UK Insurance Ltd v Holden and Another
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton Mr,Lord Justice Beatson,Lord Justice Henderson |
| Judgment Date | 12 April 2017 |
| Neutral Citation | [2017] EWCA Civ 259 |
| Docket Number | Case No: A3/2016/1667 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 April 2017 |
[2017] EWCA Civ 259
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
HIS HONOUR JUDGE WAKSMAN QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Terence Etherton, Mr
Lord Justice Beatson
and
Lord Justice Henderson
Case No: A3/2016/1667
Michael Davie QC (instructed by DAC Beachcroft LLP) for the Appellant
Graham Eklund QC (instructed by Keoghs LLP) for the Respondent
Hearing date: 29 th March 2017
Approved Judgment
The issue on this appeal is whether the Churchill motor insurance cover of the first defendant, Thomas Holden, extends to liability for damage to the property of third parties as a result of fire caused by repair work he was carrying out to his car at a time when it was immobilised. It raises questions not only about the proper interpretation of the insurance policy ("the policy") but also about the meaning and effect of section 145 of the Road Traffic Act 1988 ("the RTA"), requiring third party cover, and of Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles ("the Directive").
By his order dated 8 April 2016 His Honour Judge Waksman QC, sitting as a judge of the High Court, declared that the respondent, UK Insurance Limited ("UKI"), which provides motor insurance under the Churchill brand and would be responsible for any liability under the policy, is not liable to indemnify Mr Holden in respect of any liability he may have arising out of the fire which occurred at the premises of the appellant, R&S Pilling, trading as Phoenix Engineering ("Phoenix"), on 12 June 2010. The judge granted permission to appeal.
Factual background
The factual background may be shortly stated.
On Saturday 12 June 2010 Mr Holden, a mechanical fitter employed by Phoenix was working overtime at Phoenix's premises. The day before his car had failed its MOT due to corrosion on its underside. Having completed his first piece of work that day, he asked his employer if he could use the loading bay at the premises to do some work on the car which would hopefully enable it to pass the MOT. His employer agreed. His intention was to weld some plates onto the underside of the car to deal with the corrosion.
He disconnected the car battery so there were no live circuits with which the welding equipment might interfere. He then used a fork-lift truck to push the car up on its side so that he could get at the underside. He used a grinder first to prepare the underside and then successfully welded a plate under the driver's side. He then reconnected the battery, started the car and moved it round the other way before disconnecting it again and lifting it up once more but now with the underneath of the passenger side exposed. While he was welding, sparks from the welding ignited flammable material inside the car including the seat covers. The fire spread and set alight some rubber mats lying close to the car. The fire then took hold in Phoenix's premises and the adjoining premises and substantial damage was caused before it was extinguished.
Phoenix's insurer was AXA. It has paid out to Phoenix and the owner of the adjoining property in excess of £2m. Being subrogated to Phoenix's rights, AXA has now made a claim against Mr Holden in the name of Phoenix for an indemnity in respect of the sums it has paid out. If Mr Holden has any insurance in respect of that claim, it is only by reason of the policy.
UKI commenced these proceedings in the London Mercantile Court of the Queen's Bench Division for a declaration that it is not liable to indemnify Mr Holden in respect of any liability he may have arising out of his welding activities to his car on 12 June 2010.
Phoenix counterclaimed for a declaration that UKI is liable by the terms of the policy to indemnify Mr Holden in respect of the loss and damage suffered by himself and/or neighbouring occupiers arising out of the fire started by Mr Holden in his vehicle whilst he attempted to undertake repairs to it on 12 June 2010.
Although Mr Holden was named as the first defendant, he has played no part in the proceedings. He is not personally at risk since Phoenix has undertaken only to recover such sum (if any) as can be recovered from UKI.
The policy
The policy booklet ("the booklet") states that the policy is made up of, among other things, the booklet, the "Certificate of Motor Insurance" ("the certificate") and the "Schedule" ("the schedule") and it contains a definition of "policy" in similar terms. It states that the certificate "provides evidence that you have taken out the insurance you must have by law".
Section A of the booklet deals with liability to other people. So far as relevant, it provides as follows:
"1a Cover for you
We will cover you for your legal responsibility if you have an accident in your vehicle and:
you kill or injure someone;
you damage their property; or
you damage their vehicle."
Reference was made in the course of oral submissions to other provisions in the booklet but it is convenient to mention them in the discussion below rather than set them out in full here.
Mr Holden is identified in the schedule as the policyholder and is described as "the legal owner and the registered keeper of the car". The schedule states that the policy gives him comprehensive cover.
The certificate contains the following certification, so far as relevant, by the chief executive of Churchill Insurance Company Limited, which originally issued the policy to Mr Holden and whose insurance business was subsequently transferred to UKI:
"I hereby certify that the Policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain …"
The RTA
Section 143 of the RTA provides that it is an offence to 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 Part VI of the RTA.
Section 145 of the RTA specifies the conditions which such a policy of insurance must satisfy. It provides as follows, so far as relevant to this appeal:
"(1) In order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions.
…
(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, …"
At all times relevant to these proceedings, section 145(4)(b) provided that such a policy shall not be required to provide insurance in respect of damage to property of more than £1 million (now £1.2 million).
The Directive
The Directive consolidates a number of earlier EU Directives requiring member states to take measures to ensure that civil liability arising from use of motor vehicles is covered by insurance ("the earlier motor insurance Directives").
Recital (2) of the Directive is as follows:
"Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is of special importance for European citizens, whether they are policyholders or victims of an accident. It is also a major concern for insurance undertakings as it constitutes an important part of non-life insurance business in the Community. Motor insurance also has an impact on the free movement of persons and vehicles. It should therefore be a key objective of Community action in the field of financial services to reinforce and consolidate the internal market in motor insurance."
Article 3 provides as follows, so far as relevant to this appeal:
"Compulsory insurance of vehicles
Each Member State shall, subject to Article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance.
The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of the measures referred to in the first paragraph.
…
The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries."
Article 12(3) provides as follows:
"The insurance referred to in Article 3 shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with the national law."
It is common ground that the Directive is not of direct effect in the UK but so far as possible the RTA must be interpreted so as to accord with it.
The judgment
Following a trial without any live evidence and on the basis of the facts set out by Mr Holden in his first witness statement, the judge handed down his clear and careful judgment on 19 February 2016.
The judge observed (at para. [22]) that clause 1a of section A of the booklet is not happily worded. He said that, notwithstanding that the wording suggested that damage to property is only covered if it belongs to someone who has been injured or killed in the accident, it was accepted by UKI that the true cover was for personal injury or death or damage to someone's property or damage to someone's vehicle.
The judge said that it was also accepted...
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