British Waterways v Royal & Sun Alliance Insurance Plc

An insured must establish legal liability before claiming indemnity under a liability policy. A guilty plea is admissible under Civil Evidence Act 1968, section 11, as prima facie evidence of the conviction offence, subject to rebuttal. Where an employer or person controlling work equipment has control over its use, Provision and Use of Work Equipment Regulations 1998 may impose liability for inadequate selection, supervision, instruction or warnings, including in relation to independent contractors. Policy wording referring to liability arising from accidental death in connection with vehicle use should not be restrictively assimilated to compulsory motor insurance wording. An exclusion for operation of a vehicle as a tool did not apply where hedge-cutting had ended and the accident resulted from reversing the vehicle as a vehicle.

Two independent contractors died when a tractor and attached hedge-cutter, supplied by British Waterways, overturned into a canal while reversing along a towpath. British Waterways had pleaded guilty to an offence under section 3 of the Health and Safety at Work etc. Act 1974 and later settled civil claims brought by the deceased’s relatives and estates.

British Waterways claimed an indemnity from Royal & Sun Alliance under a fleet insurance policy. The issues were whether British Waterways was legally liable, whether the policy covered that liability, whether the tool-operation exclusion applied, and whether compulsory motor insurance legislation restored cover.

1. Liability. The conviction was admissible under section 11 of the Civil Evidence Act 1968 and raised a rebuttable presumption that British Waterways had committed the offence. The insurer bore the burden of rebutting it. The presumption was not rebutted.
2. British Waterways was also liable under PUWER and the common law. Regulation 3(3) applied because the tractor was British Waterways’ equipment and had been supplied to the contractors for the work. British Waterways had failed to impose adequate restrictions, assess towpath widths, supervise equipment selection, or provide sufficiently precise instructions and warnings.
3. Cover. The policy covered legal liability for damages and costs in respect of accidental death in connection with use of the insured vehicle. The wording was not to be restricted by assimilating it to section 145(3)(a) of the Road Traffic Act 1988.
4. Tool exclusion. The insurer failed to establish that the deaths arose out of operation of the tractor as a hedge-cutting tool. Hedge-cutting had ceased and the tractor was being reversed as a vehicle to leave the towpath. The proximate cause was reversing too close to a vulnerable bank.
5. Judgment was entered for British Waterways, subject to assessment of disputed costs and the interim payments directed in the judgment.

First-instance decision in the High Court (Commercial Court). No earlier decision is stated in the judgment.