Insurance Company of the Bahamas Ltd v Eric Antonio

Mandatory motor insurance does not extend to liabilities outside the policy’s defined scope. A policy and its certificate must be read together, and a named-driver limitation may exclude liability arising from an unnamed driver’s negligent driving. Section 12(1) of the Road Traffic Act applies only where the judgment concerns liability covered by the policy. It prevents an insurer relying on avoidance or cancellation provisions in that situation; it does not enlarge the insured risk or invalidate restrictions defining who is insured to drive. Courts cannot impose liabilities for risks neither accepted under the policy nor required by legislation. Any wider solution is a matter for legislative or extra-statutory schemes.

Eric Antonio lost his sight in a collision caused by Stevan Edgecombe, who was driving a bus owned by his employer, Convenient City Transit Services Co Ltd. Antonio obtained judgment against Edgecombe and the company, but it remained unpaid. The bus was insured by Insurance Company of the Bahamas Ltd under a policy and certificate naming 11 persons or classes of persons entitled to drive; Edgecombe was not named.

The Chief Justice held that the insurer was not liable. The Court of Appeal reversed, holding that the policy covered the company’s vicarious liability and, alternatively, that section 12(1) of the Road Traffic Act invalidated restrictions on third-party liability. The central issues were the construction of the policy and certificate, and the scope of section 12(1).

The Board allowed the appeal and restored the Chief Justice’s order refusing Mr Antonio’s relief.

1. Construction of the insurance. The policy made the Certificate of Insurance part of, and its most important component. The policy repeatedly defined authorised drivers by reference to persons named in the certificate. Read together and as a whole, the policy and certificate confined driving cover to the 11 persons or classes listed in Item 5. The policyholder’s identification in Item 2 did not make it a named driver.
2. Commercial efficacy. Extending cover to unnamed employees would expose the insurer to undisclosed and unrated risks, defeat the function of named-driver cover and create commercially incongruous protection for the policyholder and drivers. That construction was not required to give the policy business efficacy.
3. Section 12(1). Section 12(1) applies where judgment is obtained against a person insured by the policy for liability required to be covered and covered by the policy’s terms. In that situation the insurer cannot rely on avoidance or cancellation, subject to section 12(2). The subsection does not make insurers liable for liabilities outside the policy’s scope. Motor and General Insurance Co Ltd v Pavy [1994] 1 WLR 462 was confined to a post-accident breach affecting liability otherwise covered; it did not support deletion of the statutory qualification.
4. The Board noted that Herbert v Railway Passengers Assurance Co [1938] 1 All ER 650 and The Presidential Insurance Co Ltd v Mohammed [2015] UKPC 4 confirmed that provisions of this kind do not override a named-driver restriction. Wider protection for victims where no relevant cover exists is for the legislature or an extra-statutory insurers’ bureau.

The parties were given 14 days to make written submissions on costs, with a further seven days to reply.

1. Privy Council: Appeal allowed and the Chief Justice’s order restored.
2. Court of Appeal of the Commonwealth of The Bahamas: On 30 May 2013, reversed the Chief Justice, holding that the policy covered the company’s liability and, alternatively, that section 12(1) invalidated restrictions on third-party liability.
3. Chief Justice of The Bahamas: On 9 December 2011, held that the insurer was not liable because the driver was not named.