Elizabeth Ram v Motor and General Insurance Company Limited

Where compulsory motor insurance has an aggregate limit for claims arising from one accident, the statutory scheme does not require the insurer to ascertain every possible claim or obtain a rateable-distribution scheme before paying established claims. A third party’s direct right against the insurer arises only after judgment against the insured and ascertainment of the claim. Established claims must be paid in chronological order, and the insurer cannot manipulate that order. Section 4(2)(f) sets the minimum aggregate cover; it is not a payment mechanism or statutory protection for the insurer. A broader rateable scheme requires agreement by the victims or legislative intervention.

Elizabeth Ram, as administratrix of Pearl Baboolal’s estate, obtained judgment and assessed damages against the driver of a fatal maxi-taxi accident. She then brought proceedings against the driver’s insurer under section 10 of the Motor Vehicles Insurance (Third-Party Risks) Act to recover the assessed sum.

The High Court granted summary judgment, holding that the insurer should first ascertain the total claims and seek a court-devised scheme for proportionate distribution. The Court of Appeal allowed the insurer’s appeal and dismissed the action. The central issue before the Board was whether the statutory aggregate limit required an insurer to delay payment of established claims pending ascertainment of all claims and rateable distribution of the fund.

Appeal dismissed. Lord Hodge delivered the Board’s single judgment. The Board was satisfied, on the balance of probabilities, that the insurer had exhausted the $1m fund by meeting claims against the driver which had been established before the appellant established her claim.

1. Statutory framework. Section 4(2)(f) of the Motor Vehicles Insurance (Third-Party Risks) Act specified the minimum aggregate cover required for claims arising from one accident. Like section 4(2)(e), it did not create a mechanism for administering payments or confer statutory protection on the insurer.
2. Direct-action right. Section 10 imposed an obligation to pay once a third party had obtained judgment against the insured and the claim had been ascertained by judgment, arbitration award or agreement. The Board applied the established interpretation in Goberdhan v Caribbean Insurance Co Ltd [1998] UKPC 25, relying on Harker v Caledonian Insurance [1980] 1 Lloyds LR 556, Suttle v Simmons [1989] 2 Lloyds LR 227, Post Office v Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363, Bradley v Eagle Star Insurance Co Ltd [1989] AC 957 and Cox v Bankside Members Agency Ltd [1995] 2 Lloyds LR 437.
3. Administration of the limited fund. Section 10 contained no power to delay payment of an established claim so that other claimants could catch up and receive rateable payments. The Act did not address the problem of multiple claimants competing for a limited fund. The insurer was entitled to pay claims in chronological order of ascertainment and could not manipulate that order to its own advantage. The Board applied the confirmation of that principle in Teal Assurance Co Ltd v WR Berkley Insurance (Europe) Ltd [2013] UKSC 57.
4. Policy considerations. A rateable scheme might avoid injured persons being left without recovery, but the courts could not develop the common law in a manner inconsistent with the statutory scheme. Unless the insurance industry obtained the consent of all victims to such a scheme, the matter was for Parliament. The Board noted that this conclusion was consistent with the careful judgment in Patricia Dindyal and Others v Motor and General Insurance Co Ltd (HCA 1654 of 2001, unreported, 11 November 2003).
5. Order. The appeal was dismissed. Subject to further submissions, the insurer was entitled to its costs before the Board and in the courts of Trinidad and Tobago.

1. Privy Council — On appeal under [2015] UKPC 22, dismissed the appeal.
2. Court of Appeal of the Republic of Trinidad and Tobago — Allowed the insurer’s appeal on 5 February 2009, dismissed the application for summary judgment and dismissed the action.
3. High Court of Trinidad and Tobago — Ventour J granted the claimant summary judgment on 12 April 2006, holding that the insurer had failed to take account of the total claims and should seek a proportionate-distribution scheme.