A friendly society has lost an initial legal claim that it could offer members third party motor vehicle insurance.

However, according to a court judgment, the final decision as to if the Bentley Friendly Society can provide members with third party insurance could be a matter for the Governor rather than the courts.

The Bentley Friendly Society argued that the Friendly Society Act 1868 allowed them to provide motor vehicle insurance. The legislation enables the society to make good “any loss sustained by the members by fire, collision, tempest or shipwreck, or by any contingency whereby they sustain any loss or damage to their motor bikes, autos, real estate or boats” provided that investment of each member accumulate or be employed for the sole benefit of the investing member, their spouse or their beneficiaries.

However, in 2014 the Transport Control Department stopped accepting their certificates of motor vehicle insurance on the advice of the Attorney-General, causing the society to launch a legal action against the department.

In a preliminary hearing last month, the Bentley Friendly Society sought declaratory relief, asking the courts to find that their policies are motor vehicle insurance and, through the Friendly Society Act, they can provide insurance even if not compliant with the Motor Car Insurance (Third-Party Risks) Act 1943. That Act requires insurers to be approved by the Governor.

According to a judgment on the point delivered on June 15, Puisne Judge Stephen Hellman found that should the friendly society gain the Governor’s approval, there was no in-principle reason why it or other friendly societies cannot carry on insurance business within the meaning of the 1943 Act.

“Before granting such approval, the Governor would be likely to consider whether the plaintiff was able to satisfy any third party claims which it is reasonably foreseeable that it might be called upon to meet,” Justice Hellman wrote. “[For example] whether it could satisfy a claim for in excess of, say, $1 million.

“In considering this question, the Governor would no doubt form a view as to whether the funds available to satisfy a claim against a member would be limited to the value of that member’s investment. The Governor would also be likely to consider whether the interests of third parties would be adequately protected if approval were granted, given that the plaintiff is not subject to any regulatory oversight. However, these are policy matters for the Governor and not the courts.”

He continued, stating that the question of if the objects enumerated in the Friendly Society Act include the provision of motor vehicle insurance with respect for third parties was an academic one.

“If they do include such provision, it is nonetheless necessary for the plaintiff to obtain the Governor’s approval under the 1943 Act,” Justice Hellman wrote. “If they do not include such provision, the plaintiff can nonetheless apply to the Governor for approval: if such approval is forthcoming, obtaining certification from the Attorney-General and the allowance of the registrar will likely prove a formality.”

However, he added: “In my judgment, the objects enumerated the 1868 Act do not include the provision of motor vehicle insurance with respect to third party risks. In so finding, I give the words their natural and ordinary meaning.

“The plaintiff invites me to focus on the words ‘any contingency’, and suggests that they are broad enough to cover the provision of such insurance. However, I accept the defendant’s submission that, considered in context, ‘any contingency’ means any event whereby the members sustain loss or damage to their assets. It does not refer to an event causing loss or damage to a third party.”

In summary, the judge found that the “motor car insurance” issued by the friendly society were not authorised under the 1943 Act and as a result do not comply with it, dismissing the claim for relief.

• It is The Royal Gazette’s policy not to allow comments on stories regarding court cases. As we are legally liable for any slanderous or defamatory comments made on our website, this move is for our protection as well as that of our readers.