EUI Ltd v Bristol Alliance Ltd Partnership

Section 151(2)(a) of the Road Traffic Act 1988 requires both that the liability be of a kind for which insurance is required and that it be actually covered by the terms of the policy identified by the certificate of insurance. The certificate does not enlarge the policy’s cover.

An express exclusion of liability for damage deliberately caused by the insured driver is therefore effective against a third party seeking a direct statutory recovery. The use is uninsured for that purpose. The statutory scheme, together with the Motor Insurers’ Bureau arrangements for uninsured drivers, was compatible with the Motor Insurance Directives and did not require a contrary construction.

A driver deliberately crashed his car into property owned by Bristol Alliance Limited Partnership, causing substantial damage. The property owner’s insurer paid under a property policy and brought a subrogated claim in the owner’s name against the driver’s motor insurer.

The motor policy excluded damage arising from the driver’s deliberate act. Tugendhat J determined a preliminary issue in favour of the property insurer, holding that it could recover directly from the motor insurer. The motor insurer appealed.

The central issue was whether, despite the exclusion, the property owner could enforce a judgment against the motor insurer under section 151 of the Road Traffic Act 1988, having regard to compulsory insurance legislation, the certificate of insurance, the Motor Insurers’ Bureau scheme and the Motor Insurance Directives.

1. Appeal allowed unanimously. The claimant could not recover directly from the motor insurer under section 151 of the Road Traffic Act 1988.

2. Section 151 imposed four cumulative preconditions. Although the liability was of a type which section 145 required a user to insure against, section 151(2)(a) additionally required that it be a liability actually covered by the terms of the policy to which the certificate related. The policy expressly excluded damage arising from the driver’s deliberate act. That condition was therefore unsatisfied.

3. The words “to which the certificate relates” identified the particular policy connected with the delivered certificate. They did not make every liability described in section 145 part of the contractual cover. The statutory duty to ensure insurance for the actual use of the vehicle rested on the user. A policy could contain effective limitations outside those rendered void by statute. Sections 148 and 151(3) confirmed that some specified restrictions were ineffective, rather than making all exclusions ineffective.

4. The certificate neither trumped nor enlarged the policy terms. Its confirmation that the policy met the relevant legal requirements did not entitle a third party to disregard a deliberate-act exclusion when applying section 151.

5. The court accepted that the property owner was a victim for Directive purposes notwithstanding subrogation. However, the domestic scheme and the Motor Insurers’ Bureau arrangements ensured compensation for uninsured use and were compatible with the Directives. Ruiz Bernaldez did not require a construction that prevented reliance on this exclusion.

6. Ordinarily the property owner’s claim for an uninsured use would lie under the Motor Insurers’ Bureau scheme. Here, however, the 1999 Agreement excluded a claim pursued by a subrogated insurer. The preliminary issue was answered in the motor insurer’s favour.

• Court of Appeal (Civil Division): By [2012] EWCA Civ 1267, unanimously allowed the motor insurer’s appeal and answered the preliminary issue in its favour.
• High Court, Queen’s Bench Division: Tugendhat J, on 1 July 2011, had answered the preliminary issue in favour of the property insurer.