Keeley v Pashen & Anor

Whether a vehicle is being used for social, domestic or pleasure purposes depends on the essential character or primary purpose of the journey. The inquiry is fact-sensitive. An incidental deviation does not ordinarily create a separate journey or alter the purpose for which cover was provided. Use for hire or reward ended when the last fare-paying passengers left, absent evidence that the use continued on that basis. Insurers may impose express limitations on statutory third-party cover under section 151 of the Road Traffic Act 1988, but courts should not construe them benevolently in the insurer’s favour. An innocent third party’s statutory right is not defeated merely because the insured driver might be unable to recover under the policy.

Maria Kim Keeley claimed damages for psychiatric injury after her husband was killed by Edward George Pashen’s car. She obtained judgment against Pashen and sought to enforce it against his insurers under section 151 of the Road Traffic Act 1988. On agreed facts, Pashen had driven a mini-cab, had let the passengers out after an altercation, then reversed and drove at them before setting off home. The Bromley County Court held on a preliminary issue that the use was outside social, domestic and pleasure purposes. It also held that the use was not for hire or reward, a finding challenged by cross-appeal. The central issues were whether either policy limitation applied at the time of the collision.

1. Disposition. The Court of Appeal unanimously allowed the claimant’s appeal and dismissed the insurers’ cross-appeal. The insurers were therefore liable under section 151 of the Road Traffic Act 1988 to satisfy the judgment against the driver.
2. Interpretation of use limitations. Seddon v Binions [1978] 1 Lloyd’s Rep 381 required the court to identify the essential character or primary purpose of the journey. The question was necessarily fact-sensitive. The court should not search meticulously for a secondary or inessential purpose which would take the use outside the cover. The approach had also been applied in Caple v Sewell [2001] EWCA Civ 1848.
3. Application. The hire-or-reward use ended when the last fare-paying passengers left the car. The driver’s later conversation with the mini-cab controller did not extend that period, since there was no evidence that the hire-or-reward use began and ended at the office. The essential character of the subsequent journey was the driver’s journey home, which was covered by the policy. Reversing towards the men to frighten them was an incidental episode and did not constitute a separate journey.
4. Statutory protection. The claimant’s psychiatric injury was not disputed to constitute bodily injury for the purposes of Part VI. The possible inability of the insured driver himself to recover under the policy through the rule in Beresford v Royal Insurance Co Ltd [1938] AC 586 did not defeat an innocent third party’s statutory rights. Gardner v Moore [1984] AC 548, applying Hardy v Motor Insurers’ Bureau [1964] 2 QB 745, supported that conclusion. Although express limitations on third-party cover could be imposed under the Act and the Motor Vehicles (Third Party Risks) Regulations 1972, courts should not interpret them benevolently in favour of insurers. A journey whose essential character was criminal would fall outside social, domestic and pleasure use, but that was not this case.

• Court of Appeal (Civil Division) — In [2004] EWCA Civ 1491, the court allowed the claimant’s appeal on the policy-use issue and dismissed the insurers’ cross-appeal.
• Bromley County Court — On 19 February 2004, Mr Recorder Wood, sitting as deputy circuit judge, decided the preliminary issue against the claimant on social, domestic and pleasure use, while finding no hire-or-reward use.