McMinn v McMinn & Anor

The Claimant, Andrew McMinn (“Andrew”), was seriously injured in a road traffic accident. He was the passenger in a van driven by the First Defendant, his younger brother, Iain McMinn (“Iain”). Andrew claims that the accident was caused by Iain’s negligence. But Iain did not have the owner’s permission to drive the van, and the owner’s insurers, the Second Defendant, Aioi Insurance Company of Europe Ltd. (“the insurers”), have repudiated any liability to indemnify Iain for such damages as he may be ordered to pay for Andrew’s injuries. The question whether the insurers were entitled to do that was ordered to be tried as a preliminary issue in the claim for damages for personal injuries which Andrew has brought against Iain and the insurers, and this is the court’s judgment on that preliminary issue.

The background facts are not in dispute. The vehicle in which Andrew was travelling at the time of the accident was an Isuzu Trooper (“the van”). It had two front doors, two front seats and a partition behind those seats. It had no rear seats. It was owned by MEL Ltd. (“MEL”). MEL trades under the style MEL Environment Solutions and its business is that of environmental remediation. MEL bought the van in September 2001 for the specific purpose of towing a drilling rig.

The van was insured by MEL with the insurers under a policy covering MEL’s fleet of vehicles. The cover was comprehensive, and extended not merely to the use of the van on MEL’s business, but also to its use for social, domestic and pleasure purposes. However, the cover only applied to the van when it was being driven by someone who (a) had attained the age of 25, (b) held a driving licence, and (c) had been permitted by MEL to drive it.

The employee of MEL who had been permitted to drive the van was Ryan Baird (“Ryan”). He had been employed by MEL since 30 July 2001. He was then 25 years old and had a full driving licence. Towards the end of the year, the van was allocated to Ryan for his use. Although he had been given notice of his dismissal by 2 February 2002 when the accident took place, he was working out his notice at the time. He was therefore still an employee of MEL, and permitted by MEL to drive the van for social, domestic and pleasure purposes.

At the time of the accident, Iain was only 17 years old. He had never been employed by MEL, and MEL had not permitted him to drive the van. Indeed, no-one at MEL knew him. Although his mother had obtained an application form for a provisional driving licence for him, and although she and Iain had filled it in together in November or December 2001, she had not sent it off, preferring to wait until Iain had repaid some money he had borrowed from his father for a holiday. Indeed, before the night of the accident, Iain had never driven a vehicle – let alone a four-wheel drive one like the van – on a public road. His previous driving had been limited to driving tractors on private land and driving a motor-car on one occasion for about a quarter of an hour on a private road. That, at any rate, was what he told the police when he was interviewed by them, and there is no reason to suppose that to be untrue.

How did Iain come to be driving the van on the night in question? Ryan lived close to the McMinn family in Great Harwood, Lancashire. His evidence was that on the evening of Friday 1 February 2002, he drove the van to a local public house and parked it there. He then spent the evening drinking with Andrew, who was a good friend of his. Indeed, Ryan’s evidence was that he and Andrew had been “best friends” since school. The two of them ended up at a party in someone’s house in Great Harwood, where they were joined by Iain. Iain gave the police a slightly different account of the earlier events of the evening, but he has not given evidence, and I have no reason to doubt Ryan’s version of events.

The accident was to happen at about 4.50 am the following morning. Ryan’s evidence was that at some time shortly before then, Iain and Andrew decided to buy some cigarettes. Iain told the police that it was Andrew who wanted cigarettes, but with Iain not giving evidence, I have no reason to doubt Ryan’s evidence that they both wanted cigarettes. According to Ryan, no shops were open nearby, and the closest place they could think of was a garage about 4 or 5 miles away. The only way to get there was to use Ryan’s van. Ryan suggested that they go in that. Like Ryan, Andrew had a full driving licence, and he suggested that he should drive. Ryan told him that he, Andrew, had had too much to drink, as had Ryan himself. The upshot was that it was agreed that Iain would drive as he had not had much to drink.

It was on the way to the garage that the accident happened. Ryan and Andrew were sitting together in the passenger seat, Ryan between Iain and Andrew, and Andrew next to the passenger door. Neither of them were wearing the seat belt intended for the one passenger in the passenger seat. The weather was fine at the time and the visibility was good but the road surface was wet. The van was being driven south on the A680, and just after a slight left-hand bend by Hyndburn Bridge near Clayton-le-Moors, the van left the road and collided with a wall. Andrew was thrown from the van, and suffered very serious injuries. When the police arrived, Iain gave a positive breath test at the scene, but a second breath test a little later at the police station proved to be negative.

Section 151 of the Road Traffic Act 1988 (“the 1988 Act”) requires insurers to satisfy judgments obtained against drivers arising out of their use of a motor vehicle where the judgment relates to a liability which is required to be covered by a policy of insurance under section 145 of the 1988 Act. Section 145 of the 1988 Act requires the driver of a motor vehicle to be covered by a policy of insurance for any liability which may be incurred by the driver in respect of the death of, or bodily injury to, any person, or any damage to property, caused by, or arising out of, the use of the vehicle on a road or other public place. It follows that Iain’s liability for Andrew’s injuries was a liability which was required to be covered by a policy of insurance.

Subject to an important exception, section 151 applies when the vehicle is being driven by uninsured drivers as well as insured ones. Insured drivers are covered by section 151(2)(a), which requires insurers to satisfy judgments where the liability is “a liability covered by the terms of the policy… and the judgment is obtained against any person who is insured by the policy…” And uninsured drivers are covered by section 151(2)(b), which requires insurers to satisfy judgments where the liability is “a liability, other than an excluded liability, which would be so covered if the policy insured all persons…, and the judgment is obtained against any person other than the one who is insured by the policy…” It is common ground that Iain’s liability to Andrew was not covered by the terms of the policy, and that Iain was not insured by the policy, because he had not attained the age of 25, he did not hold a driving licence, and he had not been authorised by MEL to drive the van. So if the insurers are required to satisfy any judgment obtained by Andrew against Iain, it will have to be a judgment which satisfies the conditions of section 151(2)(b). It is common ground that Iain’s liability to Andrew would have been a liability to which section 151(2)(b) related if that liability had not been “an excluded liability”. That is the important exception to the generality of section 151. The critical question is whether Iain’s liability to Andrew was an excluded liability.

The manifest purpose of the exception is to relieve insurers from their duty to satisfy judgments obtained against uninsured drivers by their passengers if the passenger knew or had reason to believe that the vehicle had been stolen or unlawfully taken. Thus, section 151(4) provides, so far as is material, as follows:

“In subsection (2)(b) above ‘excluded liability’ means 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 or upon the vehicle and knew or had reason to believe that the vehicle had been stolen or unlawfully taken, not being a person who –

(a)

did not know and had no reason to believe that the vehicle had been stolen or unlawfully taken until after the commencement of his journey, and

(b)

could not reasonably have been expected to have alighted from the vehicle.”

It is accepted, of course, that Andrew was allowing himself to be carried in the van at the relevant time. And it is not suggested that he only became aware of the facts relating to Iain’s lack of authority to drive the van after the journey to the garage had started. So the critical question is whether Andrew “knew or had reason to believe that the [van] had been stolen or unlawfully taken”. The insurers accept that the burden of proof on that issue rests with them. It is therefore for them to prove, on the balance of probabilities, that Andrew knew or had reason to believe that that was the case.

Mr Nicholas Braslavsky QC for Andrew relied on the fact that section 151(4) represents an exception to the policy underlying section 151 as a whole, which is that persons injured in road traffic accidents should be compensated for their injuries even if the driver was uninsured. Accordingly, there has to be a high degree of personal fault on the part of the injured passenger if he is to be denied compensation. Mr Braslavsky argued that the question whether Andrew knew or had reason to believe that the van had been stolen or unlawfully taken should be decided with that important consideration in mind.

There is an echo of thinking of that kind in the speech of Lord Nicholls of Birkenhead in White v White [2001] 1 WLR 481. The House of Lords was considering the effect of Art. 1(4) of the Second EEC Motor Insurance Directive 84/5/EEC which required member states to establish a body with the task of providing compensation for personal injuries caused by unidentified or uninsured drivers. In the UK, that body is the Motor Insurers’ Bureau (“the MIB”). However, member states could “exclude the payment of compensation by that body in respect of persons who voluntarily entered the vehicle which caused the… injury when the body can prove they knew it was uninsured”. The relevant part of the agreement between the Secretary of State and the MIB which was in force at the time of the accident with which the House of Lords was concerned provided that the MIB would not be liable where the injured passenger “knew or ought to have known” that the vehicle had been stolen or was uninsured.

In construing the word “knew” in the Directive, Lord Nicholls said at [14]:

“The Court of Justice has stressed repeatedly that exceptions are to be construed strictly. Here, a strict and narrow interpretation of what constitutes knowledge for the purpose of article 1 is reinforced by the subject matter. The subject matter is compensation for damage to property or personal injury caused by vehicles. The general rule is that victims of accidents should have the benefit of protection up to specified minimum amounts, whether or not the vehicle which caused the damage was insured. The exception, therefore, permits a member state, contrary to the general rule, to make no provision for compensation for a person who has suffered personal injury or damage to property. Proportionality requires that a high degree of personal fault must exist before it would be right for an injured passenger to be deprived of compensation. A narrow approach is further supported by the other prescribed limitation on the permissible ambit of any exclusion: the person claiming compensation must have entered the vehicle voluntarily. The need for the passenger to have entered the vehicle voluntarily serves to confirm that the exception is aimed at persons who were consciously colluding in the use of an uninsured vehicle. And it can be noted that the Directive emphasises the exceptional nature of the exclusion of compensation by placing the burden of proving knowledge on the party who seeks to invoke the exception, namely, the institution responsible for paying compensation.”

That led Lord Nicholls to conclude that the word “knew” in the Directive meant actual knowledge, or knowledge which is treated by the law as the equivalent of actual knowledge, such as knowledge which a person deliberately refrains from acquiring in case his suspicions are confirmed.

When it came to construing the words “knew or ought to have known” in the MIB agreement, Lord Nicholls proceeded from the premise that the phrase was “intended to be co-extensive with the exception permitted” by the Directive. He concluded at [23]:

“‘Ought to have known’ is apt to include knowledge which an honest person who enters the vehicle voluntarily would have. It includes the case of a passenger who deliberately refrains from asking questions. It is not apt to include mere carelessness or negligence. A mere failure to act with reasonable prudence is not enough.”

In my judgment, the word “knew” in section 151(4) does not mean something other than actual knowledge or such knowledge as the law regards as equivalent to it. But there is an alternative to proof that the injured passenger knew that the vehicle had been stolen or unlawfully taken. Insurers will avoid liability if they prove that the injured passenger had reason to believe that the vehicle had been stolen or unlawfully taken. Whereas the words “knew or ought to have known” in the MIB agreement were intended to be co-extensive with the word “knew” in the Directive, section 151 does not fall to be construed in the light of the Directive, so that the words “knew or had reason to believe” in section 151(4) need not be co-extensive with the word “knew” in the Directive. To be fair, Mr Braslavsky did not contend for that.

So if the words “had reason to believe” in section 151(4) have to be construed independently of the word “knew”, what do they mean? Mr Braslavsky accepted – in my opinion, rightly – that insurers do not have to prove that the injured passenger actually believed that the vehicle had been stolen or unlawfully taken. What has to be proved is that the injured passenger had the information – or what Mr Adrian Palmer QC for the insurers called “the building blocks” – which would have afforded him good reasons for believing that the vehicle had been stolen or unlawfully taken had he applied his mind to the topic. Shutting one’s eyes to the obvious is therefore enough, provided that it would indeed have been obvious to the injured passenger if he had thought about it.

Mr Palmer contended that the words “stolen or unlawfully taken” in section 151(4) can only refer to the corresponding criminal offences in the Theft Act 1968 (“the 1968 Act”). Mr Braslavsky did not disagree, and I am sure that Mr Palmer is right.

The insurers do not contend that the van had been stolen by anyone. There had been no intention on anyone’s part to deprive MEL of it permanently. So the question is whether it had been unlawfully taken. The relevant section of the 1968 Act is section 12, which is headed “Taking motor vehicle or other conveyance without authority”, and which provides, so far as is material:

“(1)

Subject to subsection… (6) below, a person shall be guilty of an offence if, without having the consent of the owner or other lawful authority, he takes any conveyance for his own or another’s use or, knowing that any conveyance has been taken without such authority, drives it or allows himself to be carried in or on it.

(6)

A person does not commit an offence under this section by anything done in the belief that he has lawful authority to do it or that he would have the owner’s consent if the owner knew of his doing it and the circumstances of it.”

In R v Phipps (1970) 54 Cr.App.R. 300, the Court of Appeal held that where a person has been given permission by the owner of a motor vehicle to take and use it for a particular purpose, but on completion of that purpose fails to return it and thereafter uses it without any reasonable belief that the owner would consent to the use, he is to be regarded as having taken the vehicle without the owner’s consent or other lawful authority. Phipps was subsequently approved by the Divisional Court in McNight v Davies [1974] RTR 4, Lord Widgery CJ explaining at p.8A-C that “[n]ot every brief, unauthorised diversion from his proper route by an employed driver in the course of his working day [would] necessarily involve a ‘taking’ of the vehicle for his own use”. The test was whether “he appropriate[d] it to his own use in a manner which repudiates the rights of the true owner, and shows that he has assumed control of the vehicle for his own purposes”. In stating that test, Lord Widgery applied what Professor John Smith had said – in Smith’s Law of Theft, 2^nd ed., p.113 – namely that the driver has to have “altered the character of his control over the vehicle, so that he no longer held as servant but assumed possession of it in the legal sense”.

These cases were decided in the context of the person who had originally been authorised to drive the vehicle “taking” it by using it for a purpose for which he had not been authorised. But there is no reason why the test laid down in McNight should not also apply to the situation where the person who had originally been authorised to drive the vehicle is alleged to have taken it by letting someone else drive it, who he knew or believed would not have had the owner’s permission to drive it. So the question is: did Ryan know or believe that MEL would not have allowed Iain to drive the van?

I deal first with one specific part of the evidence. Both David Grouse and Paul Thiele, MEL’s commercial director and managing director respectively, say that there was a laminated sheet on the dashboard of the van which said that it was not to be driven by anyone under the age of 25. They further say that they saw it there more than once. Mr Thiele said that it had been pasted or sellotaped onto the dashboard, but that it had become detached in the course of time, and the last time he saw it, it was wedged on the dashboard between the heating vents. Although neither of them mentioned any of that when they were interviewed by the police, I have no reason to doubt what they say. But it is questionable whether the laminated sheet was still being displayed in the van when it was allocated to Ryan. By then, the van had been used by other employees of MEL for 2-3 months, and Ryan himself claims that he never saw it. Indeed, Mr Grouse conceded that he could not now recall when he had last seen the laminated sheet. He acknowledged that it could have been before the van was allocated to Ryan. It is not possible now to say whether the laminated sheet was still in the van when it was allocated to Ryan, and the insurers have not satisfied me on the balance of probabilities that it was.

When Ryan was first offered the job with MEL, he was sent MEL’s vehicle manual. That said that the only people who could drive MEL’s vehicles were the persons to whom each vehicle had been allocated, and any other employee who had been authorised by MEL to drive it, provided that the employee had a full driving licence and was over the age of 25. Ryan says that he did not read the vehicle manual when he got it. I do not doubt that for one moment. It is quite a long document, in small print, and I am quite sure that if Ryan had started to read it, he would have got bored pretty quickly.

But that does not mean that Ryan believed that MEL’s vehicles could be driven by anyone. On his first day at work, he went through an induction process with Mr Grouse. Mr Grouse says that that included a discussion about the use of MEL’s vehicles, and that he told Ryan that Ryan would be driving on a fleet insurance policy, that all drivers had to be named and that they had to have the permission of the managers of MEL to drive any vehicle in the fleet. Mr Grouse says that Ryan acknowledged that he understood that. For his part, Ryan cannot recall one way or the other whether Mr Grouse told him that. I find on the balance of probabilities that Mr Grouse did. It is exactly the sort of thing which I would have expected Mr Grouse to have told Ryan at the time.

Of even more significance, though, is what Ryan was told when the van was allocated to him towards the end of the year. Mr Thiele says that he spoke to Ryan at the time and told him that only Ryan was allowed to drive it. Again, Ryan could not recall one way or the other whether Mr Thiele told him that, but I find on the balance of probabilities that Mr Thiele did. I have not overlooked the fact that in his witness statement Mr Thiele said he could no longer recall “a specific conversation”, but I accept that what he meant by that was that he could not recall the specific date or time when the conversation took place. Nor have I overlooked the fact that MEL’s vehicle manual allowed employees other than Ryan to drive the van, provided that they were given permission to do so, had a full driving licence and were over 25. But that did not prevent Mr Thiele from telling Ryan that the van could only be driven by Ryan, because it had been bought for a specific purpose, and while it was allocated to Ryan he would be the only employee who would be driving it for that purpose.

For these reasons, I find that Ryan knew that only he had permission to drive the van, and that he was not authorised by MEL to give Iain permission to drive it, since Iain was not a named driver, and managerial approval for Iain to be permitted to drive it had not been sought. Indeed, when interviewed by the police, Ryan acknowledged that it had been stupid to let Iain drive the van. In his evidence, he explained why he had thought that that had been stupid at the time. MEL would never have allowed Iain to drive it, and he admitted that if he had not been so drunk at the time, he would never have let Iain drive it. Of course, Ryan’s self-induced intoxication, as Mr Braslavsky realistically conceded in the light of R v MacPherson [1973] Crim. LR 457, could not have been relied on as negativing any lack of knowledge or belief on Ryan’s part that MEL would not have permitted Iain to drive the van. But I do not believe that Ryan can put it down only to drink. He wants to do that in order to assuage his guilt, but he was far from paralytic on the night in question. He could walk down the road. He could talk to Andrew and Iain. And he was capable of realising that neither he nor Andrew could drive.

Accordingly, I find that Ryan did not believe that MEL would have permitted Iain to drive the van. Indeed, he knew that MEL would not. By allowing Iain to drive the van in these circumstances, Ryan was appropriating the van to his own use in a manner which repudiated the rights of MEL, and he was assuming control of the van for his own purposes. He should therefore be regarded as having unlawfully taken the van within the meaning of section 151(4). The same is true for Iain. He “took” the van by taking the keys from Ryan and driving it. He did not have MEL’s consent or other lawful authority to drive it. And since he has not given evidence, he has not asserted that the statutory defence in section 12(6) of the 1968 Act is available to him.

Andrew did not give evidence. I have assumed that he is not well enough to do so. The court is therefore left with having to draw such inferences as are appropriate from the primary facts about what Andrew knew or had reason to believe. One of those facts is that Andrew and Iain were living at home with their parents at the time. Their mother says that they were not then getting on all that well. But Andrew was only 18 months or so older than Iain, and even though they were not seeing eye to eye on things, the overwhelming likelihood is that Andrew knew what was going on in Iain’s life.

Mrs McMinn says that when Iain got home after the accident, he asked her where his driving licence was, implying that he thought that she had sent off for a provisional one for him. Iain told the police that he had thought at the time of the accident that he had a provisional licence. He later found out that she had not sent off for it. In the normal course of events, one might have expected Mrs McMinn to have told Iain that she had not sent off for it, but her evidence was that Iain was stunned when he discovered that she had not sent off for it, and I am not inclined to disbelieve her. If Iain had thought that he had a provisional licence, the probability is that Andrew thought that as well. But since Andrew almost certainly knew what was going on in Iain’s life, the overwhelming likelihood is that Andrew knew that Iain did not have a full driving licence and that he had never driven a vehicle on a public road.

Against that background, one thing is plain. If Andrew had applied his mind to the topic on the evening in 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 employers, and although he would have had no reason to know that it could only be driven by someone who had reached the age of 25, he would have realised, had he thought about it for a moment, that it could have been driven only by someone who had been permitted by Ryan’s employers to drive it. He had no reason to suppose that Ryan’s employers knew Iain, but even if they did, Andrew would have hardly have thought that Ryan’s employers would have let a young man who had a provisional licence only and who had not driven on a public road to drive the van without L-plates when both the holders of full driving licences in the van with him were themselves too drunk to drive, and too drunk to supervise Iain’s driving. So even if Andrew could not be said to have known that Iain was not permitted to drive the van, he had every reason to believe that Iain was not permitted to drive the van, and he therefore had every reason to believe that the van had been unlawfully taken.

There are alternative ways in which Mr Palmer put the insurers’ case, which involved Andrew having been a party to the taking of the van, i.e. that he had taken the van just as much as Ryan and Iain had. But it has not been necessary for me to consider that alternative in view of the clear conclusion I have reached that Andrew had reason to believe that the van had been unlawfully taken by Ryan and Iain. In the circumstances, the declaration which I make on the preliminary issue is that Iain’s liability for Andrew’s injuries was an excluded liability within the meaning of section 151(4) of the 1988 Act, and that the insurers are not required to indemnify Iain in respect of any judgment obtained against Iain by Andrew.

As I told the parties at the conclusion of the hearing, I do not want to put them to the expense of having to attend court when the judgment is handed down, and I leave it to them to see if they can agree costs. But if the parties cannot agree an appropriate order for costs within 14 days of the handing down of this judgment, they should refer the issue to me, and I will decide the appropriate order to make without a hearing on the basis of any written representations which are made. If Mrs McMinn as Andrew’s litigation friend wishes to apply for permission to appeal, her solicitors should notify my clerk of that within 7 days of the handing down of this judgment, and I will consider that question as well without a hearing.