Devco Holder Ltd v Legal & General Assurance Society Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SLADE,LORD JUSTICE GLIDEWELL,LORD JUSTICE RUSSELL |
| Judgment Date | 16 March 1988 |
| Judgment citation (vLex) | [1988] EWCA Civ J0316-2 |
| Docket Number | 88/0236 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 March 1988 |
[1988] EWCA Civ J0316-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE SHEEN)
Royal Courts of Justice,
Lord Justice Slade
Lord Justice Glidewell
Lord Justice Russell
88/0236
1985 D. No. 415
and
MR P. GROBEL (instructed by Messrs. Potter, Owtram & Peck, Solicitors, Liphook) appeared on behalf of the Appellants.
MR L. WEST (instructed by Messrs. Lawrence Graham & Co.) appeared on behalf of the Respondents.
This is an appeal by two plaintiffs in an action, Devco Holder Limited ("Devco"), and Burrows & Paine Limited ("Burrows") from a judgment of Sheen J. given at the trial of an action on 9th April 1987. By his judgment, he dismissed the plaintiffs' claim for damages against the defendant, Legal & General Assurance Society Limited ("Legal & General").
The claim arose as the result of the theft of a Ferrari 400 Grand Tourer motor car on 17th April 1985. It was stolen from a car park at Haslemere Station while the driver of the car, a Mr Rhodes, had temporarily left it unattended and unlocked, with the keys in the ignition, while he went to his office on the first floor of a building on the other side of the road opposite the station. The car was subsequently recovered in a seriously damaged condition on 22nd April 1985.
Mr Rhodes was an employee of Burrows, which had originally purchased the car, secondhand. The plaintiffs' claim in the action is under a policy of motor insurance No. MC 84048073/5. Subject to liability, damages have been agreed at or about £11,000.
The policy was taken out by Devco on behalf of itself and associated companies. The action was originally brought by Devco alone, but at the beginning of the trial there was I some debate as to whether or not Devco had an insurable interest. On the first day of the trial Sheen J. (without opposition) gave leave to amend the Statement of Claim so as to add Burrows as a plaintiff. In his judgment he expressed himself satisfied on the evidence that Burrows had an insurable interest. As there has been no challenge to that finding no point arises on it.
In a Schedule inside the front cover of the policy, the policyholder was expressed to be "Devco Holder Limited and/or associated and/or subsidiary companies". The Schedule provided, inter alia: "When your car(s) is/are being driven by or in the charge of P.M.H. Rhodes you will be responsible for the first £100 in respect of every claim made under Section 1 of the Policy…" There then followed some additional words which I need not read. The Schedule thus made it clear that the policy contemplated that Mr Rhodes would (or might be) the driver of one or more of the cars concerned.
Section 1 of the policy was headed "Loss or Damage to your Car". Part A was headed "Accidental damage cover", and there then followed these words (so far as material):
"If your car is lost or damaged, Legal & General will at its option pay for the repair or replacement, or will pay the equivalent amount in cash up to the market value of your car at the time of the loss or damage."
Then Part B, headed "Fire and theft cover" (so far as material) stated:
"If your car is lost or damaged by fire, lightning, explosion, theft or attempted theft, Legal & General will at its option pay for the repair or replacement, or pay the equivalent amount in cash up to the market value of your car at the time of the loss or damage….."
Pausing there, I think it is common ground that claims arising as a result of the theft of a car would fall under Part B, and not under Part A. Part B would otherwise appear to be otiose.
Further on in the policy there is a part headed:
"General exceptions and conditions applying to every section of this policy". Of the "General conditions," Condition 1, headed "Compliance with Terms and Disclosure" reads:
"Our liability to make any payment under this Policy will be conditional upon the compliance with its terms and conditions by any person claiming indemnity or benefit and upon the truth and accuracy of the information given to us about the risk insured".
Condition 2 headed: "Your duty to prevent loss or damage" reads:
"You must take all reasonable steps to protect your car against loss or damage and to maintain it in a safe and efficient condition".
It was conceded by the plaintiffs at the trial that Mr Rhodes was their agent for the purpose of complying with their contractual duties under the terms of these two conditions. The short question for ultimate consideration will be whether he took "all reasonable steps" to protect the car against loss within the meaning of General Condition 2.
The case for Legal & General (which was accepted by the Judge) is that, by leaving the car unlocked with the key in the ignition in a public place, Mr Rhodes failed to take such reasonable steps. This was the ground upon which legal & General repudiated liability under the policy.
It is necessary to refer to a few of the findings of fact made by the Judge (pages 4 to 5) in his judgment, where having reviewed the evidence, he said:
"It seems to me there is no escape from the fact that the keys were left in the car deliberately and not inadvertently That was what was said initially. It may be that it was said at a time when Mr Rhodes did not appreciate the significance of what he had said, which he later did appreciate. In many respects Mr Rhodes embellished his evidence as it went along. I mention this, and I lay some emphasis on it, because I have found the evidence of Mr Rhodes really very unreliable.
"I do not know how long the car had been parked when it was stolen. In the course of his submissions, Mr Grobel pointed out that the car park at Haslemere Station is not in the same category or class of dangerous neighbourhoods as some areas of London, and I see the force of that. I infer from that submission that what is being said is the risk of theft is much smaller. I accept that.
"I said a few moments ago I do not know how long the car was in fact parked in the station yard when it was stolen. I doubt very much whether Mr Rhodes really knows how long he had left the car there. If it is true that he ran across to his office for one purpose, which was just to collect some papers, and he was then delayed by a telephone call of such importance that he was unable to listen to a statement by his chauffeur about the car, then one knows from personal experience such conversations may go on much longer than they appear to.
"I am not entirely satisfied that I have heard all the truth about how long the car was parked. It perhaps matters not".
On this appeal there has been no challenge to the Judge's finding that the keys were left in the car deliberately and not inadvertently.
In deciding whether this conduct on the part of Mr Rhodes entitled Legal & General to disclaim liability under the policy, the Judge referred to the general guidance given by Diplock L.J. in construing a rather similar condition in Fraser v. B.N. Furman (Productions) Ltd., Miller Smith & Partners (A Firm) Third Party (1967) 1 W.L.R. 898. It is not necessary to refer to the facts of that case, save to say that it concerned an employers' liability policy, which contained a condition in the following form: "The insured shall take reasonable precautions to prevent accidents and disease".
Diplock L.J. gave the leading judgment in this Court. The relevant part of his judgment concerns the meaning of the word "reasonable" in the provision of the policy, which I have just quoted. In this context at pages 905B to 905 of the report, he.said this:
"The first point to consider is the question of construction of that condition. It must be construed, of course, in the context of a policy of insurance against specified risks. The risks so specified, which are 'liability at law for damages', are liability for breach of statutory duty, for which the owner or occupier of the factory would always be personally liable, negligence at common law of the employer, for which he would be personally liable, and also the negligence of his servants, for which he would be vicariously liable. Therefore, when one approaches the construction of the condition, one does so in this context, and applies the rule that one does not construe a condition as repugnant to the commercial purpose of the contract.
"There are three considerations to be borne in mind on the wording of this condition. (1) It is the insured personally who must take reasonable precautions. Failure by an employee to do so, although the employer might be liable vicariously for the employee's negligence or breach of statutory duty, would not be a breach of the condition. That was established in, and was the ratio decidendi of, Woolfall & Rimmer Ltd. v. Moyle. (2) The obligation of the employer is to take precautions to prevent accidents. This means in my view to take measures to avert dangers which are likely to cause bodily injury to employees. (3) The third word to be construed in this context is 'reasonable'. 'The insured shall take reasonable precautions to prevent accidents…..' 'Reasonable' does not mean reasonable as between the employer and the employee. It means reasonable as between the insured and the insurer having regard to the commercial purpose of the contract, which is inter alia to indemnify the insured against liability for his (the insured's) personal negligence. That, too, is established by the case which I...
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