HIGH COURT OFFERS INTERPRETATION OF VNUK CASE IN INTERPRETING ‘USE’ OF A VEHICLE FOR THE PURPOSES OF INSURANCE POLICY


HHJ Waksman QC has recently handed down his judgment in the case of UK Insurance Limited -v- (1) Thomas Holden (2) R & S Pilling (trading as Phoenix Engineering) [2016] EWHC 264 (QB).

The First Defendant was a mechanical fitter employed by the Second Defendant. On the day before the incident, his car failed its MOT test due to corrosion on the underside of the vehicle.

On 12 June 2010, the Second Defendant agreed to allow him to carry out some repairs to the vehicle in the loading bay of its premises. The First Defendant planned to weld metal plates to the bottom of the vehicle to repair areas of corrosion.

He positioned the car in the loading bay, and used a forklift truck to lift the car onto its side to expose the underside of the car.

During the welding, flammable material inside the car had ignited. The ensuing fire spread, causing extensive damage to the Second Defendant’s premises and the adjoining property.

The insurer of the Second Defendant’s property (AXA) paid for property repairs costing over £2 million; it planned to bring a subrogated claim to recover these costs from the First Defendant.

The First Defendant’s motor insurer (UK Insurance Limited – the Claimant) sought a declaration that its policy would not cover the claim.

Whilst the judgment relates primarily to interpretation of the particular wording of the policy in question, it does include useful comment on issues of wider application.

HHJ Waksman QC ruled that, in his view, it was implicit in the decision of the ECJ in the case of Damijan Vnuk -v- Zacarovalnica Triglav d.d. (C-162/13) that the requirements of the Sixth Directive (2009/103 EC) for compulsory motor insurance cover extend beyond use of a vehicle on a road.

The judge therefore considered that section 145(3)(a) of the Road Traffic Act 1988 (which provides that a policy is only required to cover use of a vehicle ‘on a road or other public place’) is not compatible with the Directive, as interpreted by the ECJ in Vnuk.

The second important issue considered by the High Court was whether the accident arose out of the ‘use’ of the vehicle – i.e., whether repair of the vehicle could be considered ‘use’.

The judge considered that the Vnuk definition of ‘use’ suggests activity performed by the vehicle as a vehicle. He cited examples of carrying passengers or goods, transporting the driver to a destination, manoeuvring a trailer, or parking the vehicle.

He indicated that he considered other activities, such as sleeping in an ordinary saloon car, would not constitute use, because this is outside of the normal function of such a vehicle.

The judge found that repairing a vehicle did not constitute ‘use’, as it was not a part of the vehicle’s ‘normal function’. It was not being operated in any way, and was immobile.

This case provides a helpful example of the treatment of the ECJ decision in Vnuk by the courts in England and Wales. The decision is likely to provide some additional guidance to insurers in relation to arguments about whether an accident has arisen from ‘use’ of a vehicle.

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