Charlton v Fisher

An insured cannot enforce a motor policy in respect of liability arising from the insured’s intentional criminal act. The prohibition is one of public policy and applies even if the policy, properly construed, covers the liability.

A third party claiming through a statutory assignment under the Third Parties (Rights against Insurers) Act 1930 acquires only the insured’s derivative rights and remains subject to the same prohibition. By contrast, an innocent third party may enforce an independent statutory right under road-traffic legislation or an applicable Motor Insurers’ Bureau agreement. Such independent protection did not apply where the collision occurred off a road.

The claimant was injured while sitting in a stationary car in a hotel car park. The first defendant deliberately reversed his insured vehicle into that car and subsequently pleaded guilty to criminal damage. There was no evidence that he intended to injure the claimant.

The insurer joined the proceedings and sought declarations that the incident was not an accident under the policy and that no statutory indemnity arose because it occurred off a road. District Judge Edwards declared that the insurer was obliged to indemnify the driver. Judge Thompson QC dismissed the insurer’s first appeal.

The insurer appealed to the Court of Appeal. The central questions were whether the policy covered the deliberate collision and whether public policy prevented recovery by the driver or by the claimant as his prospective statutory assignee.

1. Appeal allowed unanimously. The insured’s liability arose from his deliberate criminal act of intentionally ramming another vehicle. Public policy prevented him from enforcing any right under the policy to be indemnified against that liability, even if the policy would otherwise have covered it. The claimant’s injuries were legally caused by that deliberate act although the insured might not have intended personal injury.

2. The claimant had no independent statutory claim against the insurer. The collision occurred in a private car park which was not a road, so the compulsory third-party provisions of the Road Traffic Act 1988, including section 151, did not apply. Nor was a claim available under the Motor Insurers’ Bureau arrangements.

3. A claim under section 1 of the Third Parties (Rights against Insurers) Act 1930 would be derivative. The statutory assignee stands in the insured’s shoes and takes the contractual rights subject to the insurer’s defences. The insured therefore possessed no enforceable right capable of passing to the claimant. This differed from an innocent third party’s independent statutory right under section 151 or an applicable Motor Insurers’ Bureau agreement.

4. Section 148(7) of the Road Traffic Act 1988 did not assist the claimant. It gives persons or classes of persons specified in a policy a direct right to claim indemnity. It does not confer that right on an injured third party and does not remove otherwise available defences without clear language.

5. The meaning of “accident” did not require decision. Kennedy LJ considered that the term might extend to any incident involving the insured car, and Laws LJ would have construed it sufficiently broadly to cover the deliberate collision. Rix LJ preferred the view that, outside compulsory third-party cover, a deliberately caused collision and its natural consequences were not an accident. These views were obiter because public policy conclusively disposed of the appeal.

6. The orders below were set aside, apart from their costs orders. It was declared that the insurer was not obliged to indemnify the first defendant or satisfy his liability to the claimant. The action against the insurer was dismissed, with no order for the costs of the appeal. Permission to appeal to the House of Lords was refused.

1. Court of Appeal: The insurer’s appeal was allowed unanimously. The declarations and substantive orders below were set aside, and the action against the insurer was dismissed: [2001] EWCA Civ 112.

2. Bournemouth County Court, Judge Thompson QC: On 12 April 2000 the judge dismissed the insurer’s appeal from District Judge Edwards. No citation is stated.

3. Bournemouth County Court, District Judge Edwards: On 22 November 1999 the district judge declared that the insurer was obliged to indemnify the first defendant. No citation is stated.