Churchill Insurance Company Ltd and Another v Wilkinson and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Waller,Lord Justice Wall,The Master of the Rolls |
| Judgment Date | 19 May 2010 |
| Neutral Citation | [2010] EWCA Civ 556 |
| Docket Number | Case No: (1) B3/2009/1435 and 7MA91096 7B126175 |
| Date | 19 May 2010 |
| Court | Court of Appeal (Civil Division) |
[2010] EWCA Civ 556
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM (1) Manchester District Registry, Queen's Bench Division,
(2) Wallsall County Court
Mr Justice Blair
His Honour Judge Gregory
Before: The Master of the Rolls
Lord Justice Waller
Vice-President of the Court of Appeal, Civil Division
and
Lord Justice Wall
Case No: (1) B3/2009/1435 and
(2) B3/2009/2174
7MA91096
7B126175
Stephen Worthington QC and Fergus Randolph QC (instructed by Keoghs LLP) for Appellant (1) Graham Wood QC (instructed by Edmunds & Co) for Appellant (2)
Stephen Grime QC and Conor Quigley QC (instructed by Potter Rees) for Respondent (1)
Winston Hunter QC and Kieran Fitzgerald (instructed by Herzog & Associates for Respondent (2)
Hearing dates 29 th and 30 th March 2010
Lord Justice Waller:
Where a person insured to drive a car is a passenger in the car which he has permitted to be driven by a non-insured driver, and is injured through the negligence of the driver, by virtue of section 151(4) of the Road Traffic Act 1988 (the RTA) the insurer is bound to compensate the passenger; the question is whether in the light of certain provisions of Community law the insurers are entitled to reclaim that compensation from the passenger as the insured under section 151(8) of the RTA and/or by virtue of the terms of the policy. On 3 rd June 2009 His Honour Judge Godfrey answered that question in favour of the insurers, and denied Tracy Evans compensation from Equity Claims Limited (Equity). On 11 th June 2009 Blair J answered that question against the insurers Churchill Insurance Company Limited (Churchill) and gave judgment in favour of Benjamin Wilkinson. In these conjoined appeals the question is which of the judges was right. Consideration of that question will involve analysing the impact of Community law on the relevant provisions of the RTA, and it will be for consideration whether this court should make a reference to the Court of Justice before reaching its decision.
The common factors in both cases are that the persons injured were travelling in or on vehicles which they were insured to drive, but the negligent driver of the vehicles was uninsured, and was driving with their permission. In one case that permission was given with knowledge that the driver was uninsured; in the other the permission was given without giving any thought to that question. I attach the facts or assumed facts in a schedule to this judgment.
Compulsory insurance has been a feature of legislation in the United Kingdom for many years. The aim is to provide a guarantee that an injured person will obtain the compensation that he or she is awarded against the negligent driver. Under the RTA and indeed under Community law it is not quite every victim that will be compensated by the insurers, and the issue on the appeals is whether the injured passengers in this case, who it is accepted must be compensated, are liable to repay their compensation because they were also the insured under the policy who permitted the vehicles to be driven uninsured.
The potential insurers providing the guarantee can be divided into three: (1) contractual insurers, which cover the vast majority of cases; (2) statutory (sometimes called the RTA) insurers whose liability arises under the RTA, though there would be no contractual liability; and (3) the Motor Insurers Bureau (MIB) which, since its establishment in 1946, has provided a safety net which now operates principally where there was no insurance at all or where the driver is not identified. We are concerned in the instant cases with RTA insurers although, for reasons which will become apparent, the extent to which the injured parties might or might not have recovered if there had been no insurance and the MIB scheme was in play is relevant.
Relevant RTA provisions
Section 151(1) provides that:
“This section applies where, after a certificate of insurance or certificate of security has been delivered under section 147 of this Act to the person by whom a policy has been affected or to whom a security has been given, a judgment to which this subsection applies is obtained.”
Section 151(2) provides that:
“Subsection (1) applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either—
(a) it is a liability covered by the terms of the policy or security to which the certificate relates, and the judgment is obtained against any person who is insured by the policy or whose liability is covered by the security, as the case may be, or
(b) it is a liability, other than an excluded liability, which would be so covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and the judgment is obtained against any person other than one who is insured by the policy or, as the case may be, whose liability is covered by the security.”
It is this provision from which it follows that even if the insurance policy does not in fact cover driving by the negligent driver, the policy must be read as if “all persons” were insured.
Section 151(4) deals with the reference to “excluded liability” in s.151(2)(b) as follows:
“In subsection 2(b) above ‘excluded liability’ means a liability in respect of the death of, or bodily injury to, or damage to the property of any person who, at the time of the use which gave rise to the liability, was allowing himself to be carried in or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken, not being a person who—
(a) did not know or had no reason to believe that the vehicle had been stolen or unlawfully taken until after the commencement of his journey; and
(b) could not reasonably have been expected to have alighted from the vehicle.”
As will appear hereafter this reflects the “stolen vehicle” exclusion expressly contemplated by the Directives and defines one category of victim who does not have the benefit of insurance backing any judgment that a victim may obtain against the driver.
The duty to satisfy judgments is contained in s. 151(5) which provides as follows:
“Notwithstanding that the insurer may be entitled to avoid or cancel, or may have avoided or cancelled, the policy or security, he must, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment—
(a) as regards liability in respect of death or bodily injury, any sum payable under the judgment in respect of the liability, together with any sum which, by virtue of any enactment relating to interest on judgments, is payable in respect of interest on that sum,
(b) …
(c) any amount payable in respect of costs.”
There then follows the insurer's entitlement to recover where an insured has given permission to drive to a driver who is uninsured, the key provision on these appeals. For clarity, like Blair J, I have omitted the references to certificates of security. Section 151(8) provides as follows:
“Where an insurer becomes liable under this section to pay an amount in respect of a liability of a person who is not insured by a policy …, he is entitled to recover the amount from that person or from any person who—
(a) is insured by the policy, …, by the terms of which the liability would be covered if the policy insured all persons … and
(b) caused or permitted the use of the vehicle which gave rise to the liability.”
The Court of Appeal has considered the proper construction of “permitted”, and has held that “permission does not cease to be permission for the purposes of the statute because, in good faith, the person giving it believes that the person to whom it is given is covered by the policy when in fact the person is “not”; see Pill LJ in Lloyd-Wolper v Moore [2004] 1 WLR 2350 para 25. Thus on that construction Tracy Evans, as the insured, was held liable to reimburse the insurers even though it was not established that she knew the driver was uninsured. If that conclusion is right, then a further category of victim would appear to have been excluded i.e. a passenger who is the insured and travels in a car driven by a person uninsured who drives because the insured granted permission, and that appears on the way the section has so far been construed to be so whether the insured knew the driver was uninsured or simply granted permission believing in ignorance the driver was insured. Lloyd-Wolper does show that an insured can make it a condition of granting permission that the driver is insured and if the driver then drives without insurance such conditional permission will not constitute permission within section 151(8).
Before turning to the Community law and considering its impact, the submission of Mr Stephen Worthington QC on behalf of the insurers in the Wilkinson case appears powerful. He submits that although by section 151(2) liability includes the negligent driver's liability to Ben Wilkinson, and under section 151(5) the insurers are bound to meet that liability to Ben Wilkinson in respect of his injury, section 151(8) is clear in obliging Ben Wilkinson as the insured who caused or permitted the tortfeasor to drive to reimburse the insurers.
I would however add this which will be relevant when considering...
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