11.6.09

Claimant entitled to recover damages from insurers following accident where he had authorised uninsured friend to drive car.  

In October 2004 Mr and Mrs Wilkinson bought their son, Ben, a car for £1,600. The car was insured through Churchill Insurance Company Ltd. The policyholder was Mrs Wilkinson but Ben was a named driver. On 23 November 2005 Ben met with a couple of friends including Kieran Fitzgerald, who had been drinking. Ben allowed Kieran to drive the car. Kieran lost control and collided with another vehicle, causing Ben to suffer severe injuries. Churchill accepted that, in accordance with the provisions of s.151 Road Traffic Act 1988, it had to indemnify Kieran in respect of Ben’s claim. However, it argued that Ben would be required to reimburse any sums ordered to be paid to him pursuant to s.151(8), which allows for an insurer to recover a payment made under s.151 from any person who caused or permitted the use of the vehicle.  

Held: It was common ground that Churchill must meet the judgment that Ben had obtained against Kieran (by having to indemnify Kieran). However, the issue was whether that obligation was satisfied in circumstances in which the insurer proposed to exercise its statutory right to recover the proceeds. Section 151 was the means by which the UK implemented the Second Motor Insurance Directive (84/5/EEC) and should be interpreted in the light of the wording and the purpose of the Directive. The reality of Churchill’s case was that Ben would lose his right to payment altogether. The obligation to make a payment should be applied in a substantive and not just a formal sense. Accordingly, Churchill was not entitled to recover the amount paid to Ben from him. The Court emphasised that the principles were only being considered in relation to this particular set of facts and it was on these facts that, if recovery were allowed, the effect would be to negate Churchill’s obligation to pay, which is not a permissible outcome under the EC Directive.

Comment: The Judge was told that there was no authority on the point in question, which is surprising given its potential importance. He commented “I have found none of the points at issue at all easy, and discussed with the parties whether it would be appropriate at this stage to refer questions to the ECJ … the issues will be more clearly identified at the appellant stage should the case go that far…”  

The effect of the decision at first instance is to make it clear that the Claimant is entitled to recover damages from the insurers, notwithstanding his own role in the accident. It is however likely that an appeal will be brought against this decision.