UK Insurance Ltd v Holden & Anor

A motor insurance policy may provide wider cover than the statutory minimum where its wording contains no road-use limitation. “Use” means use consistent with the vehicle’s normal function. Repairing a vehicle, without more, is not such use. Causation is a separate question of fact and degree. Damage caused by negligent repair activity does not arise from earlier or anticipated driving merely because the vehicle had been driven to the premises or might later be driven.

AXA, exercising subrogated rights, claimed an indemnity from Thomas Holden for substantial fire damage caused while he welded plates beneath his car at his employer’s premises. UK Insurance Limited sought a declaration that Holden’s ordinary motor policy did not respond. Phoenix Engineering denied that contention and counterclaimed for the indemnity.

The agreed facts raised questions of policy construction, the relationship between the policy and the compulsory insurance requirements in the Road Traffic Act 1988, the effect of Vnuk v Triglav, whether repairing the car was “use”, and whether the fire arose from any relevant use.

1. The policy covered the location of the accident. Clause 1a contained no express limitation to roads or public places. The fact that the policy incorporated compulsory insurance requirements did not prevent it from providing wider contractual cover.

2. Section 145(3)(a) of the Road Traffic Act 1988 required compulsory cover for liability caused by or arising out of use of a vehicle on a road or other public place. Following Vnuk v Triglav, “use” meant use consistent with the vehicle’s normal function. That definition could be read into the Act, but the express geographical limitation could not be removed by interpretation. The provision was therefore incompatible with Article 3(1) of the Third Directive as interpreted in Vnuk v Triglav.

3. Repairing the vehicle was not “use”. The car was immobile and was not being operated as a vehicle; the thing being used was the repair equipment. The broader Canadian authorities were not followed. The approach in Govt. Insurance Office v King was preferred.

4. Use and causation were distinct inquiries. Causation depended on fact and degree. Here the fire arose from negligent welding and grinding without precautions against flammable material. Earlier driving, driving into the garage, proximity to mats, or contemplated later driving did not provide a sufficient causal link.

5. The court indicated, obiter, that “accident” would have included a fortuitous or unexpected fire and was not confined to a collision. The issue did not need to be decided.

6. The policy did not respond to the claim. UK Insurance Limited was entitled to the declaration sought, and the counterclaim was dismissed.