Sahin v (1) Havard (2) Riverstone Insurance (UK) Ltd  EWCA Civ 1202
The Court of Appeal has confirmed that motor insurers are not required by section 145 of the Road Traffic Act 1988 to indemnify an insured driver who has “caused or permitted” an unidentified and uninsured driver also to use a motor vehicle. Permitting use is not the same as using.
The basis of the claim
The central factual question, whether the negligent driver was a thief or actually known to the first defendant, Miss Havard was effectively put to one side for the purpose of determining the legal arguments, both at first instance and on appeal.
Under consideration was the 1935 case Monk v Warbey, which pre-dates the creation of the MIB Agreements and now applies only in very limited circumstances. Here, as the claimant, Mr Sahin was unable to enforce the default judgment against Miss Havard, and because Riverstone had refused to meet his claim, he sought a declaration that her insurers were obliged by Part VI of the 1988 Act to meet her Monk v Warbey liability to him anyway.
Mr Sahin’s argument was put in this way:
Miss Havard was liable to pay him compensation in accordance with the decision in Monk v Warbey  1 KB, which provides an injured party with a direct right of action against a person causing or permitting another to use a vehicle when uninsured.
A “Monk v Warbey” liability was in fact covered by the compulsory insurance requirements of section 145 of the Road Traffic Act (the 1988 Act) because “caused or permitted” was the same as actual “use”;
Thus, even though Miss Havard had not been present at any time and the actual driver was unidentified, Riverstone Insurance was compelled by s151 of the 1988 Act to pay Mr Sahin’s claim.
The recent EU decision in Vnuk on “use” confirmed the extended nature of an insurer’s liability and correct application of the EU Motor Directives required that section 145 of the 1988 Act to be extended to all those driving vehicles, even if they were unidentified/thieves.
- This type of claim was one that section 148 of the 1988 Act did not allow insurers to exclude (as the terms of the relevant policy actually did).
The Court of Appeal dismissed these arguments, confirming that a Monk v Warbey liability is not subject to the compulsory motor insurance regime within Part VI of the 1988 Act.
The facts of the case
On 24 January 2008, the claimant’s vehicle was struck by a Vauxhall vehicle owned by a hire company, Local Contract Hire & Leasing Limited (“LCHL”), which entered into liquidation shortly after the accident. The Vauxhall had been hired to a Miss Havard and was insured by Riverstone Insurance (UK) Ltd under a fleet policy that covered her as the Vauxhall’s lessee, and a driver authorised by the insured, LCHL. At the time of the collision, however, the Vauxhall was being driven by an unidentified and unaccompanied male and had been reported stolen by Ms. Havard. Mr Sahin sustained a soft tissue injury and subsequently incurred property damage related losses exceeding £100,000 before interest.
Although Mr Sahin initially notified a claim under the terms of the Untraced Drivers’ Agreement 2003, he later asserted that Miss Havard had permitted the unidentified driver to use the vehicle (there was no evidence for this). On this basis he elected to pursue Miss Havard personally and to try to attach liability to the insurer under section 151 of the 1988 Act.
Proceedings were issued and a default judgment secured against Miss Havard. Upon Riverstone’s refusal to accept it had any liability for the negligence of an unauthorised and unidentified driver (i.e. a thief), Mr Sahin amended his claim to seek a Declaration that Riverstone was liable.
He failed in this argument at first instance before HHJ Baucher and again before the Court of Appeal, which has now also refused an application for permission to appeal to the Supreme Court.
The decision of the Court was that:
- ‘use’ of a vehicle could not be conflated with ‘causing or permitting’ the use of a vehicle – section 143 of the 1988 Act specifically draws a distinction between the two;
- The decision in Vnuk concerned "use" of a vehicle only and had no application to "cause or permit";
- Section 145 of the Act was not to be construed in isolation from the MIB Agreements and there could be no suggestion that the UK had failed to implement the European Motor Directives;
- An exclusion for liability for loss incurred by someone driving a vehicle without permission will be effective as a matter of domestic law – section 148 of the 1988 Act does not prevent this;
- As the terms of the fleet policy in question did not actually cover the liability of Ms. Harvard the policy was not contractually required to respond either.
As a footnote to the above, just prior to the appeal hearing the appellant indicated an intention to offer the recently reported decision of HHJ Tindal in Allen v Mohammed and Allianz Insurance (2016) - that a Monk v Warbey liability was required to be covered by section 151 of the RTA – as a “road map” for the Court of Appeal. The decision is plainly wrong and now confirmed as such. In the event the appellant did not raise it and the Court of Appeal did not think it necessary to comment on it.
What this means for you: impact and practical consequences
The Court of Appeal has confirmed that a policy of insurance under section 145 of the 1988 Act is only required to cover an insured person’s liability arising out of their use of a vehicle on the road or other public place.
Accordingly the 1988 Act does not require a policy to cover every conceivable liability that may be incurred by an insured, such as a liability to a third party which arises by virtue of the insured's decision to cause or permit an uninsured person to use the vehicle, and there is no need to review or amend policy wording or current exclusions.
It is also useful to underscore that although the driver of the vehicle in the immediate case was unidentified and it was clearly not possible for the claimant to obtain a judgment against him, an attempt to circumvent the conventional approach in such circumstances of using the Uninsured Drivers Agreement has failed. The decision is, therefore, an important reminder to claimants and legal commentators that the UK’s established system of redress for the victims of road traffic accidents is regarded by the courts as effective and as compliant with the EU Motor Directives.
Finally, insurers will take heart from Lord Justice Longmore’s acceptance of a key commercial argument advanced by Riverstone, when he noted Counsel’s summary of the effect of the claimant’s argument, namely that: ”Insurance for failing to ensure that there is insurance is an oxymoronic concept for which it would be impossible to assess a premium.”
BLM partner and head of the motor practice group, Nick Rogers, successfully represented the defendant insurer in this appeal. Counsel was Mr John McDonald of 2 Temple Gardens.