UK Insurance Ltd v R&S Pilling (t/a Phoenix Engineering)

The issue on this appeal is whether the Churchill motor insurance cover of the first defendant, Thomas Holden, extends to liability for damage to the property of third parties as a result of fire caused by repair work he was carrying out to his car at a time when it was immobilised. It raises questions not only about the proper interpretation of the insurance policy (“the policy”) but also about the meaning and effect of section 145 of the Road Traffic Act 1988 (“the RTA”), requiring third party cover, and of Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles (“the Directive”).

By his order dated 8 April 2016 His Honour Judge Waksman QC, sitting as a judge of the High Court, declared that the respondent, UK Insurance Limited (“UKI”), which provides motor insurance under the Churchill brand and would be responsible for any liability under the policy, is not liable to indemnify Mr Holden in respect of any liability he may have arising out of the fire which occurred at the premises of the appellant, R&S Pilling, trading as Phoenix Engineering (“Phoenix”), on 12 June 2010. The judge granted permission to appeal.

The factual background may be shortly stated.

On Saturday 12 June 2010 Mr Holden, a mechanical fitter employed by Phoenix was working overtime at Phoenix's premises. The day before his car had failed its MOT due to corrosion on its underside. Having completed his first piece of work that day, he asked his employer if he could use the loading bay at the premises to do some work on the car which would hopefully enable it to pass the MOT. His employer agreed. His intention was to weld some plates onto the underside of the car to deal with the corrosion.

He disconnected the car battery so there were no live circuits with which the welding equipment might interfere. He then used a fork-lift truck to push the car up on its side so that he could get at the underside. He used a grinder first to prepare the underside and then successfully welded a plate under the driver's side. He then reconnected the battery, started the car and moved it round the other way before disconnecting it again and lifting it up once more but now with the underneath of the passenger side exposed. While he was welding, sparks from the welding ignited flammable material inside the car including the seat covers. The fire spread and set alight some rubber mats lying close to the car. The fire then took hold in Phoenix's premises and the adjoining premises and substantial damage was caused before it was extinguished.

Phoenix's insurer was AXA. It has paid out to Phoenix and the owner of the adjoining property in excess of £2m. Being subrogated to Phoenix's rights, AXA has now made a claim against Mr Holden in the name of Phoenix for an indemnity in respect of the sums it has paid out. If Mr Holden has any insurance in respect of that claim, it is only by reason of the policy.

UKI commenced these proceedings in the London Mercantile Court of the Queen’s Bench Division for a declaration that it is not liable to indemnify Mr Holden in respect of any liability he may have arising out of his welding activities to his car on 12 June 2010.

Phoenix counterclaimed for a declaration that UKI is liable by the terms of the policy to indemnify Mr Holden in respect of the loss and damage suffered by himself and/or neighbouring occupiers arising out of the fire started by Mr Holden in his vehicle whilst he attempted to undertake repairs to it on 12 June 2010.

Although Mr Holden was named as the first defendant, he has played no part in the proceedings. He is not personally at risk since Phoenix has undertaken only to recover such sum (if any) as can be recovered from UKI.

The policy booklet (“the booklet”) states that the policy is made up of, among other things, the booklet, the “Certificate of Motor Insurance” (“the certificate”) and the “Schedule” (“the schedule”) and it contains a definition of “policy” in similar terms. It states that the certificate “provides evidence that you have taken out the insurance you must have by law”.

Section A of the booklet deals with liability to other people. So far as relevant, it provides as follows:

"1a Cover for you

We will cover you for your legal responsibility if you have an accident in your vehicle and:

you kill or injure someone;

you damage their property; or

you damage their vehicle.”

Reference was made in the course of oral submissions to other provisions in the booklet but it is convenient to mention them in the discussion below rather than set them out in full here.

Mr Holden is identified in the schedule as the policyholder and is described as “the legal owner and the registered keeper of the car”. The schedule states that the policy gives him comprehensive cover.

The certificate contains the following certification, so far as relevant, by the chief executive of Churchill Insurance Company Limited, which originally issued the policy to Mr Holden and whose insurance business was subsequently transferred to UKI:

“I hereby certify that the Policy to which this Certificate relates satisfies the requirements of the relevant law applicable in Great Britain …”

Section 143 of the RTA provides that it is an offence to use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance or such a security in respect of third party risks as complies with Part VI of the RTA.

Section 145 of the RTA specifies the conditions which such a policy of insurance must satisfy. It provides as follows, so far as relevant to this appeal:

"(1)

In order to comply with the requirements of this Part of this Act, a policy of insurance must satisfy the following conditions.

…

(3)

Subject to subsection (4) below, the policy -

(a)

must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place in Great Britain, …"

At all times relevant to these proceedings, section 145(4)(b) provided that such a policy shall not be required to provide insurance in respect of damage to property of more than £1 million (now £1.2 million).

The Directive consolidates a number of earlier EU Directives requiring member states to take measures to ensure that civil liability arising from use of motor vehicles is covered by insurance (“the earlier motor insurance Directives”).

Recital (2) of the Directive is as follows:

"Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is of special importance for European citizens, whether they are policyholders or victims of an accident. It is also a major concern for insurance undertakings as it constitutes an important part of non-life insurance business in the Community. Motor insurance also has an impact on the free movement of persons and vehicles. It should therefore be a key objective of Community action in the field of financial services to reinforce and consolidate the internal market in motor insurance."

Article 3 provides as follows, so far as relevant to this appeal:

“Compulsory insurance of vehicles

Each Member State shall, subject to Article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance.

The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of the measures referred to in the first paragraph.

…

The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries."

Article 12(3) provides as follows:

“The insurance referred to in Article 3 shall cover personal injuries and damage to property suffered by pedestrians, cyclists and other non-motorised users of the roads who, as a consequence of an accident in which a motor vehicle is involved, are entitled to compensation in accordance with the national law.”

It is common ground that the Directive is not of direct effect in the UK but so far as possible the RTA must be interpreted so as to accord with it.

Following a trial without any live evidence and on the basis of the facts set out by Mr Holden in his first witness statement, the judge handed down his clear and careful judgment on 19 February 2016.

The judge observed (at para. [22]) that clause 1a of section A of the booklet is not happily worded. He said that, notwithstanding that the wording suggested that damage to property is only covered if it belongs to someone who has been injured or killed in the accident, it was accepted by UKI that the true cover was for personal injury or death or damage to someone’s property or damage to someone’s vehicle.

The judge said that it was also accepted that the condition “if you have an accident in your vehicle” is too narrow. He said that better wording would be “if there is an accident involving your vehicle” but clause 1a also had to “comply” with section 145(3)(a) of the RTA, which referred to damage “caused by or arising out of the use of a vehicle [on a road]”. He concluded (at para. [24]) that the proper construction of the initial part of clause 1a is:

"We will cover you for your legal responsibility if there is an accident caused by or arising out of your use of your vehicle and you kill or injure…etc".

The judge then rejected (at paras. [27] to [31]) the submission of UKI that the policy is limited to use of the vehicle “on a road or other public place” as specified in section 145(3)(a) of the RTA. The judge’s reasoning was that there is no express limitation in the policy to roads, and the statement in the certificate that the policy does not cover races, track days etc. or 4x4 off-road events also suggests that other activities not on public roads would otherwise be covered and are not excluded.

The judge said that his conclusion on that point made it unnecessary to consider the case of Vnuk v Zavarovalnica Triglav D.D [2016] RTR 188 in relation to section 145 of the RTA. That was a decision of the Court of Justice of the European Union (“the CJEU”) on Article 3 of an earlier motor insurance Directive, the material terms of which were in the same terms as what is now the first paragraph of Article 3 of the Directive. In the event, the judge did consider the case, in deference to the arguments canvassed before him.

The judge observed (at paras. [34] and [35]) that in Vnuk the CJEU held that the concept of “use of vehicles” in Article 3 of the earlier motor insurance Directive had to be given an independent and uniform EU interpretation and covered “any use of a vehicle which is consistent with the normal function of that vehicle”. He said there was no difficulty in reading that into the RTA.

The judge then said (at para. [36]) that it was implicit in the decision in Vnuk that in an appropriate case the requirement for motor insurance cover can extend to private premises. Turning to the requirement that the court should, if possible, construe primary legislation so as to be compatible with EU law, he said (at para. [38]) that it is impossible to read section 145(3)(b) of the RTA as if the word “including” appeared before “on a road” without going against the “grain” of the legislation. In the circumstances he concluded (at para. [39]) that section 145(3)(a) is incompatible with the Directive as interpreted by the CJEU in Vnuk.

The judge then turned to the question whether the repair to Mr Holden’s car was a “use” of his car within the policy and the RTA. He said (at para. [46]) that, as a matter of impression and from first principles, he could not see how undertaking a repair to a car is in any sense a “use” of it. He said that there was no English authority directly in point. Having considered Dunthorne v Bentley [1999] Lloyd’s Rep IR 560 and a number of Canadian and Australian cases, he said (at para. [60]) that he did not accept that it is a “normal function” of a car to undergo repair. He continued:

“Driving it to test a repair is a different matter, as might be running the engine to test a repair or for some other purpose since at least some important part of the car is being operated in the usual way. Insofar as public policy is invoked in support of a broader definition this does not help at what might be described as "the outer limits" of the concept of use. A line has to be drawn somewhere and different legal systems may draw it in slightly different places. The paradigm examples – namely driving and immediately related activities like parking – are covered in any event and this is surely the source of the vast majority of accidents affecting third parties. ”

Having rejected some arguments on this issue on behalf of Phoenix on the particular wording of the policy, the judge concluded (at para. [63]):

“the repair being undertaken to Mr Holden’s car was clearly not using it. It was not being operated in any way at all but was immobile and indeed partly off the ground so that it could be worked on”.

The judge then rejected (at [66]) Phoenix’s alternative argument that the fire arose out of the use of Mr Holden’s car – either because he had just been driving it, or because he drove it into the garage, or because he drove it in near mats on the floor which also caught fire, or because he would drive it afterwards, and points of that kind. He said:

“This is a wholly artificial analysis in my judgment. The fire was caused by and arose out [of] the allegedly negligent repair of the car by the use of grinders and welders without taking any precautions with regard to flammable materials in the car itself. For that reason these alternative arguments also fail.”

Finally, the Judge said (at para. [67]) that, had he found the requisite use and causation, he would have held that there was an “accident” here because it was a fortuitous or unexpected incident.

The judge concluded (at para. [68]) that the policy does not respond to the particular claim and UKI was entitled to the declaration sought. He dismissed Phoenix’s counterclaim.

Phoenix has appealed the judge’s order. There are seven written grounds of appeal and a 16 page written skeleton argument in support of them, setting out elaborate and lengthy arguments on the meaning of the single relevant sentence in clause 1a of Section A of the booklet. That skeleton argument is countered by an even longer 22 page skeleton argument for UKI. Summarising the grounds of appeal as briefly as I can, they are as follows.

UKI has served a respondent’s notice, in which it is claimed that the judge’s order should be upheld on the following additional grounds. UKI contends that motor vehicle insurance cover is not intended to provide an indemnity to an insured for any liability of the insured just because the loss or damage involved the insured motor vehicle in some way. Some limitation on such a broad construction is required. Further, limitation of the scope and operation of clause 1a by taking account of the terms of section 145(3)(a) of the RTA is in accordance with the objectively judged intention of the clause and the policy, reflects the insurance cover required to be in place to permit a motorist to use a motor vehicle legally on a road or other public place, and provides the scope of cover which would have accorded with the perception of reasonable people in the position of the parties at the date the contract of insurance was made. Any broader construction would be to treat the policy as a third party liability policy, so long as damage was caused by an act of the insured which merely involved the insured vehicle being part of the chain or circumstances of the loss and damage, but where the insured vehicle was not the cause of the loss and damage. Moreover, clause 1a did not provide cover to an insured for liability arising in circumstances where, so UKI contends, the insured car was not being used for its normal function, but was merely involved in the chain of events which caused the loss and damage to third party property.

I readily acknowledge the care and clarity of the reasoning of the judge in his judgment but I would allow this appeal for reasons which can be shortly and simply stated.

I should say at the outset that I do not accept the submission of Phoenix that the accident on 12 June 2010 falls within the express terms of clause 1a of Section A of the booklet because there was an accident in Mr Holden’s car. The express terms of the policy cover Mr Holden’s responsibility “ if you have an accident in your car”. That only applied if Mr Holden was personally in the car at the time of the accident.

The express words of cover are, however, material to the success of the appeal for a different reason.

The judge accepted the argument of UKI that the cover in clause 1a is to be read as reflecting the words in section 145(3)(a) of the RTA, so that its proper meaning is: “We will cover you for your legal responsibility if there is an accident caused by or arising out of your use of the vehicle and you kill or injure … etc”

I do not agree with that interpretation, the effect of which is to narrow the cover in clause 1a in a way and to an extent not justified by the express language.

It is obvious that something has gone wrong with the language of clause 1a in that, as I have said, its express terms only cover liability if Mr Holden was in his car when the accident occurred. Such limitation of cover was plainly never intended. As the judge rightly observed in paragraph [23] of his judgment, that error is best addressed by treating the relevant wording as if it said: “if there is an accident involving your vehicle”.

The policy states expressly that the certificate forms part of the policy and so the two documents must be read together. I agree with the judge that the certification that the policy “satisfies the requirements of the relevant law applicable in Great Britain” means that the cover provided by the policy is to be read as extending to all the matters in section 145(3) of the RTA. I agree with Mr Michael Davie QC, for Phoenix, that this does not mean a narrowing of the cover provided by the express terms of the policy, as the judge seems to have thought, but an extension of cover insofar as the express terms do not embrace the matters specified in section 145(3).

That conclusion is reinforced by the fact that in at least two specific respects the express terms of the policy give more extensive cover than that required by section 145(3). Firstly, unlike section 145(3), which is limited to use of the vehicle “on a road or other public place”, the terms of the policy contain no such geographical limitation, as the judge himself held in paragraph [27] of his judgment. Secondly, the policy provides cover for up to £20 million for loss or damage to property, whereas section 145(4) only required insurance cover up to £1 million for such loss, and now £1.2 million.

Furthermore, clause 1 of Section F of the booklet states that medical expenses will be paid “if your vehicle is in an accident” without any reflection of the language of section 145(3)(a).

Moreover, in a number of places the booklet expressly draws attention to the position under “the Road Traffic Acts” and “road traffic law”, but there is no such reference in clause 1a of Section A.

It is also notable that the policy cover did not track the long established wording now to be found in section 145(3)(a) of the RTA even though that must have been very well known to the drafter of the policy.

On the other hand, section 145(3) of the RTA requires insurance in at least one respect more extensive than the express provisions of the policy. The cover under clause 1a of Section A of the booklet is limited to an accident, that is to say, as the judge observed in paragraph [67] of his judgment, something fortuitous or unexpected. Section 145(3), however, requires insurance against the deliberate causing of death, bodily injury or damage to property. The effect of the certification in the certificate is to extend the cover to such an occurrence by necessary implication.

If the cover under clause 1a of Section A of the booklet is interpreted in that way, namely as being extended but not limited by section 145(3) of the RTA, and removing the express condition that Mr Holden be in the car at the time of the accident, the cover extends to the loss and damage caused by the accident which occurred on 12 June 2010.

I do not accept UKI’s contention that motor insurance cover is never intended to extend to such loss and damage or that no reasonable person in the position of the parties at the time the policy was entered into would have perceived that to have been the scope of the cover or that there is an insufficient causative link between the accident and the loss and damage to be indemnified under the policy. I consider the opposite to be the case where, as here, the car, having failed its MOT, was driven to a private location to be repaired, was manoeuvred into position to enable the repairs to be effected, the object of the repairs was to make the car safe and of the requisite standard to enable it to be driven, and the accident occurred by virtue of, and while, the repairs were being undertaken.

I accept that, on the proper interpretation of clause 1a of Section A of the booklet, there may be limits to the indemnity for the consequences of an accident arising out of work to the car. Where, for example, the car has not been driven for a considerable period of time, or the work is of reconstruction rather than repair, or the work to the car is not for the purpose of its use as a car in the immediate or near future, arguments may arise on the proper meaning and effect of clause 1a. Those are not, however, this case, where the circumstances in which the repairs are necessary and the purpose for which they are effected are entirely commonplace for drivers generally.

I would allow the appeal for those reasons.

In any event, I respectfully do not agree with the judge’s conclusion that carrying out the repairs in the present case by Mr Holden was not “use” of the car within section 145(3)(a) of the RTA. Nor do I agree with the judge’s interpretation of the policy in relation to repair of the car even if, contrary to my view, it were correct to limit the policy by reference to that statutory provision.

The judge held, and it is common ground, that section 145(3) must be interpreted so as to give effect to the Directive, so far as that does not go “against the grain” of the legislation and is compatible with the thrust of the legislation: Vodafone 2 v Revenue and Customs Commissioners [2009] EWCA Civ 446, [2010] Ch 77 paras [37]-[38].

The judge held, and again it is common ground, that Vnuk gives authoritative guidance on the first paragraph of Article 3 of the Directive. In that case the claimant was injured when the trailer attached to a tractor, reversing in the yard of a farm in order to position the trailer in the barn, struck the ladder on which the claimant was standing. The Slovenian court referred for preliminary ruling by the CJEU the question whether the concept of “use of vehicles” in the first paragraph of Article 3 covered such a manoeuvre by a tractor in the courtyard of a farm. The CJEU said (at para. 48) that none of the earlier motor insurance Directives contains a definition of what is meant by the concepts of “accident”, “use” or “use of vehicles” for the purposes of those Directives. It went on to say (in para. 49) that:

“those concepts must be understood in the light of the dual objective of protecting the victims of accidents caused by motor vehicles and of liberalising the movement of persons and goods with a view to achieving the internal market pursued by those Directives.”

The CJEU said (at para. 56) that, particularly in the light of the objective of protection pursued by those Directives:

“the view cannot be taken that the European Union legislature wished 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 CJEU concluded (at para. 59) that the concept of “use of vehicles” in Article 3 of the relevant Directives covers “any use of a vehicle which is consistent with the normal function of that vehicle”, and may therefore cover the manoeuvre of the tractor in question.

The judge held and it is common ground that, in order to give effect to the Directive in the light of the decision in Vnuk, “use of the vehicle” in section 145(3) must be interpreted as including any use of the vehicle consistent with its normal function.

As will be apparent from what I have said earlier, I consider that the repair work carried out by Mr Holden, in order to put his car into a safe and good working condition and so enable his car to pass its MOT, which it had just failed, and so enable him to continue to drive it, was a use of the car consistent with its normal function, applying a purposive interpretation to section 145(3).

That is consistent with the objective of the Directive to protect victims of accidents caused by motor vehicles, and the employment of the broad term “use” rather than “driving” or “operating” in the Directive. It is also consistent with the wide terms of Article 12(3) of the Directive quoted earlier. It reflects the reality that a car can pose a danger for others in its vicinity whether or not it is being driven; for example, from a fire or explosion due to petrol, oil or lubricants or if its brakes fail while parked.

It is also consistent with what was said in Pumbien at p.45 to be the object of section 143 of the RTA, namely “to protect the safety and property of other road users”.

It is also consistent with English authorities, such as Elliott, Pumbien and Dunthorne, that there may be use of a car within sections 143 and 145 of the RTA (or the predecessor provisions) even if a car is parked, or indeed immobilised.

In Elliott the appellant’s car had broken down and could not be driven because its carburettor had broken, its self-starter would not work and its starting handle would not fit into the starting handle hole. Immediately after the breakdown the appellant decided to lay up the car outside his house. He manhandled it into position, as it could not be driven at all, jacked the car up so that its wheels were off the ground and removed the battery of the car. The appellant caused the insurance policy to become suspended, intending to make it effective again as soon as he had put the car into running order and no longer had it laid up. Another motor car collided with his stationary car. On that day he had been working on the car and cleaned it, oiled its locks and lowered it to the ground, sent its batteries to be recharged, removed the broken carburettor and fitted a new carburettor into the car, examined the self-starter and found that its solenoid needed renewing. The car could not be mechanically propelled because its engine would not work and the petrol in its tank had evaporated away. He had no intention of driving the car on the day or of moving it from its position on the roadway. He was convicted of unlawfully using the motor car on the road without having a policy of insurance or security in respect of third-party risks contrary to section 35 of the Road Traffic Act 1930 (which had similar wording to section 143(1)(a) of the RTA). His appeal to the Divisional Court was dismissed. Lord Parker CJ said (at p.372) that the word “use” in the section of the 1930 Act equivalent to section 145(3)(a) of the RTA was “really equivalent to ‘have the use of a motor vehicle on the road’”. He said that “I cannot bring myself to think that this car was not fairly and squarely within the words … ‘have the use of a motor-vehicle on the road’”. The other two judges agreed.

In Pumbien the appellant purchased a motor vehicle which was in full working order. He parked on a public road and did not drive it again. He cancelled the policy of insurance covering his use of the vehicle. Subsequently the MOT test certificate relating to the vehicle expired. The vehicle remained parked on the road for over seven months, by which time the brakes had seized, the tyres were deflated and the gearbox contained no oil because of a leak in the transmission pipe. He was convicted of using the vehicle on a road without a policy of insurance covering that use, contrary to section 143 of the RTA. His appeal to the Divisional Court was dismissed. Mitchell J said (at p. 45) that the owner of a motor vehicle has the use of it on a road whether at the material time it can move on its wheels or not. He said that he found it impossible either in law or in common sense to justify the proposition that a motor vehicle which is in good condition but which has been immobilised to prevent its wheels from rotating does not attract the RTA insurance requirements whereas the requirements do apply to a vehicle in poor condition and without certain important parts if the wheels of the vehicle can rotate. As I have already mentioned, he said that the object of the provisions is to protect the safety and property of other road users. McCowan LJ agreed.

In Dunthorne Mrs Bentley was driving her car and ran out of petrol. She parked her car by the side of the road and ran across the road, having seen a colleague driving past on the other side. She was struck by the claimant’s car, and was fatally injured. The claimant suffered serious head injuries and claimed damages against the administrator of Mrs Bentley’s estate, who was the first defendant. The second defendants were the motor insurers of Mrs Bentley. Judgment in default was entered against the first defendant with damages to be assessed. Laws J held that the insurers were liable. The Court of Appeal dismissed the appeal. The issue was whether the plaintiff’s injuries were caused by or arising out of the use of the car by Mrs Bentley within section 145(3)(a) of the RTA.

Rose LJ said (at p. 462) that it was common ground from Elliott that at the time Mrs Bentley crossed the road her action could have been taken to have arisen out of the use of her vehicle, even though she was not driving it at the time. He said that “arising out of” contemplates more remote consequences than those envisaged by the words “caused by”; “caused by” connotes a “direct” or “proximate” relationship of cause and effect; “arising out of” extends this to a result that is less immediate but it still carries a sense of consequence. It excludes cases of bodily injury in which the use of the vehicle is a merely casual (i.e. fortuitous) concomitant, not considered to be, in a relevant causal sense, a contributing factor. He said (at p. 563) that, once it is accepted that “arising out of” is a wider concept than “caused by”, it is a question for the judge and is essentially one of fact rather than law. His analysis was that the claimant’s injuries were caused by Mrs Bentley seeking help to continue her journey. They arose out of her use of the car as she would not have crossed the road if she was not out of petrol and seeking help to continue her journey. The other judges gave concurring judgments.

As I have said, both the judge and we were referred to a number of Canadian and Australian authorities. I have not found them helpful and do not propose to consider them. The Canadian cases did not concern the interpretation of anything equivalent to section 145(3) of the RTA or its language. The Australian authorities did not have to take into account the Directive or Vnuk and turn on their own particular facts.

The following propositions as to the meaning of “use of the vehicle” in section 145(3)(a) of the RTA can be derived from the Directive, the CJEU jurisprudence and the English authorities. (1) “Use” is not confined to the actual operation of the car in the sense of being driven. (2) There may be “use” of a car when it is parked or even immobilised and incapable of being driven in the immediate future. (3) “Use” of a vehicle includes anything which is consistent with the normal function of the vehicle. (4) Damage or injury may “arise out of” the use of the car if it is consequential, rather than immediate or proximate, provided that it is, in a relevant causal sense, a contributing factor.

I consider that it follows that the repair of a car, which the owner was driving but due to disrepair cannot be lawfully and safely driven, and which the owner wishes to effect as soon as possible in order to be able to drive the car lawfully and safely, is “use” of the car within section 145(3)(a) of the RTA, being an activity consistent with its normal function for the purpose of that statutory provision. Alternatively, injury or damage resulting from such repair in such circumstances arises out of the use of the car, for the purposes of section 145(3)(a), because it is, in a relevant causal sense, a contributing factor.

I would add that such an interpretation of section 145(3) obviates, or at any event, reduces the need to make very fine distinctions which would otherwise fall on one side of the line or the other. Mr Graham Eklund QC, for UKI, accepted, for example, that carrying out repairs if a car breaks down or needs remedial work during the course of a journey, and such repair is carried out while the vehicle is parked, would be use of the car within section 145(3)(a); and the same would be true if the car ran out of petrol and the owner parked the car to fetch some petrol. He said the position would be otherwise if the repair work was carried out or the petrol was obtained the following day. He accepted that, if shopping was fetched from the back seat of a parked car and the door was opened carelessly and injured a passing cyclist, that would fall within section 145(3)(a), whether or not that was done immediately the car was parked, but he was not prepared to accept the same if the driver immediately or subsequently on the same day went back with an implement to remedy a squeaking part in the back of the car and caused an injury to a passing cyclist by carelessly opening the car door. In the course of the appeal, Henderson LJ posed the scenario of a motorist, who failed the MOT for the same reasons as Mr Holden, but who was able to drive onto a pit, carry out the work from beneath, and then drive off again. Mr Eklund was not prepared to commit himself to the position under section 145(3)(a) of such a situation but said that in each case it was for the judge to decide as a matter of fact and degree whether the activity fell on one side of the line or the other.

The difficulty with that answer is that section 145(3), and even more so the Directive, applies to millions of motorists and the examples given are not of rarefied situations but commonplace. It is highly unlikely that Parliament, in enacting section 145(3)(a) of the RTA and its predecessor provisions, and the EU Parliament and Council in enacting the Directive and the earlier motor insurance Directives, intended such uncertainty and fine distinctions in those situations. As I have said earlier, in relation to the proper interpretation of the express terms of the policy, temporal differences may plainly make a difference if they amount to years or possibly months between the driving of the car and putting it into a condition in which it is lawful and safe to drive. Those are not, however, the facts of this case.

Furthermore, that approach is consistent with the following express terms of the policy itself. Clause 2 of Section A of the booklet expressly extends cover to those who the insured allows “to use but not drive” the vehicle (for social or domestic purposes). Clause 1 of Section F of the booklet states that medical expenses will be paid “if your vehicle is in an accident” without any qualification by reference to driving or operating the car as such. The “General Exceptions” to Sections A to H of the policy exclude liability for injury, loss or damage while the vehicle is being driven or used by persons not allowed to drive it, or used for any purpose not allowed by the policy or is being driven by someone who does not have a valid licence or is breaking the conditions of their driving licence, but that exclusion is expressly stated not to apply if the vehicle is “with a member of the motor trade for maintenance or repair”.

Mr Eklund said that the judge found as a fact or as the result of an evaluation of the facts that the repair in the present case and its consequences did not fall within the ambit of section 145(3)(a) of the RTA and this court should not interfere with his finding unless it was wrong. For the reasons I have given, however, the judge made an error of principle in holding that a repair to a car is not using it, for the purposes of section 145(3)(a). Moreover, for the reasons I have given, and while acknowledging the care which the judge took in his judgment, I consider that his finding was wrong.

For those reasons, I would allow this appeal.

I agree with both judgments.

I agree that this appeal should be allowed for the reasons given by the Master of the Rolls.

The only observations which I wish to add concern the Commonwealth authorities to which we were referred. Speaking for myself, I have found them of some assistance, because in both Canada and Australia the courts have shown themselves increasingly willing to interpret the concept of “use”, in the context of statutory provisions or policy clauses relating to third party car insurance, broadly enough to encompass the carrying out of (at least) ordinary repairs needed to keep a vehicle in a roadworthy condition.

Thus, in the Canadian case of Elias, which on its facts provides a striking parallel to the present case (as the judge rightly recognised at para [60]), Boyle J in the British Columbia Supreme Court held that a fire accidentally caused by welding operations performed by the car owner’s husband at his employer’s premises arose out of the “use or operation” by the insured of the vehicle, within the meaning of Regulation 64 of regulations made pursuant to the Insurance (Motor Vehicle) Act, R.S.B.C. 1979. Boyle J (at 307) cited the words of Rand J in Stevenson v Reliance Petroleum, Ltd; Reliance Petroleum, Ltd v Canadian General Insurance Co (1956) 5 D.L.R. (2d) 673 at 676-7, to the effect that “use” means “…the ordinary and well-known activities to which automobiles are put …”, and continued:

“That definition has been found in the cases to have a broad meaning including, for example, siphoning gasoline for use as a cleaning agent and for use as fuel, modifying wiring and preparation for maintenance.

…

The work being done went to the “use” of the vehicle. It was not repair work without which the vehicle was immobile, unsafe or underperforming but it was consonant with, and not severable from, its use during a hoped-for period of long service. Prevention of deterioration by a family member is an integral part of use. Repair work need not be necessary to immediate driveability to come within the meaning of “use” in the regulation.

The law cannot be drawn so fine that it distinguishes between one sort of repair and another – say changing the oil and fixing potential rust spots.”

See too the discussion of the “purpose test” by Kovacs J in the Ontario Court (General Division) in Pilliteri, loc.cit., at 536-540, which led him to conclude (in a case which again concerned a fire caused by negligent welding operations by a person repairing a car on another person’s premises) that the circumstances fell within the insurer’s agreement to indemnify the insured “for loss or damage arising from the use or operation of the automobile”.

In Australia, Dixon CJ said in the case of King, loc.cit., at 96 that there was in his opinion “a distinction between using a car and putting it in order for some subsequent use”, although “it must always be kept in mind that all the incidents attending the actual use of the vehicle form part of its use”. This may be thought to betoken a rather narrower approach than that to be found in the Canadian cases, but only a few years later, in the case of Green & Lloyd, Windeyer J, again sitting in the High Court of Australia, stated the relevant test in terms similar to those used by Rand J in the Supreme Court of Canada in Stevenson v Reliance Petroleum Ltd (to which he expressly referred in his judgment). The relevant policy wording provided for an indemnity against “all liability … incurred by the owner and/or the driver in respect of the death of or bodily injury to any person caused by or arising out of the use of a motor vehicle …” In relation to this wording, Windeyer J said (at 446):

“The only limitation upon its generality that I can see is that the injury must be in some way a consequence of a use of the vehicle as a motor vehicle. Any use that is not utterly foreign to its character as a motor vehicle is, I consider, covered by the words.

…

I consider that the kind of use of a motor vehicle that is covered by the policy is driving it or doing something to it or with it that is incidental to its normal use as a motor vehicle.”

I therefore respectfully doubt whether the judge was right to say that “the Australian approach is overall, less broad than the Canadian one” at para [58]. For present purposes, however, it does not matter whether a difference of approach can be detected. The significant point is that in both jurisdictions a relatively broad approach has been adopted, in contexts comparable to that which we have to consider, to the question of what is meant by loss or damage arising out of the use of the insured vehicle.