John McGowan Litigation Manager
What constitutes “use” of a vehicle and where must it be used for the purpose of the Road Traffic Act 1988?
R & S Pilling t/a Phoenix Engineering (Respondent) v UK Insurance Ltd (Appellant)  UKSC 16
The Supreme Court has determined that conducting repairs to a vehicle located on private property is not a “use” of a vehicle for the purposes of the Road Traffic Act 1988 (the “RTA”).
The appeal was concerned with the interpretation of a policy of motor insurance and whether the policy confers on the insured owner an indemnity against liability caused to property of a third party, caused by his acts when carrying out substantial repairs to his car in the commercial premises of his employer.
In considering this interpretation the Supreme Court also had the determine the phrase “damage…caused by, or arising out of, the use of the vehicle on a road or other public place” in section 145 of the Road Traffic Act 1988, which defines the compulsory insurance requirements for the use of vehicles on such places.
In 2010, Mr Thomas Holden was performing repairs to his vehicle while on the property of his employer (“Phoenix”). In the course of those repairs, a fire started and caused significant damage to Phoenix’s premises, as well as adjoining properties. Phoenix’s property insurers AXA brought a subrogated claim against Mr Holden, who held a motor policy with UK Insurance Ltd (“UKI”). UKI sought a declaration that it was not liable to indemnity Mr Holden against the claim. AXA (which had undertaken to limit its claim to amounts recoverable from UKI) resisted the action.
Clause 1a of Mr Holden’s policy read:
We will cover you for your legal responsibility if you have an accident in your vehicle and:
- you kill or injure someone;
- you damage their property; or
- you damage their vehicle.
The policy documents also included a Certificate of Motor Insurance which stated the following:
“I HEREBY CERTIFY THAT THE POLICY TO WHICH THIS CERTIFICATE RELATES SATISFIES THE REQUIREMENTS OF THE RELEVANT LAW APPLICABLE IN GREAT BRITAIN AND NORTHERN IRELAND...”
Court of Appeal decision
The Court of Appeal considered those two documents together, in conjunction with the Road Traffic Act 1988 and EU case law. It was common ground between the Court of Appeal and Supreme Court that the policy had to be interpreted so as to meet the requirements of the RTA and EU law. Section 145(3)(a) of the RTA states that motor policies:
(A) MUST INSURE SUCH PERSON… IN RESPECT OF ANY LIABILITY WHICH MAY BE INCURRED BY HIM … CAUSED BY, OR ARISING OUT OF, THE USE OF THE VEHICLE ON A ROAD OR OTHER PUBLIC PLACE IN GREAT BRITAIN …”
This statutory provision was in turn interpreted in light of the EU case law. The Court of Appeal considered that section 145(3)(a) had to be “read down” to comply with the ECJ case of Vnuk v Zavarovalnica Triglav dd (Case C-162/13). That case established that the “use” of a vehicle included anything consistent with the normal function of the vehicle, and this was not limited to use of a vehicle on a road or public space. Accordingly, the Court of Appeal concluded that the first sentence of Clause 1a should be read as follows:
“WE WILL COVER YOU FOR YOUR LEGAL RESPONSIBILITY IF THERE IS AN ACCIDENT INVOLVING YOUR VEHICLE…” [OUR EMPHASIS ADDED]
The Court of Appeal held that UKI was liable to indemnify any liability Mr Holden had towards Phoenix.
Supreme Court decision
The Supreme Court disagreed, holding that the Court of Appeal’s favoured interpretation went further than was necessary to meet the statutory requirements. The Supreme Court determined that the first sentence of clause 1a should in fact be read as follows:
“WE WILL COVER YOU FOR YOUR LEGAL RESPONSIBILITY IF YOU HAVE AN ACCIDENT IN YOUR VEHICLE OR IF THERE IS AN ACCIDENT CAUSED BY OR ARISING OUT OF YOUR USE OF YOUR VEHICLE ON A ROAD OR OTHER PUBLIC PLACE…”
In coming to this conclusion, two matters were of particular importance.
Firstly, under English law, while “use” of a vehicle can extend beyond driving (for example, to include abandoning a vehicle on a road or in a parking space), the wording of the RTA only refers to use of a vehicle on a road or public space. Therefore when interpreting the policy to meet statutory requirements, it goes too far to extend the policy’s cover to the use of vehicles beyond that geographical limitation.
Secondly, while the case of Vnuk had expanded the requirements of EU law to any use of vehicles consistent with the normal function of that vehicle (and not just use on roads or public spaces), this simply meant that the RTA was incompatible with EU law and needed to be amended by Parliament. It was not possible for the courts to interpret the RTA against the clear and natural meaning of its wording to include use of vehicles on private property and it is the cover required by the RTA and not the extended cover required by EU law which is to be read into the policy.
In light of these considerations, the Supreme Court determined that Mr Holden’s accident did not fall within the (corrected) wording of the policy. Neither English case law nor EU jurisprudence supports the view that the carrying out of significant repairs to a vehicle on private property entails the “use” of the vehicle. The repairs were not being performed on a road or public space, nor was there a sufficient causal connection with the use of the vehicle on a road or public space. The appeal was allowed and UKI was found to have no liability to indemnify Mr Holden.
Related news & insights
Insights / Success with subrogation in the UAE
25-05-2021 / Insurance
Insurers often perceive subrogated recoveries as challenging and uncertain in this region and that can be true to some extent.
Insights / Insurance & Reinsurance guide 2021
25-01-2021 / Insurance
We are pleased to share with you Chambers and Partners 'Insurance & Reinsurance guide 2021', of which Simon Cooper is the contributing editor.
Insights / Supreme Court checks out of Orient Express Hotel
19-01-2021 / Insurance
On 15 January 2020, the Supreme Court handed down its judgment in this test case that was initiated by the Financial Conduct Authority (“”FCA”) in order to determine a number of common coverage issues pertaining to the correct response of non-damage business interruption policies to the Covid-19 pandemic.
Insights / Decennial Liability in the UAE
05-10-2020 / Insurance
At its core, decennial liability is a form of strict liability imposed on architects, engineers and contractors in the case of total or partial collapse of a building or structure or defects found in the building or structure that threaten the structural integrity of the building.
Insights / The Insurance and Reinsurance Law Review Eighth Edition
16-06-2020 / Insurance
We’re pleased to share with you the eighth edition of The Insurance and Reinsurance Law Review. Ince is a member of The Law Reviews (TLR) leading panel of contributors and the team this year led by Peter Rogan as the Editor, contributed to the following topics:
Insights / Chapter 15 - England and Wales
16-06-2020 / Insurance
The UK insurance and reinsurance industry is the largest in Europe and the fourth-largest in the world.