W.L. Sleigh Ltd v. J & H Marsh & Mclennan (UK) Ltd [2002] ScotCS 35 (8th February, 2002)
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OUTER HOUSE, COURT OF SESSION
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OPINION OF LORD EMSLIE
in the cause
W L SLEIGH LIMITED
Pursuers;
against
J & H MARSH & McLENNAN (UK) LIMITED
Defenders:
________________
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Pursuers: Weir; Aitken Nairn, W.S.
Defenders: R W Dunlop, DLA
8 February 2002
- The pursuers are a company specialising in the business of both chauffeur hire and chauffeur-driven car hire. In this action they seek damages from the defenders, who for many years acted as their insurance brokers. The claim arises out of the defenders' alleged failure, following a road traffic accident in May 1995, to prosecute a timeous insurance claim on the pursuers' behalf. According to the pursuers' averments, one of the drivers involved in that accident was a chauffeur working in the course of his employment with them; the vehicle which he was driving was a Range Rover owned by a Mr Ian Singer from Dollar; Mr Singer was travelling in the vehicle as the only passenger; and the accident was caused by the fault of the chauffeur. Although this was not specifically averred, I was invited by both parties to proceed on the basis that Mr Singer was the person who had arranged for the pursuers to provide him with a chauffeur for the journey in question.
- When the case called before me on procedure roll, it was a matter of agreement that the validity of the pursuers' claim depended inter alia on the relevancy of the following averment at page 8D:-
"Had the defenders intimated the pursuers' claim timeously in accordance with the Claims Conditions the pursuers would have been entitled to indemnity in respect of legal liability for compensation (including costs and expenses) up to the limit of indemnity ...".
The issue thus raised and debated before me concerned the scope of the policy of insurance which the defenders had previously arranged for the pursuers with GA Bonus plc. For the defenders it was submitted that, properly construed, the policy specifically excluded any possibility of a claim arising out of the road traffic accident in question, with the result that the action was fundamentally irrelevant and should be dismissed. Alternatively, failing dismissal of the whole action, certain averments in Condescendence 9 were irrelevant and should not be admitted to probation. In response, the pursuers contended that the terms of the policy were wide enough to cover their claim, and that a proof before answer on the whole of the parties' averments should be allowed.
- In support of his argument that the action should be dismissed, counsel for the defenders founded on the "LIABILITY" chapter of the policy, and in particular on Additional Clause 3 entitled "Motor Contingent Liability" which appeared at page L4. The essential terms of that Clause for present purposes were as follows:-
"Where the Insured is legally liable for Accidental Bodily Injury or loss of or Damage to Property arising out of the use of any motor vehicle in connection with the Business the Company will indemnify the Insured against such legal liability.
This indemnity will not apply
- in respect of any vehicle owned or provided by the Insured or any principal for whom the Insured is working or any sub-contractor acting for or on behalf of the Insured,
- in respect of loss of or Damage to such vehicle or to goods conveyed therein or thereon ....".
In counsel's submission, any question of the pursuers having a valid claim under that clause (on which they expressly founded in Condescendence 3) was excluded by sub-paragraph (a), in respect that the pursuers' alleged liability to third parties arose out of the use of a vehicle owned by the client, Mr Singer, and that in the circumstances narrated Mr Singer fell within the scope of the phrase "any principal for whom the Insured is working".
- By reference to certain well-known authorities, notably Investors Compensation Scheme Ltd v West Bromwich Building Society and Others 1998 1 WLR 896 and Bank of Scotland v Dunedin Property Investment Co Ltd 1998 SC 657, counsel submitted that the word "principal" should be given its ordinary and natural meaning, and that it should be held apt to cover a person, such as Mr Singer, acting on his own behalf and in his own right in setting up the arrangement under which the pursuers' chauffeur was provided. This understanding of the word "principal", he said, was consistent with dictionary definitions (Jowitt's Dictionary of English Law, 2nd Ed. at p1424 and Oxford English Dictionary, 2nd Ed., at pp 495-6), and also derived support from the broad view of the term "agent" which had been taken by the English courts in cases such as Kennedy v De Trafford & Others 1897 AC 180 and Applegate v Moss 1971 1 QB 406. Mr Singer was, in summary, a main actor for whose benefit the pursuers' services were provided, and was therefore a "principal for whom the (pursuers were) working" for the purposes of Additional Clause 3(a).
- If I was against him on that submission, counsel argued that in any event Additional Clause 3(b) applied, and that the pursuers had no relevant claim in respect of loss of the vehicle in question, namely Mr Singer's Range Rover. In counsel's submission the word "such" in that sub-paragraph referred back to the vehicle covered by the main indemnity provision, and not to the vehicle excluded under sub-paragraph (a). On this basis, the pursuers' averments in Condescendence 9 regarding the liability which they had incurred to Mr Singer should be excluded from probation, (i) because, as a matter of relevancy, that liability primarily comprised the loss of Mr Singer's vehicle, and (ii) because, as a matter of specification and fair notice, the pursuers had failed to identify the nature and extent of the balance of their liability. Counsel directed my attention to four sentences of Condescendence 9 as being the offending averments in this context.
[6[ In reply, counsel for the pursuers maintained that, on a proper construction, Additional Clause 3(a) did not render his clients' action irrelevant. He took no issue with the authorities cited by the defenders regarding the proper approach to be taken by the Court in construing a contract, but submitted that the ordinary and natural meaning of the phrase "any principal for whom the Insured is working" was not that which had been advanced on the defenders' behalf. According to counsel, if the phrase was considered in its wider context, it was clear that it could not sensibly be held to refer to a customer or client of the pursuers. For one thing, the term "customer" was expressly used in several clauses within the Schedule to the policy, and this prima facie suggested that the term "principal" in Additional Clause 3(a) had been used to mean something else. More importantly, in his submission, Additional Clause 3(a) could and should be read as applicable to three analogous situations where the vehicle in question was owned or provided by someone other than a customer or client. Ownership or provision by the pursuers themselves was admittedly covered by the exclusion, as was ownership or provision by sub-contractors to the pursuers. It would therefore be logical and natural if sub-paragraph (a) were also held to cover ownership or provision by someone else on the supply side, to whom the pursuers were in the position of sub-contractors or agents. In other words, it was argued, the sub-paragraph struck at circumstances where the services provided to a customer included the provision of a motor vehicle "... by or by way of the pursuers".
- Counsel maintained that this construction did no violence to any of the words used in sub-paragraph (a); that on the contrary it gave proper content to the key phrase "any principal for whom the (pursuers were) working"; and that it also gave content to the main indemnity provision of the Clause. By contrast, the defenders' argument would lead to sub-paragraph (a) applying to different and disparate things, and would deprive the main indemnity provision of content.
- On the defenders' subsidiary argument, counsel for the pursuers appeared to acknowledge that Additional Clause 3(b) referred to any vehicle, the use of which brought the main indemnity provision into play, and that accordingly the pursuers were not in a position to recover that part of their liability to Mr Singer which related to the loss of his vehicle. However, he submitted that his averments were adequate to enable the defenders to prepare for a proof, and in particular to recover all documents necessary to enable the proper extent of the pursuers' claim to be fully assessed. In these circumstances, he intimated that he did not seek leave to amend Condescendence 9 at this stage.
- In my judgment, the policy document founded on by the pursuers falls to be construed according to the well-established principles discussed in the authorities to which I was referred. Words should, where possible, be given their ordinary and natural meaning, consistent with the contractual context in which they appear, and in the case of a contract such as an insurance policy the aim must be to find an interpretation compatible with commercial common sense. On that basis, I have reached the conclusion that the pursuers' contentions are to be preferred, and that their claim is not rendered irrelevant by the exclusionary terms of Additional Clause 3(a). As confirmed by the reference in Exception 2 on page L6, Additional Clause 3 was prima facie intended to have a wide application, and to cover claims arising out of road traffic accidents. On the defenders' approach, however, sub-paragraph (a) would exclude all claims where the vehicle was owned or provided on either side of a chauffeur hire arrangement, that is, where the vehicle was owned or provided either by the pursuers or their associates, or by the customer or client. The word "principal" would simply mean "customer", "client" or even "person", even though any one of these words could easily have been used if that had been the intention. Moreover, the words "working for" would not normally be apt to describe the hire of a vehicle, or of a chauffeur, to a client. Yet this is what the defenders' interpretation would entail. All in all, this strikes me as a rather unlikely reading of the policy.
- It would, in my view, be entirely consistent with the ordinary and natural meaning of the words used if the reference to "any principal ..." in sub-paragraph (a) were understood as denoting some other person, firm or corporation engaging the pursuers as agents or sub-contractors in connection with obligations undertaken towards a customer or client. I can see nothing extraordinary or unusual about construing the term "principal" in this way; on this approach all three elements of sub-paragraph (a) would be ejusdem generis on the supply side of hiring arrangements; the words "working" and "acting" would mean broadly the same thing in the same context; and in addition the main indemnity provision would be left with some measurable content. Accordingly, I consider that the pursuers' contentions should be upheld in preference to those advanced on behalf of the defenders. It was not argued before me that there was room for both parties' contentions to be given effect side by side, but I would in any event have rejected such an argument as unsound. It is highly improbable, in my view, that one and the same term, namely "principal", could have been intended to refer to both supplier and customer interchangeably.
- For these reasons, I am unable to accept the defenders' contention that this action is not relevant to go to inquiry.
- Turning now to the defenders' subsidiary argument based on Additional Clause 3(b), I have already mentioned that its force was not seriously disputed by counsel for the pursuers. Nevertheless, I am not persuaded that I should exclude from probation the four sentences identified by counsel for the defenders, because in my judgment they are not wholly irrelevant. The first narrates the amount of Mr Singer's actual claim; the second narrates that this claim related primarily to the loss of the vehicle; the third confirms that Mr Singer also sought damages for personal injury; and the fourth narrates the pursuers' actual outlays in settlement. By way of amplification, the pursuers incorporate the Closed Record in that action in their pleadings. Against that background, the pursuers' entitlement clearly extends to the personal injury element of their liability to Mr Singer, and in my view all four of the sentences complained of may be said to have a bearing on the level of that entitlement. In these circumstances, I consider that the appropriate course would simply be for me to sustain the defenders' first plea-in-law to the extent of finding (a) that the pursuers had no relevant claim under the policy in respect of liability for the loss of Mr Singer's vehicle, or of any goods carried therein; and (b) that the pursuers cannot now seek to recover the amount of any such liability from the defenders. It does not seem to me that leaving the various averments in place will cause any real prejudice to the defenders. None was suggested in the course of the debate, and in my view there is quite sufficient in the pursuers' averments to enable the defenders to recover all documents showing or tending to show the breakdown of the pursuers' settlement figures and the extent to which these figures concerned heads of damage other than the loss of the vehicle or its contents.
- On the whole matter, subject to the finding referred to in the preceding paragraph, I shall allow a proof before answer, reserving meantime the first defenders' first plea-in-law.
