UK Insurance Ltd v Holden & Another - The meaning of "use" in a motor insurance policy

In the recent case of UK Insurance Ltd v Holden & Another, an English court was required to consider the meaning of “use” pursuant to the Road Traffic Act’s 1988 (“RTA”) compulsory insurance regime. The case arose following property insurers novel attempts to affect recovery, following a large-scale insured property loss.

The Court’s robust response provides peace of mind for motor insurers and serves as a useful clarification of both the effects of the RTA and the ECJ’s decision in Vnuk v Zavarovalnica Triglav.

The facts

The facts in this case were as follows:

i. Mr Holden was a mechanical fitter employed by the second defendant, R&S Pilling t/a Phoenix Engineering ("Phoenix")

ii. While Mr Holden was working on his own car at Phoenix’s premises, sparks from his welding work started a fire inside the car. The fire spread to the premises and to the adjoining property

iii. AXA, Phoenix’s public liability insurer, paid out sums in excess of GBP 2 million in respect of the property damage. AXA then brought a claim in Phoenix’ name to recover those monies from Mr Holden and/or his motor insurer; UK Insurance Limited ("UK")

iv. UK sought a declaration from the court that its policy did not cover AXA’s claim

The arguments

UK’s position was that the policy insured Mr Holden against third party claims resulting from accidents involving his car while it was being used on a public road or other public place. It argued that repairs did not constitute use of the car, so the accident could not be covered.

In contrast, Phoenix contended firstly, that the policy was not limited to accidents in public places and secondly, that the use of a car encompasses its repair, so the accident did fall within the scope of the policy.

The judgement

At trial, the judge considered two points:

i. Whether the cover in this case was limited to accidents arising from the use of vehicles on a road or public place

ii. Whether Mr Holden’s car was being "used"

The judge dealt with the first point briefly, finding that there was no evidence to suggest that the policy was intended to be limited in this way. He also noted (obiter) that such a limit on the cover would be incompatible with Article 3(1) of the First Directive, pursuant to the decision of Vnuk v Zavarovalnica Triglav, where the ECJ held that compulsory motor insurance should apply equally in public and private places.

In respect of whether Mr Holden’s car was being "used" in this case, the judge began by noting that in Vnuk the ECJ confirmed that in the context of compulsory motor insurance the term "use" means any normal function of the vehicle.

In deciding whether repairs constitute the normal function of a vehicle, the judge considered the decisions of Canadian courts, which have accepted a broad definition of the term "use" which includes repair, and Australian case law, which takes a narrower approach and distinguishes between using a car and making it ready for use.

Finally, the judge considered the English case of Dunthorne v Bentley, which concerned an accident caused by Mrs Bentley running across the road to seek help when her car ran out of petrol. It was held that the accident arose out of Mrs Bentley’s recent use of the car. However, the judge decided that this did not mean that the damage in this case arose from Mr Holden’s earlier driving of his car to the garage; the fire was caused by, and arose out of, the negligent repair of the car. Ultimately, the judge concluded that the repairs undertaken by Mr Holden did not constitute use of the car.

Conclusion - the meaning of "use"

The court’s approach will be seen by many as eminently reasonable given that the RTA’s purpose is to protect the public from the consequences of uninsured driving as opposed to providing a means for property insurers to "shift blame" to motor insurers. Nevertheless, the case does hint at a potential tension between the approaches of the English courts and the ECJ.