HAYWARD v NORWICH UNION INSURANCE LTD

An insurance-policy exclusion must be construed by giving its words their ordinary, objective meaning in their contractual context. The court must not create an ambiguity in order to invoke rules favouring the insured.

Where an exclusion applies when ignition keys have been left in or on a car, the keys are left if the insured caused or allowed them to remain there and moved away from them, with no other person left in charge. Proximity is a question of fact and degree. A robbery remains a theft for such an exclusion, provided that violence did not cause the keys to be left in the car.

The claimant's Porsche was taken from a petrol station after he left its ignition key in the car while he went to pay for fuel. The car had an armed immobiliser, but a professional thief used a device to override it. The claimant approached the car but withdrew when he feared that the thief would run him over.

A Deputy High Court judge held that the key had not been left in the car within the policy exclusion because the car was effectively attended. He also held that the claimant had not acted recklessly for the purposes of a reasonable-care condition. The insurer appealed, principally challenging the construction and application of the ignition-key exclusion. The claimant contended that robbery was outside an exclusion referring to theft.

Appeal allowed unanimously. Peter Gibson LJ gave the judgment, with which Mummery and Rix LJJ agreed.

1. The court held that the policy had to be construed objectively, beginning with the ordinary meaning of its language. Rules resolving ambiguity in favour of an insured or consumer apply only after a genuine ambiguity has been identified. They cannot be used to manufacture one. The approach stated in The Melanesian Mission Trust Bank v Australian Mutual Provident Society (17 December 1996, unreported) was applied.

2. The words requiring that ignition keys have been left in or on the car meant that the insured had caused or allowed the keys to remain there and had moved away from them. The exclusion did not contain, and could not properly be glossed with, the word “unattended”. Whether a person has moved sufficiently far away is a factual question of degree; the relevant proximity is whether the person was close enough to make theft unlikely. An adult left in charge may prevent the keys being left, whereas duress which takes the keys from the driver does not amount to leaving them.

3. The court distinguished authorities on vehicles expressly described as left unattended, including Starfire Diamond Rings v Angel [1962] 1 Lloyds Rep. 217 and O'Donoghue v Harding [1998] 2 Lloyds Rep. 281. Those authorities did not justify adding “unattended” to this differently worded key exclusion.

4. Applying the ordinary statutory meaning in the Theft Act 1968, robbery necessarily includes theft. The theft exclusion therefore covered the taking of the car; force would matter if it caused the keys to be taken rather than left.

5. The claimant had moved 15 to 25 yards away and did not see the thief enter, lock and start the car. He had left the ignition key in the car. The exclusion applied, so the court did not decide the alternative reasonable-care condition. The trial judgment was set aside, repayment of £79,020.37 was ordered, and no order for costs was made at either level.

• Court of Appeal (Civil Division): The insurer's appeal was allowed. The court set aside the judgment for the insured and ordered repayment.
• High Court, Queen's Bench Division: On 22 October 1999, Mr Michael Tugendhat QC, sitting as a deputy judge, gave judgment for the insured. He held that the ignition key had not been left in the car for the exclusion and that the insured had not acted recklessly under the reasonable-care condition.