CAPLE v SEWELL AND OTHERS

Whether insured property was being used for a specified purpose depends on the essential or predominant character of the use when the loss occurred. That character is identified from the whole factual context, principally the insured’s purpose in using its property, rather than solely from a passenger’s or other third party’s immediate objective.

A demonstration need not involve performance at speed. A vessel may be used for demonstration purposes while stationary, displayed ashore, or moving slowly on water, if the use remains directed to promoting and demonstrating the product.

A photographer was injured when a Sea-Doo, owned by Sowester Ltd, collided with another vessel during a press preview for a boat show. Sowester had brought the craft to the event to promote it. At an organiser’s request, it took the photographer on to the water so that she could photograph powerboats taking part in a demonstration.

Sowester’s policy insured the Sea-Doo while used for demonstration purposes. Its insurers contended that the craft was instead being used as a platform for commercial photography. Newman J held that the demonstration use remained the relevant use and that the photography was incidental. The insurers appealed.

1. The appeal was dismissed unanimously. Lord Justice Rix, with whom Lady Justice Hale and Lord Justice Schiemann agreed, held that Newman J was entitled to find that the Sea-Doo was being used for demonstration purposes when the collision occurred.

2. The court applied the essential-character inquiry derived from Seddon v Binions [1978] 1 Lloyds Rep 381. The issue was not resolved solely by asking what the photographer wished to do during the journey. Since the policy was between Sowester and its insurers, the insured owner’s purpose was the principal consideration. The inquiry nevertheless required a rounded assessment of the whole context, rather than a narrow focus on the immediate movement of the craft.

3. The unchallenged evidence showed that Sowester had brought the Sea-Doo to the preview for publicity and marketing. It was displayed at the slipway so that those present could see it, and it was envisaged that it could enter the water to show how it handled. Taking the photographer out was therefore a further opportunity to promote and demonstrate the product. Her photography was incidental to that essential purpose.

4. The insurers’ contention that a demonstration had to put the craft through its paces was rejected. Demonstration use could include a static land display, a showroom display, being stationary on water, or moving slowly on water. The judge had made no error of principle and had not gone seriously wrong in his fact-sensitive assessment. The appeal was dismissed with costs, subject to detailed assessment; permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): In [2001] EWCA Civ 1848, dismissed the insurers’ appeal and affirmed the finding that the Sea-Doo was being used for demonstration purposes.
• Queen’s Bench Division, Bournemouth District Registry: Newman J held that the relevant use was a demonstration use and that the photographer’s use of the craft was incidental.