Insurer Takes The Wheel
Ramsook v Crossley  UKPC 9
The Privy Council has allowed the appeal in the case of Ramsook v Crossley in a judgment handed down on 30 April 2018. The case illustrates the problems that can arise from limits on third party cover required by motor insurance legislation and highlights the consequences of an insurer failing to take instructions from their insured when conducting litigation on their behalf.
The insured motorist, and respondent to the appeal, was insured up to $1.5million in accordance with motor insurance legislation of Trinidad and Tobago. However, as the result of a claim for personal injury arising out of a road traffic accident by the appellant against the insured, the insured was ordered to pay the sum of $3.6m in damages plus costs to the appellant. The insured was therefore liable to pay the shortfall not covered by her insurance policy directly to the appellant. The insured only became aware of the order for damages and costs against her in July 2013 when the appellant sought to enforce the judgment. It transpired that the proceedings in which the order was made had been conducted entirely by the insurer, who had failed to take instructions from the insured whilst litigating the claim. The insurer had admitted liability on the insured’s behalf (even though she did not believe she had been negligent) and failed to keep her informed of the exposure she faced under the claim. On application by the insured, the judgment was set aside on the basis that she had never been served with the proceedings and had known nothing of them, as the insurer had conducted the claim without her authority. The appeal from that decision was dismissed by the Court of Appeal of Trinidad and Tobago.
The Privy Council allowed the appeal, determining that, whilst the insurer’s conduct ‘fell very seriously short’ in failing to take proper instructions from the insured and keeping her informed of her exposure to the claim, the insurers were entitled to rely on a clause in their insurance policy which read:
Under that clause, the insurer had authority to take over and conduct the defence and settlement of the appellant’s claim against the insured, to retain an attorney on the insured’s behalf, and to have full discretion in the claim’s settlement. In allowing the appeal, the Privy Council ordered that the assessment of damages in favour of the claimant be restored. The Privy Council held that, bearing in mind the insurer’s actual and apparent authority deriving from the insurance policy, any complaint which the insured had was a matter between her and her insurer, and could not affect the appellant’s position as a claimant pursuing proceedings unsuspecting of any breach of duty on the part of the insurer.
Banks Kelly Solicitors were instructed as Privy Council Agents on behalf of the appellant in this matter, who was represented by counsel Asaf Hosein, Emile Pollard, Elvis O’Connor and Derick Sylvester. Banks Kelly are registered Privy Council agents, meaning we are authorised to conduct appeals before the Judicial Committee of the Privy Council, the court of final appeal for most Commonwealth countries. If you need Privy Council representation, please contact us.