SUPREME COURT.

Dominion, Volume 5, Issue 1396, 23 March 1912, Page 15

SUPREME COURT.

MOTOR-CAR INSURANCE:. DALGETY'S AGREEMENT WITH LLOYDS. -cio.ooo di-:i'Of it Ki:nriui;i). Yesterday Mr. .lii-liee Sim delivered liis reserved judgment in an originating summons for n declaratory judgment under the l.'orcign Insurance Ciimpimir.-s* Deposits Act. IMS. The parties were ]>algoty and Co.. Ltd., a company incorporated in Kngland, !>ui. carrying on business in Xew Zealand, and the SolicitorGeneral. At the hearing Mr. C. I'. Skerrett, K.C., with him Mr. C. H. Marison, anpearoti for Dalgi'ty and Co., and the SolicitorGeneral (Mr. J. \Y. Sidmoml) appeared ill person. The facts had been agreed upon and committed to writing. In .November, l!Hi9, J)algety ami Company entered into an agreement with certain of Lloyds' Underwriters with respect to the insurance of motor-ears against tire, theft, and accidental damage. According to the recognised usage of Lloyds' Underwriters, oil which basis the contract was mode, tin; contract of insurance contemplated that tho underwriters should issue an open policy in favour of Dalgety and Co.

(a) Describing the subject of tho insurance iji general terms, and leaving tho particular property to bp covered to bo from time to timo defined by subsequent declaration.

(b) Containing a provision authorising Dalgety and Co. to issue, certificates, agroeitig that such certificates should represent tho declaration on the original policy, and conveying all tho rights of tho original holder of tho policy.

In practice, however, no such open policy was actually issued bv the underwriters to Dalgety and Co., but there was a contract embodying the terms of tho policy. In pursuance of the agreement, Dalgety and Co. had established as part of its business in Now Zealand the practice of receiving proposals for tho insurance of motor-cars, and also declared its own properties-under tho provisions of tho insurance contract.

J ho insurance so constituted took effect from the date of the certificates of insurance, and before any communication was made to Lloyds' underwriters, Dalgety and Co. paid a proportion of tho premium received to the underwriters and retained the residue. At regular intervals the company tr.insiniltf.il to the representatives of the underwriters in Loudon copies of all proposals and certificates received and issued by tho company. All claims under the insurances effected were settled bv the comnany and reimbursed by tho underwriters* It was contended by tho Solicitor-General that tho underwriters were can-ving ou the business of insurance in Xew Zealand, through Dalgety and Co. as their n"ent< and thai a deposit: of .£IO,OOO should therefore bo made bv the underwriters m accordance with Part LIT of the l'oreign Insurant-.;) Com panics Deposits Act. 1008. No such deposit had been made. In tlz> alternative it was contended that the business of insurance was carried on in New Zealand by Dalgetv and Co., and they should therefore pav the deposit. For Dalgety and Co. it was argued that any such deposit was uimeccssarv on the ground that neither they nor the underwriters were carrying oil tho business of insurance in Xew Zealand.

His Honour, in giving judgment, said that the question to be determined was whether certain of Lloyds underwriters wore carrying on the business of insurance in Xew Zealand, through tho agency of Dalgety mid Co.. so as to bring them within the scope of Part 111 of the l'oreign Insurance Companies' Deposits Act, 1903. The. answer to that question depended on the moaning 0 f (ho agreement made bv Dalgety and Co. with these, underwriters in November, IflOO, and ou the leal elVcet of what is .done hy Dalgety and' Co. under that agreement.

After reiorring to the lornis of the agreement and the different classes of goods covered under the open policv, his Honour continued, "The question be'lween tho parlies is a« in the ell'ect of the issue of such a certificate in connection with goods for'which Dalgetv and Co. have orders to insure. It appears from the case that Dalgety and Co. had established as part of its business tho practice of receiving from "its clients and from members of the public proposals for the insurance, under this open policy, of motor-cars against tire, theft, and 'accidental damage. The acceptance of such a proposal is effected by tl|o issue bv Dalgety and Co. to tho owners of the "particular car of a certificate of insurance in (he form set out in the case. The question is as to the legal effect of such a transaction. Docs it, as contended by the Solicitor-General, establish a contractual relation between the underwriters and (ho owner of the molor-qar? Or does it, as contended by Mr. Skerrett, operate merely to transfer to such owner a part of the insurance effected by Dalgety and Co. with tho underwriters? , It seems to me that tho effect of the transaction is to establish n contractual relation between the underwriters and the owner of tho car." His Honour did not know of anv ease decided in England or Xew Zealand that bore directly on the question, but according to an American ease quoted in "Jovce on Insurance," it appeared to have been decided that the issue of a certificate under an open policy created a contract of insurance between the company and tho person to whom it was issued'

"In my opinion, therefore," concluded his Honour, "the underwriters are carrying on tho business of insurance in Xew Zealand, through the agency of Dalgety and Co., and arc liable to innke posil under Part 111 of the Fnrcien Insurance Companies' Deposits Act, Iflflß. Tho Kolicitor-Clcncral was allowed ,ClO 10s. costs on tho summons.