(COURT OF APPEAL)

ZAKI SAIFAIN v. ARAB INSURANCE COMPANY

AC-REV-21-1967

Principles

·  jnsurance—SubrogatioflWhei insurer fully paid the assured—Can sue in its own name—Not essential to sue in name of assured or to join assured as co-plaintiff

“When the insurer has fully paid the assured, the insurer can sue in its own name without the necessity of suing in the name of assured, or of joining the latter as co-plaintiff.”

Advocates: Abdalla El Hassan And Abdel Wahab Abu Shakeema for applicant

Salah Mustafa for respondent

Judgment

B. M. A. Baldo J. August 7,1969:-This  is an application against the decision of His Honour the Province Judge, Khartoum dismissing summarily an application to him for revision of the decree of District Judge, Khartoum.

On perusal of the record, and consideration of the contentions raised by the learned advocates for both parties, I have come to the following conclusion. On November 11,1961, while applicant was driving car No. 1934 A, along Horia Street, he collided with car No. 4K 5773 which was insured with the respondent company for the period May 17, 1961, to May 17, 1962. Car No.5773 was damaged, and the cost of the repairs amounted to £S.78.790m/ms. Respondent indemnified the assured, and instituted this suit for the recovery of what was paid to him. Applicant had been criminally convicted. There is nothing in the record to show that the criminal proceedings were admitted as evidence in the civil case. The damages awarded are those proved in the lower court to have been the cost of repairs; they are not excessive. The cause of the accident, according to applicant’s admission, was due to his failure to stop at a halt sign. The car applicant was driving was described by him as a long car, with a left driving wheel, and not being his property. Moreover, applicant stated that he is suffering from defective memory. It is quite clear from these admissions that the accident was due to applicant’s negligence. The evidence adduced does not show that the assured has in any way been responsible for this accident. The findings of fact of the lower court will not be disturbed by this court unless its decision is obviously and manifestly against the weight of evidence.

There remains the most important question of subrogation raised by the learned counsel for applicant who contended that respondent has no right of action or at any rate none in their owi name, that they can only have that right after obtaining a letter of subrogation from the assured or the latter is joined as co-defendant. The general rule under the English common law is that the right of the insurer to institute legal pro ceedings on behalf of the insured is based on the equitable doctrine of subrogation. The policy of insurance is considered as a contract of indemnity. Thus where one party has agreed to indemnify another, he will on making good the indemnity step into the shoes of the indemnified person, and can sue in that behalf to the extent of the amount he actually paid. Scandinavian Airlines System (S.A.S.) v. Ethiopian Airlines (E.A.C.) & Another (1965) S.L.J.R. 119. It is also a rule of the English common law that if the assured upon tender of a proper indemnity as to costs refused the use of his name, the insurer can only by proceedings in equity compel him to give the use of his name, King v. Victoria Insurance (1896) A.C. 250. This means that although the insurer has a right of action on payment of the indemnity, he cannot sue alone, he can only sue in the name of the assured, or join the latter as co-plaintiff. In this connection it is stated in MacGillivray, Insurance Law (6th ed.) p. 733:

“If once a claim be paid then as a matter of equity the rights to cover against third persons pass from the assured to the insurer although the legal right to compensation remains in the assured, and although actions at law must be brought in the name of the assured and not of the insurer.”

These rules of the common law have been in application in English courts for hundreds of years. The question is whether the English rule of sub rogation with its rigidity be adopted by our courts or not. No doubt the backbone of the subrogative doctrine is the question of the satisfaction of the indemnity in that the insurer cannot subrogate in a right of action until he has paid the sum insured and made good the loss. This simply means that on payment of the indemnity the right of action in any actio connected with the policy of insurance is automatically vested in the insurer who can claim any compensation to which the assured was entitled.

It is absurd to say that instead of instituting the suit in his own name, the insurer must take proceedings in equity to compel the assured to give him the use of his name. What does this mean? And what does it serve? Such a rule of procedure is in my opinion a waste of time and is a burden on litigants as it initiates additional costs.

The risk in this rule is that it puts the insurer at the mercy of the assured who may make a settlement with the other party or who may disappear and not be traced.

This is in fact a complicated form of procedure, and it will do more harm if adopted by our courts at a time when it becomes highly essential to simplify the procedure in our courts. The English common law rule of subrogation should, I believe, be departed from at this point. In any case where the insurer has fully paid the assured, the insurer can sue in its own name without the necessity of suing in the name of assured, or

joining the latter as co-plaintiff in accordance with the Civil Justice Ordinance, Ord. VII, r. 8 of the 1st Schedule. Where the insurer is sought to be joined as co-defendant the case is different, as the Civil Justice Ordinance, Ord VII, r. 8 and the insurance (Control) Act 1960, s. will come into play.

For these reasons, this application should, therefore, be dismissed with no order as to costs.

Dafalla El Raddi Siddig J. August 7, 1969 :—I am of the same Opinion. I desire to add only few points.

In so far as the evidence in this case is concerned, it is clear on the record that the parties dispensed with the testimony of the traffic police and that they conceded to the admission of the sketch as an official docu ment. Of course in civil cases the parties are entitled by their formal admissions to render it unnecessary to adduce evidence in proof of facts covered thereby. See Cockle: Cases and Statutes on Evidence, 7th ed., at 541

With regard to the application of the doctrine of subrogation it is my view that the invention of the doctrine was to meet a situation in which an insurer could be left with a remedy.

It is an established principle of the law that there is no injury without a remedy, uhf ius fbi rernedium. The pith and core of the doctrine is to avail an insurer who actually pays with a cause for indemnity. The requirements in England, to join the insured as a co-plaintiff or to force him in equity to allow the insurer to sue in his name could only mean, to my mind, that the system in England is keen to avail an insurer with a right, lack of which may result in an injustice. In this country, the Civil Justice Ordinance ordains that no person can be joined as a co-plaintiff against his will. See the Civil Justice Ordinance, Ord. VII, r. 8 (2) (s). Thus let us assume that a situation arises in which an insured person refused joinder. In the event the insurer will be left without a remedy. Not even an action in equity can avail him because of the maxim that equity follows the law, which is the section heretofore cited.

It is ergo, my opinion that once an insurer proves payment he will be entitled to step into the shoes of the insured and that creates the privity with the third party.