Vnuk v Zavarovalnica Triglav, Case C-162/13
Mr Vnuk was injured when he fell from a ladder that was struck by a tractor and trailer that was reversing into a barn during the stacking of hay bales. Mr Vnuk brought an action seeking EUR 15,944.10 in compensation for non-pecuniary damage against Zavarovalnica Triglav, the insurance company with which the owner of the tractor had taken out compulsory insurance.
In the Slovenian courts, Mr Vnuk’s application was dismissed at first instance and on appeal. The appeal court stated that a compulsory insurance policy in respect of the use of a motor vehicle covered damage caused by the use of a tractor as a means of transport, but not damage caused when a tractor is used as a machine, in this case, manoeuvring a trailer into positon on farm. The ECJ was asked to give a preliminary ruling on the following question, referred to it by Slovenia’s Supreme Court:
‘Must the concept of “the use of vehicles” within the meaning of Article 3(1) of [the First Motor Insurance Directive] be interpreted as not extending to the circumstances of the present case, in which the person insured by the defendant struck the applicant’s ladder with a tractor towing a trailer while hay was being stored in a hayloft, on the basis that the incident did not occur in the context of a road traffic accident?’
None of the European Directives on motor insurance specify what is meant by ‘use of vehicles’ and it is, therefore, possible to take the view that compulsory motor insurance covers damage caused in the context of road use alone, or that it covers any damage caused by a vehicle. In reaching its decision the ECJ referred to the general scheme and purpose of the Directives and concluded that it cannot have been the intention of the EU legislature to exclude from the protection granted by those Directives injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle.
The ECJ concluded that the concept of ‘use of vehicles’ within the Directives must be interpreted as meaning any use of a vehicle that is consistent with the ‘normal function’ of that vehicle. Applying this to the case in question, the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn would be covered by the concept of ‘use of vehicles’.
For further information: Case C-162/13 Vnuk v Zavarovalnica Triglav.
Zurich Insurance Plc v Umerji  EWCA Civ 357
The claimant's vehicle, a Mercedes worth about £8,000, was written off in a road traffic accident on October 19, 2010. The claimant entered into a credit hire agreement, and that was extended ultimately to a period of 591 days. The total rental was £95,130.14 (representing a rate of about £161 per day). He was ultimately paid the value of his Mercedes by the insurers of the negligent driver, and he purchased a replacement car on November 16, 2012. The claimant also incurred recovery and storage charges relating to his Mercedes, in the sum of £3,420.75. The judge gave judgment for the claimant against the insurers in the sum of £101,559.36. The insurers appealed.
The Court of Appeal held as follows.
- As to the hire charges, such charges were recoverable if reasonable as regards need, rate and duration. It was reasonable for the claimant to wait until the insurers had assessed the vehicle to see whether it could be repaired before he purchased a replacement vehicle which would have taken about a fortnight. On that basis he could have purchased a replacement by March 8, 2011 and credit hire would be allowed until that date.
- The question whether the claimant had been under a duty to claim the value of his vehicle from his own insurers and use the proceeds to buy a new car would not be resolved without full argument.
- The claimant had not acted unreasonably in incurring storage charges for a four-month period before disposing of the vehicle. The insurers were aware that storage charges were being incurred before they inspected the vehicle.
For further information: Zurich Insurance Plc v Umerji  EWCA Civ 357.
Coles v Hetherton  EWCA Civ 1704
The claimants appealed from the High Court (see below  EWHC 1599 (Comm)). The appeal concerned 13 small claims arising from minor traffic incidents. In each case the claimant had motor insurance with Royal & Sun Alliance Insurance plc (RSAI) and the claimant’s vehicle was damaged as a result of the admitted negligence of the defendant driver, who was insured by either Provident or Allianz. All of the claimants’ motor policies contained an option whereby the insured could have the vehicle reinstated if the cost of repairs was judged to be less than the vehicle’s market value. If that option was chosen, the insured could elect to engage his own repairer or use RSAI’s system for repairing vehicles. If RSAI’s system was chosen the insured was also entitled to use a ‘courtesy car’. In all 13 cases the policyholder chose the RSAI repair system option and the vehicle was repaired, and some of the claimants also took advantage of the courtesy car offer. In each case, RSAI exercising its rights of subrogation as insurers, brought a claim against the negligent driver.
The main issue before the Court of Appeal was whether RSAI could recover the full cost of repairs to the vehicle when it was repaired using the RSAI repair system, which was set up through another company in the RSAI group. Provident and Allianz argued that the RSAI repair system inflated the total cost of repairs by about 25 per cent and, therefore, RSAI is only entitled to cover 75 per cent of repair costs. There was also a further question concerning the right to recover the cost of the courtesy car. There were three preliminary issues to be determined:
- Measure of loss: Where a vehicle is damaged as a result of negligence and is reasonably repaired (rather than written off), is the measure of the claimant’s loss taken as the reasonable cost of repair?
- Test of ‘reasonable repair charge’: If a claimant’s insurer has arranged repair, is the reasonableness of the repair charge to be judged by reference to: (a) what a person in the position of the claimant could obtain on the open market; or (b) what his or her insurer could obtain on the open market?
- Recoverable amount: Where a vehicle is not a write-off and an insurer indemnifies the insured by having repairs performed and paying charges for those repairs, and where the amount claimed is no more than the reasonable cost of repair, is that amount recoverable?
The Court of Appeal dismissed the appeal, deciding in favour of RSAI on all three issues. The Court decided the preliminary issues as follows:
- The Court answered ‘yes’ to preliminary issue one, with an important qualification that the ‘reasonable cost of repair’ is taken as representing the diminution in value of the chattel that has been suffered as a result of the damage caused by the negligence of the defendant.
- On preliminary issue two, the Court found that if the claimant's insurer has arranged the repair, the reasonableness of the repair charge is to be judged by reference to what a person in the position of the claimant could obtain on the open market.
- On the issue of recoverability, the Court found that, provided the final sum claimed was reasonable, it could be recovered even if the amount included administrative costs and sundry services.
For further information: Coles v Hetherton  EWCA Civ 1704.
Cheung Kwan Wah v China Ping An Inusrance (Hong Kong) Co Ltd, HKDC, 22 June 2012
Cheung Kwan Wah (CKW) was the owner of a Porsche. On 22 January 2010, he completed a motor insurance proposal form issued by the defendant insurers. The proposal asked a series of questions which were to be answered by ticking “yes” or “no” boxes. Question 3 asked whether any person who may drive the car had been convicted of any driving offences during the last 3 years, to which CKW answered in the negative, CKW also declared that the vehicle would not be driven by any person who “has been disqualified from holding [a] driving licence”. The Porsche was involved in an accident, and the insurers denied liability on the grounds that CKW had not disclosed that he had been disqualified in 2003 and 2005 and had, in 2008 and 2009, a total of three fixed penalties for speeding. The court gave summary judgment for CKW.
- The facts were not material: the insurers were not interested in any offences more than three years earlier; and there was no evidence that they regarded the fixed penalties – which were not convictions – as material, given that they were only minor transgressions and had not involved injury or damage.
- The declaration applied only to drivers who were currently disqualified, not those who had earlier been disqualified.
- Even if the facts were material, their disclosure had been waived. Limited questions waived disclosure of related material, and in any event there was no space on the form for further disclosure.
Coles v Hetherton  EWHC 1599 (Comm)
Royal & Sun Alliance Insurance Plc (RSAI) issued motor policies covering both first and third party losses. In the event of damage to an insured vehicle which could be repaired for less than the market value of the vehicle, the policy provided that the assured could choose a repairer or elect to use RSAI system. Under that system RSAI would engage Motor Repair Network Management (MRNM), a member of the RSA Group, to undertake repairs. Those repairs would be effected at one of MRNM’s six regional repair centres (QRCs) or contracted out to independent garages. MRNM and repairers in its Priority Repair Network (PRN repairers) were required to maintain minimum service standards, including a delivery and collection service and a courtesy car. The amounts charged by MRNM allowed it to make a profit over and above the charges paid by it to PRN repairers. The defendants’ insurers contended the arrangements increased costs and amounted to a failure to mitigate loss. Two preliminary issues were resolved by Cooke J:
The measure of damages for a damaged vehicle was the diminution in its value, normally assessed by reference to repair costs. It did not matter whether or not repairs were effected by the claimant: he was entitled to recover that sum because that was what he had lost. It followed from the principles that damages were due at the date of the loss, and that damages were to be assessed on that date, that questions of mitigation could not arise. The only issue for the court was the assessment of that figure. The measure of loss could be established by evidence of the actual repair cost, estimates of repair costs or expert evidence as to repair costs. However, it was not the case that only the actual costs incurred could be recovered.
In assessing the amount of damages recoverable, the intervention of the insurers is to be disregarded. The fact that insurers could have obtained (or has obtained) a cheaper price for the repairs than that achievable by the assured was not relevant. The matter had to be looked at from the point of view of the assured.
For further information: Coles v Hetherton  EWHC 1599 (Comm).
Stych v Dibble  EWHC 1606 (QB)
S was a passenger in a Range Rover being driven by D. The vehicle belonged to a customer (B) at a garage where D worked part-time, and it was being used without B’s knowledge or consent. D was uninsured. An accident occurred in which S was severely and permanently injured. S obtained judgment in default against D, and the question was whether B’s motor liability insurers were required to satisfy the judgment against D. Under section 151(2)(b) of the Road Traffic Act 1988 insurers are liable to meet a judgment obtained against any person other than the assured, but that does not apply to an “excluded liability”. That term is defined by section 151(4) as one suffered by a person who was allowing himself to be carried in or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken. The Court held, refusing to follow McMinn v McMinn  EWHC 827 (QB), that the provision had to be construed consistently with the Second Motor Insurance Directive, Council Directive 84/85/EC, which referred only to a passenger who “knew” that the vehicle was stolen, so that the words “or ought to have known” bore no additional meaning. The Court did not deal with the question whether the words “unlawfully taken” were consistent with the Directive, as it had been conceded that a taking short of theft would bring the exception into play. On the facts, the insurers had failed to prove that S had known that the vehicle had been taken without permission, and so he was able to recover.
Pattni v First Leicester Buses Ltd, Bent v Highways and Utilities Construction  EWCA Civ 1384
In each of the cases the claimant’s vehicles were damaged by the negligence of the defendant, and the claimants hired replacement vehicles on credit hire terms. In both cases the claimants were not impecunious and therefore were entitled to recover only the basic hire rate (BHR) (the local rate for a replacement vehicle of the type in question, previously referred to as the “spot rate”) and not the additional charges which constituted the credit hire. Various issues as to the recoverability of the sums expended from the defendants (or, in reality, the defendants’ insurers) were referred to the Court of Appeal. The court ruled as follows.
- In determining the BHR, the court could look at evidence of the actual charge made by the credit hire company, broken down into its various components, and also at evidence as to locally available figures.
- The defendant in Pattni was not required to pay interest charges under the credit hire agreement in respect of the period between the date of payment by the credit hire company and the date of repayment to it.
- If there was any element in the credit hire charge that represented the cost of providing credit facilities, then that was an additional benefit and was not recoverable by a claimant who had not been entitled to incur additional charges. The interest was in respect of the delayed repayment arrangement set out in the credit hire agreement.
- The fact that the claimant would, in the absence of a credit hire agreement, have hired a replacement vehicle and would therefore be entitled to interest on the actual payment, did not assist in the present case, because on the facts – by reason of his entering into the credit hire agreement – no payment had actually been made by the claimant.
- Discretionary interest would not be awarded under section 69 of the County Courts Act 1984, because there was no evidence that the claimant had ever paid anything.
- In Bent, given that it was necessary for the claimant to hire a car and that the type of car hired was reasonable, the court’s role was to ascertain the BHR for the car in question had the claimant sought to hire a car on non-credit hire terms. The trial judge had wrongly held that figures for a broadly comparable car for the period of actual hire were unavailable, and she had also erred in holding that the sum recoverable was the highest reasonable BHR: the test required the court to find the actual BHR for the car in question.
For further information: Pattni v First Leicester Buses Ltd  EWCA Civ 1384 (24 November 2011).
Sayce v TNT (UK) Ltd  EWCA Civ 1583
The claimant’s vehicle was damaged in an accident which was the fault of the defendant’s driver. At the time of the accident the driver gave the claimant a card asking her to contact TNT as soon as possible. She did so and was told that the defendant would provide a courtesy car. Her attention was drawn to the card which stated that if she did not take advantage of the offer it could affect her entitlement to damages. The claimant rejected the offer and obtained a replacement vehicle on credit hire terms.
The trial judge held that the claimant had failed to mitigate her loss and awarded nothing. On appeal, the judge, without hearing argument on the point, held that the decision of the Court of Appeal in Copley v Lawn  EWCA Civ 580, which indicated that the claimant was entitled to reject an offer of this type from the defendant’s insurers, was wrongly decided, and he held that the claimant had failed to mitigate her loss.
The Court of Appeal held that the appeal judge had been wrong to proceed on a basis not argued by the parties, and allowed the claimant’s appeal on the basis of procedural irregularity. The Court of Appeal further held that the ratio of Copley was that it was not unreasonable for a claimant to refuse an offer from the defendant if it was not at the time possible for the claimant to work out what would be the cheapest option for the defendant.
For further information: Sayce v TNT (UK) Ltd  EWCA Civ 1583 (19 December 2011).
Delaney v Pickett  EWCA Civ 1532
The claimant was seriously injured in a motor vehicle accident while being carried as a passenger by the defendant. At the time of the accident both were in possession of small quantities of cannabis. The defendant’s insurers avoided the policy for non-disclosure, and in the present proceedings the claimant sued the defendant for negligence and argued that the Motor Insurers Bureau (MIB) was liable to pay the damages awarded under the Untraced Drivers Agreement 1999.
The MIB argued that the claimant was precluded by public policy from bringing proceedings against the defendant and, even if that was wrong, then the MIB was discharged from liability under clause 6(1)(e)(ii), namely that “the vehicle was being used in the course or furtherance of a crime”.
The Court of Appeal held unanimously that the claimant was not barred by public policy from obtaining judgment against the defendant, as the illegality was merely incidental to the claim and injury. However, by a 2:1 majority the Court of Appeal held that clause 6(1)(e)(ii) gave rise to a defence to the MIB, as there was no basis for confining it to serious crimes.
For further information: Delaney v Pickett & Anor  EWCA Civ 1532 (21 December 2011)