UK INSURANCE LTD V R & S PILLING

[2017] EWCA Civ 259, Court of Appeal, Sir Terence Etherton MR, Lord Justice Beatson and Lord Justice Henderson, 12 April 2017

Insurance (motor) - Assured setting fire to buildings while carrying out repairs on car - Whether policy covered liability - Whether assured using car by repairing it - Road Traffic Act 1988, section 145(3)

On 12 June 2010 TH, a mechanical fitter employed by Phoenix, obtained permission from Phoenix to use its loading bay to carry out some work on his car which had failed its MOT the previous day. TH intended to weld some plates onto the underside of the car where there was corrosion. In the course of the welding work sparks ignited flammable material in the car. The fire caught hold and caused substantial damage to premises belonging to Phoenix and also to neighbouring premises. Phoenix's property insurers, AXA, paid the property damage clams and brought a subrogation action against TH. The claim was meaningful only if TH's motor liability insurers, UK, were liable under the policy, and AXA had undertaken to limit its recovery against TH to sums for which he received an indemnity from UK. UK thus sought a declaration that it was not liable. HHJ Waksman QC held that the policy did not respond. The policy provided that "We will cover you for your legal responsibility if you have an accident in your vehicle and: you kill or injure someone; you damage their property; or you damage their vehicle". (1) Although section 145(3) the Road Traffic Act 1988 required insurance only for the use of a vehicle "on a road or other public place" the policy did not restrict cover in that way and that there was cover for loss caused from the location in question. That made it unnecessary for the court to consider the effect of the decision of the CJEU in Vnuk v Zavarovalnica Triglav dd [2015] Lloyd's Rep IR 142, but the judge was of the view that the restriction in the legislation to roads and public places was incompatible with EU law. (2) The accident arose from the "use" of TH's car. The word "use" was not necessarily interchangeable with "drive", but effecting repairs to a vehicle did not constitute "use". In the alternative, the fire was not caused by "use" of the vehicle simply because it had been driven beforehand and was intended to be driven afterwards. (3) There was an accident, in that there was a fortuitous or unexpected incident.