action by third party against insured whether insurers to be joined

 Today case on Nigerian Insurance Court Cases blog:

ISSUES:  Insurance, action by third party against insured whether insurers to be joined, circumstances justifying joinder, high court rules, order 14 rule 5.




Abdul Jebu Dede -Plaintiff United Arab Airlines
United Nigeria Insurance -Defendants  

Suit at the high court of Nigeria, kano state on 14th march, 1969 before;
 
•Holden J.

COUNSEL:

•Kaloma Ali for plaintiff
•K Sofola for defendants
 
FACTS:
In an action commenced by a third party against the insured, the plaintiff joined the insurers (second defendant). The insurers the brought a motion contending that they be dismissed from the action on the ground that the joinder was misconceived in law there being no privity of contracts between them and the plaintiffs.
 
HELD:
A. Until there is first a judgment in the plaintiff's favor against the wrong doer and secondly a failure by the wrong doer to pay under that judgment, the injured person has no claim against the insurers and such a claim as he acquires under section 10 of the motor vehicles (third party insurance) law is in effect a right to stand in the shoes of the wrong doer and demand the indemnity due from the insurers to the wrong doer.

B. The injured person cannot ask for the insurers to be joined as parties to the original action for there are total strangers to him and his right of action.

C. On the other hand if the wrong doer knows that there is to be a dispute between him and the insurers as to their liability under the policy of insurance, then it seems to be proper for him to ask for the insurers to be joined as third parties so that the dispute can be sorted out.

D. Likewise it will appear on the analogy of the substantive decision that the insurers would be within their rights by applying to be joined in any case where they are intended to dispute liability to the wrong doer so that their liability to indemnity can be decided in the same suit. Application granted.
 
RULING:
Holden J; there is an application before the court requesting that the second defendant be dismissed from the action. Mr Sofola for them concedes that there is a policy of insurance gives rise to a contract of indemnity, but submits that this does not create any privity of contract between them and the plaintiff or give him any right of action whatsoever against them.

Mr Kaloma Ali for plaintiff submitted that it is proper to join second defendants in order to avoid the risk of second proceedings having to be taken by plaintiffs in the event of their succeeding against the first defendant and the insurance company then refusing to pay. He referred to the decision of Bello J (as he was then) in Onoche vs Audu and another unreported suit decide in 1968 where the joinder of insurance was held for these very reasons. He also refferred to Ojemuyiwa vs Sun insurance office limited where the supreme court allowed the insurers to appeal as interested persons though they had not been parties to the original case.

In particular he referred to Bairamian JA referring to the point that there are no jury trials of such actions in Nigeria and suggested that the bar should consider if it would not be better always to join insurance companies as parties. In reply Sofola submitted that Onoche should not be followed as it was decided on hypothetical issues which had not in fact arisen before the court. He submitted that the relevant part of the judgment in Ojemuyiwa was obiter and directed to the fact that in some countries it is the law that insurance companies be joined. He appeared to make this remark in order that the bar should set in motion the machinery for having the law in Nigeria changed to comply. This has not been done.
This is an interesting point and one which seems to have cause a certain amount of confusion in some quarters. The principle is simple, in my view. The claim is by an injured person against the wrong doer. If and when he succeeds in proving that the claim and the court says he is entitled to the damages, then and not till then can the wrong doer call upon his insurers to indemnify him. His rights to indemnity cannot arise until a judgment is given against him, for till that moment nobody knows whether he will have to pay or how much. The injured person has the right to be paid by the wrong doer the sum fixed by that judgment and it is only if payment is not forthcoming that he can take steps to claims from insurers through section 10 of the motor vehicles insurance law. Until there is first a judgment in his favor and secondly a failure by the wrong doer to pay under that judgment, the injured person has no claim against the insurers and such claim as he acquires under section 10 of the motor vehicles insurance law, is in effect a right to stand in the shoes of the wrong doer and demand the indemnity due from the insurers to the wrong doer.  The injured person cannot ask for the insurers to be joined as parties to the original action for there are total strangers to him and his right of action. On the other hand if the wrong doer knows that there is to be a dispute between him and the insurers as to their liability under the insurance policy, then it seems to be proper for him to ask for the insurers to be joined as third parties so that the dispute can be sorted out. 

Likewise it would appear on the analogy of a substantive decision in Ojemuyiwa that the insurers would be within their rights in applying to be joined in any case where they intended to dispute liability to the wrong doer, so that their liability to indemnify can be decided in the same suit. The part of Bairamian's speech referred to is not to be followed. As law for three reasons; firstly, it was obiter and not intended as a statement of law. Secondly, it was merely intended to make the bar think whether or not that was what the law ought to be so that the legislation could perhaps be initiated. Thirdly, it came before a very clear judgment of the court of appeal. The application of the second defendant is allowed and they are dismissed from the suit.
 
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