EDIRIWEERA

VS.

SIVAGANKAN AND OTHERS

SUPREME COURT
MALALGODA, J.
THURAIRAJA, J.
AMARASEKARA, J.
SC/APPEAL/65/2016
SC/HC/CA/LA/137/2013
WP/HCCA/COL/123/2011
58123/MR
JULY 29, 2019

Motor Traffic Act, No. 14 of 1951, sections 99(1), 100(1)(b), 102(1) and (4), 105 to 109-Motor traffic accident-Driving after consuming intoxicating liquor-Damages-Insurance against third-party risks- Exclusion of drivers-General exceptions under the insurance policy- Further exclusion of permitted drivers-Agreements between insurer and insured vis-a-vis third-party risks-Public policy-Declaration of non liability-Delictual liability

The plaintiff, who had been knocked down and seriously injured by the motor vehicle driven by the 1st defendant (with the permission of the 2nd defendant owner), filed this action in the District Court claiming damages from both. The 1st and 2nd defendants did not contest the case. The vehicle was insured with the 3rd defendant insurance company. It was recorded as admissions at the commencement of the trial that the 1st defendant had driven the vehicle after consuming intoxicating liquor and that the plaintiff had received notice under section 109 of the Motor Traffic Act from the 3rd defendant. On the strength of these two admissions, the 3rd defendant moved to dismiss the plaintiff's action in limine.

Item 5 of the general exceptions of the Insurance Policy states "the Company is not liable under the policy in respect of any accident, loss or damage arising directly or indirectly whilst the insured driving such motor vehicle having consumed any intoxicating liquor or drugs or any person having consumed any intoxicating liquor or any drugs driving such motor vehicle."

The point to be decided was whether the 1st defendant fell within the definition of "any person or persons named in the policy" under section 102(4)(c) (i) of the Act and, if so, whether the 3rd defendant was entitled to a declaration of non-liability in terms of section 109 of the Act.

The District Court held with the plaintiff but on appeal the High Court held with the 3rd defendant and dismissed the plaintiff's action in limine. The plaintiff appealed to the Supreme Court.

Held :

1. In terms of section 99(1) of the Motor Traffic Act, possession of a valid insurance or security that covers third-party risks is mandatory for the use of a vehicle on the highway.

2. Section 100(1)(b) of the Act states a policy of insurance in relation to the use of a motor vehicle must be a policy which insures such person, persons or classes of persons as may be specified in the policy in respect of any liability that may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the motor vehicle on the road.

3. Section 102(1) of the Act makes conditions or restrictions introduced into insurance policies invalidating the full effect of section 100(1)(b) null and void unless such conditions or restrictions fall within section 102(4).

4. According to section 105(1) of the Act, if there is a valid insurance policy covering third-party risks, there is a statutory obligation on the insurer to satisfy the decree unless he can disclaim liability under sections 106 to 109.

5. Section 109 enacts that no sum shall be payable by an insurer under section 105 in respect of any decree if, in proceedings commenced before or within three months of the institution of the action in which the decree was entered, the insurer has obtained from court a declaration that a breach has been established of a condition specified in the policy, being one of the conditions enumerated in section 102(4).

6. Section 102(4)(b) enacts that section 102(1) is inapplicable in the case of any condition in a policy of insurance being a condition which provides that the motor vehicle shall not be driven by a person other than (i) the insured or any person