Lord Salmon (delivering the judgment of the Board):

On June 1 1963 a forester in the employment of the Forestry Department was being given a lift in a lorry owned by the second appellants and driven by the first appellant when the lorry overturned and the forester was killed. The administrators for his estate sued both appellants against whom they obtained judgment for $21,600 damages and costs on the grounds that the accident and death had been caused by their negligence. The appellants' appeal from that judgment both on liability and quantum was dismissed. The appellants however had brought in their insurers as third parties, claiming an indemnity from them in respect of the damages and costs awarded to the deceased's estate. This claim was dismissed by the learned trial Judge and so was the appeal from his judgment. The appellants now appeal to this Board against the dismissal of their appeal by the Federal Court.

The facts lie within a short compass The second appellants have a timber concession in the jungle at Bukit Tinggi and a saw mill about 32 miles away in Seremban. On the day of the accident, the second appellants' lorry had been fully loaded with logs at Bukit Tinggi and had been driven to the Government forest checking station in Kuala Pilah about ten or 12 miles away. Here the logs were checked by the Forestry Department. This check satisfied the Department that the royalties due in respect of the logs had been paid. After leaving Kuala Pilah the lorry was on the road to the second appellants' saw mill at Seremban when it was stopped by the deceased forester who asked for a lift into Seremban. The driver told him to get into the lorry and continued his journey towards Seremban. It was in the course of this journey that the fatal accident occurred.

Prior to the accident, it was not unusual for timber lorries to give lifts to foresters, both to the logging areas and to Seremban. The deceased was one of the foresters whose duty it was to inspect lorry loads of logs at checking stations or on their way to saw mills in order to ensure that the royalties due on the logs had been paid. It will be remembered that the second appellants' lorry load of logs had been duly examined and passed at a checking station shortly before the deceased forester was given a lift There was no evidence that the deceased forester was on duty at the material time, nor that he was going to Seremban other than for private purposes. The learned trial Judge's finding was that he was merely getting a free lift into town; and there was certainly no evidence to the contrary. The learned trial Judge also accepted the driver's evidence to the effect that he agreed to give the forester a free lift because he feared that if he refused to do so it might annoy the forester and cause him to create difficulties for the second appellants in the future.

It is now necessary to consider the relevant provisions of the policy of insurance. Section II of that policy provides that:

The Company [the insurers] will subject to the Limits of Liability indemnify the Insured [the second appellants and their servant the first appellant] in the event of accident caused by or arising out of the use of the Motor Vehicle... against all sums including claimant's costs and expenses which the Insured shall become legally liable to pay in respect of (a) death of or bodily injury to any person....

The relevant "Exceptions to s. II" read as follows:

The Company shall not be liable in respect of ....

(ii) death of or bodily injury to any person in the employment of the Insured arising out of and in the course of such employment,

(iii) death of or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or upon ... the Motor Vehicle at the time of the occurrence of the event out of which any claim arises...

The result of this appeal must depend upon whether the deceased forester, when he