Supreme Court provides useful clarity on the issues of the ‘use’ of a motor vehicle
R&S Pilling t/a Phoenix Engineering v UK Insurance Ltd [27.03.19]
The Supreme Court has made a welcomed decision in confirming that a vehicle being repaired on private property is not being ‘used’. The court clarified that whilst the meaning of a motor policy, which does not purport to provide additional cover, makes it necessary to read words into it - the extension of what is expressly provided is to that which the Road Traffic Act 1988 requires, but no more.
In 2010 Mr Holden was a mechanical fitter employed by R & S Pilling, trading as Phoenix Engineering (Phoenix). He was the owner of a car, which failed its MOT because of corrosion to its underside. Mr Holden asked his employer, Phoenix, if he could use the loading bay in its premises to carry out work on his car in the hope that he could enable it to pass its MOT. His employer agreed. He carried out the work, which included welding that caused a fire inside the car, which spread taking hold in the premises and in adjoining premises, causing substantial damage.
Phoenix’s insurers paid out over £2 million for the damage to the premises. Those insurers made a subrogated claim in Phoenix’s name against Mr Holden – pursuing his motor insurers, UK Insurance, who then brought an action seeking a declaration that they were not liable to indemnify Mr Holden against the claim.
The motor insurer argued that their policy did not respond to third party claims involving the car while it is being repaired on private premises. Phoenix’s insurers contended that the motor policy did provide cover for accidents involving the car off-road and that in any event the repair of the car can properly be described either as the ‘use of it’, or as arising out of its use, on a road or other public place.
At first instance, the High Court held that the motor policy did not cover Mr Holden's accident because it had arisen out of the negligent way in which it was being repaired and not out of the use of the car. The Court of Appeal overturned this decision expanding the motor policy coverage to mean any accident. The motor insurer appealed that decision.
The Supreme Court unanimously allowed the appeal finding that the Court of Appeal went too far in extending cover to any accident involving Mr Holden's vehicle.
Mr Holden's accident was deemed not to fall within the policy - a vehicle being repaired on private property is not being ‘used’. Furthermore, although the attempted repairs may have arisen out of the use of the car, the property damage did not. It was Mr Holden's alleged negligence in carrying out the repairs, not the prior use of the car as a means of transport that caused the relevant damage.
The Supreme Court has provided some very useful clarity on the issues of the ‘use’ of a motor vehicle and this undoubtedly represents a logical decision.
A word of caution must be sounded, however, that the decision is fact specific. Whilst it is relatively clear that the vehicle was immobile (on its side) and in the process of being repaired, it was clearly not driven and therefore not being ‘used’ - but what if the fire had occurred when the vehicle was allowed to tick over while stationary post-repairs? It is not inconceivable that in those circumstances, the court could reach a different conclusion.