England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM H.H. JUDGE ANTHONY THOMPSON QC

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 2nd February 2001

LORD JUSTICE KENNEDY:

1. This is the Second Defendant's appeal from a decision of Judge Thompson QC sitting at Bournemouth County Court who, on 12th April 2000, dismissed the Second Defendant's appeal from a decision of District Judge Edwards who on 22nd November 1999 had declared that the Second Defendant is obliged to indemnify the First Defendant in respect of his liability to the Claimant.

Background Facts

2. On 5th October 1995 the Claimant was a rear seat passenger in a Vauxhall car which was stationary in the car park of the Richmond Park Hotel, Bournemouth when the First Defendant deliberately reversed his Ford Sierra motor car into it. As a result the Claimant sustained significant injury. Although it is clear that the collision was deliberate, indeed the First Defendant subsequently pleaded guilty to causing criminal damage, there is no evidence before us to suggest that he intended to cause injury to the Claimant.
3. On 29th September 1998 the Claimant commenced proceedings against the First Defendant. The written statement of claim was served on 23rd December 1998 but the First Defendant did not respond. At the material time his Sierra motor car had been insured with the Second Defendant, and the insurers applied to be joined as Second Defendant in the action. That was achieved by means of a consent order made on 19th March 1999, and on 14th April 1999 the Second Defendant served its defence in which it denied that the incident of 5th October 1995 was an "accident" within the meaning of its policy of insurance. It also pointed out that as the incident did not happen on a road there was no statutory obligation on the Second Defendant to indemnify.
4. On 7th June 1999 the Claimant served her Reply in which she asserted that the incident of 5th October 1995 was an accident within the meaning of the insurance policy. She further contended that the injuries to her "were an accident involving the First Defendant's car discreet from the damage caused to the Vauxhall Astra motor car as a result of the deliberate striking of it."
5. On 28th September 1999 the Second Defendant, pursuant to CPR Part 24, sought two declarations, namely -

"(1) .... that the incident the subject of these proceedings whereby the claimant sustained injuries, was caused by the deliberate act of the first defendant and not an accident, whereby, by reason of the terms of the second defendant's policy of insurance, the second defendant is not liable to indemnify the first defendant in respect of such liability as he may have to the claimant;

(2) A declaration or finding that the incident whereby the claimant sustained injuries as a result of the actions of the first defendant occurred in a car park on private property whereby the second defendant is not obliged to indemnify the first defendant or the claimant pursuant to the provisions of the Road Traffic Act 1988."

In the event of those declarations being made the Second Defendant also sought summary judgment, and an order for costs against the claimant.

6. Thus there arose what, on the face of it, was a curious state of affairs. The Claimant had not amended her writ or statement of claim so as to formulate any cause of action against the Second Defendant, but the Second Defendant, having been joined in the action at its own request, was seeking to escape from it at the expense of the Claimant. At the start of the hearing before us we sought assistance as to this aspect of this matter and were advised by Mr Palmer QC for the Second Defendant that what happened in this case is not unusual. Where a doubt arises as to whether an insurer will indemnify a defendant the insurer applies to be joined so that the issue of his liability to indemnify can be raised at an early stage. That is obviously in everyones' interests. It saves costs and may lead to an early disposal of the action. In the present case the liability of the First Defendant was never likely to be a live issue, but there was and remains a live issue in relation to quantum, and the alternative to the course adopted by the Second Defendant would have been to incur the expense of litigating that issue, and leave it to the Claimant to seek to recover from the First Defendant. If he was unable to pay and was rendered bankrupt the Claimant could then rely on the Third Parties (Rights against Insurers) Act 1930 to seek to recover from the Second Defendant at which point there would arise the issues which the Second Defendant was seeking to have resolved when on 28th September 1999 it made its application pursuant to CPR Part 24. To facilitate resolution of those issues Mr Palmer was prepared to have us treat the Claimant as the assignee of any benefits the First Defendant is entitled to under the relevant policy of insurance.
7. Before the Second Defendant's application was heard the Claimant, on 15th October 1999, obtained judgment in default against the First Defendant for damages to be assessed, and the Second Defendant's application was then considered by District Judge Edwards on 22nd November 1999 with the result to which I have already referred at the beginning of this judgment.

Issues

8. In addition to the issues identified in the defence of the Second Defendant and in the Reply Mr Palmer has raised in his skeleton argument for this court the issue of whether the First Defendant was entitled to an indemnity in respect of deliberate acts, either as a matter of construction or as a matter of public policy. As Mr Norman for the Claimant pointed out, the public policy issue was raised briefly by counsel then appearing for the Second Defendant before Judge Thompson, but on that occasion when Mr Norman pointed out that the issue was not pleaded it was not pursued. Mr Norman submitted that we should not allow that issue to be pursued in this court. Realistically Mr Norman does not now claim to be taken by surprise. He has had ample time to consider and respond to his opponent's skeleton, and he recognises that if a public policy issue is raised the very nature of the issue makes it impossible for the court to ignore it, but he submits that in order properly to adjudicate on the issue we need to know more that we do about the gravity of the conduct and the means of the First Defendant. For reasons which will emerge later in this judgment I consider that we do know enough to deal with all of the issues now raised, and it is nothing to the point that this is, as Mr Norman pointed out, a Second Tier Appeal. The division of this court which gave permission to appeal rightly considered that the appeal raises issues of importance worthy of consideration by the court.

Extent of the Cover

9. In my judgment the starting point for a consideration for all the issues raised must be the statutory obligation to insure. That is now to be found in section 143(1) and section 145(3) of the Road Traffic Act 1988. The material words read -

Section 143(1)(a) "A person must not use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person such a policy of insurance ... as complies with the requirements of this Part of this Act ...."

Section 145(1) "In order to comply with the requirements of this Part of this Act a policy of insurance must satisfy the following conditions.

(3) ..... the policy -

(a) must insure such person ... as maybe specified in the policy in respect of any liability which may be incurred by him ... in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road in Great Britain."

It was no doubt in order to comply with those requirements that the First Defendant contracted with the Second Defendant, and the certificate of insurance issued by the Second Defendant makes it clear that the insurers were affording him the cover he required. On that document there appear above the signature of the Chairman and Chief Executive of the Second Defendant these words -

"I hereby certify that the Policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain ..... "

The form and wording of the certificate is prescribed by paragraph 5(1)(a) and Form A in the Schedule to the Motor Vehicles (Third Party Risks) Regulations 1972 (S.I.1217). It is clear from that prescribed form that the insurer is entitled to lay down "limitations as to use" and in this case familiar limitations are set out on the face of the certificate. Under that heading the certificate reads -

"Use for social domestic and pleasure purposes including commuting to and from a permanent place of work. This policy does not cover use for racing competitions rallies or trials. Use for hiring or for any business purpose."

So, as Mr Palmer points out, it was clear from the outset that although the policy was said to satisfy the requirements of the relevant law the insurer was not agreeing to indemnify the insured in respect of every possible form of use. The obligation imposed by section 143(1)(a) required the First Defendant or other user of his vehicle not to use the vehicle on a road unless there was in force "in relation to the use of the vehicle by that person" a policy of insurance which complied with the requirements of the statute. In other words it remained the obligation of the First Defendant or other user of the vehicle to restrict the user so as to keep it within the terms of the cover. That necessarily means that a policy can comply with the requirements of section 145(3) which does not insure the person or persons specified in the policy in respect of any liability which may be incurred, but only in respect of any liability incurred whilst the vehicle is being used as permitted by the terms of the policy.

10. Turning now to the words of the policy booklet, it explains to the insured on page 2 -

"The Policy is in three parts -

the wording contained in this policy booklet

the schedule which gives details of you/your car/the cover/the Period of Cover/the premium/us

the effective Certificate of Motor Insurance which shows who may drive and the purposes for which your car may or may not be used."

11. Thus the importance of the Certificate of Motor Insurance as an indication of permitted user is again underlined. Section 1 of the Policy is headed "liability to Third Parties" and under the heading "Indemnity to You" it begins -

"We will indemnify you in respect of legal liability ... in the event of an accident involving -

(a) your car ...."

I emphasise the word accident because Mr Palmer submits that it is important. The Second Defendant chose not to offer cover which precisely reflected the wording of section 145(3) of the 1988 Act, that is to say in respect of the death of or bodily injury to any person or damage to property caused by or arising out of the use of the vehicle on a road. The cover offered was wider than that required by section 145(3) in that the vehicle did not have to be on a road but, Mr Palmer submits, it was not offered in relation to damage or the consequences of damage deliberately caused by the insured, albeit such damage would fall within the scope of section 145(3). Mr Palmer accepts that the explanatory note in relation to section 1 of the Policy does not use the word accident. It says simply -

"We will protect you against claims made for death or bodily injury to someone or for damage to their property while driving or using:

(a) your car ....."

12. If those were the words of the policy they would plainly be apt to cover damage deliberately caused. Mr Palmer accepts that under this policy the insured would still be covered when offending against the criminal law. If he caused death by dangerous driving he would be entitled to be indemnified provided, Mr Palmer submits, he did not intend to injure his victim.

Public Policy

13. Mr Palmer contends that the submission that he makes in relation to the proper construction of the Policy accords with the normal approach which is adopted by the courts in relation to contracts of insurance, and with public policy. It has been clear, at least since the decision of the House of Lords in Beresford v Royal Insurance Company [1938] AC 586 that an insured may not recover under a policy of insurance in respect of loss intentionally caused by his own criminal or tortious act, however clearly the wording of the policy may suggest otherwise, and his personal representative is in no better position. In Beresford Lord Atkin said at 595 -

"On ordinary principles of insurance law an assured cannot by his own deliberate act cause the event upon which the insurance money is payable. The insurers have not agreed to pay on that happening. The fire assured cannot recover if he intentionally burns down his house, nor a marine assured if he scuttles his ship, nor the life assured if he deliberately ends his own life. This is not the result of public policy, but of the correct construction of the contract."

As to the position of a personal representative Lord Atkin said at 599 -

"I cannot think the principle of public policy to be so narrow as not to include the increase of the criminal's estate amongst the benefits which he is deprived of by his crime. His executor or administrator claims as his representative, and, as his representative, falls under the same ban."

On the following page Lord Atkin expressed the view that the ban would not affect an assignee for value before the event apparently giving rise to liability under the policy, but that is not a situation which falls for consideration in the present case.

14. Where loss or damage is sustained caused by or arising out of the use of a vehicle on a road after a certificate of insurance has been issued then section 151 of the 1988 Act requires the insurers in certain circumstances to satisfy any judgment obtained against any person who is insured, even though they would not be required to indemnify the insured pursuant to the terms of his contract. The material parts of that section read -

"(1) This section applies where, after a certificate of insurance ... has been delivered ... to the person by whom a policy has been effected ... a judgment to which this sub-section applies is obtained.

(2) Sub-section (1) above applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either -

(a) it is a liability covered by the terms of the policy ... to which the certificate relates, and the judgment is obtained against any person who is insured by the policy ...

(5) Notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy ... he must ... pay to the person entitled to the benefit of the judgment ... "

Mr Palmer's submission, as I understand it, is that if he is right in relation to construction and public policy then, even had the relevant incident occurred on a road, the insurers would not become liable to satisfy a judgment in favour of the claimant pursuant to section 151 because the first defendant's liability to the claimant would not be "covered by the terms of the policy" for the purposes of section 151(2)(a). She would however be able to recover from the M.I.B. He points out that in section 148 of the 1988 Act certain types of restriction on liability are said to be of no effect, from which it can be inferred that other restrictions are valid.

Respondent's Case

15. On the construction point Mr Norman adopts the reasoning of the judge in the court below. Having referred to some of the authorities, including in particular Hardy v MIB [1964] 2 QB 745, to which I will turn later in this judgment, the judge held that the relevant policy covered any use by the First Defendant of his vehicle. The word "accident" was found by the judge to be wide enough to encompass the incident which occurred on 5th October 1995. The insurers could have worded their policy so as to restrict or exclude liability arising out of incidents occurring off the road, but they did not do so, and that the judge found to be significant.
16. As to public policy Mr Norman submits that, first, public policy seems to require that at least on roads those injured by motor vehicles should be properly compensated (see section 151 and the MIB Agreement). Secondly, there is in the present case no evidence of any intent to injure the claimant, so such loss as she can prove was not deliberately caused. Thirdly, the authorities suggest that the conduct of the insured needs to be scrutinised and evaluated before it is accepted as a bar to indemnity. Fourthly, the Claimant can if necessary rely on section 148(7) of the 1988 Act and fifthly, there is nothing in the wording of the policy to distinguish between use on and off the road.

Authorities

17. As Mr Palmer submitted, the situation in this case is that there is no clear dividing line between the construction and the public policy points, but the authorities cited to us are of some assistance as to the course which this court should now adopt.
18. In Hardy v MIB a security officer was checking a van when it was driven off dragging him with it, so that he sustained injury. The van was not insured, and the MIB denied liability on the ground that liability for a deliberate criminal act was not a liability which the Road Traffic Acts required or could require to be covered by a policy of insurance. The court found that the van driver must be presumed to have intended to injure the security officer, and that the liability was one which was required by section 203 of the 1960 Act (the predecessor of section 145(3) of the 1988 Act to be covered. That was upheld by the Court of Appeal. Lord Denning MR said at 760 that if the driver had taken out cover in accordance with the terms of section 203 he could not have claimed indemnity under the policy for the consequences of his own wicked and deliberate act (see Beresford ).

" the policy of insurance which the motorist is required by statute to take out must cover any liability which may be incurred by him arising out of the use of the vehicle by him. It must, I think, be wide enough to cover, in general terms, any use by him of the vehicle be it an innocent use or a criminal use, or be it a murderous use or a playful use."

i) A little later Lord Denning said that if a motorist, having taken out a policy, makes criminal use of the vehicle the consequences are these -

"If the motorist is guilty of a crime involving a wicked and deliberate intent, and he is made to pay damages to an injured person, he is not himself entitled to recover on the policy. But if he does not pay the damages, then the insured third party can recover against the insurers under section 207 of the Road Traffic Act, 1960; for it is a liability which the motorist, under the statute, was required to cover. The injured third party is not affected by the disability which is attached to the motorist himself."

19. Section 207 of the 1960 Act was the predecessor of section 151 of the 1988 Act. At 764g Pearson LJ said -

"Did the liability in respect of which the statute obliged him to insure include or not include a liability arising from his own intentional criminal use of a vehicle on a road? The statute refers to 'the use of a vehicle on a road'. Prima facie any such use is included, even if it is intentionally criminal. But does public policy require some and if so what, implied exception or provision? There are, I think, three possibilities. (1) There might be a wide, implied exception from the statutory requirement, so that a policy complying with the statute would, by reason of an express or implied exclusion, not cover a liability arising from an intentional criminal use of the vehicle on a road. (2) There might be a narrower implied provision, having the effect that a policy complying with the statute would cover the liability arising from an intentionally criminal use of the vehicle on a road, but the insurers would not be obliged in such a case to indemnify the wrongdoer himself or his personal representative. (3) The policy might cover the full liability without exception, and yet there might be a personal ban preventing the wrongdoer or his personal representative from recovering the indemnity."

Pearson LJ then looked at the second and third possibilities, and at 765f he continued-

"The Road Traffic Act 1960, by sections 206 and 207 confers alternative or independent rights in certain events on the persons to whom the insured has become liable. Public policy should be so applied as not to diminish their rights. It follows that the insurance policy required by the statute has to cover liability arising from any use, even an intentionally criminal use, of the vehicle on a road. The implied provision would merely debar (the driver) from recovering an indemnity under his policy even if he had been insured, or it can be said that there is a personal ban. Thus the liability of (the driver) to the plaintiff was a liability required to be covered by a policy of insurance under the Road Traffic Act."

Section 206 of the 1960 Act was the predecessor of section 148 of the 1988 Act

20. Diplock LJ referred at 767e to the rule "that the courts will not enforce a right which would otherwise be enforceable if the right arises out of an act committed by the person asserting the right (or by someone who is regarded in law as his successor) which is regarded by the court as sufficiently anti-social to justify the court's refusing to enforce that right." That is a passage on which Mr Norman relies as indicating a need to evaluate the conduct of the motorist.

At 768a Diplock LJ continued -

"The court has to weigh the gravity of the anti-social act and the extent to which it will be encouraged by enforcing the right sought to be asserted against the social harm which would be caused if the right is not enforced."

"How, then, does the rule affect a contract of insurance to pay a sum of money, whether by way of indemnity or otherwise, on the occurrence of an event which or may not be caused by the anti-social act of the assured? First, the rule has no effect on the construction of the contract. It deals with enforceability of rights arising out of the contract. One first construes the contract to see what the parties agree: see Beresford v Royal Insurance Co. The rule does not alter that. Secondly, the contract so construed is not unlawful. It is capable of giving rise to legally enforceable rights if, apart from the rule, the rights of the assured are capable of becoming vested in a third party other than one who is regarded in law as the successor of the assured, such as the personal representative (Beresford) or his trustee in bankruptcy (Amicable Insurance Society v Bolland [1830] 4 Bli. N.S. 194). I agree, with respect, with Lord Atkin's opinion expressed in Beresford's case that an assignee for value before the occurrence of the event would not be prevented from enforcing the contract notwithstanding that the event was caused by the anti-social act of the original assured."

21. In Gray v Barr [1971] 2QB 554 the defendant armed with a loaded shotgun went to Gray's farm. He fired one shot into the ceiling intentionally to frighten Gray, and then, possibly because Gray was grappling with him and he was falling, he involuntarily fired a second shot which killed Gray. He was acquitted of murder and manslaughter, and when sued by the administrator of Gray's estate he claimed an indemnity from his insurers under a hearth and home policy. That claim was held to be barred. The policy agreed to indemnify the insured against sums he "shall become liable to pay as damages in respect of (a) bodily injury to any person .. caused by accidents.." Lord Denning MR held that the dominant cause of the death was the defendant's deliberate Act of going to the farmhouse and going up the stairs with the loaded gun. It was "no accident". As to public policy Lord Denning at 568 said that "if his (the insured's) conduct is wilful and culpable he is not entitled to recover", and at 569 he cited with approval the proposition of the trial judge, Geoffrey Lane J -

"The logical test, in my judgment, is whether the person seeking the indemnity was guilty of deliberate intentional and unlawful violence, or threats of violence. If he was, and death resulted therefrom, then, however unintended the final death of the victim may have been, the court should not entertain the claim or indemnity."

Salmon LJ held that the injuries which resulted in the death of the deceased were caused by accident, because the defendant did not intend to shoot or injure Gray, but the policy had to be read subject to an implied exception that it did not apply to injuries caused by an accident occurring in the course of threatening unlawful violence with a loaded gun.

22. As to public policy Salmon LJ said at 581 -

"I am confident that public policy undoubtedly requires that the no one who threatens unlawful violence with a loaded gun should be allowed to enforce a claim for indemnity against any liability he may incur as a result of having so acted."

A little later he observed -

"It seems now to be settled law that a motorist can rely on his policy of insurance to indemnify him in respect of his liability for any injury which he has caused otherwise than on purpose (Hardy). These road traffic cases may be sui generis. In any event, although motor cars have sometimes been labelled lethal weapons these cases are not in my view akin to the cases in which injuries are caused in the course of unlawfully threatening a man with a loaded gun."

Phillimore LJ also focused on the defendant's decision to go to the farmhouse with a loaded gun and refused to accept that decision on his part as an accident. At 586 he said -

"Could Barr have said it was an accident if it had merely wounded Gray or if it had killed some body else who happened to have been nearby? No doubt the word "accident" involves something fortuitous or unexpected, but the mere fact that a wilful and culpable act - which is both reckless and unlawful - has a result which the actor did not intend surely does not, if that result was one which he ought to reasonably have anticipated, entitle him to say that it was an accident.

In the context of the present case that last observation may be said to beg the question whether injury to the claimant was a result which the first defendant ought reasonably to have anticipated, and , as Mr Norman points out, we have no evidence about that.

Phillimore LJ went on to agree that in any case the defendant could not recover from the insurers on grounds of public policy.

In support of his submission that the word "accident" in the policy is wide enough to embrace deliberate conduct intended to cause damage Mr Norman invited our attention to two cases under the breathalyser legislation. Section 8(2) of the Road Traffic Act 1972 enabled a constable to require a breath sample "if an accident occurred owing to the presence of a motor vehicle on a road." In Chief Constable of West Midlands Police v Billingham [1979] 1 WLR 747 the defendant was suspected of having released the brake on a parked police car, and of having steered it downhill until it hit a telegraph pole and went on down an embankment. At 752e Bridge LJ, sitting in the Divisional Court, said -

"There have been many authorities dealing with the meaning of the word 'accident' in different statutory and contractual contexts. It is, in my judgment, a word which has a perfectly well understood meaning in ordinary parlance, but that meaning is an elastic one according to the context in which the word is used."

At 753e he continued -

"It seems to me that 'accident' in this context is perfectly capable of applying to an untoward occurrence which has adverse physical results, notwithstanding that one event in a chain of events which led to the untoward consequence was a deliberate act on the part of some mischievous person."

Similarly in Chief Constable of Staffordshire v Lees [1981 RTR 506 there was deliberate conduct by the motorist. He drove through a locked gate onto a parkland road. Donaldson LJ rejected the contention that because the driving was deliberate, for the purposes of section 8(2) there had been no accident, and Bingham J said at 510 -

"It would be an insult to common sense if a collision involving a motor car arising from some careless and inadvertent act entitled a constable to exercise his powers under the Act but a similar result caused by a deliberate anti-social act did not."

As Mr Palmer points out, there would be no insult to common sense if the word "accident" were to be given a narrower meaning in an insurance policy.

In Gardner v Moore [1984] AC 548 the uninsured first defendant deliberately drove a car at the plaintiff who was walking on the pavement, and thus caused serious injuries. The MIB accepted that the trial judge was bound by the decision of the Court of Appeal in Hardy to declare that the Bureau was bound to indemnify the plaintiff in respect of his judgment against the first defendant, and the Bureau was granted leave to appeal direct to the House of Lords, which dismissed the appeal. Lord Hailsham LC, with whom the other members of the House agreed, at 555f accepted the principle that a person "may not stand to gain advantage arising from the consequences of his own iniquity", but he pointed out at 559b that the doctrine has its limits. In the words of Fry LJ in Cleaver v Mutual Reserve Fund Life Association [1882] 1 QB 147 it throws "no impediment in the way of a suit by those who claim with clean hands themselves and as assigns of the innocent insured." Lord Hailsham cited with approval the judgments in Hardy, including Lord Denning's assertion that "if the motorist is guilty of a crime involving a wicked and deliberate intent, and he is made to pay damages to an injured person he is not himself entitled to recover on the policy." For the MIB that afforded no comfort because, as Lord Hailsham said at 560d -

"It seems to me that the outcome of the general principle invoked by the MIB is that whereas it may be invoked against the wrongdoer it cannot be invoked against the third party whose claim is not through that of the wrongdoer."

At the end of his speech Lord Hailsham dealt with two extraneous matters which he found to be irrelevant. As to the first he said at 562c -

"We were invited by the appellants to examine the actual terms of policies and certificates issued by existing insurance companies, with a view to ascertaining the meaning of the word "accident" in the description of the risk thereby insured. I am not sure that we were right to examine these. I assume we were. But either they cover the risks required to be insured against by section 143 and 145 of the Road Traffic Act 1972 and applied by the certificates or they do not. If they do, all well and good. If they do not, the certificates would amount to a misrepresentation of the risks covered by the policies."

Conclusion

23. In my judgment the word "accident" in section 1 of the Policy with which we are concerned should not be given a narrow meaning. On the face of it, and bearing in mind that the insurer and the insured are contracting against the statutory background provided by the Road Traffic Act 1988 it may well extend to any incident involving the insured's car, but I recognise the force of the arguments to the opposite effect, which are explored in the judgment of Rix LJ.
24. However it seems to me that on the authorities it is clear beyond argument that the principle that Lord Hailsham formulated as that a person may not stand to gain an advantage arising from the consequences of his own iniquity applies in relation to motor insurance contracts as it does elsewhere, and for most purposes has the same effect as if section 1 were so worded as not to apply to damage arising from the insured's own deliberate criminal act. Even if the First Defendant did not know that the claimant was in the car which he struck, and we do not know whether that was the case, it seems to me impossible to contend that in law her injuries were caused by anything other than his deliberate criminal act.
25. Had the incident occurred on a road the First defendant would have been required by section 143 of the 1988 Act not to so use his vehicle unless it was insured to the extent required by section 145. It was not so insured, but the claimant would then have been able to recover pursuant to section 151or under the MIB Agreement.. As the incident in fact occurred off the road the claimant has no such redress. Section 148(7) is, in my judgment, of no assistance to the claimant. It merely enables a person or persons specified in the policy (e.g. other named drivers) to obtain indemnity from the insurer.
26. I would therefore allow the appeal and declare that the Second Defendant is not obliged to indemnify the First Defendant or to discharge the First Defendant's liability to the Claimant. In its Appellant's Notice the Second Defendant seeks an order that the Claimant pay the Second Defendant's costs of the appeal and the hearings below, and of the action. I await with interest counsel's submissions in relation to costs, bearing in mind that the persuasive arguments addressed to us were not addressed to the court below.

LORD JUSTICE LAWS :

27. I have had the benefit of reading the judgments of my Lords Kennedy LJ and Rix LJ in draft, and I agree with them that this appeal should be allowed on the footing that any recourse by the claimant to the second defendant insurers, not being independently conferred by the Road Traffic Act 1988, would require her (strictly, by force of the Third Parties (Rights against Insurers) Act 1930) to stand in the shoes of the first defendant insured; but that cannot avail her, since public policy deprives the first defendant of any claim under the policy of insurance to be indemnified against a liability arising from his own intentional criminal act. Accordingly he possesses no rights under the policy capable of enuring to the benefit of the claimant.
28. That aspect of the matter is conclusive of the appeal. However my Lords have expressed, provisionally at least, contrasting views upon the question whether the event giving rise to this dispute, when the first defendant deliberately reversed his Ford Sierra into the parked car in which the claimant sat, may properly be categorised as an "accident" for the purpose of the relevant policy of insurance. Given our conclusions upon the issue of public policy, it may be that our views upon this further question should fall to be regarded as obiter dicta, as Rix LJ for his part acknowledges in paragraph 42 of his judgment. However, having regard to counsel's arguments and my Lords' potential difference on the point, I think it more helpful than not if I express my own opinion, as briefly as I may.
29. A useful starting-point, I think, is to have in mind two contrasting propositions, neither of which (taken in isolation) can sensibly be doubted, but which would appear at face value to be inconsistent with one another.
30. The first of these proposition consists in the general rule that an assured is not covered by an insurance contract in respect of loss caused by his own intentional act: see for example Beresford [1938] AC 586 per Lord Atkin at 595. Rix LJ has described this as "a basic rule of insurance law" (paragraph 13 of his judgment). Lord Atkin stated that the proposition "is not the result of public policy, but of the correct construction of the contract". But public policy would surely vouchsafe at least as much, at any rate in a case where the intentional act in question was also a crime.
31. The second proposition is derived from the following state of affairs. The user of a vehicle is required by statute (on pain of criminal penalties) to be insured in respect of any liability which he may incur by virtue of the death of or personal injury to any person (or damage to property) which is occasioned by the use of the vehicle on a road in Great Britain, and this includes the case where the injury is deliberately and criminally caused: Road Traffic Act 1988 ss. 143(1)(a), 145(3)(a), Hardy [1964] 2 QB 745, Gardner [1984] AC 548. This state of affairs entails the conclusion that there is a class of case in which a policy of motor insurance may as a matter of construction cover the assured against losses caused by his own intentional and criminal act (else the statute would be incapable of fulfilment in relation to a category of possible events which, upon high authority, was plainly intended to be covered). This conclusion constitutes the second proposition. On its face it is inconsistent with the first proposition or is an exception to it.
32. It will be obvious that there are two public policies involved here. The first is the broad principle of the common law, that no man may rely on his own wrong to gain advantage or benefit against another. That is behind the first proposition. The second is the principle of statute, that innocent third parties should be protected so far as money can do it from the harm - sometimes fatal - that may be inflicted by careless, dangerous, and criminal drivers on the public roads: a protection not sufficiently given by the private law of insurance. That is behind the second proposition. The tension between the two arising where the driver's conduct is criminal is resolved by the rule (derived from Hardy, confirmed in Gardner) that a policy whose words on their face cover liability for death, personal injury or damage to property occasioned by the use of a vehicle on a road is treated - so as to give effect to the second proposition - as still doing so even where the liability arises on the facts from the driver's own criminal act; although in that case - so as to give effect to the first proposition - the insured driver himself cannot take advantage of the policy. The only difficulty with such a rule is that it consigns the first proposition to the realm of public policy, where Lord Atkin said it did not belong. But as I have said the first proposition is anyway justified by public policy in a case where the intentional act in question is also a crime.
33. As it seems to me, with great respect, the reasons advanced by Rix LJ to support the view that here there was no "accident" for the purpose of the relevant policy of insurance rest in large measure upon considerations which favour or promote the truth of the first proposition. However, although of course the relevant event in this case did not happen on a road, the key question in relation to the word "accident" is surely whether the material terms of the insurance policy in the case fulfil the requirements of s.145(3)(a) of the Act of 1988. This must be so, since s.145(3)(a) is the only route to the second proposition - the only means by which the case may potentially be brought within the class of case in which as a matter of construction a policy of motor insurance may cover the assured against losses caused by his own intentional and criminal act.
34. In my judgment a policy, such as that in the present case, whose insuring clause contains the word "accident", may readily fulfil the requirements of s.145(3)(a), even in relation to a set of facts where the insured's liability arises from his own deliberate criminal act. I have no difficulty in accepting that "accident" and its cognates may be applied so as to cover such a set of facts: depending on the context of the word's use, they plainly can. Billingham [1979] 1 WLR 747 and Lees [1981] RTR 506, cited by my Lords, vouchsafe as much. I note Rix LJ's observation at paragraph 20 that neither Billingham nor Lees was concerned with the construction or application of insurance contracts. That with great respect is plainly right; but the utility of those authorities for present purposes is only to demonstrate that as a matter of language "accident" may include the intended consequences of a crime (so far as the question is distinctly one of law, rather than merely one of language). Now it is true that there are dicta in Gray v Barr [1971] 2 QB 554 to the effect that "accident" does not include injury deliberately inflicted. But Gray was not a road traffic case; it was not in the territory of the second proposition; indeed, in my judgment the view taken of the causation issue in that case was driven by the pressing claims of the first proposition.
35. Moreover, if the court's view of "accident" is conditioned by the force of the first proposition, there at once arises the danger of an approach being taken to the material provisions of the Act of 1988 which would undermine the purpose and utility of s.151. As Rix LJ says (paragraph 14) the first proposition - the basic rule - applies whether or not the word "accident" appears in the policy. In theory one might, driven by the first proposition, arrive at a result such as would not allow any policy of motor insurance (whether or not containing the word "accident") to cover the insured's liability for damage caused by his own deliberate criminal act; but that would contradict entirely the second proposition. Once one recognises (a) that in the field of motor insurance the role of the first proposition is only to disable the insured from recovering for his own benefit in a case of deliberate criminal conduct, and that (b) the policy may nevertheless and at the same time be treated as one which for the purposes of s.143 and 145 insures the driver against liability for death (&c.) in just such a case (and that is the effect of Hardy and Gardner), it becomes apparent that the presence or absence in the insuring clause of "accident" or its cognates is of little or no significance.
36. I should add that I have considered Lord Hailsham's remarks towards the end of his speech in Gardner, where he expressed the view that the terms of policies issued by insurance companies were not relevant to the issues falling for decision in the case before him. It has to be borne in mind that in that case the House was dealing with a state of affairs in which there was no extant policy, and the question was as to the plaintiff's right to recover under the MIB agreement. It is not with respect to be supposed that had the case engaged what is now s.151, the Lord Chancellor would have chosen to express himself in like terms.
37. In conclusion, then, had the claim in this case depended merely on the construction of the policy of insurance, including as it does the term "accident", I would have favoured the claimant; but because she has no s.151 rights or other rights against the MIB (the incident having happened off the road), and must therefore claim through the criminal insured, she is defeated by public policy.

LORD JUSTICE RIX:

38. The facts in this appeal can be shortly stated. The claimant, Mrs Jean Charlton, was a passenger in a car into which the first defendant, Mr Sheridan Fisher, deliberately reversed, causing damage to the car and, Mrs Charlton alleges, injury to her. Mr Fisher was insured by the second defendants, Churchill Insurance Co Limited ("Churchill"). The collision occurred in the car park of a hotel. It is common ground that the car park was not a "road" for the purposes of the Road Traffic Act 1988 (the "1988 Act"). It follows that the compulsory third-party insurance provisions of that Act do not apply, since they are all premised on the use of a motor vehicle "on a road" (see for instance section 143(1)(a) of the Act). Mr Fisher was charged with causing criminal damage, and convicted on his plea of guilty. Mrs Charlton sued Mr Fisher, and Churchill, as his insurers, were granted leave on their application to be added as second defendants. No defence was ever filed by Mr Fisher, against whom Mrs Charlton has obtained judgment for damages to be assessed, as the judge below remarked "for what it is worth". Because the collision did not occur "on a road", Churchill are not directly liable to Mrs Charlton under section 151 of the Act to satisfy any judgment against Mr Fisher. In practice, therefore, her hopes of any recovery are likely to depend substantially or entirely on whether Churchill are obliged to indemnify Mr Fisher.
39. No claim has at present been pleaded against Churchill, but they are willing to treat the position as though Mr Fisher had been made bankrupt and Mrs Charlton had a monetary judgment which she was seeking to enforce directly against them as Mr Fisher's insurers under the Third Parties (Rights against Insurers) Act 1930. The purpose is to short-circuit the process of resolving the assessment of Mrs Charlton's damages, if it be the case that they cannot be under any liability at the end of the day. On this basis Churchill seek a declaration that they are not obliged to indemnify Mr Fisher or Mrs Charlton as his statutory assignee under the 1930 Act. They take two points, one pleaded, the other unpleaded. The pleaded point is a point of construction, that they are only liable under their policy of insurance for an accident, not for deliberate damage, loss or injury. The unpleaded point is a question of public policy: they submit that it is contrary to public policy to permit an assured to recover an indemnity in respect of his deliberate criminal act. In either event they submit that Mrs Charlton, as Mr Fisher's statutory assignee, cannot be in a better position than he would have been in himself.

Construction: the meaning of "accident"

40. The policy is written to cover accidents. Thus section 1, which deals with liability to third parties, provides by clause 1 that –

"We will indemnify you in respect of legal liability including claimants costs and expenses for death of or bodily injury to any person and damage to property in the event of an accident involving…your car…"

41. Similarly clause 3 under section 1, headed "Costs and expenses", begins –

"In respect of any accident which may be the subject of indemnity under this Section we will pay…"

42. After section 2, which deals with fire and theft, and section 3 which deals with windscreen damage, comes section 4 which is headed "Accidental Damage" and says that "We will indemnify you against loss of or damage to your car…". Section 5 ("Additional Covers") grants "personal accident benefits" to the assured (and spouse) if either sustain in connection with the assured's car "any bodily injury caused by violent accidental external and visible means…"
43. The policy document or booklet also stated that the certificate of insurance was part of the contract and showed "who may drive and the purposes for which your car may or may not be used". The certificate provided, under the heading "Limitations as to use", that the policy did not cover "Use for racing competitions rallies or trials" or "Use for hiring or for any business purpose". It also certified –

"that the policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain…"

44. The certificate further explained that it provided evidence that –

"you have insurance cover to comply with the law. For full details of your insurance cover reference should also be made to the policy booklet and Schedule."

45. Those statutory requirements referred to in the certificate are set out now in the 1988 Act and in particular in section 145, headed "Requirements in respect of policies of insurance", subsection 3(a) of which provides that the policy –

"must insure such person, persons or classes of person as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road in Great Britain…"

46. The certificate issued to Mr Fisher was in the form prescribed under the Motor Vehicles (Third Party Risks) Regulations 1972, which inter alia require "Limitations as to use" to be specified, and a statement that the policy satisfies the requirements of the relevant law to be made, but otherwise permits the "full details of the insurance cover" to be referred to merely by reference to the policy.
47. In his judgment below HHJ Anthony Thompson QC accepted the submissions on behalf of Mrs Charlton that in these circumstances it was simply impossible for Churchill to sustain an argument that a deliberate collision was excluded from cover. His reasoning can be expressed as follows: (i) Since the compulsory third party insurance provisions of the statute were confined to use of a motor vehicle on a road, the policy could have limited itself as it wished where use off a road was concerned: but it had not done so, making no distinction between use on or off a road. The policy therefore had to be construed in such a way as to satisfy the statutory requirements which the certificate certified that it did. (ii) That it could only do if the policy would have provided cover for the collision, deliberate as it was, even if it had taken place on a road. (iii) This was confirmed by the reasoning of Lord Denning MR in Hardy v. The Motor Insurers' Bureau [1964] 2 QB 745 at 760/761, as approved by Lord Hailsham of St Marylebone LC in Gardner v. Moore [1984] AC 548 at 559/560, and in particular by Lord Denning's dictum at 760 as follows:

"The policy of insurance which a motorist is required by statute to take out must cover any liability which may be incurred by him arising out of the use of the vehicle by him. It must, I think, be wide enough to cover in general terms any use by him of the vehicle, be it an innocent use or a criminal use, or be it a murderous use or a playful use. A policy so taken out by him is good altogether according to its terms."

48. In any event, the judge held that the word "accident" is wide enough to encompass deliberate damage or injury, as demonstrated by the decision of the Divisional Court in The Chief Constable of the West Midlands Police v. Billingham [1979] 1 WLR 747 on what was section 8(2) of the Road Traffic Act 1972, now section 6(2) of the 1988 Act. That subsection enables a constable in uniform to administer a breath test "If an accident occurs owing to the presence of a motor vehicle on a road…" In that case someone had quite deliberately taken the handbrake off a car parked on a hill, and this had caused what was held to be an accident. Bridge LJ at 752 pointed out that the meaning of the word accident "is an elastic one according to the context in which the word is used", and at 753 said –

"I approach the matter here by asking whether in the ordinary man's understanding of the word, especially having regard to the mischief at which this statute is aimed, the man in the street would say in such circumstances as those with which we are here concerned that an accident had occurred owing to the presence of a motor vehicle on a road…Also to take an example given by Mr Wakerley in the course of argument in this case, if a drunken driver deliberately drives into the back of another car, again I think any ordinary person would say that there had been an accident occurring owing to the presence of a motor vehicle on a road."

49. In responding to Churchill's appeal, Mr Norman on behalf of Mrs Charlton has relied on this reasoning in the judgment below. It is a powerful line of reasoning, and its cogency is supported by the dictum of Lord Denning, approved by the House of Lords. Nevertheless, I am not persuaded by it, and I will seek to explain why. The matter has to be looked at both from the point of view of insurance law and from the particular point of view of the compulsory provisions of the Road Traffic Act.
50. It is a basic rule of insurance law that a contract of insurance does not cover an assured against his deliberate or wilful infliction of loss, at any rate in the absence of express stipulation or necessary implication. This is a matter of construction, quite apart from public policy. A classic statement of this principle is that of Lord Atkin in Beresford v. Royal Insurance Co [1938] AC 586 at 595:

"On ordinary principles of insurance law an assured cannot by his own deliberate act cause the event on which the insurance money is payable. The insurers have not agreed to pay on that happening. The fire assured cannot recover if he intentionally burns down his house, nor the marine assured if he scuttles his ship, nor the life assured if he deliberately ends his own life. This is not the result of public policy, but of the correct construction of the contract."

51. This would remain the case even in the absence of the use in the policy of the word "accident" or "accidental", for it is inherent in the concepts of risk, peril and fortuity, which are basic to the law of insurance. However, the use of such wording expressly emphasises that the contract covers accidents rather than the deliberate infliction of loss: see MacGillivray on Insurance Law, 9^th ed, 1997, at para 25-1. In Gray v. Barr [1971] 2 QB 554, it was taken for granted that a liability policy insuring against accidents could not cover liability for a death which was deliberately caused. Lord Denning MR said, at 566 –

"But the word "accidents" does not include injury which is caused deliberately or intentionally. If a man shoots another in self-defence, or under gross provocation, the death is not caused by accident. It is caused by a deliberate act, no matter how justifiable or inexcusable it may be. But, if a man shoots another whilst out shooting pheasants, without intention, being grossly negligent, the death is caused by accident, even though it be manslaughter."

52. Salmon LJ spoke to similar effect at 578. The issue for decision was rather one of causation, namely whether the death of Mr Gray was "caused by accident" in circumstances where Mr Barr's first shot (which went wide) was deliberate, but the second shot, which was the fatal one, was the involuntary product of a struggle on the stairs. That issue of causation was resolved (by a majority) against the assured. Lord Denning put it in this way (at 567):

"the dominant and effective cause of the death was Mr Barr's deliberate act in going up the stairs with a loaded gun determined to see into the bedroom. The whole tragic sequence follows inexorably from that act…"

53. Phillimore LJ agreed. He said (at 586):

"No doubt the word "accident" involves something fortuitous or unexpected, but the mere fact that a wilful and culpable act – which is both reckless and unlawful – has a result which the author did not intend surely does not, if that result was one which he ought reasonably to have anticipated, entitle him to say that it was an accident…"

He went to say (at 587) that he found support for his view in MacGillivray, citing the proposition that –

"Where the happening which caused the death or injury was the foreseeable result of an intended action of the insured, the death or injury is not caused by accident."

He also referred to the passage from Lord Atkin's speech in Beresford v. Royal Insurance which I have cited above.

54. I have not been able to find the exact citation used by Phillimore in the current edition of MacGillivray: but the subject of an "accident" is discussed in the context of a "loss caused by deliberate act" at para 14-31/33, and at greater length at para 25-1ff. At para 25-3 the learned authors say this –

"For injury or loss to be other than accidental…[i]t suffices that he embarked upon a deliberate course of conduct where the occurrence of injury or loss was, objectively viewed, a natural and probable consequence of his actions"

going on to cite, among other authorities, Gray v. Barr.

55. If consideration passes from general principle to the specific provisions of the Churchill policy in this case, it is to be observed that the concept of accidental damage or injury is not confined to section 1 and its compulsory third party cover: it is also found in section 4 ("Accidental Damage") and section 5A ("Personal Accident Benefits"). It follows that if under the pressure of the context of the Road Traffic Act the policy has to be construed so as to provide cover even in the case of deliberate damage or injury, I do not see how a classic or even sensible construction can be given to the provisions of sections 4 and 5. Surely the policy is not to be read as providing the assured with cover where he deliberately writes off his car, or deliberately injures himself in it? If, however, "accident" in section 1 is to be given the broad meaning sanctioned by Chief Constable of the West Midlands Police v. Billingham, then how can it be given a different meaning in other parts of the policy, for all that those other parts fall outside the scope of compulsory insurance? To do so would not be to construe the policy, but to manipulate it.
56. As for the decision in Billingham, the provisions of the Road Traffic Act there under consideration were not concerned with insurance or the construction of insurance contracts but with the use of breath testing in the control of drunk driving. In that context, there seems to me no difficulty whatsoever in giving to the word "accident" a broad meaning. The crucial fact is that for persons other than the driver/assured, his deliberate conduct will indeed strike with the force of fortuity, so as to make the use of the word "accident" entirely appropriate. If another person deliberately drives into my car, or deliberately rolls his car down a hill into my garden wall, the misfortune which I suffer is of course a fortuity or risk against which I would be covered under my motor or house insurance, for all that such insurance might be expressed in terms of accident or accidental damage. The question which arises in this case, or arose in Gray v. Barr, but did not arise in Billingham (or in Chief Constable of Staffordshire v. Lees [1981] RTR 506 where Billingham was applied) is the question of how a contract of insurance is to be construed as between an assured and his insurer. As Phillimore LJ said in Gray v. Barr at 585:

"In my judgment Geoffrey Lane J was right in saying that the incident must be described from the point of view of the claimant on the policy, namely, Barr…"

It seems to me that this remains the case, so far as the construction of a motor insurance policy is concerned, even though, where third party liability is involved, insurance is compulsory. It remains the fact that it is the driver assured who is insured, not the third party.

57. It might be argued that if "accident" was to be construed as excluding a deliberate act of damage or injury, then there would be a danger that a great number of situations frequently encountered in the context of driving would also have to be treated as no accident, even though they would be commonly thought of as covered by that expression. Thus it is in the nature of things that much damage and injury is caused by those who deliberately and wilfully drive too fast, or drive when drunk, or overtake at inappropriate moments, or go through red lights. However, damage or injury caused by such behaviour has always been adjudged to be accidental and covered by a driver's motor policy. The leading case, which goes back to a time before compulsory third party cover (introduced by the Road Traffic Act 1930), is Tinline v. White Cross Insurance Association Limited [1921] 3 KB 327. There the insured knocked down three people (killing one of them) while driving at excessive speed. He pleaded guilty to manslaughter. He was sued, and sought a declaration that he was entitled to be indemnified under his motor policy, which covered him for liability for "accidental personal injury". His insurer argued not so much that the personal injury did not arise out of an accident, but that it would be against public policy to indemnify a person against the civil consequences of his criminal act. Bailhache J disagreed, drawing a distinction in this regard between injury caused by negligence, even gross negligence, which the policy was designed to cover, for without negligence there would be no civil liability, and that caused intentionally. He said (at 332):

"It must of course be clearly understood that if this occurrence had been due to an intentional act on the part of the plaintiff, the policy would not protect him. If a man driving a motor-car at an excessive speed intentionally runs into and kills a man, the result is not manslaughter but murder. Manslaughter is the result of an accident and murder is not, and it is against accident and accident only that this policy insures."

58. This distinction between injury caused accidentally and intentionally was approved in Gray v. Barr, see at 568/9, and 579, even if it was pointed out in the former passage that some manslaughters may well be said for the purpose of insurance to be no accident.
59. It follows that a broad definition of non-accidental loss or injury in terms of reckless conduct, such as that cited from MacGillivray in para 17 above, cannot be too readily applied in the context of motor insurance. That difficulty does not, however, as it seems to me, arise in this case, for it was not simply that Mr Fisher used his car recklessly, but that he used it deliberately as a weapon by driving it deliberately into another car. In this connection I would emphasise that it is not every deliberate criminal act, such as the deliberate decision to drive while drunk, or the deliberate decision to drive at excessive speed, or in contempt of road markings or directions or traffic lights, that would mean that any resultant loss/damage or injury would be no accident, even if, in a general way, the consequences of such conduct can be foreseen. In my opinion, such cases would still be cases of accident, see Tinline v White Cross Insurance, just as deliberate but reckless conduct which results in the actor's death is not without more suicide. Thus I would for myself draw the distinction between damage caused by a deliberate criminal act (cf paragraph 36 of the judgment of Laws LJ) and damage intentionally caused. For these purposes it matters not that the actor is deliberately committing a crime but that he is deliberately causing damage.
60. I would regard Gray v Barr as illustrating the fact that this distinction may, in particular cases, be a fine one to draw, and that the resultant question of causation a difficult one to decide, as illustrated by the division of opinion in that case. Plainly, however, the deliberate use of a loaded gun in a threatening manner, even without an intention to injure, goes beyond the use of a car in a reckless manner.
61. In the present case it might be suggested that although the collision was intentional, and damage caused by it to the car in which Mrs Charlton was a passenger was deliberately caused, nevertheless any injury caused to Mrs Charlton herself was not intended and remained an accident. That, however, is a question of causation, just as the question of Mr Gray's death in Gray v. Barr was a question of causation. If there was a deliberate intent by Mr Fisher to use his car as a weapon and to ram the other car, I am inclined to think that the fact that the damage caused may have been more extensive than he may have intended, or may have extended to personal injury to the passengers of the car, would not affect the position. In such circumstances he is to be regarded as intending also the natural consequences of his act, in the instant case any injury caused to an occupant of the rammed car by reason of the collision. This was the basis on which the issue of causation in Gray v. Barr itself was decided. See also Hardy v. MIB at 762, where Pearson LJ said that the driver there "should be presumed to have intended the natural consequences of his acts".
62. I turn therefore from the point of view of insurance law to consider whether there is anything in the context of the compulsory insurance provisions of the Road Traffic Act which mandates a different approach or conclusion. The first matter to note is that the statutory duty to comply with the requirements in respect of compulsory insurance is upon the driver, not the insurer. (The insurer's separate duty, under section 151, to meet a judgment obtained against a person to whom it has issued a certificate of insurance in respect of third party liability, even in circumstances where the policy would not avail his assured, is something separate.) The second matter to note is that although the driver or more strictly the user is required to obtain a policy of insurance which covers him in relation to his use of a motor vehicle on the road, so that whatever use he puts his vehicle to, he is required by statute to be insured for it in respect of third party risks, it is not apparent that there is a similar obligation on his insurer to cover him in respect of any and every use to which the user may put his car.
63. Section 143 imposes the duty to be insured against third party risks on the user. Section 143(1)(a) puts that duty in these terms:

"(a) a person must not use a motor vehicle on a road unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such a security in respect of third party risks as complies with the requirements of this Part of this Act…"

64. Section 143(2) makes a user who contravenes section 143(1) guilty of an offence. There is no similar or correlative duty imposed on an insurer.
65. Section 151 (subject to the exceptions contained in section 152) sets out the "Duty of insurers or persons giving security to satisfy judgment against persons insured or secured against third-party risks" as the title of that section puts it. That duty creates a separate statutory cause of action in favour of the third party, which may operate in circumstances where the insurer would be under no liability to indemnify the insured, for instance where the insurer is entitled to avoid or cancel the policy (section 151(5)). Moreover, for the purposes of third party liability but not otherwise, the Act avoids certain exceptions (section 148) such as exceptions relating to the age of a driver, or the condition of the vehicle and so on (section 148(2)). There is nothing, however, to stop an insurer stipulating for such exceptions and, outside the area of third party liability, they will take effect according to their terms. Where an insurer is required to discharge a liability only because of the interference of statute in arrangements between the insurer and insured, as in a case, among others, where section 148 bites or where the insurer's separate duty to the third party survives avoidance of the policy, the insurer is entitled to recover payment from his insured: see for instance sections 148(4) or 151(7) or (8). Normally of course an insurer cannot recover from his insured what it is required to pay out under the terms of his policy. Thus as between the third party and the insurer, the third party is protected as if the insured had been covered, but as between the insured and the insurer, the statute recognises that, in cases where the law compels a payment which would not otherwise be made under the terms of the policy, the insured is treated as if he was not insured.
66. As for the use to which a motor vehicle can be put, the effect of section 143(1)(a) is that the duty of ensuring that he is covered by third party insurance in respect of any use to which he puts a car is placed squarely on the user. Indeed, it might be said that the insurer can hardly anticipate every use to which an insured might seek to put his car. Or rather, the insurer could only do so if he insured every possible use without limitation. However, the statute seems to recognise that the insurer may limit the use to which a car is put, because the prescribed form of certificate of insurance itself requires the disclosure in the certificate of limitations on use. The limitations of use in Mr Fisher's case are probably frequently found, and the limitation on business use is obviously a significant one. Thus the insured is on notice regarding what uses to which he might put his car are respectively within or outside his policy. Such limitations on use are not included within section 148(2) so as to be made unenforceable in relation to third party liability by reason of section 148(1).
67. It is in this context that one approaches section 145(3)(a) which, for the sake of convenience I will set out again. It provides -

"(3) Subject to subsection (4) below, the policy –

must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on the road in Great Britain…"

68. Does this mean that the insurer must provide insurance to the persons specified in the policy in respect of any third party liability caused by or arising out of any use of the vehicle on the road? If so, then it would not be possible for an insurer to limit the use of the vehicle in any way, at any rate so far as third party liability is concerned. It would also mean that in this respect the statute would depart from the structure found elsewhere, which is in general to permit the normal contractual autonomy as between insured and insurer, while making certain exceptions unenforceable so far as third party liability is concerned and giving to the third party a separate cause of action against the insurer which goes beyond the insured's rights against the insurer. I am inclined to the view that section 145(3)(a) does not have the effect queried, which is the effect which Judge Thompson below gave to it, but rather means that the user does not comply with his obligation under section 143(1)(a) not to use a motor vehicle on a road without having in force a policy meeting the requirements of the Act unless the policy covers him in respect of any third party liability arising out of the use to which he puts the vehicle on a road.
69. Is this consistent with Hardy v. MIB and Gardner v. Moore? I think it is. Lord Denning and Lord Hailsham were there speaking of the duty of the user, not of the insurer. In Hardy v. MIB the claimant, Hardy, was a security officer who was injured by a driver who drove off while Hardy was half in and half out of the car. The driver was convicted of an offence under section 20 of the Offences against the Person Act 1861. He was sued to judgment, but was uninsured. Hardy therefore sued the MIB. Under the MIB's agreement with the Minister of Transport the MIB agreed to discharge any unsatisfied judgment "in respect of any liability which is required to be covered by a policy of insurance". The MIB defended on the ground that the driver was guilty of a wilful and deliberate criminal act and that "No person…can insure in respect of his own wilful crime. Nor can the legislature be supposed to have required him to do so" (at 757/758). The court of appeal agreed that the driver had been guilty of a wilful and deliberate act and could have been convicted of an offence of intent under section 18 of the 1861 Act. Even so, the driver's civil liability was one for which the statute (there a predecessor section to section 145(3)(a)) required that he be covered by insurance. As Lord Denning said at 760, the policy of insurance "which a motorist is required by statute to take out" must cover any liability which may be incurred by him arising out of the use of the vehicle by him, and he proceeded to illustrate that by referring to any use, innocent, criminal or even murderous.
70. Ex hypothesi there was no contract of insurance in that case to construe. The claimant succeeded because the driver's liability was one in respect of which he was required by statute to be covered, and that triggered the MIB's separate liability.
71. In Gardner v. Moore the facts were in all material respects identical. The driver was again guilty of deliberately driving his car into the claimant, pleaded guilty to an offence under section 18 of the 1861 Act, and was again uninsured. The MIB were second defendants. In the light of Hardy, the case leap-frogged straight to the House of Lords, where Hardy was approved. The only substantive speech was given by Lord Hailsham. At the end of his speech there is a brief passage which touches on the present issue. He said (at 562c/d):

"There are two matters which I feel inclined to add simply to show that they are irrelevant. We were invited by the appellants to examine the actual terms of policies and certificates issued by existing insurance companies, with a view to ascertaining the meaning of the word "accident" in the description of the risk thereby insured. I am not sure that we were right to examine these. I assume we were. But either they cover the risks required to be insured against by sections 143 and 145 of the Road Traffic Act 1972 and applied by the certificates or they do not. If they do, well and good. If they do not, the certificates would amount to a misrepresentation of the risks covered by the policies. In neither case can they affect the construction either of the statute or the MIB agreement."

72. That passage shows that the issue currently under discussion was considered irrelevant to the decision in those two cases. If so, that would support the submission of Mr Palmer QC, and my own view, that those authorities are not determinative of the issue of construction.
73. Nevertheless, it has to be accepted that in the course of the judgments in Hardy v. MIB, even if not in the passage cited by Judge Thompson below, there are dicta which suggest that a third party claimant could sue an insurer under what is now section 151 of the 1988 Act on the basis that the policy required by the Act would and indeed must cover the deliberate criminal use of a car to cause injury, even if the insured could not, as a matter of public policy, enforce such a contract for his own benefit. Therefore, it was said, the third party could recover against the insurer under section 207 of the 1960 Act in Hardy, or section 149 of the 1972 Act in Gardner, since the third party was not affected, under his separate statutory cause of action, by the public policy which barred the driver himself from recovering an indemnity.
74. The terms of section 151 of the 1988 Act were not the subject of detailed if any submission in this court, and therefore I would want to be cautious about what I say about it. It appears, however, that in Hardy Lord Denning said that a policy taken out by a driver in the terms required by what is now section 145(3)(a) would entitle a third party to recover under the then section 207 (at 761). That would be so on the assumption made, that the driver had insured himself, as required of him, against any third party liability arising out of any use of his car. Pearson LJ at 765 and Diplock LJ at 769 spoke to similar effect. In Gardner Lord Hailsham referred with approval to the relevant passages in the judgments at any rate of Lord Denning and Pearson LJ (at 560B/D). He then referred to section 149 of the 1972 Act in the following passage of his own speech at 561G:

"Section 149, in particular, imposes on the insurer for the benefit of an innocent third party an obligation to recompense him for the liability incurred by an uninsured third party [sc driver?] in respect of a liability for which he should have been insured under sections 143 and 145."

75. In all these passages the predecessors of section 151 appear to be construed without reference to the actual terms of the policy in question, on the assumption that the policy is in the terms required to cover any use and thus the particular use to which the driver has put his car. Since in both cases there was no actual policy to construe, there could be no complaint about that process. What, however, about the case where there is a particular policy which falls to be construed? The difficulty then, as it seems to me, is that it would seem to be arguable that the direct cause of action against an insurer vested in a third party who has obtained a judgment relating to a third party liability in respect of which the assured is required to be covered does not cover every situation but only, for instance, situations where it is "a liability covered by the terms of the policy" (under section 151(2)(a)) or "a liability, other than an excluded liability…" (under section 151(2)(b)). Those provisions may be said to illustrate that it is contemplated that the actual policy in question may well not cover the precise circumstances in which the car was used in the case in question. To the extent that limitations on the cover provided are rendered of no effect and thus irrelevant (eg under section 148(1) and (2) or section 151(3)), this does not matter. But what of other limitations which are not rendered ineffective? What of limitations on use which are expressly stated in the certificate of insurance itself, following a prescribed form? In that passage at the end of his speech which I have cited above, Lord Hailsham considered such a possibility an irrelevance; but he was dealing with a case where there was no policy in question.
76. Lord Hailsham also expressed the view in passing that where a policy did not cover the risks required to be covered by sections 143 and 145, then the certificate would amount to a misrepresentation. This court, like Judge Thompson below, was pressed with that thought: it led Judge Thompson to conclude that, in order to avoid a misrepresentation, he was bound to conclude that the policy did in fact cover a case of deliberate injury. This, however, is not so much the language of contractual construction as of statutory predetermination. As Lord Hailsham concluded (at 562D): "In neither case can they [the actual terms of policies] affect the construction either of the statute or the MIB agreement." Moreover, it might be said that there is no misrepresentation if the certificate is viewed as saying: "If you use your car within the limitations and exceptions of the policy to which you are referred by this certificate, then you are covered as you are required to be covered by law." Even so, Mr Norman submitted that there was no express limitation excluding use of the car as a weapon and that the possible meaning inherent in the word "accident" was not made express. I am not myself impressed by that: I do not think that an insured has to be told expressly, if use of the concept of "accident" is not sufficient in itself, that he will not be indemnified if he causes damage deliberately.
77. In these circumstances, I am reluctant to say anything which might be thought to restrict the usefulness of section 151 to third parties who have obtained a judgment in the circumstances provided for in that section. However, it would seem that in any event, where such a third party cannot recover from the insurer, recourse to the MIB would still be available. The current MIB agreement (dated 21 December 1988) promises payment of any unsatisfied judgment "in respect of any relevant liability" which is defined as meaning "a liability in respect of which a policy of insurance must insure a person" in order to comply with the statutory requirements. Moreover, where a driver incurs a liability arising out of an uninsured use of a vehicle in respect of which there is some policy of insurance, the liability of the MIB to satisfy the judgment is in fact to be discharged, under the MIB Domestic Regulations, by the insurer who issued the policy, known as the "Domestic Regulations Insurer", who is not entitled to reimbursement from the MIB (clauses 6(1) and 7 of the Regulations). The Regulations' definition of such an Insurer makes it clear that an insurer is a Domestic Regulations Insurer even though eg

"some term, description, limitation, exception or condition (whether express or implied) of the insurance or of the proposal form on which it is based expressly or by implication excludes the Insurer's liability whether generally or in the particular circumstances in which the judgment debtor's liability was incurred".

The underlying liability to meet an unsatisfied judgment in such circumstances remains that of the MIB, as clause 8 of the Regulations recognises.

78. This appeal of course is not concerned with a use of a vehicle which was required to be insured, and therefore the focus of argument has not been on that circumstance. Nevertheless the point of construction presently under discussion has involved looking at the wider picture. Since that is so, and because I wish to be cautious about saying anything which could affect the case of compulsory insurance, and since this appeal can, in my judgment, in any event be decided under the second point, of public policy, dealt with below, there is no need to make my views on the present question of construction of the policy part of any decision in this appeal. I would in any event pay respectful regard to the the powerful reasoning of my Lord, Laws LJ. I would, nevertheless, conclude this issue by expressing the view that either, following Lord Hailsham in Gardner v. Moore, the question of the actual terms of the policy are to be treated as irrelevant on the basis that every policy has to be considered as though, for the purposes of compulsory third party liability insurance, the policy was in the form which the statute requires of every user of a motor vehicle on a road; or it has to be permissible to construe the policy in accordance with its terms. If it is the former, then there is no need to subvert the proper construction of the policy in order to achieve an effect which is achieved by other means. If it is the latter, then I would wish to stand by the construction of the concept of "accident" which I have considered above. In either case, I do not see why, outside the field of compulsory third party cover, the concept of "accident" cannot be given its normal insurance effect. Since the collision in question occurred off a road, I would therefore prefer simply to say that the deliberate collision and its natural consequences were no accident and not within the policy.

Public policy

79. Mr Norman submitted that it was not open to Churchill to raise a public policy defence since before Judge Thompson it was not pleaded and, when raised by Churchill's counsel, and objected to by Mr Norman, counsel then appearing for Churchill said that he was merely praying in aid the public policy reasoning in support of his submission of construction. The point was therefore half taken, by reference to Gray v. Barr, but not fully developed, and not mentioned in the judgment below, possibly because, as indicated by Judge Thompson during argument, it was then regarded as "probably not a good point anyway...". Certainly, Churchill's counsel was not willing to risk any adjournment which taking the point might, as Mr Norman submitted it should, have engendered.
80. In this court, however, the point has been taken in full measure, even if belatedly, and even if not in the notice of appeal itself, but only in Churchill's supplemental skeleton. That may have consequences in costs, but it is in the nature of a public policy defence that, once it has come to the notice of the court and it is clear from the facts in evidence that it has a valid basis, the court is obliged to take it into consideration. In the present case it is common ground that the car in which Mrs Charlton was a passenger was deliberately rammed. In such circumstances, if it be the case that Mr Fisher has no right to an indemnity under his policy, and that Mrs Charlton has no better right than Mr Fisher's, then it is the duty of this court to recognise the defence.
81. In this connection, Hardy v. MIB and Gardner v. Moore are authorities binding on this court to the effect that an insured cannot recover under his motor policy, even if it would otherwise cover the risk, where he claims in respect of a liability which he has incurred as a result of his deliberate and wilful criminal act of intentional damage or injury. The same public policy has been applied in the case of a claim under a life policy arising out of the suicide of the assured at a time when suicide was still a crime (Cleaver v. Mutual Reserve Fund Life Association [1892] 1 QB 147 and Beresford v. Royal Insurance [1938] AC 586) and a claim under a liability policy other than a motor policy in the case of Gray v. Barr.
82. The exception to the rule is where a claimant can claim under an independent cause of action, such as a third party possesses under section 151 of the 1988 Act or by reason of the MIB agreements: again Hardy v. MIB and Gardner v. Moore are authorities for that. There is also a more uncertain exception in the case of an assignment of the policy before loss. I shall refer to that below, since in this case, because the collision took place off a road, Mrs Charlton has no remedy whether under section 151 or against the MIB, but only as a statutory assignee under the Third Parties (Rights against Insurers) Act.
83. The principle stated by Fry LJ in Cleaver v. Mutual Reserve Fund at 156 was in these terms:

"It appears to me that no system of jurisprudence can with reason include amongst the rights which it enforces rights directly resulting to a person asserting them from the crime of that person."

In Beresford v. Royal Insurance Lord Atkin said this (at 598):

"I think that the principle is that a man is not to be allowed to have recourse to a Court of Justice to claim a benefit from his crime whether under a contract or a gift. No doubt the rule pays regard to the fact that to hold otherwise would in some cases offer an inducement to crime or remove a restraint to crime, and that its effect is to act as a deterrent to crime. But apart from these considerations the absolute rule is that the Courts will not recognize a benefit accruing to a criminal from his crime."

84. Lord Atkin went on to state the exception in this passage at 599/600:

"I cannot think the principle of public policy to be so narrow as not to include the increase of the criminal's estate amongst the benefits which he is deprived of by his crime. His executor or administrator claims as his representative, and, as his representative, falls under the same ban.

"Anxiety is naturally aroused by the thought that this principle may be invoked so as to destroy the security given to lenders and others by policies of life insurance which are in daily use for that purpose. The question does not directly arise, and I do not think that anything said in this case can be authoritative. But I consider myself free to say that I cannot see that there is any objection to an assignee for value before the suicide enforcing a policy which contains an express promise to pay upon sane suicide, at any rate so far as the payment is to extend to the actual interest of the assignee. It is plain that a lender may himself insure the life of the borrower against sane suicide; and the assignee of the policy is in a similar position so far as public policy is concerned."

85. In Hardy v. MIB these principles were applied to the case of a motor policy. Lord Denning said (at 760):

"It is based on the broad rule of public policy that no person can claim indemnity or reparation for his own wilful and culpable crime. He is under a disability precluding him from imposing a claim. This difference is important, because if the policy of insurance should come, by assignment or otherwise, into the hands of a person who is not affected by the disability, then a person can enforce the policy according to its terms: see Cleaver v. Mutual Reserve Fund Life Association, and Beresford v. Royal Insurance Co Ltd."

Lord Denning went on to point out that a third party with a right to recover directly from the insurer under what is now section 151 "is not affected by the disability which attached to the motorist himself". The same was true where, as in that case, the driver was uninsured and the liability fell on the MIB to pay directly to the third party a judgment "in respect of any liability which is required to be covered" under the Road Traffic Act (at 761).

86. Pearson LJ put the matter in this way (at 765/766), contemplating that the rule of public policy would operate as an implied exception to the cover required by the statute:

"At any rate, the principle to be applied is that stated by Fry LJ in Cleaver v. Mutual Reserve Fund Life Association: "The rule of public policy should be applied so as to exclude from benefit the criminal and all claiming under her, but not so as to exclude alternative or independent rights." I think the basis of that sentence is that the implication should not be wider than is necessary to effectuate its object. Also it was contemplated by Lord Atkin in Beresford v. Royal Insurance Co that although the personal representative of a person who had committed suicide while sane could not recover under a life policy purporting to provide indemnity in such a case, yet a person to whom the benefit of the policy had been assigned for value before the suicide might be able to enforce the policy, at any rate to the extent of his interest.

"The Road Traffic Act, 1960, by sections 206 and 207 confers alternative or independent rights in certain events on the persons to whom the insured has become liable. Public policy should be so applied as not to diminish their rights…Thus the liability of Phillips to the plaintiff was a liability required to be covered by a policy of insurance under the Road Traffic Act. The agreement applies, and the plaintiff is entitled to succeed."

87. Diplock LJ reached the same result by slightly different reasoning (at 768/9). He said that the rule of public policy has no effect on the construction of the contract, only on its enforceability; that the rights under the contract remain enforceable if they become vested in a third party other than one who is regarded in law as the successor of the assured, such as a personal representative; and he also stated his agreement with Lord Atkin's view as to the right to enforce of an assignee for value before the occurrence of the event. He then pointed out that the benefit of a liability insurance policy is incapable of assignment at common law, for the assignee would have no insurable interest in the subject-matter of the insurance, and that the scheme of the Road Traffic Act is not to effect a statutory assignment of the assured's contractual rights but to confer on the third party a direct right of action against the insurers. He continued (at 769):

"No doubt in the unlikely event of the assured himself discharging his liability to the third party, the rule ex turpi causa non oritur actio would prevent his enforcing his contractual right to indemnity against the insurers if the event which gave rise to his liability to the third party were an intentional crime committed by the assured. But the rule would not prevent a third party from enforcing his statutory rights against the insurers, for he did not commit the anti-social act. He was its victim. The purpose of the rule is to prevent persons becoming victims, not to penalise them when it has failed in its purpose."

Diplock LJ had also previously said (at 767):

"The court's refusal to assert the right is exercisable only against the person (including anyone who is regarded in law as the successor of that person, such as a personal representative or trustee in bankruptcy) who has committed the anti-social act out of which the right would, in the absence of the rule, arise: it is not exercisable against any other person in whom the right arising out of the contract is vested."

88. In Gardner v. Moore these principles were approved and applied. Lord Hailsham said (at 558F):

"That there is such a general principle I do not doubt. It is, in substance, that a person (or those who stand in the shoes of such a person) may not stand to gain an advantage arising from the consequences of his own iniquity."

89. In those cases the third party claimants did not stand in the shoes of the assured, because they were given independent rights against the MIB following a judgment against the driver. Similarly, where what is now section 151 applies, the third party judgment creditor is not affected by the rule which prevents the assured from enforcing his policy. At any rate in retrospect, those cases do not, it seems to me, present any difficulty in terms of the public policy rule. Not only were the third parties given independent rights, but the public policy in the case of compulsory insurance is clear. It may be, but I make the suggestion with diffidence, that the exception to the ex turpi causa rule can be put even more simply, in that in such cases, under the special provisions of statute or MIB agreement, the basis of the third parties' claim is their judgment against the driver rather than a claim under a policy at all. Ex hypothesi in Hardy v. MIB and Gardner v. Moore there was no claim under a policy, for the drivers were uninsured.
90. In the present case, however, Mr Fisher was insured and, on the assumption that he was insured even against his liability for injury caused by his deliberate act of ramming, the question is whether Mrs Charlton, as statutory assignee of Mr Fisher's claim under his policy, is within the exception to the rule of unenforceability based on public policy. Section 1 of the Third Parties (Rights against Insurers) Act 1930 (the "1930 Act") transfers "the rights of the assured against the insurer in respect of any such liability" being a liability to a third party covered by insurance.
91. If the public policy question is looked at broadly, despite the fact that the factor of compulsory third party insurance is not available in a case where the collision occurred off a road, it is nevertheless possible to see a respectable argument that the wrong-doer's disability should not be extended to the third party. In the first place the third party is obviously innocent of the driver's guilty conduct. Secondly, the 1930 Act was enacted to protect the third party against the mischief that upon the bankruptcy of the assured the claim on his insurance would go to the benefit of all his creditors: instead it is insulated for the benefit of the injured third party. Therefore, it may be said that this policy of insulation can be extended to insulate the third party from the wrong-doer's personal disability from enforcing his contract. Thirdly, the 1930 Act only operates upon the bankruptcy (or winding-up) of the assured: therefore it does not benefit him. Fourthly, although the statutory assignment after injury is not analogous to Lord Atkin's contemplation of an assignment for value of a life policy prior to suicide, it is also outside the other cases spoken of in the authorities, such as a personal representative or trustee in bankruptcy, who are in every way the successors of the assured.
92. However, if the public policy question is looked at more technically, the cause of action upon which the third party sues, as statutory assignee, is the assured's cause of action, albeit transferred into the hands of the third party. It is well established that as a statutory assignee under the 1930 Act the third party simply stands in the shoes of the assured. The cases are collected in the footnotes to MacGillivray at para 28-17. Thus in McCormick v. National Motor and Accident Insurance Union Limited (1934) 40 Com Cas 76 the court of appeal held that a third party suing under the 1930 Act could not take free of any defence available to the insurer as against the assured, such as, in that case, a right to avoid for misrepresentation. Scrutton LJ said (at 82):

"Now, what is transferred? The rights under the contract. You cannot take the rights under the contract separate from defences under the contract."

Or, as Harman LJ famously said in Post Office v. Norwich Union Fire Insurance Society Ltd [1967] 2 QB 363 at 376, the third party cannot "pick out the plums and leave the duff behind". Thus if the assured was a company which had been dissolved, no right could vest in the third party at all: Bradley v. Eagle Star Insurance Co Ltd [1989] AC 957, albeit that decision was reversed by statute in the Companies Act 1989, since it worked an obvious injustice in the case of employees whose diseases did not manifest themselves for many years after their employment by the assured had ceased.

93. It might be said that none of those cases deals specifically with the public policy defence as distinct from defences which arise from terms of the contract itself, or from general principles of contract law such as those dealing with repudiation, avoidance and so forth. Moreover, the reversal of the Bradley case by statute perhaps makes that example, in the public policy context, an equivocal one. I therefore turn to see what guidance can be sought on the general question of the rights of an assignee. In Samuel & Co v. Dumas [1924] AC 431, a claim was brought by the mortgagee of a vessel which had been scuttled by her owners. The claim failed because it was held that a loss by scuttling was not a loss by perils of the sea and the claim was therefore simply not within the policy. Had it not been for that point about the scope of the cover, however, it would have been held that the mortgagee could have recovered, despite the owners' fraud, because it was separately insured for its own interest and was not simply bringing a derivative claim as the owners' assignee. In other words, if the mortgagee's claim had been a purely derivative one, it would have failed in any event, even if the loss had been covered by the policy. Although the insurer's defence based upon the owners' fraud was founded on a section of the Marine Insurance Act 1906 itself, section 55(2) of which provides that "the insurer is not liable for any loss attributable to the wilful misconduct of the assured", that defence, like the defence of public policy expressed by the maxim ex turpi causa, was interpreted by Viscount Cave (at 445), Lord Finlay (at 450) and Lord Sumner (at 469,472) as being a defence available only against the guilty owners, not the innocent mortgagee with a separate insured interest. Although the mortgagee, if it had been a mere assignee, would have been just as innocent, it would have failed, since its claim would have been a merely derivative one. As Lord Sumner said (at 469):

"Forbidding him to take advantage of his own wrong means that something, which in itself would be his of right under the contract, is denied to him because the law is more moral than the contract. Of course, it is true that he cannot take advantage of his own wrong, or, as it is sometimes put, dolus circuitu non purgatur. This, however, seems to me to be obviously a case of personal disability, which cannot affect persons who are neither parties to the dolus nor only standing in the guilty person's shoes."

94. That passage in my judgment clearly shows that an assignee with a merely derivative claim stands in the guilty person's shoes for the purpose not only of an ordinary contractual defence, but also of the ex turpi causa defence which is personal to the guilty party: and that this is so despite the innocence of the assignee himself.
95. Consistently with this conclusion. In Hardy v. MIB at 768/9, Diplock LJ had contrasted the direct right of action granted to a third party under what is now section 151 with a statutory assignment. The statutory assignment that he would have had in mind in making that contrast was in all probability that effected under section 1 of the 1930 Act.
96. For these reasons, in my judgment, Mrs Charlton's claim would, in due course, when brought within the 1930 Act, be a purely derivative claim, founded on Mr Fisher's own unenforceable, because guilty, cause and would be no more enforceable in her hands than in those of Mr Fisher himself.
97. Nevertheless, Mr Norman had a further argument based on section 148(7) of the 1988 Act itself. That provides as follows:

"Notwithstanding anything in any enactment, a person issuing a policy of insurance under section 145 of this Act shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons.

98. Mr Norman submits that this is a statutory injunction upon the insurer to indemnify the insured in accordance with the policy's terms (for present purposes assumed to cover the collision in question), irrespective of a public policy defence, since the only question is what the policy "purports to cover". He submits that the language "a person issuing a policy of insurance under section 145 of this Act" goes beyond compulsory cover and extends to the whole of the policy (see MacGillivray at para 29-20 citing Austin v. Zurich General Accident and Liability Insurance Co [1945] 1 KB 250 and Barnet Group Hospital Management Committee v. Eagle Star Insurance Co Ltd [1960] 1 QB 107).
99. In my judgment, however, Mr Norman's reliance on section 148(7) is misconceived. The purpose of section 148(7) is to extend to "persons or classes of persons specified in the policy" the right to sue under it for an indemnity, even though they are not parties to it. The assured himself has no need of such statutory help. This statutory right of action is not given to the third party. Moreover, this direct right of action is subject to all defences available to the insurer, as the commentary on it, and the cases cited, in MacGillivray at para 29-19 make clear. Thus in McCormick v. National Motor at 84 Scrutton LJ said that the predecessor to this subsection did not take away the common law defences that an insurer was not liable on a policy obtained by fraud, concealment or innocent misrepresentation. Mr Norman submitted that these were still defences related to the insurance contract itself, as distinct from the defence of public policy which stood wholly outside it. It appears to be the case that there is no authority on section 148(7) which deals specifically with the public policy defence, but in my judgment Scrutton LJ's approach in McCormack would apply equally to the present point in issue where he said (at 84/5) that it would take clear words for the statute to remove common law rights which one would not expect to be taken away without such clear language. In that context the public policy defence is of a still higher order, in that it reflects the policy of the law over and above the autonomy of the parties. (That is not to say, however, that on ordinary principles discussed elsewhere in this judgment, a person specified within the clause may not be able to avoid a public policy defence where he is personally innocent of any wilful misconduct, since he is given his own direct right of action against the insurer.) In any event, section 148(7) does not help Mrs Fisher, since she is a third party and not a person or within a class of persons specified in the policy.

Conclusion

100. In conclusion, Mrs Charlton suffered the double misfortune of being a passenger in a car which was deliberately rammed by Mr Fisher, and of that happening off a road. If the collision had occurred on a road, she would in one way or another have been able to enforce her judgment against his insurer, either directly under section 151, or, as I am prepared to accept, indirectly as the insurer responsible, under the insurance industry's internal arrangements, for the MIB's liability. As it is, however, she would, on Mr Fisher's bankruptcy, receive as his statutory assignee only his unenforceable rights: Hardy v. MIB. In such circumstances, it is unnecessary to decide whether on its true construction the policy would cover a case of deliberately caused damage and injury, but my view is that it would not.

Order: Appeal allowed. The orders of HHJ Thompson QC dated 12 April 2000 and of District Judge Edwards dated 22 November 1999 be set aside, save that the orders for costs made therein shall stand. It is declared that the 2^nd Defendant is not obliged to indemnify the 1^st Defendant in respect of his liability to the Claimant for the Claimant's injuries caused on 5^th October 1995 and the 2^nd Defendant is not obliged to satisfy the 1^st Defendant herein. The action against the 2^nd Defendant is dismissed. No order for costs in the appeal. Permission to appeal to the House of Lords is refused.

(This order does not form part of approved judgment)