R & S Pilling t/a Phoenix Engineering (Respondent) v UK Insurance Ltd (Appellant) - (27 Mar 2019)

Carrying out of significant repairs to a vehicle on private property does not entail “use” of vehicle

Insurance

Present appeal is concerned with the interpretation of a policy of motor insurance. The question is whether the policy confers on the insured owner of a vehicle an indemnity against liability for damage caused to the property of a third party which was caused by his acts, when he was carrying out substantial repairs to his car in the commercial premises of his employer. The appeal also raises questions about the meaning of 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 (RTA), which defines the compulsory insurance requirements for the use of vehicles on such places.

The real dispute is therefore between the two insurance companies. At its simplest, UKI says that the Policy does not respond to third party claims involving the car while the car is being repaired on private premises, such as Phoenix’s garage. Phoenix contends that the Policy covers accidents involving the car off-road and that in any event the repair of the car can properly be described either as the use of it, or as arising out of its use, on a road or other public place. The question is the correct interpretation of the Policy against the background of domestic and EU legislation which imposes compulsory third party insurance in respect of motor vehicles.

Section 145(3) of the RTA must be interpreted as mandating third party motor insurance against liability in respect of death or bodily injury of a person or damage to property which is caused by or arises out of the use of the vehicle on a road or other public place. The relevant use occurs where a person uses or has the use of a vehicle on a road or public place, including where he or she parks an immobilised vehicle in such a place (as the English case law requires), and the relevant damage has to have arisen out of that use.

Clause 1a of the policy says “we will cover you for your legal responsibility if you have an accident in your vehicle and: you kill or injure someone; [or] you damage their property … .” As required by law, the policy also includes a certificate that, it satisfies the requirements of relevant legislation, which includes the RTA.

Neither English domestic case law nor the jurisprudence of the CJEU supports the view that the carrying out of significant repairs to a vehicle on private property entails the “use” of the vehicle. Supreme Court is not persuaded to say that a vehicle which is on its side being repaired on private property, such as a garage, is being used “as a means of transport” as the CJEU jurisprudence requires.

Fire was caused by and arose out of the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself. It was Mr Holden’s alleged negligence in carrying out the repairs and not the prior use of the car as a means of transport which caused the relevant damage. Phoenix’s claim clearly falls on the wrong side of the line. Appeal allowed.

Tags : POLICY COVER STATUTORY REQUIREMENTS