EUI v Bristol Alliance

JurisdictionEngland & Wales
JudgeLord Justice Ward,Lord Justice McFarlane,Dame Janet Smith
Judgment Date11 October 2011
Neutral Citation[2012] EWCA Civ 1267
Docket NumberCase No: A2/2011/1955
CourtCourt of Appeal (Civil Division)
Date11 October 2011

[2012] EWCA Civ 1267

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MR JUSTICE TUGENDHAT

HQ10X03192

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Ward

Lord Justice McFarlane

and

Dame Janet Smith

Case No: A2/2011/1955

Between:
EUI Limited
Appellant
and
Bristol Alliance Limited Partnership
Respondent

Mr Howard Palmer QC and Ms Marie Louise Kinsler (instructed by Cordner Lewis) for the appellant

Mr John Ross QC and Ms Laura Johnson (instructed by Reynolds Porter Chamberlain LLP) for the respondent

Hearing date: 7th March 2012

Lord Justice Ward
Introduction
1

The only point of human interest in this appeal on a dry point of law is the background. James Williams was a very unhappy young man. At about 1 am on 12th December 2008 he drove his motor car at times at speeds of about 100 mph from the M32 down Newfoundland Street on the outskirts of Bristol and then deliberately swerved into a low wall which launched his car spinning into the air, bouncing off the roof of a car waiting at the junction with Bond Street South and smashing into the plate glass windows of the House of Fraser store causing over £200,000 of damage to that property. He was seriously injured and very nearly died. In time he was convicted of dangerous driving and of causing criminal damage. The Recorder who sentenced him to 21 months imprisonment said, "It is clear you suffered from serious depression at that time and the purpose of your driving was to kill yourself." Fortunately he seems to have recovered and although he did not participate in this appeal, he did attend court and took a keen interest in the proceedings.

2

The issue between the parties arises in this way. The House of Fraser store is one of the units within the Cabot Circus Centre owned by the claimant. The damage to the shop windows was covered by its policy of property insurance and a claim was brought against James by the property insurer by subrogation in the name of the claimant, the owner of the property. James had motor insurance but his policy did not cover damage arising out of his deliberate acts. It is common ground that this damage was caused by a deliberate act. It follows that James had no contractual right to indemnity against his motor insurer in respect of his liability to the property owners. This particular use of the vehicle was, therefore, uninsured and in the usual case this would not matter because damage to property caused by the uninsured use of a motor vehicle on a road would be paid by the motor insurer under the scheme set up by the Motor Insurers' Bureau (the MIB) for Compensation of Victims of Uninsured Drivers. This, however, is not a usual case. Here an exception in the MIB agreement provides that the scheme does not extend to compensating those who suffer property damage where such damage was insured by the victim's own insurer who brings a subrogated claim for recovery. Thus battle is joined between the property insurer and the motor insurer. The property insurer contends that upon a proper construction of the policy, the Road Traffic Act 1988, sections 145 and 151 in particular, and the European Directives on Motor Insurance, the motor insurers must cover damage to property whether deliberately caused or not. The motor insurer contends that because the policy expressly excludes damage deliberately caused with the result that this damage is not covered by the motor insurance policy, then upon the proper construction of section 151 they are not obliged to indemnify the claimant.

3

Faced with these rival contentions, Master Eyre ordered the trial of a preliminary issue defined as follows:

"Is the claimant entitled to recover from the second defendant [the motor insurer] even if the second defendant is right in contending that:

(a) the damage to the claimant's premises was the result of a deliberate act by the first defendant [James]; and

(b) the insurance obtained by the first defendant from the second defendant was set out in paragraphs 8–10 of the second defendant's defence" [namely, that the insurance policy excluded "any … damage … arising as a result of … deliberate act caused by you …].

On 1st July 2011 Tugendhat J answered that preliminary issue in the affirmative. The motor insurer now appeals with the permission of Rix LJ.

The statutory background
4

Part VI of the Road Traffic Act 1988 ("the Act") provides for third-party liabilities and compulsory insurance or security against third-party risk. Section 143 creates an offence of using a motor vehicle without insurance. It provides as follows:

"143 (1) Subject to the provisions of this Part of this Act—

(a) a person must not use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act, …

(2) If a person acts in contravention of subsection (1) above he is guilty of an offence. …"

5

The requirements in respect of policies of insurance are set out in section 145:

"145(1) In order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions.

(2) The policy must be issued by an authorised insurer.

(3) Subject to subsection (4) below, the policy—

(a) must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place in Great Britain …

(4) The policy shall not, by virtue of subsection (3)(a) above, be required—

(a) to cover liability in respect of the death, arising out of and in the course of his employment, of a person in the employment of a person insured by the policy or of bodily injury sustained by such a person arising out of and in the course of his employment, or

(b) to provide insurance of more than £1,000,000 in respect of all such liabilities as may be incurred in respect of damage to property caused by, or arising out of, any one accident involving the vehicle, or

(c) to cover liability in respect of damage to the vehicle, or

(d) to cover liability in respect of damage to goods carried for hire or reward in or on the vehicle or in or on any trailer (whether or not coupled) drawn by the vehicle, or

(e) to cover any liability of a person in respect of damage to property in his custody or under his control, or

(f) to cover any contractual liability."

6

S.147 provides for the issue and surrender of certificates of insurance and of security:

"147(1) A policy of insurance shall be of no effect for the purposes of this Part of this Act unless and until there is delivered by the insurer to the person by whom the policy is effected a certificate (in this Part of this Act referred to as a "certificate of insurance") in the prescribed form and containing such particulars of any conditions subject to which the policy is issued and of any other matters as may be prescribed."

7

S.148 provides for the avoidance of certain exceptions to policies or securities:

"148(1) Where 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 effected or to whom a security has been given, so much of the policy or security as purports to restrict—

(a) the insurance of the persons insured by the policy, or

(b) the operation of the security,

(as the case may be) by reference to any of the matters mentioned in subsection (2) below shall, as respects such liabilities as are required to be covered by a policy under section 145 of this Act, be of no effect.

(2) Those matters are—

(a) the age or physical or mental condition of persons driving the vehicle,

(b) the condition of the vehicle,

(c) the number of persons that the vehicle carries,

(d) the weight or physical characteristics of the goods that the vehicle carries,

(e) the time at which or the areas within which the vehicle is used,

(f) the horsepower or cylinder capacity or value of the vehicle,

(g) the carrying on the vehicle of any particular apparatus, or

(h) the carrying on the vehicle of any particular means of identification other than any means of identification required to be carried by or under the Vehicle Excise and Registration Act 1994."

8

Section 151 features large in the appeal. It imposes a duty on insurers or persons giving security to satisfy a judgment against persons insured or secured against third-party risk. It is in these terms:

"151(1) 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 effected or to whom a security has been given, a judgment to which this subsection applies is obtained.

(2) Subsection (1) above 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...

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4 cases
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