16TH JUNE, 1978.

SUIT NO. SC 260/1975

3PLR/1978/9 (SC)



(1978) 6 – 7 Sc 39












Bayo Osipitan for the Appellant.

Prof. A. B. Kasunmu for the Respondent.



COMMERCIAL LAW – CONTRACT:- Privity of contract – Insurance Policy as a contract of indemnity – Liability of insurer – Need for same to be invoked by a party to the contract and to be based on proof of the existence of the contract of indemnity – Where right to bring the action conferred by statute –Proper treatment

INSURANCE AND RE-INSURANCE LAW:- Contract of indemnity – When obligation arises – Third party policy – Occurrence of risk insured – Proceedings against insured – Joinder of Insurer – When appropriate – Procedure for claims against insurer by insured – S. 10, Motor vehicles (Third Party Insurance) Act, Cap. 126, Laws of the Federation of Nigeria – How treated

TORT AND PERSONAL INJURY:- Negligence – Claim and Proof of liability – Injuries arising from negligent act of driver of an insured vehicle – Joinder of insurance company – Justification – Need for issues to be joined on the pleadings implicating insurer – Effect of failure thereto

HEALTHCARE AND LAW:- Access to healthcare – Pain and suffering arising from negligent driving by defendant – Recovery of cost from defendant – Joinder of defendant’s principals or insurers – Conditions precedent

EMPLOYER AND EMPLOYEE LAW:– Agent and principal – Vicarious liability of principal for the act of agent – How proved – Need to establish agency relationship

TRANSPORTATION AND LOGISTICS LAW – MOTOR VEHICLE ACCIDENT:- Motor car vehicle accident – Insured vehicle – Where negligent driver is not a party to the contract of indemnity and fails to prove agency relationship with insured person – Whether can join insurance company to the action by third party notice

PRACTICE AND PROCEDURE – ACTION:- Civil proceedings – Failure to amend Writ of summons – Failure of party to enter appearance – Legal effects

INTERPRETATION OF STATUE:- Section 10 of the Motor Vehicles Third Party Insurance Act – Interpretation of




IRIKEFE, J.S.C. (Delivering the Judgment of the Court):

On 11th April, 1970, a Mercedez-Benz lorry No. WB 4760 in which the respondent herein was a fare-paying passenger, careered off the highway near Ubulu-Uku Town in Bendel State, into a ditch and landed on its side. The respondent got trapped in the front compartment and had to be freed with the aid of some other passengers. On being freed, he complained of a smarting sensation in his two eyes as some fluid, the nature of which was not disclosed by evidence had apparently got into the eyes while he was still trapped in the vehicle. He also complained of reduced visibility at the scene of the accident resulting within a short space of time in total loss of sight in the two eyes.


At the time of the accident, the vehicle was under the control of the 2nd defendant, its driver, who has not appealed.


The respondent commenced the present proceedings on 30th November, 1972 at Asaba in the Asaba Judicial Division of the then Mid-Western State initially against the two persons – namely:-

(a)     one of the alleged co-owners of the lorry, and

(b)     the driver.



The plaint reads:-

‘The plaintiff claims from the defendants jointly and severally the sum of £30,000 (Thirty thousand pounds) being general and special damages for negligence. On or about the 11th day of April, 1970, at UBULU-UKU within the jurisdiction of this Honorable Court, a lorry No. W.B. 4760 owned by the 1st defendant and driven by the 2nd defendant who was the servant of the first defendant was so negligently driven on the public highway by the said second defendant, having regard to all the circumstances of the case including the nature, condition and use of the highway and the amount of traffic which actually was at the time or which might reasonably be expected to be on the highway, that it fell into a pit on the wrong side of the road and severely injured the plaintiff who as a result suffered great pains and personal injuries and lost his two eyes and became blind.


  1. Loss of two eyes.
  2. Deep cuts and wounds at back and shoulder.
  3. Pains and suffering.

Particulars of Special Damages

(a)     Transport and hospital expenses                                     £100

(b)     Loss of earning capacity due to loss of two eyes    £10,000

AND GENERAL DAMAGES for personal injuries                 £19.900

Total damages claimed                                                         £30.000″  


Later, two additional defendants were introduced into the case. The third defendant, one N. Nnonyeli, of 48, Forestry Road, Benin City, was added upon the application of the respondent.


The respondent’s affidavit in support of his motion to amend the writ to include the 3rd defendant alleged inter alia as follows:-

“3.     That investigations made by me have revealed that although the said vehicle was owned and managed by the 1st defendant at the material time insured in the name of one N. NNONYELI by the Mercury Insurance Company Ltd., whose Head Office is at No. 17 Martins Street, LAGOS.

  1. That in the interest of justice it is necessary to bring in the insured as a co-defendant.
  2. That in the interest of justice both the ostensible owner, that is the 1st defendant, and the insured, N. NNONYELI, should be of great assistance to the court to arrive at the justice of this case.”


As the 3rd defendant took no part in the proceedings throughout, we shall from time to time set out all that was said about him, since, in our view, he was the principal party to whom the judgment in this case was directed as he it was, who took out the insurance policy on the strength of which the appellant was brought into the proceedings.


Service of the writ on the 3rd defendant was made by an order of substitution, that is by pasting the writ of summons on his last known address, namely – No. 48, Forestry Road, Benin City.


The respondent’s affidavit in support of the motion for substituted service stated inter-alia:-

“3.     That all efforts to get at the 3rd defendant at Benin to effect service on him proved abortive.

  1. That I have once consulted the 3rd defendant at the said address viz: 48, Forestry Road, Benin and he wrote me through the said address but the said letter got missing.
  2. That I verily believe that the said 3rd defendant is deliberately evading the service of the summons.”


On 29th June, 1973 when the lower court made the order for pleadings, the learned trial Judge made the following note in his record book:-

“3rd defendant duly served on 11/6/73.”


We take the above note to mean that the order for substituted service had been complied with on that date.


As against the 1st, 2nd and 3rd defendants the respondent averred inter-alia as follows:-

“2 (a) On 11/4/70 the first defendant and the third defendant were transporters of goods and passengers and owners of commercial vehicle No. WB 4760 used for this purpose.

(b)     On 11/4/70 the vehicle No. WB 4760 was insured with the fourth defendant in the name of the third defendant and was physically and personally managed by the 1st defendant and the 2nd defendant at Agbor/Ubulu-Uku/Asaba road.

(c)     On 11/4/70 the second defendant was the driver employed and paid by the first defendant and the third defendant to drive vehicle No. WB 4760.

  1. The defendants carried on their business along most roads of Nigeria including AGBOR/UMENEDE/UBULU-UKU/ASABA road.
  2. On 11th April, 1970, the 2nd defendant in the course of his employment accepted the Plaintiff as a passenger to be by him (2nd Defendant) safely carried in WB.4760 along the public highway from Agbor via Ubulu-Uku to Asaba for reward.
  3. The 2nd Defendant did not safely carry the Plaintiff but drove W.B. 4760 with such circumstances of negligence that it moved from the left hand side of the road to the right hand side at a bend near a bridge at Ubulu-Uku within Asaba Judicial Division and fell into a ditch and injured the plaintiff.
  4. At that time Nigeria was driving on the left hand side of the road.
  5. The vehicle fell into the ditch and injured the plaintiff through the negligence of the second defendant.”


The 1st defendant in addition to the general traverse, averred inter-alia as follows:-

“3.     The first defendant avers that he is agent of the third defendant at all material times and that the second defendant was the driver.

  1. The first defendant admits paragraph three but avers that the accident occurred but denies that it was as a result of the negligence of the second defendant.”


The first defendant next applied that the appellant be joined as the 4th defendant and this application was granted. The above notwithstanding, the record does not indicate that an amended writ of summons was ever filed, nor for that matter, an amended statement of claim setting out in clear terms the nature of the claim, if any, that the respondent had against the appellant, although he (the respondent) did aver in paragraph 2(b) of his amended statement of claim as follows:-

“On 11/4/70 the vehicle No. WB 4760 was insured with the fourth defendant in the name of the third defendant and was physically and personally managed by the 1st defendant and the 2nd defendant at Agbor/Ubulu-Uku/Asaba Road.”


In the light of the foregoing, the appellant merely averred inter-alia as follows:-

“6.     Except having business transaction with the 3rd defendant, the 4th defendant denies having transaction with the plaintiff or other defendants in this case.

  1. The 4th defendant avers that one Mr. N. NNONYELI insured vehicle Registration No. WB 4760 subject to conditions stipulated in the Insurance Policy. These conditions shall be relied upon, if necessary, at the trial.”


At the hearing before the lower court, the respondent gave evidence on oath and called witnesses. He did not, however, say a word about the 3rd defendant. The latter as we had pointed out earlier on, did not put in appearance, throughout the hearing. It is equally significant that even the 1st defendant at whose instance the 3rd defendant was joined in the action had very little to say about him. When asked about him by the court he deposed thus:-

“I know one NNONYELI. He is from the East Central State (Igbo). I do not know the town he comes from in the East Central State. He was living in that State when the accident took place. I have never visited his place of abode there.

  1. Did you tell your lawyer he lived in the East Central State?
  2. I did not tell him.

Court-Q.      You did not know you should tell him?

  1. I did not know I should.

Court-Q.      Did your lawyer ask you?

  1. He did and I told him I did not know where he lived.



In answer to questions put to him on his relationship with the 3rd defendant, he had this to say:-

“I took only what he gave me. Nnonyeli gave me no fixed commission. He only gave me some money (dash) from time to time.”


One Mrs. Theresa Momodu (Nee Omashor) the Area Representative at Agbor of the appellant, testified on its behalf. She denied ever being known as Miss Ogun as alleged by the 1st defendant and insisted with much emphasis that it was the 3rd defendant in person with whom she dealt when the insurance policy in this case was taken on 3rd January, 1970. She denied any prior knowledge of the existence of the 1st defendant until the time when she came to court to testify in this case. She added that having no prior knowledge of his existence, she was in no position to confirm or deny that the (1st defendant) was the agent of the 3rd defendant.


The 2nd defendant admitted being the driver of vehicle No. WB.4760 on the date of the accident and also that he was employed to drive the said lorry by the 1st defendant who paid him a salary of £8 per month. He also denied knowing any one going by the name of the 3rd defendant.


After a very careful evaluation of all the evidence, the learned trial Judge (Uche-Omo, J. (as he then was) allowed the claim of the respondent and awarded him the total sum of N11,300 as damages against all the defendants (amongst whom the appellant is the 4th defendant) jointly and severally.


The learned trial Judge’s decision rests entirely on a finding of negligence against the 2nd defendant. He dealt with this in the following words:-

“I therefore hold that negligence by the 2nd defendant has been duly proved. The vicarious liability of his master/employer for the consequences of this negligence has not been denied. On that day the 2nd defendant was in the employment of the 1st defendant, acting for and on behalf of the 3rd defendant – the actual owner of the vehicle vide – Shamonda v. James (1960) L.L.R. 47. 3rd defendant remains an “owner’ who has throughout the whole transaction, in my finding not put in any appearance.

The 2nd defendant was also going to ASABA FROM AGBOR in the course of his lawful employment. The 1st and 3rd defendants are therefore vicariously liable for the negligence of the 2nd defendant, and I so find. xxxxxxxxxxxxxxxxxxxxxxxxxxxxx .


Contrary to the submission of counsel for the 4th defendant company, I am satisfied that the link between the 4th and the 1st, 2nd and 3rd defendants has been fully established. The onus is on the 4th defendant company, in order to avoid the policy, to establish that the accident was not reported within 30 days vide Jia Enterprises (Electrical Limited) vs. British Commonwealth Insurance Co. Ltd. (1965) N.M.L.R. 147. This it has failed, in my finding, to establish. The 4th defendant company is therefore liable to satisfy any damage that may be awarded in favour of the plaintiff in this action.”


Before the above finding, the learned trial Judge had rejected in unequivocal language the testimony of the appellant’s sole witness in this case, on the question whether the insurance policy with which the action is concerned was taken up by the 1st defendant or by the 3rd defendant. As to this, he observed as follows:-

‘The 4th defendant’s only witness denied any knowledge of the 1st defendant.

She said she dealt only with the 3rd defendant. She further denied ever being informed orally or in writing by the 1st defendant or any one else about the accident. The 1st defendant said he reported the accident to one Theresa Ogun – the then representative of the 4th defendant company at Agbor: and that he was the one who took, out the policy on 3/1/70, in the name of N. Nnonyeli – the owner.

Mrs. Theresa Omashor was, in the witness box, a very self-confident and articulate witness. She is obviously a capable woman. However I have no doubt whatsoever that she was not telling this Court the whole truth.

I am satisfied and so find that the same person now known as Theresa Momodu, and previously as Theresa Omashor, was known to the 1st defendant in January, 1970 as Theresa Ogun.

If the actual owner of the vehicle is from the East Central State, and was in that enclave during the war (which ended on 15th January,. 1970), which facts I believe to be true, then it is very unlikely that he was at Agbor, and negotiating an Insurance Policy for vehicle No. WB 4760 on the 3rd January, 1970. I believe and find as the truth, that the 4th defendant’s witness on that date, with full knowledge of the true position, and anxious to do some lucrative insurance business, carried out the negotiation for the policy, as a result of which Exhibits G AND H were issued, with none other than the 1st defendant – Christopher Ajarbor.”


This appeal is against the foregoing decision and learned counsel appearing on behalf of the appellant rested his case on the only ground argued before us, which reads:-

“15.   The learned trial Judge erred in law and misdirected himself when as at that stage of the proceedings in the High Court he was considering the vicarious liability of the 3rd defendant (N. NNONYELI) as against the 2nd defendant – driver MR. OKAFOR DIBIA when the evidence disclosed the fact that the said 3rd defendant did not employ or had any notice whatsoever of the employment of the 2nd defendant/driver in the driving and management of the vehicle Registration No. WB 4760, the subject-matter of the action insured by the 3rd defendant with the appellant.

Particulars of Error and Misdirection

(a)     It is an error of law on the part of the learned judge to have considered JOINTLY and SEVERALLY the liability of the appellant as an insurer with the liabilities of the 1st, 2nd, 3rd defendants and that of the plaintiff.

(b)     The learned trial Judge failed to consider the provisions of Section 10 of the Motor Vehicles Third Party Insurance Act (Cap. 126 – Laws of the Federation) in that no evidence was led, and the plaintiff did not plead that the appellant was served with the usual statutory notices under the above section before instituting the proceedings.

(c)     The learned trial Judge misconstrued the statutory provisions of and the interpretation of:-

(i)      Section 10 of the Motor Vehicles Third Party Insurance Act (Cap. 126 – Laws of the Federation of Nigeria and Lagos) by his failure to strike out the appellant and dismissing the plaintiff’s claim against it both at common law and in equity;

(ii)     The learned trial Judge misinterpreted the principles laid down by this Honourable Court in the case of Sun Insurance Coy (Nigeria) Ltd. vs. Victoria OJemuyiwa – (1965) N.M.L.R. p.451 when he held (at page 108 of the record) ft was in order to join the appellant on the application of the 1st defendant when the evidence disclosed that it was the 3rd defendant who owned vehicle WB 4760 and who did not employ the 2nd defendant, the driver.”


In arguing the above ground of appeal, learned counsel submitted that, as the cause of action was clearly set out in the writ of summons, and further as the statement of claim did no more than merely allege that the appellant was the insurer of vehicle No. WB 4760, it was a misconception in law for the trial court to hold the appellant vicariously liable in negligence. This was the more so, as the writ of summons was neither amended to incorporate the appellant, nor in the circumstances, could any averment of negligence be made against it. Counsel argued that a contract of insurance was one of indemnity and that, in any case, if there were such a contract, it was only between the appellant and the 3rd defendant. The 1st and 2nd defendants who were undoubtedly strangers to the contract, counsel submitted, could not derive any benefit under ft, unless, of course, the 3rd defendant constituted a trust in their favour.


As between the 3rd defendant and the appellant, counsel submitted that the obligation to indemnify would not arise until judgment had been obtained against the 3rd defendant. Counsel then submitted that, under no circumstance could the appellant be made a party to these proceedings upon the application of the 1st defendant.


In support of these submissions, counsel relied on:-

(a)     Post Office v. Norwich Union Fire Insurance Society Ltd. (1967) 1 A.E.R. p.577;

(b)     Odubanio AND Ors. vs. New India Assurance Coy. Ltd. – S.C. 85/69 (unreported Supreme Court decision – delivered on 8/10/71);

(c)     Section 10 Motor Vehicles (Third Party Insurance Act) Cap. 126 Laws of the Federation of Nigeria.


For the respondent, it was submitted that no objection was taken to joinder by the appellant. Learned counsel was however prepared to concede that the appellant was joined in the case as an insurer and that it had not been sued in negligence.


As we had shown earlier on in this judgment, the respondent who had applied that the 3rd defendant be joined in these proceedings, gave no testimony touching him. All he did was to describe him in his statement of claim as a co-owner with the 1st defendant. The 1st defendant on the other hand denied being a co-owner with the 3rd defendant and asserted on oath that he was the 3rd defendant’s agent.


The 3rd defendant though served by substitution took no part in the proceedings and the court was thus deprived of the opportunity of discovering from him on oath what connection, if any, he had with vehicle No. WB 4760 and the insurance policy, relating to it (Exhibits G AND H).


In view of the learned trial Judge’s finding that the 3rd defendant could not have taken up the insurance policy (Exhibits G AND H) as on 3rd January, 1970 and that same was in fact done, by the 1st defendant, the question that immediately arises is why did the 1st defendant have to use the 3rd defendant’s name?


Assuming, that the 3rd defendant was indeed the principal of the 1st defendant (and there was no finding to that effect) what evidence was there of the scope of the latter’s agency or that the 3rd defendant actually authorised the taking up of the policy aforesaid in his name? The record is completely silent on these matters.


Even if it were established that an identifiable person, i.e. the 3rd defendant took up the policy of Insurance (Exhibits G AND H) with the appellant, we are satisfied that a third party such as the respondent was, could not sue the appellant ab-initio. This must be so as there would be no privity of contract between the parties, and even if such a right were conferred by a statute, such as Section 10 of the Motor Vehicles (Third Party Insurance) Act, Cap. 126 Laws of the Federation of Nigeria, it would still be inappropriate to bring in the insurer as a party, except, perhaps, by way of third party proceedings based on a contract of indemnity, if any – See Post Office v. Norwich Union Fire Insurance Society Ltd. (supra) and Odubanio v. New India Assurance Co. Ltd. (supra).


We think it was an error on the part of the learned trial Judge to have joined the appellant in these proceedings and to have proceeded to record a verdict against it when, at the end of hearing, no issue was joined on the pleadings between the respondent and the appellant.


In Odubanjo case this Court ruled that the insurer be struck out from the claim. We propose to adopt the same course on this occasion.


Accordingly this appeal succeeds and it is allowed. The judgment of Uche-Omo, J., (as he then was) in Suit No. A/35/72 delivered in the Asaba High Court on 31st January, 1975, (including the order as costs), in so far as it applied to the appellant (4th defendant) only, is set aside. Instead, we order that the claim against the 4th defendant be struck out and this shall be the judgment of the court. Costs in favour of the appellant are assessed at N55 in the court below and in this Court at N463.00.


Appeal allowed.

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