The Court of Appeal concluded repairing a car is consistent with the normal function of a vehicle for the purposes of Section 145(3)(a) of the Road Traffic Act 1988 ('RTA').
Mr Holden, a garage mechanic, obtained permission from his employer, Phoenix Engineering ('Phoenix'), to use his work premises to carry out repairs to his vehicle. Due to his negligence when carrying out the repairs, a fire started at the premises and spread to adjoining premises.
Phoenix's insurer paid out in excess of £2million for substantial damage caused by the fire, and sought to bring a subrogated claim against Mr Holden. The only insurance policy which might potentially cover that claim was Mr Holden's car insurance policy with UK Insurance Limited.
UK Insurance Limited sought a declaration that it was not liable to indemnify Mr Holden in respect of any liability arising out of his actions. Phoenix counterclaimed for a declaration that UK Insurance Limited were liable to indemnify Mr Holden.
The question for the courts was whether undertaking repairs on a car constituted "use" of the vehicle for the purposes of motor insurance cover under section 145(3)(a) of the RTA.
At first instance
The trial judge acknowledged the RTA is incompatible with the Motor Insurance Directive as interpreted by the CJEU in Vnuk. However, he held carrying out repairs on a car did not fall within the ambit of the 'use' of the vehicle, on the basis repairs are not a "normal function" of a car (although driving to test a repair would be a different matter).
The Court of Appeal held carrying out repairs is an activity consistent with 'use' of a vehicle and its normal function. The repairs were necessary in order to put Mr Holden's car into a safe and good working condition in order for it to pass its MOT and allow Mr Holden to drive it.
Sir Terence Etherton, Master of the Rolls, who gave the leading judgment, stated this approach is consistent with the objective of the Motor Insurance Directive; to protect victims of accidents caused by motor vehicles. Furthermore the employment of the broad term "use" rather than "driving" or "operating" reflects the reality that a car can pose a danger to others in its vicinity whether or not is it being driven.
What can we learn?
- This case is a continuation of the courts giving a wide interpretation to "use of a vehicle" following the Vnuk ruling. It was recently held in Wastell that a hamburger van parked in a layby, with the purpose of conducting a business, constituted use of a vehicle on the road.
- The case is an example of the UK courts acknowledging the RTA is incompatible with the Motor Insurance Directive as interpreted by the CJEU in Vnuk.
- In December 2016 the Government launched a consultation to amend the UK's legal position to accord with the Vnuk judgment. The consultation closed on 13 April 2017. It questioned what vehicles require compulsory insurance and could potentially result in compulsory insurance for previously uninsured vehicles such as lawnmowers and mobility scooters.
- Industry bodies have raised concerns about the consultation, believing the amended Directive option, which will require drivers to hold third party insurance whilst driving on public land will be difficult to enforce and could lead to increased fraud.
- Indeed it may provide a fresh hunting ground for claimant solicitors and claims management companies (CMCs) seeking to encourage claims, which would ultimately lead to an increase in costs for insurers.