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To'a v National Pacific Insurance Ltd [2001] TOLawRp 34; [2001] Tonga LR 189 (27 July 2001)

IN THE COURT OF APPEAL OF TONGA
Court of Appeal, Nuku'alofa

CA 21/2000

To'a

v

National Pacific Insurance Ltd

Burchett, Tompkins, Spender JJ
18 July 2001; 27 July 2001

Insurance – exclusion clause – “reckless” and “dangerous” not proved – insurer liable

On 31 January 1998, the appellant was driving the insured vehicle and collided with a van causing considerable damage to the van and writing off the insured vehicle. Following a claim under the policy, the respondent paid $5,500 on the basis that the value of the vehicle written off was $6,000 less an excess of $500. Subsequently the other driver sued the appellant and obtained judgment in the Supreme Court against him for the damage to his vehicle in the sum of $3,114, interest at 10% and costs of $1,000. The appellant was also charged with and pleaded guilty to negligent driving. There was a clause in the policy that excluded liability where the vehicle was being driven in a reckless/dangerous manner. In the Supreme Court it was held that the circumstances were within the exclusion clause, with the result that the claim failed. The appellant appealed against that decision. The appellant also submitted that the contract of insurance was unfair as there was no Tongan version of the contract provided.

Held:

1. In the absence of any evidence of misrepresentation, duress, mistake or other grounds for avoiding the terms of the policy, both the insured and the insurer were bound by those terms. The appellant sought to enforce the policy against the respondent. He could hardly claim an amount under the policy and at the same time seek not to be bound by a term in the policy. The contract of insurance was not unfair so that ground of appeal did not succeed.

2. The words "reckless" and "dangerous" were commonly used in the context of driving giving rise to more serious criminal liability, such as dangerous driving. The use of those words in an exclusion clause in an insurance policy emphasises that they should be applied only to driving with additional elements of culpability, compared to what would otherwise be considered to be negligent or careless driving.

3. The onus was on the respondent to prove that the appellant's motor vehicle was being driven in a reckless/ dangerous manner. The evidence was not sufficient to discharge that onus. As the respondent did not prove the general exception upon which it relied to deny liability, the respondent was bound to indemnify the appellant for the loss of or damage to his vehicle.

4. The appeal was allowed. The appellant was entitled to judgment against the respondent for the amount of his liability to the driver of the other vehicle, $3,114 plus interest at 10% and costs of $1,000; $1,460 for loss of use; interest on the amounts at 10% interest on the amount payable to the other driver from the date of the judgment against him to the date of payment, plus interest for loss of use of the vehicle from 12 May 1998 to the date of payment; and costs in the proceedings.

Case considered:

Provincial v Morgan [1933] AC 240

Counsel for appellant: Mr Fifita
Counsel for respondent: Mr Etika

Judgment

[1] This appeal concerns a claim under an insurance policy. The appellant, the plaintiff in the Supreme Court, claimed that he was entitled to be indemnified by the respondent for losses following a motor accident on 31 January 1998. The Chief Justice, by a decision delivered on 2 August 2000, held that the circumstances were within an exclusion clause in the policy, with the result that the claim failed. The appellant has appealed against that decision.

The contract of insurance

[2] The contract of insurance is a motor vehicle policy in the name of the appellant as the insured and the Bank of Tonga as the finance company. It insured the appellant's motor vehicle for a period of 12 months commencing on 19 June 1997. The Bank of Tonga was named as the finance company because it had lent the appellant $7,200 to enable him to purchase the vehicle for use as a taxi. The loan was conditional on the appellant arranging insurance. The premium was paid by the bank to the respondent and the amount added to the appellant's loan account.

[3] The motor vehicle policy was in a standard form. Relevant to the principal issue on this appeal is the following general exclusion.

"You are NOT covered for any loss, damage, injury or liability while any vehicle in connection with which cover benefits are granted under the policy is:

...

(c) being driven in a reckless / dangerous manner."

The claim

[4] On 31 January 1998, the appellant was driving the insured vehicle and collided with a van causing considerable damage to the van and writing off the insured vehicle. Following a claim under the policy, the respondent paid $5,500 on the basis that the value of the vehicle written off was $6,000 less an excess of $500. Subsequently the other driver sued the appellant and obtained judgment in the Supreme Court against him for the damage to his vehicle in the sum of $3,114, interest at 10% and costs of $1,000. The appellant was also charged with and pleaded guilty to negligent driving.

[5] The claim before the Chief Justice was for the balance between the sum paid by the respondent for the damage to the appellant's vehicle and the insured sum of $7,200, for the sum awarded against the appellant for the damage to the third party vehicle, for $3,900 loss of earnings whilst waiting for payment by the insurance company, for $500 for the loss of the use of the vehicle during the same period for his non-commercial use of it and for $300 for inconvenience.

[6] The judgment first dealt with a claim for payment of the balance between the sum paid and the amount insured. The Chief Justice held that the respondent paid the market value of the vehicle at the time, and that there was no liability to make any further payment for the damage to the appellant's vehicle. That finding is not challenged.

Was the contract unfair?

[7] The appellant submitted that the contract of insurance was unfair as there was no Tongan version of the contract provided. It was submitted that the bargaining power of the parties was not in proportion as the appellant was inexperienced with insurance. The respondent should have advised the appellant to seek independent advice before entering into the contract.

[8] The Chief Justice's finding on this issue was:

"During the trial the plaintiff also sought to allege that the defendant had failed to advise the plaintiff properly about the scope of the policy. That was not pleaded, but I have no hesitation in saying that I accept that the plaintiff was given a sufficient explanation and, in any event, the policy document is clear in its terms. The plaintiff is an educated man and his work at that time required a familiarity with English — the language of the written agreement."

[9] The terms of the policy, including the general exclusions, are the terms of the contract between the insured and the insurer. In the absence of any evidence of misrepresentation, duress, mistake or other grounds for avoiding the terms of the policy, both the insured and the insurer are bound by those terms. Here the appellant is seeking to enforce the policy against the respondent. He can hardly claim an amount under the policy and at the same time seek not to be bound by a term in the policy. We find no reason to differ from the conclusion the Chief Justice reached. This ground of appeal cannot succeed.

The general exclusion defence

[10] On the defence based on the general exclusion set out above, the Chief Justice said:

"As the party relying on the exclusion, the burden is on the defence to prove that the driving was reckless or dangerous. It was the plaintiff who called evidence that, when the accident occurred, the other driver was travelling in the opposite direction and saw the plaintiff's vehicle driving towards him in a zigzag manner. He pulled in to the left hand side of the road. The other vehicle went across the road and back three times before it ran head on into his vehicle on the plaintiff's offside of the road at about 40 kph. The plaintiff's evidence was that he could not challenge that account because he was very tired at that time. Anyone who continues to drive when so tired that he is likely to fall asleep at the wheel is clearly driving recklessly. ...

However, on the evidence as a whole including that called by the plaintiff, I am satisfied beyond any doubt at all that the plaintiff's driving on that day was reckless and dangerous."

[11] For that reason the Chief Justice held that the respondent was not liable for any claim by the appellant arising out of the accident.

[12] This finding, and the challenge to it, turns on the proper interpretation of the phrase "reckless / dangerous" in the general exception, and whether the driving of the appellant was within that phrase so interpreted.

[13] Where a trial judge has made findings of fact based at least in part on the impression of the witnesses and the overall impression of the evidence, an appellate court will not interfere unless the finding of fact can be shown to be clearly wrong. That principle does not apply to the circumstances of this case. The facts were not in dispute. There was no conflict of evidence, so no issue of credibility arose. The only issue is a question of law, namely whether on the undisputed facts, the driving of the appellant was "reckless / dangerous" within the meaning of that phrase in the general exception. For determining that issue, this court is in as good a position as the Supreme Court.

[14] The general exception is in a contract of insurance. To the extent that it may give rise to an ambiguity, it is to be interpreted contra proferentes, that is against the insurer. If the insurer wishes to escape liability under given circumstances, it must use words admitting of no possible doubt: Provincial v Morgan [1933] AC 240, Lord Russell of Killowen at 250.

[15] The contract of insurance indemnifies the insured "for sudden unforeseen accidental physical loss or damage to your vehicle". That will include damage caused by a person driving carelessly or negligently. So driving in a manner that is reckless and dangerous must be intended to be of a different kind of driving than driving in a manner that is careless or negligent. The Shorter Oxford Dictionary includes in the meanings of "reckless" in relation to a person "Careless of the consequences of one's actions, lacking in prudence or caution". However, the word here is coupled with "dangerous", so the driving must not only be reckless, it must also be dangerous. Further, in the context of the exception to the indemnity provided by the policy, the phrase must be intended to apply only to driving that is significantly more blameworthy than carelessness or negligence. The words "reckless" and "dangerous" are commonly used in the context of driving giving rise to more serious criminal liability, such as dangerous driving. The use of those words in an exclusion clause in an insurance policy emphasises that they should be applied only to driving with additional elements of culpability, compared to what would otherwise be considered to be negligent or careless driving.

The evidence of the driving

[16] The evidence about the appellant's driving is sparse. He did not refer to the accident in his evidence in chief. In cross-examination there is the following passage at page 16 of the transcript:

"Let's go to the accident, is it correct that before you collided with the other vehicle you were zigzagging on the road?

I do not know, at that time I was sleepy.

Were you at the hearing of civil case 748/98 when Fisilau Valikoula gave evidence?

Yes.

Are you calling Fisilau to give evidence?

Yes.

Did you hear Fisilau's evidence that day that you were zigzagging were speeding before colliding with his vehicle?

Yes.

Do you believe that is what happened that morning?

I believe so."

[17] Fisilau Valikoula was called to give evidence by the appellant. Other than referring to having an accident with the appellant's vehicle, he did not describe the accident in his evidence in chief. In cross-examination he gave the following account at page 18 of the transcript:

"How did the collision occur?

I saw To'a driving towards me on the Hihifo Road heading towards town and I pulled up on the side of the road To'a's vehicle came and hit my vehicle.

Do you recall your case against To'a and the NPI when you said that To'a zigzagged before he hit you?

Yes.

Is that still your evidence?

Yes.

Is that why you pulled up along side the road.

Yes.

When he was zigzagging, many times?

My estimate is three times.

Was he speeding when he was zigzagging?

Was not very fast but was a bit fast."

[18] To the court, he said that when the appellant hit, he was on the left side of the road. In re-examination he estimated the appellant's speed at about 40 plus kmh. No further details of the accident were given in evidence. From the bar, the court was informed that the accident happened about 7.00 or 8.00 am after the appellant had driven a passenger to the west of the island. There is no suggestion that alcohol was involved.

Conclusion on the general exemption defence

[19] The onus was on the respondent to prove that the appellant's motor vehicle was being driven in a reckless/ dangerous manner, as we have interpreted that phrase in [15]. We do not consider that the evidence to which we have referred is sufficient to discharge that onus. The evidence is so limited that it is not possible to determine just what was the nature of the appellant's driving. The description of the appellant's driving as zigzagging came from counsel's question, with which the witness agreed. It is not entirely clear what the witness took the description to mean.

[20] The evidence does not establish the degree of zigzagging, to what extent it may have brought the appellant's vehicle onto its incorrect side, or for how long the witness had the appellant's vehicle under observation. The evidence does not show whether the zigzagging occurred over a relatively lengthy stretch of road, or whether it was momentary. The estimate of speed the witness gave is moderate. As we have stated, no question of alcohol was involved. To the extent that an inference about the cause of the accident can be drawn from this evidence, it appears to have been a momentary lapse of concentration on the part of the appellant, possibly because he was feeling sleepy.

[21] We accept that if a person continues to drive for a significant time when he is aware that he is falling asleep at the wheel, that may, under some circumstances, amount to driving in a reckless and dangerous manner. But the evidence in the present case does not establish such driving. The appellant was not cross-examined about how long he had been feeling sleepy, whether he fell asleep at the wheel, if so whether on one or more than one occasion, and what were his movements over the preceding 24 hours.

[22] For these reasons we, with respect, differ from the conclusion reached by the Chief Justice. The added element, beyond negligence, necessary to prove driving in a reckless and dangerous manner has not been established. As the respondent has not proved the general exception upon which it relied to deny liability, the respondent is bound to indemnify the appellant for the loss of or damage to his vehicle.

The amount of the indemnity

[23] The appellant claimed that the amount the respondent paid to the appellant for the damage to his vehicle, which was apparently treated as a write-off, was inadequate. The Chief Justice disallowed that claim. He was satisfied that the respondent paid the market value at the time and there is no liability to pay any other figure under the policy for the damage to the appellant's vehicle. There is no reason to disturb that finding.

[24] The appellant also claimed the amount of the judgment in the Supreme Court in favour of the driver of the other vehicle. The judgment was for $3,114 plus interest at 10% and costs of $1,000. The appellant is entitled to be indemnified in respect of this judgment.

[25] The appellant also claimed $3,900 for the loss of use of his vehicle as a taxi between the date of the accident, 31 January 1998, and 12 August 1998 at $150 per week. The proof of this loss is unsatisfactory. The appellant said in evidence in chief that he earned from the taxi "an average of $150 per week." No further detail was given. More importantly, he did not say whether this figure was his gross takings or his net earnings after deducting the cost of petrol, tyres, repairs, maintenance etc. However, there was no cross examination by the respondent's counsel on this claimed figure.

[26] Nor did the evidence establish the terminating date of 12 August 1998. The appellant said in evidence that the payment by the respondent to the Bank of Tonga for the damage to his vehicle was made on 12 May 1998. It appears that there may have been some further delay in his obtaining a replacement vehicle, due to the appellant's difficulty in raising another loan. But that delay cannot, come within the indemnity provided by the policy. It is our conclusion that it will be reasonable to allow the appellant $100 per week for the period from 31 January 1998 to 12 May 1998, 14 weeks and 3 days making a total sum of $1,460.00.

[27] The appellant also claimed $500 for the loss of the private use of the vehicle and $300 for inconvenience. Neither of these claims has been established.

The result

[28] The appeal is allowed. The decision in the Supreme Court is set aside. The appellant is entitled to judgment against the respondent for:

• the amount of his liability to the driver of the other vehicle, $3,114 plus interest at 10% and costs of $1,000;

• $1,460 for loss of use;

• interest on the above amounts at 10% interest on the amount payable to the other driver from the date of the judgment against him to the date of payment, plus interest for loss of use of the vehicle from 12 May 1998 to the date of payment. If the parties are unable to agree on the interest payable, leave is reserved to apply to the Supreme Court;

• costs in the Supreme Court and in this court to be agreed or taxed.