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McMinn v McMinn & Another, High Court, 11 April 2006

26 April 2006
The issues

Insurance -Road Traffic Act 1988 Section 151; whether insurer obliged to indemnify.

The facts

Ryan Baird had a van given to him for his use by his employer MEL. He was permitted to drive the van for social, domestic and pleasure purposes. It was insured by MEL under a policy with insurers under a fleet policy. The cover was comprehensive and extended to the vehicle’s use for social, domestic and pleasure purposes. The cover applied to the van when it was being driven by someone who had reached the age of 25, held a driving license and had been permitted by MEL to drive it. On the 1st February 2002 Ryan drove the van to a local pub and parked it there. He spent the evening drinking with Andrew McMinn who was a good friend. They ended up at a party in someone’s house where they were joined by Andrew’s brother Iain. The accident happened at 4.50am the following morning. They wanted some cigarettes but there were no shops nearby. They decided to drive to a garage 4 to 5 miles away. Ryan suggested they use his van. Both Ryan and Andrew considered they had had too much to drink. It was agreed that Iain would drive as he had not had so much to drink. Iain was 17. He had never been employed by MEL or permitted to drive the van by MEL. He did not have a driving license. On the way to the garage the accident happened. No other vehicle was involved. It left the road and collided with a wall. Andrew was thrown from the van and suffered very serious injuries. Iain had 2 breath tests, the second of which was negative. Insurers sought a declaration that they were not bound to indemnify.

The decision

1. Section 151 Road Traffic Act 1988 required insurers to satisfy Judgments obtained against drivers arising out of their use of a motor vehicle where the Judgment related to a liability which was required to be covered under Section 145 of the 1988 Act.

2. Section 145 of the 1988 Act required the driver of a motor vehicle to be covered by a policy of insurance for any liability incurred by the driver in respect of the death of or bodily injury to any person or any damage to property arising out of or caused by the use of a vehicle on a road or other public place.

3. Section 151(2)(a) required insurers to satisfy Judgments whether liability was a liability covered by the terms of the policy and the Judgment was obtained against any person insured by the policy.

4. Section 151(2)(b) required insurers to satisfy Judgments where the liability was a liability (other than an excluded liability) which would be so covered if the policy, insured or persons and the Judgment was obtained against any person other than the one who was insured against the policy. It was common ground that Iain’s liability was not covered by the terms of the policy and therefore if the insurer had to satisfy any Judgment it would have to be a Judgment satisfying the conditions of Section 151(2)(b). The issue arose therefore as to whether Iain’s liability was an excluded liability.

5. Section 151(4) provided that an excluded liability meant a liability in respect of the death of or bodily injury to or damage to the property of any person who, at the time of the use, which gave rise to the liability was allowing himself to be carried in the vehicle or knew or had reason to believe that the vehicle had been stolen or unlawfully taken. The critical question was whether Andrew knew or had reason to believe that the van had been stolen or unlawfully taken. The burden of proof on that issue rested with the insurer.

6. In White v White, the House of Lords concluded that the word “knew” in the second EEC Motor Insurers Directive meant actual knowledge or knowledge treated by the law as the equivalent of actual knowledge. It excluded mere carelessness or negligence or a mere failure to act with reasonable prudence.

7. As for the words “had reason to believe” they were to be construed independently of the word “knew”. They had to mean that insurers did not have to prove that the insured passenger actually believed that the vehicle had been stolen or unlawfully taken. It was enough to show that the injured passenger had the information which would have afforded him good reason to believing the vehicle had been stolen or unlawfully taken had he applied his mind to the question.

8. There is no suggestion that the van had been stolen. It was common ground that the word stolen or unlawfully taken could only refer to corresponding criminal offence in the Theft Act 1968. Section 12 of that Act referred to taking motor vehicles without authority and provided that a person be guilty of an offence if without the consent of the owner he took a vehicle for his own or another’s use knowing that any vehicle had been taken without such authority or knowing that any vehicle had been taken without such authority drove it or allowed himself to be carried in it.

9. On the fact of the case Ryan knew that he and only he was permitted by MEL to drive his van. He knew he was not authorised to give another person permission to drive it. By allowing Iain to drive the van in these circumstances, Ryan was appropriating the van to his use and should therefore be regarded as having unlawfully taken the van within the meaning of Section 151(4). The same reasoning applied to Iain.

10. If Andrew had applied his mind to the question he would have had every reason to believe that Iain was not permitted to drive the van. He knew that the van belonged to Ryan’s employer and that it could have been driven only by someone who was permitted by Ryan’s employer to drive it. He had no reason to believe that MEL would have permitted Iain to drive it and had every reason to believe that Iain was not permitted to drive the van and therefore every reason to believe that the van was unlawfully taken.

11. It followed that the insurers were entitled to a declaration on the preliminary issue to the effect that Iain’s liability for Andrew’s injuries was an excluded liability within the meaning of Section 151(4) of the 1988 Act and therefore that the insurer was not required to indemnify Iain in respect of any Judgment obtained against Iain by Andrew.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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