Case BriefsForeign Courts

Supreme Court of United Kingdom: The 7-Judges Bench comprising of Lord Reed, President Lord Hodge, Dy. President, Lady Black. Lord Kitchin, Lord Sales, Lord Leggatt, Lord Burrows, JJ., addressed the issue concerned with the application of the concept of scope of duty in the tort of negligence for professional advice given by expert accountants.

The similar issues were placed before the Bench in Khan v Meadows [2021] UKSC 21 with regard to professional advice given by a medical expert. The Bench addressed the issue in detail by analysing landmark cases of South Australia Asset Management Corpn. v York Montague Ltd. (SAAMCO), [1996] 3 WLR 87 and Hughes-Holland v BPE Solicitors, [2017] 2 WLR 1029.

Facts of the Case

The claimant- Manchester Building Society (MBS) was a small mutual building society. From 1997 until 2012, the society’s accounts were audited by the defendant, Grant Thornton, a large firm of accountants. The said firm allegedly advised the society, incorrectly and negligently, that the society’s accounts could be prepared using a method known as “hedge accounting” and that the accounts prepared using that method gave a true and fair view of the society’s financial position. In reliance on that advice, the society carried on a strategy of entering into long-term interest rate swap contracts as a hedge against the cost of borrowing money to fund mortgage lending. The misstated accounts served to hide volatility in the society’s capital position and became a severe mismatch between the negative value of the swaps and the value of the mortgage loans which the swaps were supposed to hedge. When after seven years the accountants realised their error, the society had to restate its accounts to show substantially reduced net assets and insufficient regulatory capital. To extricate itself from this predicament, the society closed out the swaps at a cost of over £32m.

The issue in appeal was whether the society can recover this cost as damages from the accountants (reduced by 50% for the society’s contributory negligence)?

Trial Court’s findings

 The Trial Judge awarded damages to the society of only £316,845-the main item of damages being the transaction costs payable to terminate the swaps early; as the judge found that Grant Thornton’s negligent advice was an effective cause in law of that loss and that the loss was a reasonably foreseeable consequence of Grant Thornton’s negligence and therefore not too remote to be recoverable. However, it was held by the Trial Court that the society could not recover damages for this loss from Grant Thornton (apart from the transaction costs paid to terminate the swaps early) because, in the opinion of the Court, the losses flowed from market forces for which Grant Thornton did not assume responsibility, that the case did not fall within the principle as laid down in SAAMCO, and that the society had itself been negligent which contributed to its loss.

Judgment of the Court of Appeal

 The Court of Appeal dwelled on the distinction between “advice” and “information” as explained by this court in Hughes Holland, and applying that distinction, the Court concluded that, that was an “information” case, such that Grant Thornton was legally responsible only for the foreseeable financial consequences of its information/advice being wrong. To show that the society suffered a loss by terminating the swaps, it would have to prove that it would have been better off if it had continued to hold the swaps, which the society was unable to establish. Hence, the Appellate Court dismissed the society’s appeal.

Analysis and Observations by the Court

 The auditor’s duty of care

 “Like other professional advisers, an accountancy firm acting as an auditor owes a duty, as an implied term of the contract by which the firm is retained and also in tort, to carry out the service which it has agreed to supply with reasonable care and skill.”

However, the auditor’s duty of care is limited to protecting the audited entity and its members against the risk that its audited accounts are inaccurate It is no part of the auditor’s duty to advise the audited entity what business decisions it should make nor to identify what considerations apart from the accuracy of its audited accounts are relevant for the entity to take into account in making such decisions. Those are exclusively matters for the entity’s directors and members (or possibly other advisers) to assess.

Scope of Grant Thornton’s duty

 In accordance with the normal role of an auditor, Grant Thornton owed a duty to advise the society with reasonable care and skill whether its accounts had been properly prepared and gave a true and fair view of the society’s financial position. That included a duty to advise the society whether the lifetime mortgages and interest rate swaps entered into by the society were correctly accounted for in a manner which complied with applicable accounting rules and standards which governed hedge accounting. The Bench was of the view that Grant Thornton did not advise the society whether it should enter into lifetime mortgages or interest rate swaps or about which particular mortgages or swaps to enter into. In particular, Grant Thornton gave no advice about the desirability of entering into swaps with 50-year terms. Neither was it asked to advise the society about the commercial wisdom of its intended hedging strategy nor about whether it would be sensible or desirable to enter into interest rate swaps (and, if so, in what amounts and of what duration). 

Impact of Contributory Negligence by the Society

  • As found by the Trial Judge that the society had itself been negligent in two respects which contributed to its loss; i.e. entering into 50-years waps and fault of its Finance Director in devising the society’s approach to hedge accounting and considering that hedge accounting was available when it was not. The society’s own negligence which contributed to this state of affairs was properly reflected in the reduction of 50%, however, rejecting the findings of the Court of Appeal that the loss sustained by the society as a result of entering into long term interest rate swaps in reliance on Grant Thornton’s negligent advice was not within the scope of Grant Thornton’s duty, the Bench held that it was a loss from which Grant Thornton owed a duty of care to protect the society. Hence, after giving credit for the value of the mortgages and the 50% reduction for its contributory negligence, the society was entitled to recover damages, in addition to the amount awarded by the judge, of some £13.4m (50% of £26.7m).

 Application of SAAMCO-style counterfactual analysis

The SAAMCO case proposed a form of counterfactual analysis as a way to assist in identifying the extent of the loss suffered by the claimant which falls within the scope of the defendant’s duty, by asking in an “information” case whether the claimant’s actions would have resulted in the same loss if the advice given by the defendant had been correct. This procedure generates a limit to the damages recoverable which had been called the SAAMCO “cap”.

The Bench opined that though the counterfactual test maybe regarded as a useful cross-check in most cases, but that it should not be regarded as replacing the decision that needs to be made as to the scope of the duty of care. Analysis using the counterfactual “tool” as deployed in SAAMCO was designed to assist with looking at the scope of duty question from a causation-based perspective. Therefore, once it is accepted that the scope of duty inquiry turns on identifying the purpose of the duty, it can readily be seen that a SAAMCO-type counterfactual analysis is just a cross-check, rather than the foundation of the relevant analysis.

Where the Appellate Court’s Analysis went wrong?

The society sought to argue that its basic loss was within the scope of Grant Thornton’s duty on the ground that this loss resulted from having to break the swaps before term and that the risk of that happening was a risk which Grant Thornton owed a duty of care to protect the society against. The Courts below erred which reaching to the conclusion that the society did not suffer loss from having to break the swaps before term and the said loss was caused by entering into swaps with 50-year terms and retaining them for several years (as a result of a combination of its own imprudence and Grant Thornton’s negligent advice). The Bench opined that the evidence did not show that the loss suffered would have been avoided or reduced if the society had not needed to break the swaps.

To the contrary, the evidence indicated that the society’s loss would have been even greater if the swaps had not been broken. Therefore, the judge was bound to conclude that the society’s decision to enter into swaps with terms far longer than the likely duration of the mortgages, combined with the way that interest rates turned out, were the only effective causes of its loss. Hence,

“An equally effective cause was Grant Thornton’s negligent professional advice, maintained over a period of some seven years, that it was permissible to use hedge accounting and prepare accounts which showed the swaps to be a highly effective hedge for the lifetime mortgages, thereby hiding the mismatch between the values of the swaps and mortgages and the society’s inadequate regulatory capital.”

Conclusion

In the backdrop of above, the appeal was allowed and it was held that Grant Thornton was liable to pay the overall net loss of (approximately) £26.7m to the said society, subject to a 50% reduction for contributory negligence.[Manchester Building Society v. Grant Thornton UK LLP, (2021) 3 WLR 81, decided on 18-06-2021]


Kamini Sharma, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Madras High Court: The Division Bench of Pushpa Sathyanaryana and S. Kannammal, JJ., revised the amount of compensation awarded to the claimant in a motor accident claim and enhanced it from Rs 30,89,430 to Rs 83,35,000.

Instant appeal was preferred challenging the decision and decree of the Motor Accident Claims Tribunal.

Deceased was proceeding in a two-wheeler, driver of the lorry drove the vehicle in a rash and negligent manner, dashed against two-wheeler. Due to the said impact, the deceased sustained injuries and died.

In view of the above, legal heirs – appellants/claimant of the deceased filed claim petition.

Insurance Company submitted that the accident occurred due to the carelessness and negligence on the part of the deceased and the deceased had not possessed any valid driving licence.

Tribunal, after considering the oral and documentary evidence, held that the accident had occurred due to the drunken driving of the deceased and also because of the rash and negligent driving of the driver of the first respondent and fixed the liability at 50:50.

Analysis, Law and Decision

High Court noted that in the post-mortem report no mention about the presence of alcohol was there.

Court added that having failed to prove that the accident occurred due to the drunken driving of the deceased, contributory negligence of 50% could not be attributed to the deceased.

From the sketch placed on the investigation report, it represented that the deceased was going from South to North on the left extreme of the road and the offending vehicle, namely, the lorry which was coming in the opposite direction hit the deceased and he died. Therefore, even on that ground, negligence cannot be attributed to the deceased.

For proving an offence under Section 185 of the Motor Vehicles Act, 1988, breath test is mandatory as per Section 203 of the MV Act.

Since the above was not satisfied, it was concluded that the deceased was not in a drunken state.

10% was deducted from the compensation on the ground that the deceased did not possess the valid driving licence

For the above contention, it was stated that he had only a learners licence. It is not the case of the second respondent that a person having LLR cannot ride on the road.

Though it is stated that a person having LLR and riding or driving should have an Instructor with them, it does not disqualify a person from riding a vehicle.

Award of the Tribunal was enhanced to Rs 83,35,000 from 30,89,430.[Kuralvani v. Kathirvelan, 2021 SCC OnLine Mad 2232, decided on 31-03-2021]


For Advocates before the Court:

For Appellants: Mr.I.Pinaygash

For R – 2 : Mr.B.Rajesh Saravanan

Case BriefsHigh Courts

Allahabad High Court: The Division Bench of Dr Kaushal Jayendra Thaker and Ajit Singh, JJ., allowed the appeal of the claimants in a motor vehicle accident claim while dismissing the appeal of the insurance company.

Claimants and Insurance Company on being aggrieved by the award and decree passed by Motor Accident Claims Tribunal, filed the present appeal.

Claimants were the legal heirs namely widow and parents of the deceased who died in the vehicular accident.

Deceased was earning Rs 25,00,000 and claimants claimed a sum of Rs 3,40,50,000.

Respondent’s truck was being driven by Afzal Sekh and was insured with National Insurance Company Limited who had been saddled with the liability to make good the amount of compensation.

Due to the truck rash and negligent driving the motorcycle of the deceased was dashed by the truck.

Insurance Company challenged the award on the grounds that the deceased was a contributor to the accident having taken place, that income considered by the Tribunal was on the higher side and the same would not have been made the basis of compensation.

Claimants felt aggrieved as the tribunal did not consider the amount for future loss of income and did not even grant proper interest. Tribunal also erred in directing 2/3rd of the compensation to be paid to the parents and 1/3rd to the widow.

What is Negligence?

Negligence means failure to exercise care towards others which a reasonable and prudent person would in a circumstance or taking action which such a reasonable person would not. Negligence can be both intentional or accidental which is normally accidental.

More particularly, it connotes reckless driving and the injured must always prove that the either side is negligent. If the injury rather death is caused by something owned or controlled by the negligent party then he is directly liable otherwise the principle of “res ipsa loquitur” meaning thereby “the things speak for itself” would apply.

Contributory Negligence

It means that a person who either contributes or author of the accident would be liable for his contribution to the accident having taken place.

In the present set of facts and circumstances, Bench while referring to the recent decision of the Supreme Court in Md. Siddiqui v. National Insurance Co. Ltd (2020) 3 SCC 57 would come to the aid of the claimants as there was no colossal connection of the deceased having contributed to the accident.

What is Liability?

Liability of the Insurance Company.

While considering the issue of breach of policy condition under Section 149 of the Act Bench relied to elaborately sift the documentary evidence on record and whether the owner had taken proper care and caution to see that the driver was authorised to drive the vehicle or not.

High Court opined that the Insurance Company’s contention that the driver was not holding valid and effective driving licence could not be accepted.

While considering the case of the Insurance Company, can it be said that the driver did not have valid driving licence? This question has to be answered in favour of the claimants and owner.

Owner of the vehicle was satisfied, and it was proved that he had taken all care and caution that vehicle was being driven by a person who was authorised to drive the same which was even apparent from the fact that the owner had gone to the extent of producing evidence so as to bring home the fact that there was no breach of policy condition.

Hence, it was held that no breach of policy conditions was committed.

Compensation

It was submitted that the tribunal did not grant the proper amount under the head of non-pecuniary damages to the widow who became a widow at the age of 24 and who was not re-married.

Even the Insurance Company felt aggrieved and challenged the compensation.

Supreme Court held that in the case of motor accident compensation, guess work is inevitable.

Compensation payable to the appellants in view of the decision of the Supreme Court in National Insurance Company Ltd. v. Pranay Sethi, (2017) 16 SCC 680

With respect to the issue of rate of interest, it should be 7.5% in view of the Supreme Court decision in National Insurance Co. Ltd. v. Mannat Johat, 2019 (2) T.A.C 705 (S.C.)

Disbursement and Tax at Source

Claimants Counsel Ram Singh submitted that several years elapsed, parents are at the fag end of their lives, therefore, on additional deposit being made, this Court may not direct deposit of said amounts in fixed deposits and though this Court had time and gain directed the Insurance Companies not to deduct TDS, the same was being deducted.

Bench relied on the Supreme Court decision in A.V. Padma v. R. Venugopal, (2012) 3 SCC 378.

Further, Court stated that people even rustic villagers’ have bank account which had to be compulsorily linked with Aadhar, therefore, what is the purpose of keeping money in fixed deposits in banks where a person, who suffered injuries or lost his kith and kin, was not able to see the colour of compensation.

“..time is now ripe for setting fresh guidelines as far as the disbursements are concerned.”

Court expressed that the guidelines in General Manager, Kerala, SRTC, Trivandrum v. Susamma Thomas, (1994) 2 SCC 176, are being blindly followed causing more trouble these days to the claimants as the Tribunals are overburdened with the matters for each time if they require some money, they have to move the tribunal where matters would remain pending and the tribunal on its free will, as if money belonged to them, would reject the applications for disbursements, which is happening in most of the cases.

The parties for their money have to come to court more particularly up to High Court, which is a reason for our pain.

In High Court’s opinion, Tribunal may release the money with certain stipulations and that guidelines have to be followed but not rigidly followed as precedents.

Further, it was added that while sitting in Single Bench of this Court, Dr Justice Kaushal Jayendra Thaker held that the Insurance Company should not deduct any amount under T.D.S in the case of Sudesna v. Hari Singh, F.A.F.O. No.23 of 2001, decided on 26.11.2020, which should be strictly adhered to.

Hence, appeals by claimants were partly allowed and the appeal preferred by the Insurance Company was dismissed.

Respondents shall jointly and severally liable to pay the additional amount with an interest at the rate of 7.5%

Court directed that on deposit of amount, Tribunal shall disburse the entire amount by way of account payee cheque or by way of RTGS to the account of the claimants. [National Insurance Co. Ltd. v. Anuradha Kejriwal, 2021 SCC OnLine All 269, decided on 13-04-2021]


Advocates before the Court:

Counsel for Appellant: Kuldip Shanker Amist, Manoj Nigam

Counsel for Respondent: Manoj Nigam, Amit Kumar Sinha, Deepali Srivastava Sinha, Mata Pher, Ram Singh

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Division Bench of Anup K Thakur (Presiding Member) and Dr S.M. Kantikar (Member) while addressing the present matter of contributory negligence, expressed that:

“…grant of compensation to remedy the medical wrong/negligence is within the realm of law of torts.”

Complainant 1’s wife Complainant 2 during her pregnancy was under the care of OP 1. As soon as the labor pains started, Complainant 2 was admitted to OP 3—KMC and on conducting the delivery of the patient a healthy female baby was born.

Later it was informed to Complainant 1 that the baby was suffering from fever and added that the child needed ICU care and nothing major was there.

Complainant 1 requested the OP 2 to show the baby, but she was not willing to show it, however after a lot of persuasions the cloth was unwrapped from the baby which revealed a bandage put on lower portion of both the legs.

Upon further enquiries, OP 2 admitted that the baby sustained burn injuries because of a rod heater kept nearby. It was alleged that the entire staff went to attend another delivery and they forgot the instant baby, putting near the rod heater. The mother and the child were kept under treatment at the KMC for two months. The baby’s skin grafting of both legs was done using the mother’s skin.

On consulting at another Hospital, it was informed to the complainants that due to the thermal burn injuries the baby had lost three toes in the left and two toes in the right side because of dry gangrene.

The Complainant further submitted that the baby was under regular treatment for several years at Apollo Hospital, New Delhi and underwent several corrective operations & plastic surgery. The Complainants suffered mental agony and incurred huge expenditure on the treatment of their child due to the alleged medical negligence by the Opposite Parties.

Analysis, Law and Decision

Bench noted that the burns suffered by the baby were thermal burns due to dry heat from the hot air blower and during this time the baby was under the care of her grandmother. Hence complainant’s allegation that a rod heater was kept near the baby was dismissed.

Due to severe winter in the month of December, the hospital provided a hot air blower to keep the room sufficiently warm. Logically any prudent person or the Staff shall not put the blower facing towards the newborn. The evidence of staff nurse Ms Anis revealed that the blower was initially not directly facing the baby; however, after attending another delivery when she came back; noticed the blower was turned towards the baby and the grandmother was not present there.

In Commission’s opinion, the hospital staff as well as the patient’s attendant-grandmother both were responsible for the unfortunate mishap and in the charge sheet the charge under Section 338 of Penal Code, 1860 was found proved against the staff nurse Ms Anis.

While addressing the issue of maintainability o the complaint, Commission relied upon the decision of the Supreme Court in Spring Meadows Hospital v. Harjol Ahluwalia, (1998) 4 SCC 39 held that the parents of victim can file the complaint. The court acknowledged the importance of granting compensation to the parents of a victim of medical negligence in lieu of their acute mental agony and the lifelong care and attention they would have to give to the child.

No negligence on the part of OP 1 and 2 was found while conducting the uneventful delivery of the healthy baby and the care after the burns, however, the hospital –OP 3 was held liable vicariously.

It is settled law that the hospital is vicariously liable for the acts of its doctors in various decisions of Supreme Court in Achutrao Haribhau Khodwa v. State of Maharashtra, (1996) 2 SCC 634, Savita Garg v. National Heart Institute, (2004) 8 SCC 56, which also followed in Balram Prasad v. Kunal Saha, (2014) 1 SCC 384.

It is known that living with a disabled child can have profound effects on the entire family–parents, siblings, and other family members. Far-reaching effects associated with raising a disabled child are the time and financial costs, physical and emotional demands, healthcare expense and logistical complexities.

Contributory Negligence

Further, it was added that it would be pertinent to note that the newborn was in the custody of grandmother who failed in her duty of care towards the baby. According to the evidence of the staff nurse Ms Anis, the grandmother was not present in the room whereas the blower was facing towards the baby. Thus it can be inferred that no other than grandmother put the blower facing the baby. Thus, it was contributory negligence in the instant case.

Contributory negligence breaks the causal connection between the defendant’s negligence and plaintiff’s injury or loss and frequently pleaded in defense in the case of negligence. In the instant case, the affidavit of nurse Ms Anis established that the grandmother (complainants’ attendant) contributed to the burn injury of the newborn.

In view of the principle of restitution in integrum, Bench held KMC hospital to be vicariously liable for the medical negligence.

It was noted that 15 years have passed since the time the complaint was filed, with regard to quantum of award of compensation, bench relied upon the Supreme Court decisions in Malay Kumar Ganguly v. Sukumar Mukherjee, (2009) 9 SCC 221, V. Krishnakumar v. State of T.N., (2015) 9 SCC 388; Balram Prasad v. Kunal Saha, (2014) 1 SCC 384.

While concluding, it was held that a lump sum compensation to the sum of Rs 40 lakh shall be just and adequate. The contributory negligence is evident in the instant case, therefore the liability of KMC hospital shall restrict up to 50%. Accordingly, OP 3 Kanpur Medical Center Pvt. Ltd. was directed to pay Rs 20 lakh to the Complainants (parents of the child). [Mohit Srivastava v. Dr Neelam Mishra, 2021 SCC OnLine NCDRC 40, decided on 04-03-2021]

Case BriefsForeign Courts

High Court of Republic of Singapore, General Division: Aedit Abdullah, J., while addressing the matter on contributory negligence, observed that:

Having the right of way does not equate to a licence to collide with another road user in exercising that right.

Plaintiff was a passenger with a few others aboard on the taxi driven by the first defendant.

Factual Matrix

While the first defendant was executing a right turn at a junction, the vehicle was driven by the second defendant, who had priority as the lights were in his favour, collided with the taxi, causing injury to the plaintiff and some other passengers, and unfortunately, the death of one of them.

In view of the above incident, the first defendant was charged with a number of offences including a charge under Rule 5 of the Road Traffic (Motor Vehicles, Wearing of Seat Belts) Rules 2011 due to failing to ensure that his rear-seat passengers were belted up (Seat Belt Offence).

Plaintiff had claimed damages against the first and second defendant for negligence in driving their vehicles.

During the Trial the key issue was the apportionment of liability between the first and second defendant and another issue was whether the plaintiff had indeed used his seatbelt.

Bench had found no contributory negligence on the part of the plaintiff and the primary liability laid upon the defendants. Amongst them, the first defendant bore the greater part of the responsibility, at 65% liability and the second defendant at 35%.

Primary Issues:

(a) the respective liabilities of the two defendants, considering, in particular, the experts’ opinions concerning the speed of the second defendant’s vehicle up to and at the point of collision; and

(b) whether there was contributory negligence by the plaintiff in not wearing his seatbelt.

Analysis of the High Court

Bench while determining the second defendant’s speed, found that the momentum exchange analysis was less reliable than the video analysis and concluded that the video evidence was more reliable and preferred.

Adding to the above, Court also found that the second defendant failed to keep a proper lookout and drive with proper care at the junction.

Determination of second defendant’s responsibility in driving

Having the right of way essentially means that other users should yield or give way.

It was expressed in view of “right of way” that the said right would not absolve that particular road user of the need to exercise due care. In exercising such care, a driver must take heed of other road users, and adjust his speed lower if needed in the circumstances to reduce the risk of an accident occurring.

Though the second defendant was not going beyond the speed limit, yet since it was a large and busy junction, he ought to have proceeded slower than the speed limit so as to keep a proper lookout and respond to the turning traffic.

“Upon seeing vehicles turning, or at least one vehicle doing so, the appropriate reaction would have been to slow down, sound the horn if need be, and make sure no other vehicle was following suit in turning, either from behind or next to the one that took its chances.”

Apportioning liability between the defendants

Major Factors to be considered while apportioning the Contributory Negligence:

(a) the relative causative potency and

(b) the relative moral blameworthiness of parties’ breaches

Causative potency is the extent to which each party’s conduct contributed to the damage in question, whereas the assessment of blameworthiness entails a consideration of a wide range of conduct to arrive at a just and equitable result on the facts.

The above two factors are also to be considered in the case when liability is to be apportioned in respect of two tortfeasors who were both sued for negligence by the same plaintiff in the same suit.

In the Court’s opinion, the conduct of both the defendants’ were equally causatively potent. but since the blameworthiness attached is different, there would be a difference in their liability.

Hence, Bench found the 33% responsibility on the part of second defendant to be appropriate.

But while the first defendant could have avoided the collision if he had exercised due care, this did not mean that the second defendant was wholly without blame.

Bench observed that, the two defendants’ conduct were equally causatively potent – each of their acts and omissions was equally important in forming a continuous causal link leading to the plaintiff’s eventual injuries.

With regard to blameworthiness, Court expressed that:

Greater blameworthiness lay on the party executing the turn, as the signal light was in favour of oncoming traffic. The second defendant could not be made to assume the same degree of liability as the first defendant, even if the second defendant was speeding.

In view of the above discussion, High Court held that the first defendant should be responsible for 65% of the liability whilst the second defendant shall bear the remaining 35%.

Contributory negligence by the plaintiff

Determination of whether the plaintiff wore a seat belt

There was no evidence that the plaintiff’s injuries pointed to the likelihood or probability that the plaintiff had in fact not worn the seatbelt.  He was not even party to the criminal proceedings, nor was he convicted of any offence of not wearing a seatbelt.

Lastly, while concluding the Court held that the plaintiff was not contributorily negligent for his loss.[Ting Jun Heng v. Yap Kok Hua, [2021] SGHC 44, decided on 25-02-2021]

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., while addressing the matter observed that:

“…where there are multiple claims, MACT should place all the matters before the same Tribunal and the same tribunal should consolidate the matter and decide the same.” 

The instant appeal was at the behest of the claimants preferred against the award passed by the Motor Accident Claims Tribunal.

Factual Matrix

An accident took place on 26-02-2009 when the deceased along with her husband and another person namely Harendra Singh and others were travelling. The car was being driven by the claimant i.e. the husband. Further, it has been stated that a tanker coming from the opposite direction very negligently and carelessly turned to the right side of the road and rammed into the car causing an accident in which the wife of Harendra Singh, wife of claimant 1 and one other person namely child sustained multiple injuries.

Harendra Singh’s wife died due to the injuries and claimant’s wife suffered pain for almost about 3 months due to which she was hospitalised and later died.

Tribunal

Tribunal framed several issues and came to the conclusion that the husband of the deceased namely claimant 1 who was equally negligent and written the finding of the contributory negligence thereby halving the compensation awarded to the claimants.

Matter being considered in the High Court

In the above-background, the instant matter requires to be considered. the appellants are the legal heirs of the deceased.

Legal representatives rather heirs of the deceased felt aggrieved with the tribunals’ finding on the issue of negligence and compensation as far as the decision of the tribunal on other issues was concerned they attained finality.

Out of the said accident, as has been stated above, one other claim petition was being preferred by Harinder Singh v. Kamal Singh, MACP No. 104 of 2009 under Section 166 of the Motor Vehicles Act, 1988. This matter was tried before another tribunal wherein it was decided that the driver of the truck was solely negligent and claimants were to be compensated.

The above-stated decision was placed before the tribunal whose order is impugned.

Analysis and Decision

The truck rammed into the car causing 3 casualties of persons travelling in the Maruti van and caused injuries to other inmates of the car.

Supreme Court in the decision of Sudarsan Puhan v. Jayanta Mohanty, (2018) 10 SCC 552 and UPSRTC v. Mamta, (2016) 4 SCC 172 held that the appeal is a continuation of the earlier proceedings and High Court is under the legal obligation to decide all the issues of lis and decide it by giving reasons.

Bench stated that the tribunal has committed an error which is apparent on the face of the record and is against the settled principles of law.

Court dealt with the issue in the instant case under separate heads:

Issue of Negligence even in absence of applicability of the doctrine of res judicata and whether the same was rightly decided by the tribunal

Negligence: It means the failure to exercise care towards others which a reasonable and prudent person would in a circumstance or taking action which such a reasonable person would not.

If the injury rather death is caused by something owned or controlled by the negligent party then he is directly liable otherwise the principle of “res ipsa loquitur” meaning thereby “the things speak for itself” would apply.

Contributory Negligence: A person who either contributes or is co-author of the accident would be liable for his contribution to the accident having taken place.

Supreme Court recently in the decision of Archit Saini v. Oriental Insurance Company Ltd., (2018) 3 SCC 365, considered the principles of negligence.

In the decision of Khenyei v. New India Assurance Company Ltd., 2015 LawSuit (SC) 469, the question of joint and several liability was considered.

In the case of contributory negligence, a person who has himself contributed to the extent cannot claim compensation for the injuries sustained by him in the accident to the extent of his own negligence; whereas, in the case of composite negligence, a person who has suffered has not contributed to the accident but the outcome of the combination of the negligence of two or more other persons.

Hence, it can be seen that there is a difference between contributory and composite negligence.

Supreme Court in the decision of T.O. Anthony v. Karvarnan, (2008) 3 SCC 748 has held that in case of composite negligence, injured need not establish the extent of responsibility of each wrong doer separately, nor is it necessary for the court to determine the extent of liability of each wrong doer separately.

Qua applicability Of Doctrine Of Res Judicata where Decision On Negligence Was Decided By competent Tribunal in Claim Arising Out Of The Same Accident :

Doctrine of res judicata applies even if the decision by the earlier court is right or wrong but if it has attained finality between parties the doctrine shall apply and issues decided.

In light of the Gujarat High Court’s decision in United India Insurance Co. Ltd. v. Lajibhia Hamirbhai, the issue of negligence will operate as res judicata.

It is held in the said case that where the parties in two petitions are same, except the claimant, the decision by the tribunal in petition decided earlier, would operate as ‘res judicata’ as far as the issue of negligence is concerned in a subsequent petition.

Supreme Court’s decision in Ishwardas v. State of M.P., (1979) 4 SCC 163, it was held that in order to sustain the plea of res judicata, it is not necessary that all the parties to the litigations must be common. All that is necessary is that the issue should be between the same parties or between the parties under whom they or any of them claimed.

In the instant case, the claimants were being heirs of the deceased who succumbed to the injuries and qua them even if the tribunal was of the opinion that the driver of the car was negligent therefore it was a case of composite negligence.

Court concluded that there was no rebuttable evidence before the tribunal to hold the driver of the car also negligent. Tribunal misdirected itself in venturing to decide the issue afresh without discussing why he would not follow the earlier decision, therefore the said decision required modification.

Question of Legal Representative 

Section 2 (11) of the Code of Civil Procedure defines the term ‘legal representative’.

In the Supreme Court decision of GSRTC v. Ramanbhai Prabhatbhai, (1987) 3 SCC 234, it was held that for claiming compensation under either of the Acts the term legal cannot be given a narrow meaning as ascribed in Fatal Accidents Act 1855. Major, married son & earning son of the deceased can claim compensation. Dependency is not basic criteria for relief in accident cases to the claimants if they are a legal heir or legal representative of the deceased.

Legal Representative of Owner of Vehicle

Claimants before this Court and tribunal are the legal representatives of the deceased as they are husband and children who fall in Class-I heirship.

Hence, in view of the above, the deduction of compensation of claimant 1 by the tribunal cannot be sustained as he was claiming as an heir and not the driver or injured.

Compensation

Relying on the decision of the Supreme Court in Laxmidhar Nayak v. Jugal Kishore Behera, (2018) 1 SCC 746, it was held that the income of the housewife in the year 2009 would be Rs 4,000 per month, the amount would be Rs 48,000 per annum, to which as the deceased was 38 years of age, 25% will have to be added as she was self-employed.

Hence, the appeal was partly allowed and the Judgment and Decree passed by the tribunal shall stand modified to the aforesaid extent.

While parting with the judgment, the Court held that a direction is required to be given to all tribunals in the State that where there are multiple claims, MACT should place all the matters before the same Tribunal and the same tribunal should consolidate the matter and decide so that the situation as it arose in the present matter may not arise.[Dharam Veer v. Kamal Singh, 2020 SCC OnLine All 1404, decided on 26-11-2020]


Advocates who appeared for the matter:

Counsel for Appellant:- Mohan Srivastav
Counsel for Respondent:- Rahul Sahai, K.K.D

Case BriefsHigh Courts

Allahabad High Court: Dr Kaushal Jayendra Thaker, J., directed the insurance company to indemnify the claimants of the deceased who died in an accident, subject, inter alia, to recovery/deduction of 10% of the amount since the present is a case of contributory negligence.

 Present appeal arose from the accident which injured the family of the deceased (late District Judge) and in which the sole bread earner of the family lost his life in the accident. It has been stated that both the driver of the car and owner of the car died whereas the driver of the truck also lost his life.

Claimants preferred the present appeal against the judgment and award passed by Additional District Judge/Motor Accident Claims Tribunal, Allahabad.

Insurance company challenged the grant of compensation in Durga Verma v. Ranno Devi, FAFO No. 1359 of 2001 and FAFO No. 1365 of 2001 whereby the insurance company challenged the judgments qua quantum and alleged breach of policy condition and have also challenged the finding of the tribunal as far as negligence attributed to the driver of the truck was concerned.

Facts that lead to the present appeals

Husband and father of the claimants respectively died in an accident which occurred in the year 1994. The car which the deceased was driving dashed with another vehicle (a truck) causing the death of drivers of both the vehicles who succumbed to injuries caused by the said accident.

The insurance company contested that the vehicle in which the Fiat car dashed was not involved in the accident and the insurance company was not liable and the driver was not having a valid driving license, hence there was a breach of a policy condition. Insurance company contended that it was a case of contributory negligence on the part of the driver of the car.

Insurance Company preferred two appeals against the award in favour of the heirs of driver of Fiat car and heirs of owner of Fiat car. The injured and heirs of both driver and owner have also filed appeals for enhancement.

Analysis & Decision

The Bench stated that it will advert to the principles of negligence: both contributory as well as composite negligence. Further, it added that it is a case of composite negligence but qua the driver of the Fiat car, it can be a case of contributory negligence.

Relying on the decision of Supreme Court in Pappu v. Vinod Kumar Lamba, (2018) 3 SCC 208 and Sant Lal v. Rajesh, (2017) 8 SCC 590, the Bench stated that the liability would arise if a number of the licence was given and issuing authorities whereabouts were given in absence of the same, the insurance company has to be granted recovery rights from the owner of the truck to recover subject to the procedure suggested in the above two cases.

Insurance company did not file any documentary evidence, however, subject to the fact that the driver of the truck did not possess a proper driving license, they are granted recovery rights from the owner.

Negligence

Negligence means failure to exercise the required degree of care expected of a prudent driver. Negligence is the omission to do something which a reasonable man, guided upon the considerations, which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do. Negligence is not always a question of direct evidence. It is an inference to be drawn from proved facts.

What may be negligence in one case may not be so in another.

Well-Settled Law

At the intersection where two roads cross each other, it is the duty of a fast-moving vehicle to slow down and if the driver did not slow down at the intersection, but continued to proceed at a high speed without caring to notice that another vehicle was crossing, then the conduct of driver necessarily leads to the conclusion that vehicle was being driven by him rashly as well as negligently.

In the instant matter, the Bench observed that:

“Merely, because the driver of the truck was driving a vehicle on the left side of road would not absolve him from his responsibility to slow down vehicle as he approaches the intersection of roads, particularly when he could have easily seen, that the car over which deceased was riding, was approaching intersection.”

Court added that, even if courts may not by interpretation displace the principles of law which are considered to be well settled and, therefore, court cannot dispense with proof of negligence altogether in all cases of motor vehicle accidents, it is possible to develop the law further on the following lines; when a motor vehicle is being driven with reasonable care, it would ordinarily not meet with an accident and, therefore, rule of res-ipsa loquitor as a rule of evidence may be invoked in motor accident cases with greater frequency than in ordinary civil suits [per three-Judge Bench in Jacob Mathew v. State of Punjab, (2005) 6 SCC 1.

It was held that by the above process, the burden of proof may ordinarily be cast on the defendants in a motor accident claim petition to prove that motor vehicle was being driven with reasonable care or that there is equal negligence on the part the other side. In the present case, the vehicles are of unequal magnitude: one is a fiat car and the other a truck; the oral testimony of the witnesses go to show that the truck driver driving the vehicle at an exorbitant speed could not control itself, but at the same time if the driver of the Fiat car would also had been cautious, he would have averted the accident taking place and therefore he is held to be also “co-author” of the accident but to the tune of 10%.

Bench held that, it is case of composite negligence as far as the other inmates of Fiat car are concerned and therefore the insurance company will have to indemnify the claimants however it may recover the said amount to the tune of 10% from the owner-driver and insurance company of the Fiat car. As far as the claimant is concerned who is the widow of the driver of the Fiat car the compensation would be lessened to the tune of 10% as the driver has been held to be negligent to that effect. The driver of the Fiat car should have also taken proper caution and having not done so some negligence is attributed to him also.

Hence, the appeals preferred by the insurance company are decided likewise.

Appeals of claimants were partly allowed. [National Insurance Co. Ltd. v. Durga Verma,  2019 SCC OnLine All 6696, decided on 10-12-2019]

Case BriefsHigh Courts

Bombay High Court: The Bench of Sunil K. Kotwal, J. dismissed an appeal while modifying the award passed by the Motor Accident Claims Tribunal, Latur (MACT).

The present appeal was filed by the New India Assurance Company Ltd. – respondent 2 against the judgment and award passed by Motor Accident Claims Tribunal, Latur. Tribunal had awarded total compensation of Rs 5,96,000 inclusive of “no-fault liability” compensation; with interest thereon @7.5% p.a.

Facts of the case are that the deceased while proceeding on his motorcyclye along with his friend was dashed by the offending tractor from the opposite direction which resulted in his death. It has been stated that the accident occurred due to rash and negligent driving, due to which the claim petition for compensation under Section 166 Motor Vehicles Act was filed.

Mr S.G. Chapalgaonkar, counsel for the appellant submitted that the present challenge for the award is preferred on two grounds that the accident occurred due to contributory negligence of the deceased and exorbitant compensation has been awarded by the Tribunal. Further, it has been stated by the counsel for the appellant that, Tribunal without any evidence assessed the notional income of the deceased to be Rs 4,500 per month and awarded exorbitant compensation. As no cross-objection or cross-appeal was filed, the Court cannot enhance the compensation and only determine fair and reasonable compensation. He cited the decision of the Supreme Court in Jitendra Khimshankar Trivedi v. Kasam Daud Kumbhar; (2015) 4 SCC 237, and stated that, Supreme Court exercise jurisdiction under Article 142 of the Constitution of India while enhancing compensation in absence of cross-objection and cross-appeal by the claimant.

Further counsel for the claimants Mr N.D. Kendre, Advocate submitted that the Tribunal erroneously applied the multiplier of “16” when the deceased was only 30 years old and as per the decision in Sarla Verma v. DTC, (2009) 6 SCC 121, multiplier of “17” is applicable.

Thus the High Court examined all the contentions place before it and further analysed and noted that, the insurance company did not examine any eye witness of the accident which leaves them to examine the police papers in order to determine if the plea for contributory negligence by the insurance company can be accepted or not.  Court through the FIR copy found out that the accident occurred due to rash and negligent driving by the driver of the offending tractor.

“While deciding quantum of compensation, the age of the deceased plays an important role.”

It was clear by placing reliance on the above-stated decision of the Supreme Court in Sarla Verma v. DTC, (2009) 6 SCC 121, that multiplier of “17” would be applicable in the present set of circumstances.

Further, while keeping in consideration the age and personal skill of the deceased, notional income as determined by the tribunal was just and reasonable. Taking up the decision from the case National Insurance Co. Ltd. v. Pranay Sethi; (2017) 16 SCC 680, 40% income is to be added in the annual income of the deceased towards loss of future prospect.

As the appeal was filed by the Insurance Company, fruits of awards passed by the Tribunal won’t be received by the claimant, which leads them to an entitlement of compensation only at 9% p.a. interest.

Therefore, the conclusion that comes out from the present case is that the High Court cannot exercise jurisdiction under Article 142 of the Constitution of India as done by the Apex Court stated above, the only jurisdiction that can be exercised by the High Court is under Order 41 Rule 33 CPC, which would enhance the rate of interest to the extent of 9% p.a and the same to be modified by the tribunal in the present case.[New India Assurance Co. Ltd. v. Sunita, 2019 SCC OnLine Bom 2, decided on 04-1-2019]

Case BriefsForeign Courts

High Court of South Africa, Eastern Cape Division: Plaintiff had approached this court before a Single Judge Bench of E. Revelas, J., for grant of damages against the defendant for injuries sustained by him during a motor vehicle accident.

Counsel of defendant, Advocate Paterson conceded that in absence of any contrary version the plaintiff’s account of the accident had to be accepted but since plaintiff did not apply brakes shows his negligence and that there was contributory negligence on his part.

High Court was of the view that even if some other driver would have reacted differently in the same circumstances, it does not mean that the plaintiff’s responses and actions were negligent. It was noticed that if the plaintiff had applied brakes it could have caused the vehicle to skid into other traffic and could have then resulted in contributory negligence. Court found the other colliding vehicle’s driver to be aggressive, reckless and inconsiderate and the one to be wholly blamed. Therefore, the defendant was directed to pay 100% of damages to the plaintiff. [Nicholas v. Road Accident Fund, Case No. 3880 of 2015, decided on 27-11-2018]

 

Case BriefsForeign Courts

High Court of Australia: In the instant case, the respondent sustained serious spinal injuries which rendered her paraplegic, when she was thrown from the back seat of a car being driven by the appellant who was drunk at the time of the accident. The issue for determination was whether the respondent was contributorily negligent  for choosing to travel in the car driven by the appellant when she ought to have known that he was intoxicated and, secondly, for failing to engage her seatbelt.

The trial Judge rejected the contention of the respondent that the appellant’s erratic driving had prevented her from fastening her seatbelt and held that failure to wear a seatbelt constitutes contributory negligence under Section 49 of the Civil Liability Act 1936. The Judge further held that the exception in Section 47(2)(b) of the Act applies in the present case as the respondent could not reasonably be expected to have avoided the risk of riding with the appellant in the circumstances. On appeal, a majority of the Full Court of the Supreme Court of South Australia dismissed the appellant’s appeal on the Section 47(2)(b) issue, and allowed the respondent’s cross-appeal on the issue of Section 49 and held that her failure to fasten her seatbelt was a result of her direct and natural response to the appellant’s erratic driving.

The appellant appealed to the High Court on both issues. A bench of French CJ, Kiefel, Bell, Keane And Gordon JJ unanimously dismissed the appeal on the Section 47(2)(b) issue and held that the respondent, who suffered major injuries as a result of a motor vehicle accident, was not contributorily negligent under Section 47 of the Civil Liability Act 1936 for travelling in a car driven by an intoxicated driver, as according to the facts of the case, she could not reasonably be expected to have avoided the risk of travelling with the appellant. However, the Court allowed the appeal and affirmed the trial judge’s finding that the appellant’s driving did not prevent the respondent from fastening her seatbelt and accordingly held that the respondent was contributorily negligent under Section 49 of the Act for failing to wear the seatbelt. [Alex Allen v. Danielle Louise Chadwick, decided on 9-12-2015]