On the 27th March 2020, the Court of Appeal in the case Middlesea Insurance plc vs Emanuel Ciantar et spoke about the extent of liability of an insurance company in vehicle collisions with respect to third party victims. The Court seemed to base its judgment after deliberating on the applicability of Subsidiary Legislation 403.13 to the case at hand.
In this case, the Court of Appeal was challenged with a case where a demand had been made by the Middlesea Insurance plc. to order that the insurance policies issued in favour of the respondent were to be declared null and void in terms of Article 10(3) of Chapter 104 of the Laws of Malta. This is because Middlesea had claimed fraudulent behavior on behalf of the policyholder as he had originally managed to subscribe to the said policies after managing to withhold certain substantial material facts from Middlesea itself.
Highlighting such reasoning, Middlesea further requested the Court to declare that since such policies were null and void, it had no obligation to pay any amount resulting from the said insurance policies to third parties.
The Court of Appeal decided in favour of Middlesea’s claim, stating that since the company had successfully managed to prove that the respondent had acquired the policies as a result of his non-disclosure of facts, it had a right to annul the policies. Therefore and in so doing, the Court of Appeal upheld that the insurance company was not legally obliged to pay any third party damages, as there was no longer an active policy that affected such implementation. In fact, the Court of Appeal further sustained that if an insurance policy had been declared null and void under Article 10 of Chapter 104 of the Laws of Malta, the insurance company would not be viewed as a concerned party in terms of Subsidiary Legislation 403.13. In other words, the insurer would hold no legal obligation to effect damages to the victims in question.
Nonetheless, it is important to note that this judgment is the antithesis of the understanding held by the Court of Appeal in Montaldo Insurance Agency Limited v. Christian Bugeja, decided on the 18th July 2017.
In this case, the Court of Appeal concluded that an insurance company couldn’t escape responsibility by simply invoking fraudulent behavior from its policyholder. The reasoning adopted by this court was all based under Article 24 (2)(b) of Subsidiary Legislation 403.13 as the court held that the insurance company is still deemed legally responsible and is irrelevant if the policyholder had withheld information from the said company when obtaining his policy. In fact, the court seemed to sustain that the intention of the legislator was always to ensure that the obligation to pay the victim is placed on the insurer’s shoulders.
These are two (and both very recent) contradicting judgments that even though the subject matter and facts of the case may be varied, the legal element behind both scenarios is completely identical.