R&S Pilling (t/a Phoenix Engineering) v UK Insurance Ltd [2017] EWCA Civ 259

The Court of Appeal clarified the definition of “use” of a vehicle under section 145(3) of the RTA and the Directive.

Facts of the case

On 12 June 2010, Thomas Holden carried out repairs to his car at his employer’s (the Appellant’s) premises with their permission. This was in order to make his car roadworthy as it had recently failed its MOT. As a result of Mr Holden welding the underside of his car, the Appellant’s premises caught fire and were damaged. Mr Holden’s motor insurer was Churchill, a brand through which UK Insurance Limited, the Respondent to the appeal, provides motor insurance cover.

The Respondent sought a declaration that it was not liable to indemnify Mr Holden regarding any liability arising from this incident, and the Appellant counterclaimed for a declaration that the Respondent was liable to indemnify Mr Holden. Mr Holden was named as First Defendant, but did not played a role in proceedings.

His Honour Judge Waksman QC, by an order of 8 April 2016, held that the Respondent was not liable to indemnify Mr Holden in respect of any liability he had from this incident. He held, inter alia, that undergoing repairs was not part of the normal function of a vehicle, and that it was an “accident” as it was a fortuitous or unexpected event.

Issues

The key issue of law in the appeal was whether the conducting of repairs on an immobilised vehicle constituted “use” of the vehicle, under Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 (“the Directive”), and in line with previous authorities such as Dunthorne v Bentley [1999] Lloyd’s Rep IR 560.

Judgment

Sir Terence Etherton MR, Lord Justice Beatson and Lord Justice Henderson unanimously allowed the appeal in full. In his leading judgment, the Master of the Rolls held that, as the policy purported to satisfy the requirements of the applicable law, the policy was to be interpreted as being extended by section 145(3) of the Road Traffic Act 1988 (“RTA”) where matters were not expressly mentioned, and to not be limited to situations where Mr Holden was inside the car. In that regard, the policy responded to the incident in question. He did not accept that there was insufficient causative link between the accident and the damage, or that persons entering into the policy would not have anticipated that it would cover such incidents. He accepted that the policy might not respond if the car which was being repaired had been out of use for some time.

The Master of the Rolls further held that the repairs did constitute “use” of the car under section 145(3) of the Road Traffic Act 1988. He approved HHJ Waksman QC’s finding that this section must be interpreted in line with the Directive, providing it does not go against the grain of the legislation; and that Vnuk v Zavarovalnica Triglav D.D [2016] RTR 188 gives authoritative guidance on the first paragraph of Article 3. He held that, applying Vnuk and a purposive interpretation of section 145(3), carrying out repairs to enable the car to be in a safe condition and pass its MOT so he could continue to drive it was consistent with the normal function of a car.

The Master of the Rolls held that such an interpretation was consistent with the Directive’s aim in protecting victims of motor accidents, and also with the wording of the Directive, which used the word “use” rather than “operate” or “drive”. It also related to the fact that cars can pose a danger even when they are not being driven. He held that it was consistent with the English authorities, including Pumbien v Vines [1996] R.T.R. 37, that “use” could occur when a car was stationary. He held that it would also be consistent with the interpretation of s143 of the RTA in Pumbien, which was to protect road users’ safety and property.

He set out the following propositions regarding “use”:

  1. “Use” is not restricted to driving of the car.
  2. A car can still be in “use” when parked or immobilised, even if it is not capable of being driven at that moment.
  3. “Use” involves anything consistent with the normal function of the vehicle.
  4. Damage “arising out of the use” of a vehicle can be consequential rather than proximate as long as it is contributory.

Repairing a car so that it can be lawfully and safely driven again thus fell under “use” of the vehicle within section 145(3)(a) of the RTA, being part of the normal function of the vehicle. Alternatively, it was held that the circumstances of such an accident meant it was “arising out of the use” of the car under section 145(3)(a) as the repair was a contributing factor to the damage.

Comment

This case suggests that a wide interpretation may be taken in terms of insurance policy cover. It is useful given that Dunthorne v Bentley might be considered to be fact-specific, and indeed Lord Justice Pill opined in Dunthorne that the case established no general principle. The case here indicates the approach underlying the reasoning is a purposive one, relating to the legislative aims to protect road users. It appears that fine distinctions been factual scenarios may not be made in such cases.