England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BROMLEY COUNTY COURT
Mr Recorder Wood

		Royal Courts of Justice Strand, London, WC2A 2LL
		10 November 2004

Lord Justice Brooke :

1. This is an appeal by the claimant Maria Kim Keeley against a judgment of Mr Recorder Wood sitting as a deputy circuit judge in the Bromley County Court on 19^th February 2004 whereby he held on a preliminary issue that the second defendant insurance company was not liable pursuant to section 151 of the Road Traffic Act 1988 ("the 1988 Act") to satisfy the judgment she obtained against the first defendant Edward George Pashen. The judge also made an adverse finding against her on another issue he was invited to decide, but she does not appeal against his finding on that issue.
2. The claimant is the widow of Mr Terence Keeley deceased, and she brought her claim against Mr Pashen for damages for psychiatric injury (diagnosed as "traumatic grief") arising out of her husband's death in Oakfield Road, London SE20 on 20^th February 1999 in the circumstances which I will describe. No issue arises in connection with other claims arising out of her husband's death, which were settled by a payment of £235,000 embodied in a Tomlin order dated 2^nd May 2003.
3. The judge decided the issue of law he had to determine on the basis of an agreed statement of facts, which ran along the following lines.
4. Mr Pashen was a mini-cab driver. He had been working for Sapphire Cars, a mini-cab firm in Penge, for about three months prior to the night of Mr Keeley's death. He used his own car, a Honda Accord. On the day in question he had been working since about 2 pm, and his last job of the night involved picking up Mr Keeley and three other men at the premises of Sapphire Cars. He drove them to Oakfield Road, where one of the four wished to alight.
5. The men were drunk, and because they were messing about inside the car, Mr Pashen stopped the car and asked them to stop behaving like this. An altercation followed during which he maintained that he was attacked. There was evidence that he called Sapphire Cars on his car radio to the effect that he was being attacked. He sustained injuries to his head.
6. At all events the four men then left the mini-cab, and Mr Pashen drove north to the junction of Oakfield Road and High Street Penge. The men continued on foot towards this junction – Mr Pashen maintained that they were running – and Mr Pashen then decided to reverse back up Oldfield Road. When he had passed the men he stopped and drove his car at them. It was at this stage of the events of that night that Mr Keeley sustained his fatal injuries. About 16 seconds elapsed between the time when the passengers got out of the car and the time when he was knocked down. Mr Pashen then drove away, stopping outside the mini-cab office for a word with the controller on his way home.
7. In due course he stood trial at the Central Criminal Court on a murder charge. He pleaded guilty to manslaughter, and this plea was accepted on the basis that because his car was proceeding at less than 15 mph he did not intend to cause really serious harm. The sentencing judge accepted that he was driving in a state of panic and had merely intended to frighten the men.
8. Mr Pashen's motor insurance policy contained cover for third party, fire and theft. His certificate of insurance contained the following express limitations:

"Use only for social, domestic and pleasure purposes including travel to and from permanent place of business.

The policy does not cover use for hire or reward."

Section 4 of the policy contained the provisions for third party cover:

"We will insure you for all amounts you may be legally liable to pay in respect of death of or injury to any person and accidental damage to any other person's property involving your car…"

General Exception (1) to the policy provided that:

"We will NOT provide Insurance

(i) While any car covered by this Insurance is being:

(a) used for any purpose not permitted by your Certificate of Insurance…"

9. In an admirably clear judgment the judge held that Mr Pashen was not using the car for social, domestic and pleasure purposes when he reversed it back down Oakfield Road and drove it at the four men. The claimant now appeals against that finding. The second defendants cross-appeal against the judge's further finding that Mr Pashen was not using the car for hire or reward at the time of the accident because that use had stopped for the night when the four men got out of the car.
10. The Motor Insurers' Bureau ("MIB") is not involved in these proceedings. No notice of this claim was given to it in the seven days following the issue of the claim on 18^th February 2002, contrary to a condition in the current MIB agreement. The precise issues canvassed in the two leading cases of Hardy v MIB [1964] 2 QB 745 and Gardner v Moore [1984] AC 548 do not therefore arise, although the Lord Chancellor's speech in the latter case is of value in identifying the purposes behind the statutory arrangements for compulsory third party cover.
11. Mr Pashen's insurance policy was issued against the background of this statutory scheme for compulsory insurance of motor vehicles against third party risks which is now to be found in Part VI of the 1988 Act. The provisions of that statute that are of most relevance in the present case are sections 143, 145, 147 and 151, which are in the following terms, so far as are material:

"143 (1) Subject to the provisions of this Part of this Act –

(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…

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

(2) The policy must be issued by an authorised insurer.

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

(a) 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 caused by, or arising out of, the use of the vehicle on a road…in Great Britain…

147 (1) A policy of insurance shall be of no effect for the purposes of this Part of this Act unless and until there is delivered by the insurer to the person by whom the policy is effected a certificate…in the prescribed form and containing such particulars of any conditions subject to which the policy is used and of any other matters as may be prescribed…

151 (1) This section applies where, after a certificate of insurance…has been delivered under section 147 of this Act to the person by whom a policy has been effected…a judgment to which this subsection applies is obtained.

(2) Subsection (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…the policy … he must, subject to the provisions of this section, pay to the persons entitled to the benefit of the judgment -

(a) as regards liability in respect of…bodily injury, any sum payable under the judgment in respect of the liability [together with interest]…

(c) any amount payable in costs."

12. Section 147 (1) refers to a certificate of insurance in a prescribed form, and the Motor Vehicles (Third Party Risks) Regulations 1972 prescribe the contents of such certificates. They must be in Form A (which appears in the Schedule to the Regulations), and Form A identifies six matters which have to appear on the face of the certificate, namely

"1. Registration mark of vehicle

2. Name of policy holder

3. Effective date of the commencement of insurance…

4. Date of expiry of insurance

5. Persons or classes of persons entitled to drive

6. Limitations as to use." (Emphasis added)

13. It was never suggested that the psychiatric illness from which the claimant suffered did not constitute "bodily injury" within the meaning of Part VI of the 1988 Act. On the face of it, therefore, the claimant having obtained judgment against Mr Pashen should be entitled to enforce her judgment against his insurers unless they can show that this liability is not covered by the terms of his policy. The insurers in this case argued that it was not so covered for two reasons:

(1) At the material time Mr Pashen was using his car for hire or reward, and such use was expressly excepted by the terms of the policy;

(2) At the material time he was not using his car for social, domestic or pleasure purposes but for the quite different purpose of trying to frighten Mr Keeley and his friends.

14. In Seddon v Binions [1978] 1 Lloyd's Rep 381 this court gave guidance on the proper method of interpreting a term of a motor insurance policy which defines the limitations of use subject to which the policy provides cover. Three passages in the judgment of Roskill LJ (at pp 384-6) deserve citation:

"Inevitably, where one has a phrase such as 'social, domestic or pleasure purposes' used in a policy of insurance…there will be cases which will fall on one side of the line and cases which will fall on the other side. For my part, however much claims managers might wish it otherwise, I do not believe it is possible to state any firm principle under which it can always be predicted which side of the line a particular case will fall. It must depend on the facts of the particular case; and the facts of particular cases will vary infinitely in their detail."

"It seems to me that the solution to the problem can best be reached in this case by asking the question: what was the essential character of the journey in the course of which the particular accident occurred?"

"It may well be that there will be cases, as there have been in the past, where the essential character…of a particular journey was of a particular kind - and that that essential character will not be altered in the crucial respects merely because, incidental to that journey, something happens in the way of giving a lift to a friend as an act of courtesy or, to borrow Mr Justice du Parcq's expression [in Passmore v Vulcan Boiler & General Insurance Co Ltd (1936) 54 Ll L R 92], charity."

15. Megaw LJ, agreeing, said at pp 387:

"[I]n general, I should have thought that there is something that can clearly be called, as I would put it, a primary purpose, by which I intend the same meaning, I think, as Roskill LJ intended in using the phrase 'essential character of the journey'. If there be such a primary purpose, or essential character, then the Courts should not be meticulous to seek to find some possible secondary purpose, or some inessential character, the result of which could be suggested to be that the use of the car fell outside the proper use for the purposes of which cover was given by the insurance policy."

The test in Seddon was recently applied by Rix LJ sitting in this court in Caple v Sewell [2001] EWCA Civ 1848 at [19] and [26]; [2002] Lloyds IR Rep 626.

16. If one applies this test, then the answer in the present case appears to be fairly straightforward. Mr Pashen kept his car at home. He drove it from home at the beginning of his day's shift as a mini-cab driver; he then drove it for hire or reward while he was conveying passengers in it for that purpose; and he drove it back home at the end of his shift. Even though he spoke to the controller at the mini-cab office on his way home, he did not go out of his way for that purpose and there was no evidence to the effect that somehow or other the period during which he used his car for hire or reward began and ended at the mini-cab office.
17. On this analysis, the defendant's cross-appeal fails. In my judgment, the judge was correct to hold that Mr Pashen was not driving his car for hire or reward at the critical time because his last fare-paying passengers of the day had left the car further up Oakfield Road. I consider, however, that he was wrong to hold that Mr Pashen was not driving his car for "social, domestic and pleasure purposes".
18. After he dropped the four men, the essential character of the journey on which he then set out was to drive his car home, and this was undoubtedly a purpose covered by his policy. It is of course true that he unwisely deviated by reversing down Oakfield Road and driving towards the men in order to frighten them, but to classify this incidental episode (as the judge did) as a quite separate journey is to fall into the trap which Roskill and Megaw LJJ, with their immense knowledge of insurance law, expressly warned against in Seddon. It may be that Mr Pashen himself could not recover under the policy through the operation of the rule in Beresford v Royal Insurance Co Ltd [1938] AC 586, 588, but this consideration does not disqualify the claimant, an innocent third party, from enforcing her statutory rights under Section 151 of the 1988 Act (see Gardner v Moore [1984] AC 548, 559, applying Hardy v Motor Insurers' Bureau [1964] 2 QB 745, 760-761).
19. This is a satisfactory conclusion. Under this statutory scheme Parliament intended innocent third parties to be able to recover direct from the driver's insurers, and although in Gardner v Moore Lord Hailsham of St Marylebone LC overlooked (at pp 555 and 562) the possibility that under the Act and the Regulations a motor insurer may impose express limitations on the third party cover it provides, the courts should not be astute to interpret any such limitations benevolently in the insurer's favour. Of course, if the essential character of the journey in question consists of use for a criminal purpose (as when a burglar takes his car out for a night of burgling other people's houses) then the car will not be being used for "social, domestic or pleasure purposes", but that is not this case.
20. For these reasons I would allow the appeal and dismiss the cross-appeal.

Lord Justice Jonathan Parker:

21. I agree.

Lord Justice Keene:

22. I also agree.