§ As amended (in the Standing Committee), considered.
§ CLAUSE 1. —(Rights of third parties against survivors or bankruptcy, &c., of the insured.)
§ Dr. BURGIN
I beg leave to move, in page 1, line 14, to leave out the words "the company commencing to be wound up" and to insert instead thereof the wordsa winding-up order being made, or a resolution for a voluntary winding-up being passed, with respect to the company.This is a Bill the short purport of which is to deal with the possibility of an insured person becoming bankrupt and being deprived of the result of the insurance and to the insurance money passing under the general bankruptcy of the debtor amongst the creditors as 2504 a whole. The object of the Bill is to provide a direct right of action by the victim of an accident against the insurance company. It is reasonable, whenever you have a Bill dealing with insurance to endeavour to place an individual and a limited company upon the same footing. An individual is susceptible of being made bankrupt. A company, on the other hand, has to be wound up. The first Clause provides, in the case of an insured person, that the operative moment for the Bill to have effect is when the insured becomes bankrupt. Becoming bankrupt, in the language of the law, means an actual order of adjudication. It is quite different from the presentation of a, petition, which must subsequently be admitted or be paid off or be adjourned, or abandoned. These things must happen. On the other hand. when you deal with a company you present a petition which is largely and widely advertised. Under the Companies Act the commencement of winding-up of a company is the actual date of the presentation of the petition.
The object of my Amendment is to say that in the case of the company, as in the case of the individual, that you should wait until an actual bankruptcy, and so it is provided that in the case of an individual the moment should be "becoming bankrupt," and in the case of a company, not the presentation of the petition, which is a, vicious and artificial method of calculating, but the winding-up order actually being made, or the resolutions for a voluntary winding-up being passed, The Amendment has the effect merely of placing a limited company on exactly the same footing as an individual, and, as the House is well aware, by far the largest proportion of actual insurances are effected with companies and not with individual persons. This amendment is one of substance and one which may be said to be required for purposes of symmetry to bring the insurance company and the insured individual into line.
§ The SOLICITOR-GENIERAL (Sir James Melville)
I have had a long preliminary opportunity of considering this Amendment. In my view, it is a reasonable one and makes the Bill more sym- 2505 metrical and brings the limited company's position into line with that of the ordinary individual and I would advise the House to accept it.
§ Amendment agreed to.
§ CLAUSE 2.—(Duty to give necessary information to third parties.)
§ Dr. BURGIN
I beg to move, in page 3, line 8, to leave out the words "any company commencing to be wound up," and to insert instead thereof the words:a winding-up order being made, or a resolution for a voluntary winding-up being passed, with respect to the company.This Amendment is purely consequential and covers precisely the same point as the earlier Amendment.
§ Amendment agreed to.
§ Mr. R. A. TAYLOR
I beg to move, in page 3, line 18, after the word "property" to insert the words:or any insurance company concerned in any contract to which this Act applies.The Bill, as has already been explained by the hon. Member for Luton (Dr. Burgin), does not deal with the general law and will affect relatively a very small number of persons. It will only be effective in the case of bankruptcies and winding-up orders, and, therefore, the number of cases with which the Bill is concerned will be very limited indeed. But, in view of the fact that we are now considering the extension of the general principle of compulsory third-party insurance in relation to the Road Traffic Bill, I think that the principle which I desire to lay before the House has assumed a more important character.
I am concerned with the poor person, the ordinary pedestrian who is knocked down by a motor car and injured. In the majority of cases this person would not be likely to be insured. He would therefore not have the assistance of expert legal advice unless he was in a position to pay for it. It is entirely with that type of person that I am concerned in the Amendment. In Clause 2, certain obligations are put upon a number of persons who may be concerned with a bankruptcy. Clause 2 says:it shall be the duty of the bankrupt, debtor, personal representative of the deceased debtor or company, and, as the case 2506 may be, of the trustee in bankruptcy, trustee, liquidator, receiver, or manager, or person in possession of the property to give at the request of any person claiming that the bankrupt, debtor, deceased debtor, or company is under a liability to him.certain information or any relevant facts that may be in their possession, in order to enable that person to determine whether or not he has a rightful and proper claim against the insurance company. The most important interest in relation to the claim of the injured person, namely, the insurance company, are completely left out of this clause. There is no obligation laid upon the insurance company, which is the vital factor in determining whether the injured person shall or shall not receive compensation. We all know the various devices to which insurance companies resort when there is any substantial claim made upon them for injury, especially when it happens to be an injury to a poor person who cannot reasonably be expected to be in a position to pursue them to the High Court, in the event of prolonged litigation.
The Amendment, if carried, would have the effect of compelling an insurance company to disclose to the injured person who had a claim under this Act, all the relevant facts in their possession. Those relevant facts would include the policy and, what is equally important, the proposal form. It is well known that the Substance of the Contract as between the insurance company and the assured is the truth or otherwise of the statement made upon the proposal form. In a recent case in which I was concerned, and of which I had personal knowledge, it was alleged by the insurance company as a reason for repudiating liability that certain false representations had been made upon the proposal form and that, therefore, the contract as between the assured and themselves was not valid. Imagine the position in which a poor person is placed. If he takes the insurance company into the Court, they can be compelled to disclose the proposal form and all the relevant facts which they have in their possession, but my point is that the insurance company will not, under this Bill or this clause, be compelled to disclose all these material facts to the injured person having a claim under the Bill, until he takes them into Court. The prospect of expensive litigation and the possibility of an appeal is not the kind of thing that a poor per- 2507 son can view with equanimity. As this Clause proposes to lay definite responsibility upon everybody else other than the insurance company, the Solicitor-General might consider with sympathy whether it is not possible for him to accept my Amendment or some Amendment which would effect the same purpose.
I regard it as of great importance that the injured poor person should have the right to demand from the insurance company, before they resort to the expensive and uncertain processes of the law, all the relative facts disclosed to them in order to enable them to make up their minds as to whether they have a substantial claim or not.
§ The SOLICITOR-GENERAL
When it was introduced this Bill was in rather a skeleton form, but with the co-operation of Members of the Committee we built it up and by adding the Clause to which the hon. Member has referred we impose a duty on the person who has done the injury to give the necessary information to the third party. I quite agree with the hon. Member that we might have gone a step further in Committee and imposed a similar duty on the insurance company themselves. I have drafted an Amendment which I think will meet his desires. It is to insert in the Clause the words:If the information given to any person in pursuance of sub-section (1) of this section discloses reasonable ground for supposing that there have or may have been transferred to him under this Act rights against any particular insurer, that insurer shall be subject to the same duty as is imposed by the said sub-section on the persons therein mentioned.His Amendment is rather too wide. The words:any insurance company concerned in any contract.are very wide indeed, and numbers of insurance companies who might possibly be concerned might be pestered with requests for information very often by people who may be seeking to raise speculative claims, and, as the Amendment stands, a solicitor acting for an injured person might be held to have been negligent if he did not communicate with every possible company concerned in the matter. If the hon. Member will agree, 2508 and if the House approves, I would ask him to accept the words of my Amendment. I can assure him that I have given the matter careful consideration and I am satisfied that these words bring about the effect he desires whilst at the same time confirming the requirements to more reasonable limits.
§ Mr. R. A. TAYLOR
I am much obliged to the hon. and learned Member for his reply. May I ask him this specific question. Under his proposal, w ill it be the duty of an insurance company in the event of a person having a claim, transferred by reason of a bankruptcy, to disclose the terms of the proposal form? Will it be the duty of the insurance company to give that person the opportunity of taking a copy of the proposal form? If the Amendment of the Solicitor-General achieves that purpose, I shall be very glad to withdraw my Amendment.
§ The SOLICITOR-GENERAL
In view of the Amendment which stands further down on the Paper in the name of the hon. Member for Luton (Dr. Burgin)—in page 3, line 30, at the end, to insert:(2) The duty to give information imposed by this section shall include a duty to allow all contracts of insurance, receipts for premiums, and other relevant documents in the possession or power of the person on whom the duty is so imposed to be inspected and copies thereof to be taken.and assuming that the House accepts that Amendment, I have very little hesitation in saying that in ordinary circumstances, that would be one of the matters upon which a person who had been injured could reasonably ask the insurance company to give information.
§ Amendment, by leave, withdrawn.
§ Amendment made:
In page 3, line 30, at the end, insert the words:
(2) If the information given to any person in pursuance of sub-section (1) of this section discloses reasonable around for supposing that there have or may have been transferred to him under this is Act rights against any particular insurer, that insurer shall he subject to the same hay as is imposed by the said sub-section on the persons therein mentioned."—[The Solicitor-General.]
§ Dr. BURGIN
I beg to move, in page 3, line 30, at the end, to insert the words:(2) The duty to give information imposed by this section shall include a duty 2509 to allow all contracts of insurance, receipts for premiums, and other relevant documents in the possession or power of the person on whom the duty is so imposed to be inspected and copies thereof to he taken.The hon. Member for Lincoln (Mr. Taylor), in the Amendment which has been withdrawn, had in mind precisely the same point as that which is dealt with here and it has engaged the attention of those of us who, in Committee and since, have been endeavouring to make this Bill a, workable piece of legislation. But the width of the hon. Member's wording frightened some of us. The words "any insurance company concerned" would, literally have included every contract of reinsurance and a person injured in an accident would have no means of finding out about contracts of reinsurance which might have been entered into by the insurance company, insuring the person responsible for the accident. Those of us who have experience on the legal side of the consequences of those accidents, know that a duty to give information is an insufficient protection. If you write to an insurance company and ask "Is so and so insured?" you are entitled to the monosyllabic answer "Yes" and that would be "giving information." Therefore this Amendment seeks to provide expressly that the duty to give information imposed by this Clause shall include the duty of allowing all contracts of insurance—and I may remind the House that a contract consists invariably of offer and acceptance and that any contract of insurance means the proposal form and the policy—receipts for premiums and other relevant documents in the possession or power of the person on whom the duty is imposed to be inspected and copies thereof taken. I can think of no wider words and they meet, in express terms, the point of the hon. Member for Lincoln. I am confirmed by expert opinion in the view that the Amendment covers completely the points which we desire to have covered.
§ Mr. R. A. TAYLOR
I beg to second the Amendment.
I wish to thank my hon. Friend for the assistance he has given in finding a solution of the difficulty which I had in mind.
§ Amendment agreed to.2510
§ CLAUSE 3.—(Settlement between insurers and insured persons.)
§ Dr. BURGIN
I beg to move, in page 3, line 31, to leave out the words "No settlement or," and to insert thereof the words:Where the insured has become bankrupt or where, in the case of the insured being a company, a winding-up order has been made or a resolution for a voluntary winding-up has been passed, with respect to the company, no.This Amendment is to be taken in conjunction with the two next Amendments on the Paper which are consequential—in page 3, line 34, to leave out the words "of the insured," and to insert instead thereof the wordsor winding-up, as the case may be, nor any waiver, assignment, or other disposition made by, or payment made to the insured after the commencement of aforesaid.and in page 3, line 35, to leave out from the word "rights," to the end of line 37, and to insert instead thereof the wordstransferred to the third party under this Act, but those rights shall be the same as if no such agreement, waiver, assignment, disposition, or payment had been made.The point of these Amendments is entirely different from that which we have been discussing. The effect of the Amendments, in substance, is to provide that once an event has happened which results in a liability attaching, the rights given by this Measure shall not be taken away by any agreement that may have been made between the insurer and the insured, by any waiver, by any assignment, by any disposition or by any payment. It occurred to those of us who were concerned with this Bill that if it was proved that the victim of an accident should have a claim direct against art insurance company, it might be possible to find that the insured person and the insurance company had put their heads together and that the insured person had offered to discharge the company from liability if they paid him a relatively small sum. It occurred to us that there might be a waiver and that a person might waive all rights against an insurance company in return for some consideration. It occurred to us that we had to legislate to prevent rights given by this Measure being taken away from the person injured by some agreement between the insured and the insurance 2511 company. These Amendments have been carefully considered and carefully drafted and I give the House the assurance, which I have no doubt will be echoed by the Solicitor General that in the considered view of those who have been helping to make this Bill an effective Measure these words are necessary to protect the victims of accidents, that they have the effect of doing so and that they are not injurious to any legitimate legal interest.
§ The SOLICITOR-GENERAL
This also is a Clause upon which we had an understanding that it would be considered fully before the Report stage. I think the House will be well advised to accept these Amendments in the terms in which they have been put by my hon. Friend.
§ Amendment agreed to.
§ Further Amendments made:
In page 3, line 34, leave out the words "of the insured," and insert instead thereof the words:
or winding up, as the case may be, nor any waiver, assignment, or other disposition made by, or payment made to the insured after the commencement aforesaid.
In line 35, leave out from the word "rights," to the end of line 37, and insert instead thereof the words:
transferred to the third party under this Act, but those rights shall be the same as if no such agreement, waiver, assignment, disposition, or payment had been made."—[Dr. Burgin.]