AXA Insurance UK Ltd v EUI Ltd (t/a Elephant Insurance)

Insurance cover depends on the essential or primary purpose of the journey, assessed from the insured driver's perspective and on the particular facts. A secondary or incidental purpose does not displace an otherwise covered primary purpose. A journey may change character, but the change must be established at the time of the accident. A courtesy lift or detour will not necessarily alter a journey home from work. A policy covering a “private motor car” may exclude a vehicle operated or supplied in the course of a business, even if its physical configuration is private. Where the wording is clear, contra proferentem has no application.

AXA sought a declaration that it and EUI were equally liable to indemnify the driver of a courtesy car after a serious road accident. The car was owned by a garage and lent to the driver while his own vehicle was being repaired. The driver had been returning home after a security shift and intended to collect a friend from a nearby coach station.

The court had to decide whether the journey fell within cover for “social, domestic and pleasure purposes only”, and whether the courtesy car was a “private motor car” under EUI’s policy. If either issue was answered against AXA, EUI had no liability.

1. Outcome. The declaration sought by AXA was refused. Any liability falling on AXA had to be borne by AXA alone.
2. Purpose of the journey. The court applied the guidance from Seddon v Binions [1978] RTR 163, Passmore v Vulcan Boiler & General Insurance Co. Ltd. (1936) 54 Lloyd’s List Rep 92, Caple v Sewell [2002] Lloyd’s Rep (I and R) 627, Keeley v Pashen [2005] Lloyd’s Rep (I and R) 289 and AXN v Worboys [2013] 1 Lloyd’s Law Rep (I and R) 207. The essential or primary purpose had to be assessed from the insured’s perspective and on the facts of the particular journey.
3. The journey’s essential character was the driver’s journey home from work. Collecting a friend on the way was a courtesy fitted into that journey and did not transform it into a social, domestic or pleasure journey. The court was not required to search for a secondary purpose capable of taking the use outside the policy.
4. The journey had not changed character in the manner identified in Keeley v Pashen and AXN v Worboys. The driver remained on his homeward commute at the time of the accident.
5. Private motor car. The courtesy car was supplied and operated by a garage as part of its business and as a marketing convenience. “Privately owned motor car” therefore excluded a car owned or supplied for business purposes, whether the business was conducted by a company or a sole trader and regardless of the vehicle’s physical configuration.
6. The policy wording was sufficiently clear. The contra proferentem principle did not apply. The AXA Policy alone responded to the circumstances.