Keeley v Pashen - Bad News For Motor Insurers
Keeley v Pashen - Bad News For Motor Insurers
Keeley v Pashen
Court of Appeal [2004]EWCA Civ 1491
This case concerned interpretation of a common provision of a motor insurance policy, namely whether at the time of the collision the vehicle concerned was being used for “social, domestic and pleasure purposes”. The liability of the driver’s insurers to satisfy the judgment pursuant to section 151 of the Road Traffic Act 1988 (“the Act”) depended on this issue.
Facts
The claim arose from a road traffic accident and was brought by the widow of Mr Keeley. Me Kelley died as a result of fatal injuries suffered in that accident.
The First Defendant was a mini-cab driver. He was driving four men (Mr Keeley and three others) to their destination in his own private vehicle. The men were drunk, and because they were messing about inside the car, he stopped the car and asked them to stop behaving in that manner. An altercation followed during which the First Defendant maintained he was attacked. The First Defendant stopped his vehicle at a junction and the four men left the vehicle. The First Defendant then reversed his vehicle back along the road he had driven along and drove forwards at the men “in order to scare them”. The vehicle hit Mr Keeley and he sustained fatal injuries.
About 16 seconds elapsed between the time when the passengers left the car and the time when Mr Keeley was knocked down. The First Defendant then drove away, stopping outside the mini-cab office for a word with the controller on his way home.
The First Defendant was prosecuted for murder. He pleaded guilty to manslaughter and that plea was accepted on the basis that because his car was proceeding at less than 15 mph he did not intend to cause really serious harm. The sentencing judge accepted that he was driving in a state of panic and had merely intended to frighten the men.
The First Defendant had insured the vehicle with the Second Defendant on a third party, fire and theft basis. The motor insurance policy contained the following express limitations
“Use only for social, domestic and pleasure purposes including travel to and from permanent place of business. The policy does not cover use for hire or reward.”
“We will NOT provide Insurance…While any car covered by this Insurance is being used for any purpose not permitted by your Certificate of Insurance.”
The Claimant sued the First Defendant and obtained judgment against the First Defendant. The Motor Insurer’s Bureau was not involved and it was not given the requisite notice.
The question of whether the Second Defendant was liable pursuant to section 151 of the Road Traffic Act 1988 to satisfy that judgment was then tried as a preliminary issue.
Decision in the County Court
The Deputy Circuit Judge held that the Second Defendant was not liable as the First Defendant was not using the car for “social, domestic and pleasure purposes” when he reversed the car and drove it at the four men, and so the type of use to which the vehicle was being put was not one of the uses covered by the policy. The Judge also held that the First Defendant was not using the car for hire or reward at the time of the incident because that use had stopped for the night when the four men got out of the car.
The Claimant appealed against the first finding. The Second Defendant cross-appealed against the second finding.
The Court of Appeal’s Decision
The Second Defendant contended that the liability was not covered by the terms of the policy for two reasons
(1) At the material time the First Defendant was using his car for hire or reward, and such use was expressly excepted by the terms of the policy
(2) At the material times he was not using the car for social, domestic or pleasure purposes but for the quite different purpose of trying to frighten Mr Keeley and his friends.
Brooke LJ, giving the only full judgment of the Court, referred to passages in the judgment of the Court of Appeal in Seddon v Binions [1978] 1 Lloyd’s Rep 381.
In particular he referred to Roskill LJ’s dicta that (1) whether any given factual circumstance falls within “social, domestic or pleasure purposes” depends on the facts of any particular case and not on any firm principle, (2) the solution in that particular case was to ask the following question: what was the essential character of the journey in the course of which the particular incident occurred?.
Brooke LJ also referred to Roskill LJ’s emphasis on the “essential character” of a particular journey, and to Megaw LJ’s judgment (also in Seddon) where he emphasised the need for Courts to look for the primary purpose of a journey and to be slow to seek some possible secondary purpose, or some inessential character, the result of which could be suggested to be that the use of the car fell outside the proper use for the purposes of which cover was given by the insurance policy”.
Applying the Seddon test (which had been applied by the Court if Appeal in Caple v Sewell [2001]EWCA Civ 1848 [2002] Lloyds IR Rep 626), the Court of Appeal held that the First Defendant had driven his car for hire or reward until he dropped off his last passengers of the day, that thereafter the essential character of the journey was to drive his car home, and that the First Defendant driving his car at the passengers was merely an incidental episode on the journey home. More generally, it was held that though a motor insurer may impose express limitations on the third party cover it provides, the courts should not be astute to interpret any such limitations benevolently in the insurer’s favour.
Thus the car was being used for “social, domestic and pleasure purposes”, a use covered by the insurance policy and the Second Defendant was obliged to settle the judgment pursuant to section 151 of the Act.
The Claimant’s appeal was therefore allowed and the Defendant’s cross-appeal was dismissed.
Comment
Section 151 of the Road Traffic Act 1988 affords protection to victims of road traffic accidents when they have been injured by a driver who was not insured to drive the vehicle concerned, but where other drivers were insured to drive that vehicle. Broadly speaking, an insurer is a Road Traffic Act insurer if it has delivered a current certificate of compulsory motor insurance in respect of the offending vehicle at the time of the accident, although the insurance did not cover the offending driver.
This case concerned the interpretation of one of the pre-conditions to that general rule, namely that section 151 (2) (a) which provides that the liability of the insurer arises only if “It is a liability covered by the terms of the policy to which the certificate relates, and the judgment is obtained against any person who is insured by the policy…”
Whilst each case turns on its facts, it is perhaps surprising that on the facts of this case the Court of Appeal was prepared to overturn a finding at first instance that a mini-cab driver who deliberately drove at passengers he had discharged was not driving for “social, domestic and pleasure purposes”. After all, the driver had dropped off the passengers, and he then reversed and then drove at them for reasons intimately connected with the previous journey. One might have expected the journey home to commence when the driver was driving in the usual way and had passed the point where he had dropped the passengers off, or when he contacted his supervisor to inform him that he had finished work for the day.
However, the real significance of this case is in the application of the Seddon test, as the Court of Appeal has shown that where the driver is already established on a journey with a primary purpose they will be slow to find a secondary purpose, especially where the finding of that secondary purpose would allow the driver’s insurers to avoid liability.
Ordinarily, even if the Claimant was unable to establish that the vehicle’s insurers were liable to meet the judgment pursuant to section 151, the Claimant could of course recover against the Motor Insurers’ Bureau pursuant to the Uninsured Drivers’ Agreement 1988 or 1999 (depending on when the accident occurred). This case was unusual in that the Claimant’s solicitors had not covered that fall-back option, and if the Claimant did not establish liability pursuant to section 151 of the Act, the Claimant would not recover any damages. One wonders whether the absence of this option may have coloured the Court of Appeal’s approach in this case.