INSURANCE CONTRACT

Evening Post, Volume CXXVI, Issue 73, 23 September 1938, Page 11

INSURANCE CONTRACT

EFFECT OF ADMISSION

APPEAL AGAINST DECISION

The Court of Appeal today reserved j decision on the appeal brought by the South Island Motor Union Mutual Insurance Association against a recent judgment by Mr. Justice Northcroft in a suit brought by the S.I.M.U. Company against Minsons, Ltd., Arthur William Minson and Evelyn Constance Minson, of Christchurch, to recover £ 1225 6s 2d paid by the insurance company to Mrs. Emma Jane Rule, who was injured on January 13, 1937, when she was knocked down in Cashel Street, Christchurch, by a car driven by Arthur William Minson and owned by Minsons, Ltd. It was claimed by the appellant company that Minson voided the contract of insurance by admitting liability for the accident in a statement which he made subsequent to it and contrary to section 11 of the Motor-Vehicles (Third-Party Risks) Act, which says that the owner shall not. without the consent of the insurance company, "make any offer, promise of payment, or settlement or any admission of liability."

Mr. W. J; Sim, with him Mr. E. J, Anderson, appeared for the appellant, and Mr. M. J. Gresson, with him Mr, P. H. T. Alpers, for the respondents.

At the original hearing1' Mr. Justice Northcroft found for the defendant, Minson, and the appeal was against this decision, the company seeking to recover from the respondent the amount paid by it to Mrs. Rule.

On the Bench were the Chief Justice (Sir Michael Myers), Mr.. Justice Blair, and Mr. Justice Callan.

Mr. Anderson submitted that the purpose of the Motor-Vehicles (Thirdj Party Risks) Act was, first, to protect an injured person against an impecunious driver, and, seconds to protect the participating insurance companies. He submitted that although Minson was the driver of the car involved in the accident and Minsons, Ltd., were the owners of the vehicle, it was the purpose of the Act that the terms "owner" and "driver" should be construed in a wide sense and that if either an owner or a driver made an admission involving an insurance company, the company should be entitled to recover from the person making the admission.

Mr. Justice Blair: In other words, the person who lets his tongue wag too much has to pay for it.

Mr. Gresson argued that section 11 of the Act prohibited an admission of liability to pay damages, for which the person making the admission was indemnified by an insurance company. It did not, he argued, prohibit any admission whatever but strictly an admission^ of-liability to pay damages. It was unreasonable, he considered, to argue that an unguarded remark made in the upset of a collision could be employed to void a policy of insurance. The admission must be made as a result of a claim made or of negotiations for a settlement.