Advantage Insurance Co Ltd v Stoodley & Anor

Driving-other-cars cover may constitute the insurance required by Part VI of the Road Traffic Act 1988 for the vehicle being driven. The expression “the vehicle” is not confined to the policyholder’s principal vehicle where the policy covers other vehicles or classes of vehicle.

Section 148(5) modifies the insurer’s contractual obligation by rendering specified post-accident avoidance conditions ineffective. It does not alter the contractual source of the obligation to indemnify. A construction which would leave a driver using driving-other-cars cover uninsured, and potentially criminally liable, is untenable and contrary to the Marleasing principle.

The court may set aside a notice of discontinuance under CPR r 38.4 where this furthers the overriding objective, promotes finality and enables the court to resolve the issues for which the claim was brought.

Advantage issued a motor policy to Mr Stoodley containing driving-other-cars cover. Mr Stoodley was driving a BMW owned by Mr Hampton when the accident occurred. The BMW was insured under a separate policy issued by Trinity, but that policy did not cover Mr Stoodley.

Advantage sought a declaration that it was not liable under its driving-other-cars cover because Mr Stoodley had failed to comply with post-accident policy conditions. It argued that sections 145 and 148(5) of the Road Traffic Act 1988 applied only to the principal vehicle insured under the policy.

After the court invited submissions on the Marleasing principle, Advantage discontinued the claim. Trinity applied both for judgment in its favour and to set aside the notice of discontinuance under CPR r 38.4. The central issues were the scope of the statutory insurance requirement and whether the discontinuance should stand.

1. Statutory scope of driving-other-cars cover. The claim for a declaration was dismissed at the interlocutory stage. Sections 143 and 145 of the Road Traffic Act 1988 identify the insurance which a driver must have to use a motor vehicle lawfully on a road. They are not merely a protocol addressed to insurers. A motor insurance certificate stating that the policy satisfies the relevant law is capable of assuring the driver that driving-other-cars cover provides the required third-party insurance.
2. Where a policy covers more than one vehicle or class of vehicle, “the vehicle” in section 145(3) is not restricted to the principal vehicle identified in the schedule. When Mr Stoodley drove the BMW with the owner’s permission, it became the vehicle insured for the purposes of the policy and section 145(3). The contrary construction would make use of driving-other-cars cover uninsured and criminal under section 143(2), despite the certificate of insurance.
3. Effect of section 148(5). The statutory provision renders ineffective contractual conditions which would allow the insurer to avoid liabilities required to be covered under section 145 because of post-accident conduct such as failure to report or co-operate. It modifies the contractual obligation to indemnify; it does not make Part VI the source of that obligation. Advantage was therefore the contractual insurer, with its obligation modified by statute.
4. The court applied the Marleasing principle, as stated in Marleasing (ECC 106/89). National legislation should, so far as possible, be interpreted consistently with the wording and purpose of the relevant directive. The proposed construction would frustrate the purpose of the Motor Insurance Directives.
5. Discontinuance. The notice of discontinuance was set aside under CPR r 38.4. The discretion is exercised to give effect to the overriding objective, applying the formulation adopted in Stati v The Republic of Kazakhstan [2018] EWHC 1130 (Comm) from High Commissioner for Pakistan v National Westminster Bank plc [2015] EWHC 55 (Ch). Abuse of process is unnecessary, although it is a powerful factor. Finality in litigation, recognised in Johnson v Gore Wood [2002] 2 AC 1, and active case management supported retaining the claim. Advantage had brought the proceedings to resolve the insurers’ positions and could not tactically leave the mechanism of its liability open for later litigation.