In the recent case of UK Insurance Ltd v Holden & Another,
an English court was required to consider the meaning of
"use" pursuant to the Road Traffic Act's
1988 ("RTA") compulsory insurance regime. The case arose
following property insurers novel attempts to affect recovery,
following a large-scale insured property loss.
The Court's robust response provides peace of mind for motor
insurers and serves as a useful clarification of both the effects
of the RTA and the ECJ's decision in Vnuk v Zavarovalnica
The facts in this case were as follows:
i. Mr Holden was a mechanical fitter employed by the second
defendant, R&S Pilling t/a Phoenix Engineering
ii. While Mr Holden was working on his own car at Phoenix's
premises, sparks from his welding work started a fire inside the
car. The fire spread to the premises and to the adjoining
iii. AXA, Phoenix's public liability insurer, paid out sums
in excess of GBP 2 million in respect of the property damage. AXA
then brought a claim in Phoenix' name to recover those monies
from Mr Holden and/or his motor insurer; UK Insurance Limited
iv. UK sought a declaration from the court that its policy did
not cover AXA's claim
UK's position was that the policy insured Mr Holden against
third party claims resulting from accidents involving his car while
it was being used on a public road or other public place. It argued
that repairs did not constitute use of the car, so the accident
could not be covered.
In contrast, Phoenix contended firstly, that the policy was not
limited to accidents in public places and secondly, that the use of
a car encompasses its repair, so the accident did fall within the
scope of the policy.
At trial, the judge considered two points:
i. Whether the cover in this case was limited to accidents
arising from the use of vehicles on a road or public place
ii. Whether Mr Holden's car was being "used"
The judge dealt with the first point briefly, finding that there
was no evidence to suggest that the policy was intended to be
limited in this way. He also noted (obiter) that such a limit on
the cover would be incompatible with Article 3(1) of the First
Directive, pursuant to the decision of Vnuk v Zavarovalnica
Triglav, where the ECJ held that compulsory motor insurance
should apply equally in public and private places.
In respect of whether Mr Holden's car was being
"used" in this case, the judge began by noting that in
Vnuk the ECJ confirmed that in the context of compulsory
motor insurance the term "use" means any normal
function of the vehicle.
In deciding whether repairs constitute the normal function of a
vehicle, the judge considered the decisions of Canadian courts,
which have accepted a broad definition of the term "use"
which includes repair, and Australian case law, which takes a
narrower approach and distinguishes between using a car and making
it ready for use.
Finally, the judge considered the English case of Dunthorne
v Bentley, which concerned an accident caused by Mrs Bentley
running across the road to seek help when her car ran out of
petrol. It was held that the accident arose out of Mrs
Bentley's recent use of the car. However, the judge decided
that this did not mean that the damage in this case arose from Mr
Holden's earlier driving of his car to the garage; the fire was
caused by, and arose out of, the negligent repair of the car.
Ultimately, the judge concluded that the repairs undertaken by
Mr Holden did not constitute use of the car.
Conclusion - the meaning of "use"
The court's approach will be seen by many as eminently
reasonable given that the RTA's purpose is to protect the
public from the consequences of uninsured driving as opposed to
providing a means for property insurers to "shift blame"
to motor insurers. Nevertheless, the case does hint at a potential
tension between the approaches of the English courts and the
Settling contentious claims without prejudice to liability is an everyday occurrence for most Insurers. The vast majority of claims which are subject to litigation are settled at some point in the course of the proceedings, and the settlement is usually expressed to be without admission of liability.
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