McMinn v McMinn, High Court, 11 April 2006
Subject: Motor liability
Issue
In what circumstances can RTA motor insurers refuse to satisfy a personal injury claim from a passenger in the vehicle.
Summary
Under S 151(4) of the Road Traffic Act 1988 (RTA) an insurer need not meet a claim from an injured passenger where the passenger “knew or had reason to believe” that the vehicle had been stolen or unlawfully taken. To avoid liability it will be sufficient for the insurer to show that the objective facts were such that the claimant would have had reason to believe had he turned his mind to the facts.
Practical Importance
The decision illustrates fairly broad grounds on which an insurer can decline liability. A vehicle can be “unlawfully taken” where, as in this case, the authorised user of a vehicle uses it beyond the limits of the authority. Whether the passenger had reason to believe will be judged objectively, not by his actual knowledge.
Legal Background
S 151 of the RTA requires insurers of a motor vehicle to satisfy judgments obtained against a driver where the liability is one that is required to be covered under S145. This applies to uninsured drivers.
But S 151(4) excludes some liabilities from those covered by the obligation to satisfy judgments. It states,
“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.”
A vehicle can be “unlawfully taken” by a person who is authorised by the owner to drive it, if he uses it outside the limits of the authority granted by the owner. (McKnight v Davies 1974).
The Decision
Three friends went out drinking. One of the group, R, had the use of his employer’s vehicle for private purposes. R had been told by his employer that the vehicle could only be driven by persons over 25, with a full licence and with permission from the employer. The other 2 persons were brothers, the claimant and defendant in the action.
At one point during the evening the group decided to move on. R and the claimant had been drinking heavily and so it was agreed that that the defendant would drive. He was 17 years old and did not hold a driving licence, full or provisional.
There was an accident when the defendant lost control of the vehicle. The claimant was seriously injured and sought damages from the defendant. The insurers of the vehicle argued that they were not liable under S151 of the RTA to meet any judgment in favour of the claimant because it was an excluded laibility under S 151(4).
The Court held that to avoid liability it was for the insurers to show on the balance of probabilities that the claimant knew or had reason to believe that the vehicle had been stolen or unlawfully taken. These terms refer to the corresponding offences under the Theft Act 1968.
“Knew” meant actual knowledge, the subjective state of mind of the claimant.
“Reason to believe” must mean something different to the actual knowledge indicated by “knew”. It meant that there was sufficient information available to cause the claimant to believe, had he applied his mind to the issue. This is an objective test.
The vehicle in this case had not been stolen but it had been unlawfully taken. R was aware that he was the only person authorised to drive the vehicle. In allowing the defendant to drive R was going beyond the authority given to him by his employer and was appropriating the vehicle to his own use in a manner inconsistent with the rights of the employer. He had therefore unlawfully taken the vehicle.
The defendant driver also had unlawfully taken the vehicle. He had no reason to suppose that he was entitled to drive the vehicle .
The claimant also would have realised this if he had applied his mind. He could not have believed that the employer would have allowed the vehicle to be driven by a 17 year old who had never driven on a public road before and he must have realised that the vehicle could only be legitimately driven by someone authorised by the employer.
It could not be said that the claimant knew that the vehicle had been unlawfully taken but he had reason to believe in that the facts would have led him to that conclusion if he had applied his mind to them.
The insurers were entitled to refuse to meet any judgment in favour of the claimant: it was an excluded liability under S151(4).
Brendan O'Keeffe
Claims Counsel, Swiss Re UK
