - Exhibit 2. The bodily injury of the plaintiff, they further say, arose out of and in the course of his employment by the insured, namely Messrs Mousoulides & Son (Successors). The liability in respect of such injury is, therefore, not covered by the policy of insurance - Exhibit 2.

(2) The liability in respect of which judgment was given in plaintiff’s favour in Action No. 7521/71 is not one which is required to be covered by a policy of insurance under S.4(1)(b) of Cap. 333.

(3) Messrs. Mousoulides & Son (Successors) took out an Employers’ Liability Policy with the Minerva Insurance Company Ltd., to cover themselves against liability for bodily injury to their employees arising out of and in the course of their employment with them. It was expressly agreed in the policy of Insurance - Exh. 2 - that the defendants would not indemnify any authorised driver if such driver is entitled to indemnity under any other policy. The liability of the authorised driver in the present case being thus covered by Minerva Insurance Company under the [*45] said Employers’ Liability Policy, the defendants allege that they are entitled to repudiate liability under their policy - Exhibit 2.

During the hearing of the action the last ground of defence was abandoned by the defendants inasmuch as no evidence at all was adduced to prove the existence of any other policy of insurance allegedly issued by Minerva Insurance Company Limited.

The major issue in these proceedings is whether the plaintiff has in the present circumstances a direct remedy against the defendants insurers or not.

At common law no person other than he who could strictly be called a party to a contract could sue upon it. This principle stood always in the way of a person injured by reason of another person’s negligence to recover compensation directly from the insurers who have undertaken to indemnify the wrongdoer. With the addition of a great number of motor vehicles to the traffic of the roads in England during the third decade of our century, accidents became numerous. There emerged, consequently, a growing need for the protection of third persons injured in “running down” cases. In consequence of the growth of public feeling on this matter the legislature intervened. The impact of the enactment of the Road Traffic Acts, 1930 - 1934, was threefold; first, the introduction in England of a compulsoly system of insurance in respect of third party risks; secondly, the intervention to some extent in the unlimited [*46] right under the common law of the contracting parties to impose any conditions they pleased in policies .of insurance; and thirdly, the recognition of a statutory right of action to an injured third party enforceable directly against the insurers of the wrongdoer, a right which the common law had always denied.

In Cyprus the common law principles continued to prevail until after the second world war which brought about a rapid change in the social conditions of the island. With the increase of the income of the average Cypriot family and the improvement of the standard of living generally, there also came the importation of motor vehicles in steadily growing numbers. Our narrow roads filled with cars. Road accidents increased daily and the protection of injured third parties became a matter of urgent social need in consequence whereof the Motor Vehicles (Third Party Insurance) Law, now Cap. 333, was enacted on 15.12.1954 on the model of the English Road Traffic Acts, 1930 - 1934.

S.10(1) of Cap. 333 reads as follows:-

‘‘If after a certificate of insurance has been issued under the provisions of sub-section (4) of S. 4 in favour of the person by whom a policy has been effected judgment in respect of any such liability as is required to be covered by a policy issued under the provisions of paragraph (b) of sub-section (1) of S.4, being a liability covered by the terms of the policy, is obtained against any person [*47] insured by the policy 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 the provisions of this section, pay to the persons entitled to the benefit of such judgment any sum payable thereunder in respect of the liability, including any sum payable in respect of costs and any sum payable by virtue of any Law in respect of interest on that sum or judgment.”

From the contents of this sub-section which copies sub-section (1) of S. 10 of the English Road Traffic Act, 1934, it is evident that it was neither intended to provide nor did it in fact provide invariably and in all circumstances an insurance fund from which all injured third parties could recoup their losses, if such losses were not paid by the tortfeasor responsible for them. Before succeeding in his direct remedy against the insurers an injured third party, apart from satisfying several other prerequisites which do not arise in the present case and to which I need not refer, must bring himself within the limited class or “third parties” covered by S.10(1) of Cap. 333. He must inter alia satisfy the Court in this respect that the judgment obtained by him against some insured person is not only covered by the policy of insurance but it is also such as is required to be covered by compulsory insurance under the provisions [*48] of S. 4(1) (b) of Cap. 333 to which I shall shortly refer. I say this in answer to a submission made by learned counsel for the plaintiff to the effect that the liability need not be of the nature which must be compulsorily insured under the law and that all insured passengers whether voluntary or not may avail themselves of the statutory direct remedy against insurers under S.10(1) of Cap. 333. If support be required for the proposition that only those persons who can clearly bring their case within the four corners of S.10 may recover directly from the insurers, it may be found in the case of Baker v.

Provident Accident and White Cross Insurance Company Ltd., (1939) 2 All E.R. 690 where the injured passenger travelling in

his employer’s van failed to recover from the insurers because the accident having occurred beyond the transport limits provided by the employer, the carriage of the plaintiff at the material time was not a carriage in pursuance of her contract of employment and, therefore, the liability in respect of which the plaintiff had obtained .judgment was not a liability required by the Act to be covered by a policy of insurance. I

also cite the cases of Cross v. British Oak Insurance Co. Ltd., (1938) 1 All E.R. 383, and Herbet v. Railway Passengers Assurance Co., (1938) 1 All E.R. 650. In the latter case,

dismissing the claim of the injured third party against the insurers based on S.10 of the Act of 1934, Porter J. said at p. 654 of the report that “….. where an Act of Parliament stipulates that recovery shall not take place except in certain events, those events must take place before the plaintiff can recover”. [*49]

Having thus sketched the plaintiff’s claim against its proper legal background, I now propose to examine it in the light of the particular submissions put forward by the defendants, to which I have already referred.

LIABILITY AND THE INSURANCE POLICY

The first question which poses for determination is whether the liability in the present case is covered by the policy of insurance - Exhibit 2. The contention of the insurers that it is not covered is based on the allegation that it falls within the exception clause in the policy of insurance inasmuch as the plaintiff’s injuries arose out of and in the course of his employment by the insured Messrs. Mousoulides & Son (Successors). The plaintiff’s answer to this contention is that his co-employee Naso Eliadou, being at the material time the “authorised driver” of the vehicle, is being substituted for the insured and that the exception clause upon which the insurers rely applies in the present circumstances only to an employee of the authorised driver and not to the employee of the person who has taken out the insurance. There is no allegation in this case, and none could in fact been put forward, that the plaintiff was at the material time in the course of his employment by the authorised driver Naso Eliadou.

The answer, therefore, to the above first question depends entirely on the true construction of the policy of insurance - Exhibit 2. The main guide to the correct interpretation of the

policy is the language of Section II [*50] thereof under the heading “Liability to Third Parties”. It reads as follows:-

“ 1. The Company will subject to the Limits of Liability indemnify the Insured in the event of accident caused by or arising out of the use of the Motor Vehicle against all sums including claimant’s costs and expenses which the Insured shall become legally liable to pay in respect of

(a) death of or bodily injury to any person except where such death or injury arises out of and in the course of the employment of such person by the Insured and excluding liability to any person being a member of the Insured’s household who is a passenger in the Motor Vehicle unless such person is being carried by reason of or in pursuance of a contract of employment;

(b) damage to property ……

2. In terms of and subject to the limitation of and for the purposes of this Section the Company will indemnify -

(a) any Authorised Driver who is driving the Motor Vehicle provided that such Authorised Driver -

(i) shall as though he were the Insured observe, fulfil and be subject to the Terms of this Policy in so far as they can apply, [*51]

(ii) is not entitled to indemnity under any other policy;

(b) the Insured whilst personally driving a private motor car ……’’.

In the Schedule attached to the Policy, which shall in accordance with condition 1 of the Policy be read together with it as one contract, there is this provision with regard to the authorised driver:-

“Authorised Driver: Any of the following:-

(a) The Insured.

(b) Any other person who is driving on the Insured’s order or with his permission.

Provided that …….’’

In this Schedule Messrs. S. Mousoulides & Son (Successors) are named as being the “Insured”.

It is clear enough from the language of the above clauses that there is not one contract of insurance only. First, by operation of clause 1(a) of Section II of the Policy we have one contract with the named Insured. Secondly, by operation of clause 2(a) of the same Section of the Policy we have another contract in favour of any other person who at any given time may be driving the vehicle on the Insured’s order or permission. Such other person being an “authorised driver”, as Naso Eliadou is in the present case, may, on the authority of Tattersal v. Drysdale (1935) 2 K.B. 174, claim in his own name directly [*52] from the insurers indemnity in respect of liability incurred by him to any other person whilst using the vehicle on the road. Extremely helpful in this respect is the case of Digby v. General Accident Fire and Life Assurance Corporation Ltd., (1942), 2 All E.R. 319.

The exception clause in the Policy quoted above, like all exception clauses in Policies of Insurance must be construed strictly: John T. Ellis Limited v. Hinds, (1947), 1 All E.R. 337.

Having given the matter my utmost consideration, I am unable to agree with the submission of the learned counsel for the defendants. This case comes within the four corners of Richards Cox, (1942) 2 All E.R. 624 where an employee was injured in a car owned by the insured, who were her employers, through the negligence of the driver, who was also in the employment of the insured and authorised to drive the car. Para.(1) of the insurance policy provided that the insurance company would indemnify the insured against liability in respect of bodily injury caused by the car to third parties, excepting persons employed by the insured. Para.(2) provided that the insurance company would treat as though he were the insured person any authorised driver of the car provided “that such person shall as though he were the insured observe fulfil and be subject to the terms exceptions and conditions of this policy in so far as they can apply”. It was contended that the proviso in para. (1), which excluded employees of the insured, extended to the cover given by para.(2), and that no claim could be [*53] made by an authorised driver in the case of injury.to a fellow employee. The Court of Appeal held that the exception in para.(2) operated to exclude persons employed by the authorised driver but not persons employed by the company or person taking out the policy.

Upon the proper construction of the Policy - Exhibit 2 - I am, therefore, convinced that the liability in the present case is one covered by the terms of the Policy and is not being excluded by reason of the allegation that the plaintiff was at the time carried out of and in the course of his employment by the Insured, i.e. Messrs. S. Mousoulides & Son. It should be observed that I carefully abstained as yet from expressing any opinion on the issue whether the plaintiff was at the time carried in his employer’s vehicle out of and in the course of his employment or whether he was so carried by reason of or in pursuance of a contract of employment. It was not necessary for me to decide this issue at this stage once I found that the exception in the Policy would only have operated if the plaintiff had been in the employment of the authorised driver Naso Eliadou.

LIABILITY AND COMPULSORY INSURANCE

The second question which should be answered in proceedings is whether the liability in the present case is such as is required by the law to be covered by a policy of insurance. Compulsory insurance is required by law in respect of certain and not all the liabilities which may arise in respect of the use of motor vehicles. Section [*54] 4(1)(b) of Cap. 333 to which S.10(1) of the same Law expressly refers, reads as follows:-

“4(1) - A policy for the purposes of this Law must be a policy which -

(a) …………….

(b) insures such person or persons, or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of a motor vehicle on a road covered by the policy:

Provided that such policy shall not be required to cover -

(i) liability in respect of the death arising out of and in the course of his employment of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment; or

(ii) except in the case of a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, liability in respect of the death of or bodily injury [*55] to persons being carried in or upon or entering or getting on to or alighting from the motor vehicle at the time of the occurence of the event out of which the claims arise; or

(iii) any contractual liability.”

Section 4(1) of Cap. 333 copies Section 36(1) of the English Road Traffic Act, 1930 and, therefore, the several English cases where the provisions of the English Sections are construed are of equal guidance to us in our task to interprete and apply the provisions of our corresponding Section.

I have already stated that the liability in the present case is covered by the policy. This, nevertheless, is a matter clearly distinguishable from the matter now in issue, i.e. whether the liability is one which is by the Law made compulsory to insure. Unless the latter question is answered in the affirmative, the plaintiff has no direct remedy against the insurers under S. 10(1) of Cap. 333.

In his endeavour to bring himself within S.10(1) of the Law, the plaintiff alleges that in the circumstances of this case as he has stated them in his evidence, he was at the material time carried in his employer’s vehicle by reason of or in pursuance of his contract of employment by the Insured, Messrs. S.Mousoulides & Son. His case, he says, clearly falls within the exception in clause (ii) of [*56] the proviso to paragraph (b) of sub-section (1) of Section 4 of the Law, and the liability to him is one which is by the Law compulsory to insure.

In their endeavour to avoid liability to the plaintiff, the defendants contended that:-

(a) The plaintiff is estopped by record from alleging that time was at the material time, being carried in the vehicle otherwise than out of and in the course of his employment by the Insured Messrs S. Mousoulides & Son (Successors). The record referred to is the judgment - Exhibit 1, upon which he otherwise bases his claim;

(b) in case the plaintiff is not in law so estopped by the doctrine of res-judicata, the Court should find that in the circumstances under which the plaintiff was being carried in the vehicle in the present case, he was being carried therein out of and in the course of his employment by the Insured Messrs. S. Mousoulides & Son (Successors) within the meaning of clause (i) of the proviso to paragraph (b) of sub-section (1) of S.4 of the Law. The liability, therefore, for the bodily injury sustained by the plaintiff is not one, the defendants say, which the Policy is by law required to cover.

I shall first examine whether there is anything in the prior judgment - Exhibit 1, founding the allegation [*57] that, in pronouncing its judgment in the said action, the Court has conclusively determined the issue now sought to be re-agitated, viz. whether the plaintiff’s injuries arose whilst he was being travelling in the vehicle out of and in the course of his employment by Messrs. S. Mousoulides & Son (Successors) or whilst he was travelling in the same vehicle by reason of or in pursuance of a contract of employment by the same firm.

The extract of the judgment - Exhibit

1 - upon which the defendants rely is to be found at page 8 of the judgment under the heading “Liability”. It reads as follows:-

“The accident occurred on the main Nicosia-Larnaca road when motor car under Registration No. CR.942 belonging to defendant No. 2 and in which both the plaintiff and defendant No.

1 were travelling, overturned, as a result of which they both received personal injuries. At the time of the accident, defendant No. 1 (Naso Eliadou) and the plaintiff were travelling in the course of their employment by defendant No. 2 (S.Mousoulides & Son (Successors)).”

Irrespective of the fact that the defendants failed to plead the estoppel as they ought to have done, I have not been pursuaded that there is merit in the submission that the judgment - Exh. 1

- can in law operate as an issue estoppel so as to debar the plaintiff from arguing that his injuries arose whilst travelling as a passenger in the vehicle “by reason of or in pursuance of a contract of [*58] employment” and not “out of and in the course of his employment by the Insured.”

It is true that in the aforementioned extract of the judgment of the Court - Exhibit 1 - it has been expressly determined that not only Naso Eliadou but also the plaintiff were at the time of the accident travelling in the course of their employment by S. Mousoulides & Son (Successors). Yet, this in itself cannot found an estoppel per rem judicatam. The determination must be fundamental and not merely collateral. In Spenser Bower and Turner Res Judicata, Second Edition, page 179, para. 210, we read:

Even when in one way or another it can be demostrated that the Court has expressly determined, in the earlier proceedings, the same issue as is now in dispute, an issue estoppel will not by any means always be the result. Only determinations which are necessary to the

decision - which are fundamental to it and without which it cannot stand - will found an issue estoppel. Other determinations, without which it would still be possible for the decision to stand, however definite be the language in which they are expressed, cannot support an issue estoppel between the parties between whom they were pronounced.”

In Hoystead v. Taxation Commissioner, (1926) A.C. 155, Lord Shaw delivering the judgment of the Judicial Committee said:- [*59]

‘‘The former judgment was pronounced by the Australian Courts under that Section (s.38(7) of the Land Tax Assessment Act). It was not merely incidental or collateral to the question so decided, that the appellants were joint owners. It was fundamental to it. Unless it had been decided that under the settlement Mr. Campbell’s children had a beneficiary interest in land or income ‘in such a way as they are taxable as joint owners’ they could not have been taxed at all.”

It is not always easy to distinguish between matters fundamental or cardinal to the prior judgment or so necessarily involved in it as to form its legal foundation, from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation of the judgment. To make this essential distinction possible the test suggested by DIXON J., in the Australian case of Blair v. Curran (1939) 62 C.L.R., 464 (H. Ct. of Aus.) , is to inquire in each case whether the determination upon which it is sought to found an estoppel is so fundamental to the substantive decision that the latter cannot stand without the former. Nothing less than an affirmative answer to the above will do. A collateral or subsidiary proposition being a mere step in reasoning is insufficient: Re Allsop and Joy’s Contract (1889), 61 L.T. 213. [*60]

Reading the judgment - Exhibit 1 - it becomes evident that, apart from the nature and extent of the injuries which the plaintiff sustained and the assessment of the compensation to which he was entitled, the determinations fundamental to the substantive decision made in the action were upon the identity of the driver of the vehicle, on whether such driver was negligent or not and on whether the owners of the vehicle, Messrs.

S. Mousoulides & Son (Successors) were vicariously liable for the negligence of the driver of the vehicle who was found to be Naso Eliadou. The determination by the Court that Naso Eliadou was at the time travelling in the vehicle in the course of her employment by Messrs„ S. Mousoulides & Son (Successors) is so fundamental to the substantive decision that the latter cannot stand without it. This determination formed the basis of the liability of Messrs. S. Mousoulides & Son (Successors) towards the plaintiff for the negligent driving of Naso Eliadou. The same considerations do not, however, apply to the determination that the plaintiff was at the time travelling in the vehicle in the course of his employment by Messrs. S. Mousoulides & Son (Successors). Whether he was so travelling or travelling in any other capacity, for instance by reason of or in pursuance of his contract of employment, he would nevertheless have been equally entitled to the same compensation against both Naso Eliadou and Messrs. S. Mousoulides & Son (Successors). The substantive

decision could, therefore, perfectly stand without such determination. One may in fact argue that the [*61] determination upon which the defendants seek to found the estoppel is upon a metter which if it ever arose at all in the dispute, it did so as a very remotely collateral matter. The plea of issue estoppel, therefore, fails and the plaintiff is entitled to reagitate the issue.

It is common ground that the plaintiff was at the material time travelling as a passenger, albeit not voluntary, in his employers’ vehicle driven by his co-employee. In general and subject to certain exceptions, the combined effect of Sections 4(1) and 10(1) of Cap. 333 is that liability in respect of the death of, or bodily injury to a person being carried in or upon or entering or getting into or alighting from the vehicle at the time of the occurrence of the event out of which the claim arises, is not required to be covered by compulsory insurance, and the direct remedy against the insurance company available to a third party within the range of compulsory insurance will not be open to the passenger. The first qualification to this rule, attached to the vehicle as such, is that the policy is required to cover liability for death of or injury to passengers carried therein for hire or reward. This qualification does not arise in the present case and I need not deal further with it. The second qualification to the foregoing rule, also attached to the vehicle itself, is that the liability for death of or injury to passengers becomes a compulsorily insurable one if passengers are habitually carried therein by reason of or in pursuance of a contract of employment. [*62]

The fact that the plaintiff passenger in the present case was at the material time in the employment of the primary Insured has complicated the issues even more in view of clause (i) of the proviso to paragraph (b) of sub-section 1 of S.4 of the Law which is set out hereinbefore, and which is wide enough to cover passengers as well. Eminent authors of the calibre of Christopher Shaw-cross have expressed the opinion that the reason why in England S.36(1)(b) of the Act by its proviso stated that compulsory insurance need not be effected against liability to persons who receive injuries by the use of motor vehicles out of and in the course of their employment, is that in England such persons would have a claim against the insured as their employer under the Workmen’s Compensation Acts, and that the aforesaid clause (i) of the proviso under consideration was probably intended to except from the liabilities required to be insured against liability imposed by the Workmen’s Compensation Acts. These Acts have now been replaced by the National Insurance (Industrial Injuries) Act, 1946, which introduced a much wider system of insurance against personal injury or death caused by accident to all those employed under a contract of service in England, which accident arises out of and in the course of such persons’ employment.

The learned authors of Halsbury’s Laws of England, 3rd ed., Vol. 22, express the view in para 757 of the Book that the scope of the provision that, in the case of a vehicle in which passengers are carried by reason of [*63] or in pursuance of a contract of employment, liability for death or bodily injury must be covered, is somewhat obscure, as such provision is often difficult to reconcile with the provision excluding liability for injuries arising out of and in the course of a person’s employment. One contrast between the two provisions now settled by the decision

of the House of Lords in Izzard v. Universal Insurance Co. Ltd. (1937) 3 All E.R. 79, is that the contract of employment by

reason of which, or in pursuance of which, a passenger is carried need not be with the assured.

“Arising out of and in the course of his employment”.

The phrase ‘arising out of and in the course of his employment’ has always been given the same interpretation as that which it has been held to bear in cases under the Workmen’s Compensation Acts.

“ ‘Arising out of the employment’ means arising out of the

work the man is employed to do and what is incident to it; in other words, out of his service”:- (Per Finlay, L.C. in Charles R. Davidson & Co. v. U’Robb (1915) A.C. 304, at p. 314).

“ There is, in my opinion, one test which is always… applicable, because it arises upon the very words of the

statute….. It is this: was it part of the injured person’s employment to hazard, to suffer or to do that which caused his injury? If

yea, the [*64] the accident

arose out of his employment. If nay, it did not, because, what it was not part of the employment to hazard, to suffer or to do

cannot well be the cause of

an accident arising out of the employment. To ask if the cause of the accident was within the sphere of the employment, or

was one of the ordinary risks

of the employment, or reasonably incidental to the employment, or conversely was an added peril and outside the sphere of the

employment, are all different ways of asking whether it was a part of his employment that the workman should have acted as he was acting, or should have been in the position in which he was, whereby in the course of that

employment, he sustained injury’’ (per Lord SUMMER in Lancashire and Yorkshire Railway Co. v. Highley (1917) A.C. 352,

at p. 372).

“If the accident results from a risk which is necessarily incident

to the performance of the employed person’s work …., the accident arises out of the employment; all enquiry as to the

frequency or magnitude of the

risk is irrelevant and it makes no difference that members of the public face the same risk” (Commissioner’s Decision No.

C.W.1 6/49; following dicta of Lord FINLAY L.C., in Dennis v. A.J. White & Co. (1917) A.C. 479 at p. 482).

In St. Helens Colliery Co. Ltd. v. Hewitson (1924) A.C. 59 the test laid down was that the workman must be under some duty or necessity to take the conveyance offered [*65] by the employers before it could be said that whilst travelling therein he was acting in the course of his employment. Lord ATKINSON said this at p. 71:

“ The true groun upon which the test should be based is a

duty to the employer arising out of the contract of employment, but it is to be born in mind that the word ‘employment’ as

here used covers and includes things belonging to or arising out of it”.

This so-called “nexus of duty test”

was followed in a number of subsequent cases, like Newton v. Guest, Keen & Nettlefolds Ltd. (1926) 135 L.T. 386 and London

& North Eastern Ry. Co. v. Brentnall (1933)

148 L.T. 530.

In Weaver & Tredegar Iron and Coal Co. Ltd., (1940) 3 All E.R. 157, H.L. Lord WRIGHT expressed his opinion thus at p. 172:

“ Unless there was some obligation and duty, the accident

could in no sense be connected with the employment. If there was an obligation or duty, as there is in the case of a man going

about the public street under his employer’s orders, he would be entitled to compensation if injured by an ordinary street risk. So also if sent on duty by train”.

Lord PORTER has this to say at pp. 179-180 of the report:

“The test which is put by the county court judge is [*66] whether

there was any duty on the part of the workman to travel by the train in question, and he comes to the conclusion that there was

obviously no duty in the

present case. In some cases, no doubt, it may be helpful to consider whether the man owed a duty to his employers at the

time of the accident and, indeed, if duty be construed with

sufficient width, it may be a decisive test, but, so construed, to say that the man was doing his duty means no more than he was acting

within the scope of his

employment. The man’s work does not consist solely in the task which he is employed to perform. It includes also matters

incidental to that task.

Times during which meals are taken, moments during which the man is proceedings towards his work from one portion of his

employer’s premises to

another, and periods of rest may all be included. Nor is his work necessarily confined to his employer’s premises. It is rather

whether he was within the

sphere or area of his employment, No doubt the questions of what is incidental to the man’s employment and what is the area

or sphere of his work are matters which are often difficult

of ascertainment, and may sometimes turn on fine distinctions. In the ordinary case, when a workman is employed on his master’s

premises, he ceases to be in the course of his employment when he has left those premises and has reached the [*67] public

street. Equally, he may have left those premises if he reaches a place which is not public, but from which he, like others who are

not engaged in the same

employment, can proceed to his home. Nor, in my view, does it make any difference that, when he reaches the public street, he is

conveyed from the premises in a coach provided by his employer,

nor that, when he reaches the place which is not public, he is carried in a railway train or other conveyance for the provision of

which his employer has made the necessary arrangements. In either of the latter cases, he is not in the course of his employment, though he is using facilities for reaching

his home which are granted to him by his employer. It is true that he is being carried in a vehicle which has either

been provided by his master or for the provision of which his master has arranged, but he is being conveyed over ground which is not confined to the use of himself or his fellow-employees, and, generally at any rate, unless he is

compelled to travell in that conveyance, the course of his employment has ceased. The fact, however, that he is using a facility, and

not a compulsory method of

progression, is not decisive. If on the premises there is a staircase and a moving stair, and he is entitled to use either,

the moving stair is a

facility, yet, if, in getting from one part of the premises to another, he uses the moving [*68] stair and is injured, he is in the course

of his employment. Of course, if the facility is something which does not come into operation until after the course of his employment has otherwise ceased, the fact that the employer supplies it does not make the workman’s use of it a

use in the course of his employment. However, if it is in the course of his employment, the fact that he might have chosen an alternative

method does not disentitle him to recover.’’

In Vandyke

v. Fender and Another (Sun Insurance Office Ltd., Third Party) (1970) 2 All E.R. 335, the words “arising out of and in the course of his employment”

were construed in the context of S.203(4) of the English Road Traffic Act, 1960, which superceded S.36(1)(b) of the 1930 Act. It was held by Lord DENNING M.R. that these words whether used in the old Workmen’s Compensation Acts from 1897 to 1945, or in the Road Traffic Acts 1930 - 1960, or in employers’ liability policies, are so closely connected that they ought, as a matter of common sense to receive the same interpretation. After referring to the leading cases Hewitson (supra) and Weaver (supra) he goes on to say this at p. 340 of the report:

‘‘They show to my mind quite conclusively, that when a man is going to or coming from work, along a public road, as a passenger in a vehicle provided by his employer, he is not then in the course of his employment - unless he is obliged by the terms [*69] of his employment to travel in that vehicle. It is not enough that he should have the right to travel in the vehicle, or be permitted to travel in it. He must have an obligation to travel in it. Else he is not in the course of his employment. That distinction must he maintained, for otherwise there would be no certainty in this branch of the law.”

“ By reason of or in pursuance of a contract of employment”.

These words, until their meaning was finally settled by the decision in Izzard v. Universal Insurance Co. Ltd., (supra), gave rise to considerable speculation. Expressing the opinion of the House, Lord WRIGHT stated that the words covered persons who were on the insured vehicle for sufficient practical or business reasons, and had taken a contract of employment in pursuance of which they were on the vehicle as an adequate cretierion of such reasons. He also stated that there was no reason for holding that this criterion should be limited to employees of the insured person.

In Baker v. Provident Accident and White Cross Insurance Co. Ltd., (1939) 2 All E.R. 690, where the plaintiff, a laundress, was injured while being carried from the place of her work in her employers’ laundry van at a point on her way home far beyond the place to which the employers [*70] permitted their employees to be carried as a facility from getting to and from their work, and the issue was whether the plaintiff was being carried by reason of or in pursuance of her contract of employment, CASSELS,

J. used these these words:

“ In so far as there is a difference - and there undoubtedly is - between the phrase ‘in pursuance of a contract of employment’ and the phrase ‘by reason of the contract of employment’ I think its effect is this. A person is being carried in pursuance of a contract of employment, if it is a term of the contract of employment that he or she shall be carried. That is the meaning which I would attach to the phrase ‘in pursuance of a ‘contract of employment’. In so far as the person may be affected by reason of a contract of employment, I would say, with reference to a case where an employer says to an employee, ‘Go on that vehicle’, and he is only able to give that order by reason of the fact that there is the relationship of employer and employee between them, that, by reason of a contract of employment, it would certainly cover such an instance or example as arose in Izzard v. Universal Insurance Co. Ltd., where in fact a passenger was employed, not by the insurers, but by somebody else altogether.”

In Vandyke v. Fender (supra) Lord DENNING M.R. expressed the opinion that the words “by reason of or in [*71] pursuance of a contract of employment” are much wider than the words “in the course of his employment”, and that passengers are carried in a vehicle “by reason of” a contract of employment whenever such a contract is the cause, or one of the causes, of their being carried. He added that, if passengers are so carried in it habitually, the vehicle must be covered in respect of them. The facts of this case were that, as an inducement to the plaintiff and the first defendant to take up employment at the second defendants foundry, a car belonging to the second defendants was lent to the first defendant and weekly payments were made to him for petrol on the understanding that, if he used it to go to and from work, he would bring the plaintiff with him. In their way to work an accident occurred by reason of the negligence of the first defendant whereby the plaintiff passenger received bodily injuries. There was no obligation on the plaintiff to travel in that car nor were the first defendant obliged by his contract of service to use the car. The crucial point was that: If the injury to the plaintiff arose “out of and in the course of his employment” by the second defendants, it was covered by the employers’ liability policy with the third party. If it did not arise “out of and in the course of his employment” it ought to have been covered by the road traffic policies. It was held that in the circumstances of the case the plaintiff’s injury did not arise out of and in the course of his employment, but whilst carried in the car “by reason of or in pursuance of his contract of employment” and there should have been, [*72] therefore, an insurance policy in existence covering the owner and the driver against liability to passengers. As there was no effective policy covering these passengers the Motor Insurances’ Bureau came in and made good the loss to the plaintiff.

In Nottingham

v. Aldridge and Another (The Prudential Assurance Go. Ltd., Third Party) (1971) 2 All E.R. 751, the plaintiff and the first defendant were

apprentices employed by the Post Office, the second defendants. It was part of their contract of service to attend a residential training school at Bletchley on weekdays except Fridays when classes would be attended at Oxford where they actually lived. On a Sunday night they were returning from Oxford to the school at Bletchley in a van driven by the first defendant and owned by his father, covered by a policy issued by the third party assurance company excluding liability to passengers carried otherwise than by reason of or in pursuance of a contract of employment. The plaintiff was a passenger in the van. The first defendant had agreed to take the plaintiff back to Bletchley not as a friendly act but in the knowledge that he was entitled to claim from the second defendants a mileage allowance for the journey and an additional passenger allowance for the plaintiff. In their way an accident occurred and the plaintiff was injured and sued both defendants for damages for negligence. The first defendant admitted negligence and brought third party proceedings against the insurers. The question arose in the third [*73] party proceedings whether the policy covered the first defendants’ liability to the plaintiff, which question depended on whether the plaintiff passenger was at the time carried “by reason of or in pursuance of a contract of employment”. It was held that:

“The liability of the first defendant to the plaintiff was covered by the terms of the policy for, approaching the question on the basis that the contract of employment referred to in the policy was that of the passenger, the test was whether the contract of employment had some relevance to the undertaking of the carriage; for the purpose of construing the policy there was no difference between the case where payment was made to the carrier for carrying an employee to work under a pre-existing contract of carriage and the case where the carrier, while under no obligation on contract with the employer to carry, knew that he could look to the employer for payment if in fact he did carry an employee; in the present case the employers had agreed with their employees to finance their carriage and it was for this reason that the first defendant was carrying the plaintiff; accordingly the plaintiff was being carried by reason of his contract of employment.” (See p. 761 d and p. 762 a to c.).

Finally, in the very recent Privy Council case [*74] of Tan Keng Hong and Another v. New India Assurance Co. Ltd., (1978) 2 All E.R. 380, a forester was given lift in one of the company’s lorries loaded with logs and driven at the time by one of its drivers from the logging area to the sawmill of the company. The forester was one of the foresters employed by the Forestry Department to check the logs and ascertain whether the royalties due in respect of them were in fact paid. The forester’s contract of employment contained no provision, express or implied, either allowing him to or forbidding him from obtaining lifts in timber lorries for his own convenience. An accident occurred in the way and the forester died as a consequence. The administrators of his estate obtained judgment against the driver and the company for damages in negligence, who in turn claimed against the insurers for indemnity under their policy of insurance contending that the exception in the policy in the familiar form did not apply since the forester had been carried “by reason of” his contract of employment in that, but for that contract, the driver would not have given him a lift. The driver had alleged and the Court found that he had agreed to give the forester a free lift because he feared that if he refused to do so it might annoy the forester and cause him to create difficulties for his company in the future. It was held on the above facts that the forester was not on the lorry for business reasons but for personal reasons, i.e. his own personal convenience; that his contract of employment, so far as he or his employers were concerned, could not have any connection with his [*75] presence on the lorry since there was no term in his contract of employment, either express or implied, which required or entitled him to travel in the company’s lorry; and that he did not fall within the exception in the policy and the insurers were, therefore, not liable to indemnify the driver or the company.

Delivering the judgment of the Board in the above case Lord SALMON said this at p. 383:

“In their Lordships’ view the words by reason of…. a contract of employment must be read in conjunction with the words ‘in pursuance of’ and, properly construed, mean because the contract of employment expressly or impliedly requires the employee or gives him the right to travel as a passenger in the motor vehicle concerned. It does not mean that the passenger was being carried because the driver of the vehicle thought that by reason of the passenger’s employment he might gain some business advantage by doing the passenger the favour of giving him a lift.”

He continued by saying this at p. 384:-

‘‘These two authorities

(meaning Hewitson case (supra) and McSteen v. McCarthy (1952) N 133) and all the others to which reference was made in

argument make it plain that whether a passenger is carried by reason of or in pursuance of a contract of employment within the meaning of exception (iii) depends solely on the terms of the passenger’s employment.” [*76]

C o n c l u s i o n

Applying the above authorities I have reached the conclusion that this is a classical case of an accident ‘arising out of and in the course of the. employment’ of the plaintiff by Messrs S. Mousoulides & Son (Successorss). The plaintiff met his injuries whilst performing the very duty which his contract of service required him to do. i.e. travelling to Larnaca to demostrate and sell his master’s goods carried on the same vehicle. He had not even a choise on the means of conveyance. He was under an obligation to his employers to travel in the vehicle where he was found when the accident occurred on that routine trip during this working hours.

The other conclusion at which I have arrived is that the plaintiff may, a fortiori, be said to have been travelling at the time ‘by reason of or in pursuance of his contract of employment’ with Messrs. S. Mouzoulides & Son (Successors) in as much as his contract of employment with them was the only cause of his being on that vehicle at the time. The meaning of the latter words as expounded in the authorities hereinbefore cited is wide enough to cover the circumstances of this case where the plaintiff had both a duty and a right to be on the vehicle at the material time. It should also be noted that the vehicle in question was one out of four vehicles habitually used for the same work or purpose.

In my humble apprehension, the words “arising out [*77] of and in the course of one’s employment” cover a part of the ground which is being covered by the wider words “by reason of or in pursuance of a contract of employment.” It has not been contended and I have no reason to think that a passenger loses his capacity as a person carried “by reason of or in pursuance of a contract of employment” simply because the circumstances of his case bring him also within the special or narrower category of passengers carried “out of and in the course of their employment”. The one capacity does not necessarily excludes the other.

It follows that clause (ii) of the proviso to paragraph (b) of sub-section (1) of S.4 of Cap. 333 is not an obstacle in the pursuit by the plaintiff of the direct remedy under S.10(1) of the Law against the insurers.

It is evident from what has hitherinbefore been stated that, but for the one last point to be considered, i.e. clause (i) in the proviso to para. (b) of sub-section (1) of S.4 of Cap.

333 excluding from the ambit of compulsory insurance liability in respect of bodily injury to a person in the employment of a person insured by the policy and arising out of and in the course of such person’s employment, the plaintiff would have been entitled to judgment as per claim. Whether in the circumstances of this case the exception in this proviso stands in the way of the plaintiff or not is that crucial point in the case which has caused to me great difficulty to decide, in view of the fact that I could trace no direct

authority on the [*78] matter other than the decisions in Richard v. Cox (supra) and in Digby’s case (supra) in which the question whether an injured employee has

a direct remedy against his employer’s insurers under S.10(1) of the Road Traffic Act, 1934, or not did not arise as such.

Since the injury to the plaintiff employee arose out of and in the course of his employment with the primary insured, i.e. Messrs S. Mousoulides & Son (Successors), one may argue that prima-facie the exception applies, that the liability is outside the scope of compulsory insurance, and that the plaintiff’s claim must, therefore, fail. I was for a moment tempted, in fact persuaded, to accept this view which appears

to be consistent with the line of reasoning adopted in the opinion of Lord WRIGHT in Izzard v. Universal Insurance Co. Ltd.,

(supra) who said at p. 83 of the report the following:-

‘‘I think the Act is dealing with persons who are on the insured vehicle for sufficient practical or business reasons, and have taken out a contract of employment in pursuance of which they are on the vehicle as an adequate criterion of such reasons. But there is no sufficient ground for holding that this criterion should be limited to employees of the insured person. Such employees, if injured or killed, would ordinarily fall under exception (1), though I am not prepared to say that there might not be, in certain events, an employee of the [*79] assured who could claim as a passenger. But such cases must be rare. The most probable case is where the man killed or injured was on the vehicle in pursuance of a contract, not with the owner of the vehicle, but with someone else, for instance, with the person whose goods were being carried on the vehicle: Thus, a commercial vehicle, carrying a contractor’s or merchant’s goods, would frequently and, perhaps, even normally, have on it an employee of the goods owner, to see to loading or unloading or delivering the goods, or caring for them in transit. For these purposes, such a man may be carried as a passenger. The insured person may come under third party liability to such a man, who may be described as being in the position of an invitee in the legal sense, vis-a-vis the insured person.”

The same view appears to find support in the following words of Lord SALMON in Tan Keng Hong and Another v. New India Assurance Company Ltd., (supra) at p. 384:

‘‘The reason an employer is rarely able to claim under his policy of insurance in respect of injury sustained by anyone in his employ whilst being carried on one of his vehicles is that the accident causing such an injury would usually arise out of and in the course of the passenger’s employment; and the insurers would accordingly be protected by [*80] exception (iii) (meaning of the policy then under consideration, whose wording is similar to clause (i) of the proviso which is now considered). In McSteen’s case (1952) N.I. 33), however, the plaintiff employee was injured whilst being driven home; and accordingly could not have been held to have been injured in the course of his employment.”

The facts in both above cases are clearly distinguishable from the facts of the present case and whatever it was said therein may not have a direct bearing on the matter now in issue.

I would have not hesitated to adopt this view if there were not in the policy - Exhibit 2 - the extension clause covering use of the vehicle by an authorised driver. The effect of this clause set out earlier in the judgment, extending cover to permitted drivers, is that a separate policy of insurance is deemed to have been issued in favour of and directly enforceable by Naso Eliadou who thus becomes “a person insured by the policy” within the meaning of S. 10(1) and S.4(1) of Cap. 333. Helpful in this respect, is the following passage from Shawcross on Motor Insurance, 1949 Edition, p. 201 as to the meaning of the words “In the employment of a person insured by the policy” to be found in S. 36(1)(b) (i) of the Act of 1930:

“The question has been answered previously in the sense that such persons are insured by the policy who can directly enforce rights thereunder against [*81] the insurers. Thus persons driving with the assured’s consent are insured by the policy if there is the normal extension clause contained therein: Tattersall v. Drysdale (supra) and Digby v. General Accident ……(supra).”

It should, perhaps, be re-iterated that, upon the correct construction of the policy - Exhibit 2 - a similar exception in it was found to operate only as regards the permitted driver Naso Eliadou but not as regards the primary insured-employer of the plaintiff. It should further be noted that the plaintiff in this case has obtained judgment in respect of his injuries not only against the primary insured but also against Naso Eliadou who, being herself a person insured by the policy, can in her own name sue the insurers for indemnity in respect of her liability to the plaintiff resulting to the issue of such judgment against her. She is possessed of such a right on the authority of Tattersall v. Drysdale (supra) and pursuant to S.10(3) of Cap. 333. Finally, it should be remembered that the plaintiff was at the time in the course of his employment by the primary insured and not by the authorised driver Naso Eliadou.

The cumulative effect on my mind of all the above facts and considerations was to lead me to the conclusion, not without some hesitation I must confess, that, in view of the extension clause in the policy of insurance - Exhibit 2 - the exception in clause (i) of [*82] the proviso now under consideration operates to exclude from the ambit of compulsory insurance only the employees of the authorised driver Naso Eliadou who was herself, when this liability arose, an insured person with distinct and separate rights and obligations under the said policy. The liability to the plaintiff passenger, who is not an employee of Naso Eliadou, is within the ambit of compulsory insurance.

In my humble apprehension, there are two distinct liabilities in this case, and two different “persons insured”. First, the liability of Naso Eliadou towards the plaintiff who is an injured third party and a stranger to her, i.e. not in her employment, carried on the vehicle by reason of and in pursuance of his contract of employment by Messrs.,

S. Mousoulides & Son (Successors). This liability led to the issue of the. judgment - Exhibit 1 - against her, which is a joint and several judgment. By virtue of this judgment, the plaintiff may levy execution against her alone for the whole amount. Secondly, the liability of Messrs. S. Mousoulides & Son (Successors) towards the plaintiff, who is their employee. This liability also led to the judgment - Exhibit 1 - against the said firm. Being a liability towards an employee of the firm, this latter liability is outside the scope of compulsory insurance. Had the plaintiff relied only on his judgment against S. Mousoulides & Son (Successors) he would have no direct remedy against the insurers. The channel, however, which leads the plaintiff to the funds of the defendants insurers [*83] in this case, is his judgment against Naso Eliadou, which, for the reason stated above, is in respect of a liability within the scope of compulsory insurance. Section 10(1) of Cap. 333 is, therefore, available to the plaintiff.

I believe that my aforesaid

conclusion finds support in the following passages from Halsbury’s Laws of England 3rd ed., Vol. 22:-

From para. 741, p. 361 under heading, “Extent of cover afforded to a permitted driver”:-

‘‘….. Even if a policy has an exclusion of liability for injuries sustained in the course of his employment by an employee of the assured, this exclusion is, so far as a permitted driver is concerned, usually ineffective; if a driver and his passenger are fellow employees of the assured, the passenger is not the employee of the driver. The passenger can, therefore, obtain compensation from the insurance company if he is injured by the driver’s negligence, notwithstanding the exclusion of injuries sustained by employees of the assured, if there is a permitted driver clause and he sues the driver rather than the employer: Richard v. Cox (1942) 2 All E.R. 624. This result can probably be avoided if the exclusion in the policy is formed by reference to employment ‘by the person named in the ‘schedule’, namely the original assured.” [*84]

From p. 367, para 753, under the heading,

“Risks required to be insured”, sub-heading, ‘‘Exclusion is only of employee of a person insured”:-

“In the normal case the person insured by the policy is the assured himself, and it is his needs that are in contemplation both of himself and of his insurers when the policy is issued. Complications arise, however, if the policy contains, a permitted driver clause, because then the permitted driver will be a person insured by the policy (i.e. for the purpose of the Road Traffic Act, 1930, S. 36(1)(a)(b) proviso (i); see p. 366, ante.), and the exclusion will in such a case only operate as regards a person in the employment of the permitted driver (Richard v. Cox

(1942) 2 All E.R.624; see p. 361, ante.). It does not, however, follow from this that an offence is committed by an assured if there is no permitted driver clause in his policy and the vehicle is sent out in the charge of a servant of the assured who holds

no personal insurance (Lees v. Motor Insurance Bureau (1952) 2 All E.R. 511, C.A.; see p. 361, ante.). Many vehicles

driven on the roads belong to limited companies, and the driving of them inevitably therefore has to be done by a servant of the company. The liabilities which have to be covered, [*85] however, are the company’s liabilities only; if there is no permitted driver clause in the policy, there is no breach of the Act merely because the driver’s personal responsibilities, for example to a passenger who is a fellow servant of the employers but not an employee of the driver, are not covered (see p. 361, ante.).”

The ratio decidenti of the judgment of Lord GODDARD C.J., in Lees v. Motor Insurers Bureau (1952) 2 All E.R. 511, lends support to my view that it is the permitted driver extension clause in the policy - Exhibit 2

- that makes all the difference in the present case and weighs the scales against the defendants insurers. In that case, a lorry belonging to a limited company, whilst negligently driven by one of its servants in the course of his employment, ran down and killed another employee of the company, It was common ground that the latter’s death arose out of and in the course of his employment by the said company. His widow and administratrix of his estate brought an action against the driver of the lorry and obtained judgment which remained unsatisfied. She then sued the Motor Insurers Bureau for a declaration that the judgment she had obtained was in respect of a liability required to be covered by a policy of insurance by S.35(i) and S. 36(1)(b) of the Road Traffic Act, 1930. This was denied by the Motor Insurers Bureau. There was at the time in force in respect of the use of the lorry a policy of [*86] insurance issued to the company without containing any permitted driver clause, but containing an exception clause in the familiar words excluding liability to employees of the assured company. On appeal from the decision of the arbitrator, the administratrix sought to base her claim on Richard v. Cox (supra) and Digby’s case (supra) . After referring to the permitted driver clause in Richard v. Cox, Lord GODDARD C. J., added this at p. 514:-

“It was held that there were in effect two policies in one document, a policy insuring the owner of the vehicle and a policy insuring the driver. The owner of the vehicle would not have been able to recover against the underwriters because the policy did not cover his liability to his own servant, but as the terms of the policy insured the driver himself, and as the injured person was not a servant of the driver, nevertheless the driver was covered by the policy and was entitled to an

indemnity by the insurance company against the damages which he had to. pay. I do not find in the present policy any such term.” (The underlining is mine).

For all the above reasons, I give judgment in favour of the plaintiff and against the defendants insurers as per claim with costs to be assessed by the Registrar and be approved by the Court. [*87]

I would finally like to express my appreciation to both learned counsel for the commendable way in which each has presented his respecting case and for the help which they have given me in deciding this case.

Judgment as per claim with costs.