The Presidential Insurance Company Ltd v Mohammed and others

The compulsory insurance scheme does not make an insurer liable beyond the persons and liabilities covered by the policy. The policy may therefore exclude a claim arising from an unauthorised driver. For taxis, deeming the owner to be the driver's employer establishes vicarious liability but does not rewrite the insurance contract. The insurer's duty to satisfy judgments applies only to liability required to be covered and covered by the policy. An insurer may also plead fraud said to have induced a separate undertaking to indemnify. On late amendment, the jurisdictional requirement of a change in circumstances is distinct from the discretionary assessment of reasonable diligence, fairness and litigation discipline. Newly discovered information can satisfy the jurisdictional threshold, although delay may still justify refusal.

The Mohammed family claimed for extensive property damage after a maxi-taxi crashed into their shop. The vehicle owner was insured by Presidential, but the driver was neither a named driver under the policy nor licensed to drive a maxi-taxi. The Mohammeds obtained a default judgment against the owner and then sued Presidential, relying on an alleged undertaking to indemnify them and on the Motor Vehicles Insurance (Third-Party Risk) Act.

Charles J dismissed an application to strike out Presidential's defence and permitted a late re-amendment. The Court of Appeal unanimously reversed that decision, struck out the defence and counterclaim, and refused the amendment. The central questions were whether the statutory scheme barred Presidential's coverage and fraud defences, and whether the late amendment was permissible.

Appeal allowed. The Court of Appeal's judgment was set aside and the proceedings were remitted to the High Court.

1. Insurance coverage. Section 4(1) of the Motor Vehicles Insurance (Third-Party Risk) Act leaves the parties to specify in the policy the persons or classes of persons covered. Section 4(7) does not impose liability for a risk which the policy does not purport to cover. Section 4A, subject to its larceny exception, deems the insured owner of a taxi to be the driver's employer for vicarious liability purposes. It does not alter the policy's terms or extend its cover. The Board applied the approach in The Presidential Insurance Company Ltd v Resha St Hill [2012] UKPC 33.
2. Judgment-satisfaction liability. Section 10(1) applies only where the liability is required to be covered and is covered by the policy. Its reference to a liability covered by the policy permits an insurer to plead that the claim falls outside the policy. The provision restricts avoidance or cancellation defences in covered cases, subject to sections 10(2) and 10(3), but does not prevent an insurer from resisting a claim based on absence of cover. It also did not prevent a fraud-based application to set aside a judgment.
3. Fraud defence. The alleged participation of a Mohammed representative in an attempt to alter the police account was relevant to the alleged oral agreement and letter undertaking indemnity. If fraud induced that agreement, it could be voidable. There was therefore no basis for striking out Presidential's defence and counterclaim.
4. Late amendment. Rule 10.6 of the Civil Proceedings Rules 1998 requires the court to distinguish jurisdiction from discretion. Becoming aware of information for the first time can constitute a change in circumstances, but reasonable diligence by a prudent litigant remains relevant to the discretionary decision. The unjustified delay could have justified refusal, but Charles J acted within her discretion because the fraud issue was already pleaded and justice required the relevant facts to be available. The Court of Appeal therefore erred in treating the absence of a significant change in circumstances as determinative. The Board referred to The Great Northern Insurance Co Ltd v Hannibal CA No 238 of 2010.
5. Wider context. The Board noted the continuing compensation gap affecting innocent victims of uninsured drivers and observed that section 12 might provide a legislative basis for compulsory cover regardless of policy definitions. That observation did not alter the construction of the Act in the present appeal. Costs submissions were invited within 28 days.

• Privy Council: In [2015] UKPC 4, allowed Presidential's appeal, set aside the Court of Appeal's judgment, and remitted the proceedings to the High Court.
• Court of Appeal of the Republic of Trinidad and Tobago: On 28 July 2011, unanimously allowed the Mohammeds' appeal, refused Presidential's application to re-amend, and struck out its defence and counterclaim.
• High Court: On 20 May 2011, Charles J dismissed the Mohammeds' application to strike out and permitted Presidential to re-amend its defence and counterclaim.