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CONNELL v. MOTOR INSURERS' BUREAU.

COURT OF APPEAL, CIVIL DIVISION

[1969] 2 QB 494, [1969] 3 All ER 572, [1969] 3 WLR 231, [1969] 2 Lloyd's Rep 1

HEARING-DATES: 7, 8 May 1969

Insurance -- Motor insurance -- third-party risks -- Compulsory third-party insurance -- Hire or reward -- Passenger in private car on three occasions paying owner 10s. for a lift -- Passenger injured -- Vehicle not habitually used for hire or reward -- Whether owner bound to insure against liability to passenger -- Whether Motor Insurers' Bureau liable -- Road Traffic Act 1960 (8 & 9 Eliz. 2 c. 16), s. 203.

HEADNOTE:
E., who was the owner of a motor car, on three occasions agreed to give the plaintiff a lift in return for 10s. and a drink. On the third occasion E. drove negligently and both men were injured. E.'s policy of insurance contained a clause which excluded "any liability to passenger" and also a clause excluding "any liability while the car was being used for hire or reward". The plaintiff brought an action against E., who was without means and did not defend it; he obtained damages and costs. E.'s insurers did not pay this because the insurance did not cover it, and the plaintiff then sued the Motor Insurers' Bureau on the ground that E. was compelled to be insured under s. 203 of the Road Traffic Act 1960 which required insurance "in the case of a vehicle in which passengers [were] carried for hire or reward".

Held: the Motor Insurers' Bureau were not liable to the plaintiff because, since E.'s car was not a vehicle in which passengers were habitually carried for hire or reward, E. was not compelled to insure against injury to passengers (see p. 573, letter I, p. 576, letters D to F, and p. 577, letter E, post).

Dictum of BRANSON, J., in Wyatt v. Guildhall Insurance Co., Ltd. ([1937] 1 All E.R. at p. 796) applied.

Coward v. Motor Insurers' Bureau ([1962] 1 All E.R. 531) considered.

Appeal allowed.

NOTES:
As to passengers carried for hire or reward, see 2 HALSBURY'S LAWS (3rd Edn.) 368 para. 756; and for cases on the subject, see 29 DIGEST (Repl.) 547-549, 3723-3731.

For the Road Traffic Act 1960, s. 203, see 40 HALSBURY'S STATUTES (2nd Edn.) 885.

CASES-REF-TO:

Coward v. Motor Insurers' Bureau, [1962] 1 All E.R. 531; [1963] 1 Q.B. 259; [1962] 2 W.L.R. 663; 29 Digest (Repl.) 548, 3731.
R. v. Steel (17th June 1968), unreported.
Whittal v. Kirby, [1946] 2 All E.R. 552; [1947] K.B. 194; [1947] L.J.R. 234; 175 L.T. 449; 111 J.P. 1; 45 Digest (Repl.) 123, 433.
Wyatt v. Guildhall Insurance Co., Ltd., [1937] 1 All E.R. 792; [1937] 1 K.B. 653; 106 L.J.K.B. 421; 156 L.T. 292; 29 Digest (Repl.) 548, 3728.

INTRODUCTION:
Appeal. This was an appeal by the defendant, the Motor Insurers' Bureau, from a judgment of PAULL, J., whereby it was adjudged that the plaintiff, James Connell should recover the sum of £ 3,294 in damages and costs from the defendants pursuant to their agreement with the Ministry of Transport that they would compensate third parties injured where drivers ought to have been, but were not, insured. The facts are set out in the judgment of LORD DENNING, M.R.

COUNSEL:
Tudor Evans, Q.C., and Patrick Bennett, Q.C., for the Motor Insurers' Bureau. R. M. O. Havers, Q.C., and A. M. Kenny for the plaintiff.

PANEL: Lord Denning, M.R., Sachs and Karminski, L.JJ.

JUDGMENTBY-1: LORD DENNING, M.R.

JUDGMENT-1:
LORD DENNING, M.R.: This is a case of significance for drivers of cars and their passengers. The plaintiff Mr. Connell, used to visit The White House, at Brixton Hill. In April 1962 he was in the bar. He wanted to cash a cheque at his bank four miles away. Also in the bar was a Mr. English. He had a car outside. The plaintiff asked Mr. English: "Will you do me a favour? Will you drive me to the bank so that I can cash a cheque?" Mr. English replied in lurid English: "Not bloody likely; that won't pay for the petrol." The plaintiff said: "I'll give you 10s. and buy you a drink." Thereupon Mr. English agreed. He drove the plaintiff to the bank. Two or three weeks later the same thing happened again. Another 10s. and a drink; and another drive to the bank. On 15th May 1962 they were again in the bar. The plaintiff wanted this time to go to Norwood. Mr. English agreed on the same terms -- 10s. and a drink. But this time Mr. English drove badly. He ran into a lamp post. Both men were injured. The plaintiff wanted compensation for his injuries. But Mr. English's insurance did not cover it. His policy contained a clause which excluded "any legal liability to passengers", and also a clause excluding "any liability while the car was being used for hire or reward". The plaintiff went to solicitors, and they gave him some advice. In consequence, he went to see Mr. English in hospital and asked him: "Will you write down that I paid you 10s. for these journeys?" Mr. English said: "I cannot do that. I am in enough trouble with the insurance as it is." The plaintiff retorted in illegitimate English: "You are a right [edited by admin]", and left. Then the plaintiff took action against Mr. English for damages. Mr. English was without means. He did not defend. The plaintiff obtained damages of £ 2,850 and costs, making a total of£ 3,294 payable by Mr. English. The insurance company did not pay. They were not bound to. The insurance did not cover it.

So the plaintiff took the next step. He sued the defendants, the Motor Insurers' Bureau, on the ground that, by statute, Mr. English was compelled to be insured; and that, as he was not insured against this injury, the Motor Insurers' Bureau ought to pay the £ 3,294.

The plaintiff's case is perfectly good if Mr. English was bound, under the statute, to insure against injury to the plaintiff; because the Motor Insurers' Bureau have agreed with the Ministry of Transport that they will pay the damages in every case where a driver is uninsured when he ought to have been insured. So the question comes down to this: was Mr. English compelled, by statute, to insure aganst injury to the plaintiff?

The relevant provisions are contained in s. 36 of the Road Traffic Act 1930, which are now in substance re-enacted in s. 203 of the Road Traffic Act 1960. Summarised, it comes to this. Everyone who is using a vehicle on a road is compelled by law to insure against third-party liability; but there is this important exception: he is not compelled to insure against injury to passengers. The plaintiff was a passenger. So it seems that Mr. English was not bound to insure him. But there is a proviso to the exception in this respect: although a driver is not usually bound to insure his passengers, yet he is bound to do so "in the case of a vehicle in which passengers are carried for hire or reward". Those are the critical words of the case. The plaintiff says that he was being carried in Mr. English's car for reward, namely for 10s. So he claims that Mr. English was bound to insure him.

In construing the Act, it is important to remember that, if a person uses a car on the road without having the insurance required by the Act, he is guilty of a criminal offence, see s. 201: and we ought not to hold him to be guilty unless the Act is clear. I thin, that the proviso means that insurance is compulsory in the case of a vehicle in which as a matter of practice or habitually passengers are carried for hire or reward. It means that taxis, motor coaches, private-hire cars, and the like are compelled to be insured in respect of passengers. But I do not think the proviso applies to private cars in which people are given a lift. If the legislature had intended all passengers to be covered when they pay for the lift, it would have omitted the words "in the case of a vehicle in which" and put simply "when". By using the words "in the case of a vehicle in which passengers are carried", the legislature denotes a vehicle whose habitual or normal use is for the carriage of passengers for hire or reward. This was the view adopted by BRANSON, J., in Wyatt v. Guildhall Insurance Co., Ltd. n(1) when he said:

n(1) [1937] 1 All E.R. 792 at p. 796; [1937] 1 K.B. 653 at p. 662.

"It seems to me that this subsection is really dealing with vehicles which are normally or habitually used in the way in which the exception mentions, and the mere fact that upon one isolated occasion a man takes some reward -- it need not even be a monetary reward -- for the conveyance of a passenger in his car, is not intended to render him liable to penalties if he has not got a policy which covers that passenger on that occasion."

BRANSON, J., was rightly influenced by the fact that a man who has not got a proper insurance is liable to be prosecuted. This proviso does not render a private owner liable to be prosecuted -- simply because he gives a man a lift and accepts a contribution towards the petrol or receives a small sum of money as a reward. He is not bound to insure such a passenger.

That dictum of BRANSON, J., has been accepted in the textbooks as being authoritative. For instance, in SHAWCROSS ON MOTOR INSURANCE at pp. 202, 203, it is said that the judgment of BRANSON, J., "may be regarded as settled law". In 24 HALSBURY'S STATUTES OF ENGLAND (2nd Edn.) p. 606, Wyatt's case n(2) is given as authority for the proposition that "unless there is an habitual carrying for hire or reward there is no statutory necessity for a policy covering risks to passengers". In addition, it is to be noted that since Wyatt's case n(2), the Road Traffic Act 1960 has been passed to consolidate, with corrections, the provisions as to road traffic. If Parliament thought that Wyatt's case n(2) ought to be corrected, they would have done so.

n(2) [1937] 1 All E.R. 792; [1937] 1 K.B. 653.

The result is, therefore, that the owner of a vehicle, such as a motor coach, a taxi, and a private-hire car, is bound to insure his passengers. But the owner of a private car is not bound to insure his passengers, even though they may make a contribution towards the petrol or pay a sum of money in return for the lift.

I must, however, say a word about Coward v. Motor Insurers' Burau n(3), by which the judge was much influenced. In that case Mr. Cole had a motor cycle. He took Mr. Coward daily to work on the pillion. Mr. Coward gave him money reguarly every week. After 18 months there was an accident in which both were killed. It was due to the negligence of Mr. Cole, but he was not insured against injury to passengers. Mr. Coward's widow sued the Motor Insurers' Bureau. She failed. This court held that Mr. Cole was not compelled to be insured aganst injury to Mr. Coward. They put the decision on the ground that Mr. Coward and Mr. cole never intended to enter into a legally binding obligation of carriage. In the present case the judge found that there was a legally binding contract by which Mr. English agreed to carry the plaintiff; and for that reason he held that Mr. English was bound to insure the plaintiff.

n(3) [1962] 1 All E.R. 531; [1963] 1 Q.B. 259.

I must confess that I am not altogether satisfied about the ground given for the decision in Coward's case n(3). It is often a very nice question whether there is a legally binding contract when a driver gives a man a lift. I should have thought that, in the ordinary way, when a man agrees to carry another for payment, there is a contract, albeit informal, no matter whether the payment is by way of contribution to the petrol or a reward for the lift. In any case, contract or no, it is a fine point; and it would be a pity if these cases turned on it. I do not think they do turn on it. I would prefer to put the decision in Coward's case n(3) on the ground that the motor cycle was not "a vehicle in which passengers are carried for hire or reward". It was a private motor cycle giving a man a lift. So Mr. Cole was not bound to insure against injury to passengers. At any rate, the court in Coward's case n(3) die not decide the point we have here.

n(3) [1962] 1 All E.R. 531; [1963] 1 Q.B. 259.

I propose to decide the present case on this simple ground: the car driven by Mr. English was not a vehicle in which passengers were normally or habitually carried for hire or reward. It was a private vehicle in which Mr. English had given the plaintiff a lift on two or three occasions. Even though the plaintiff paid for the lief under a contract, nevertheless Mr. English was not bound to insure against injury to him. The plaintiff cannot, therefore, recover against the Motor Insurers' Bureau.

I would only add this: many people think the Act should be altered so as to provide compulsory insurance for passengers. I think so too. It is very hard on a passenger that he should be injured by the negligence of the driver -- and have no recourse for damages. I hope that Parliament will soon remedy the position. Meanwhile, I would suggest that anyone who asks for or accepts a lift should ask the driver: "Are you insured for passenger or not?"; for, if he is not, and there is an accident, he may be unable to get any compensation.

I would allow the appeal and given judgment for the Motor Insurers' Bureau.

JUDGMENTBY-2: SACHS, L.J.

JUDGMENT-2:
SACHS, L.J.: On the only issues argued before the trial judge I am in agreement with his conclusions -- both as regards his having held that Mr. English's car was not in effect a "local taxi", and as to the legal effect of what on the relevant occasions transpired between Mr. English and the plaintiff.

Having regard to Coward v. Motor Insurers' Bureau n(4), which is, or course, binding on this court, it was necessary for the plaintiff to establish not only that he was being carried for reward as opposed to being carried free, but that the reward was one payable under a legally binding contract. On the facts found by the trial judge as to how the 10s. came to be paid on three successive occasions, it seems to me clear that the plaintiff established both points. It happens that the 10s. was paid in advance. If it had not been so paid and the trip had been made, an action for it would have lain. Moreover, the 10s. was a sum far greater than would be that arranged on a mere petrol-sharing agreement.

n(4) [1962] 1 All E.R. 531; [1963] 1 Q.B. 259.

I would, however, mention that the fact that neither party happened to give thought to whether a legal relationship was intended does not to my mind conclude an issue as to whether a legally binding contract was in fact achieved. What this court has to do is to look at the primary facts accepted by the trial judge as being true and then draw the correct inferences. I would adopt the views expressed in CHESHIRE AND FIFOOT ON THE LAW OF CONTRACT (7th Edn.), p. 95, where the proposition is put forward as follows:

"The test of contractual intention is objective, not subjective. What matters is not what the parties had in their minds, but what inferences reasonable people would draw from their words or conduct."
Here the trial judge put it like this: "If before a journey starts the workman who has the car says 'I will not carry you unless you agree to pay me 10s.'... and the other man says 'Very well, if you carry me, I will pay you 10s.'..." Then he, the trial judge could not see why that does not make a perfectly good legal contract. With that approach I respectfully agree. This is not merely one of those domestic or social occasions referred to in CHESHIRE AND FIFOOT, as being those on which legally binding contracts are in appropriate circumstances found not to have been made. The dividing line may sometimes be thin, but in the instant case the agreement appears to me to have been well on the contractual side of the line.

I now turn to the second issue discussed in this court. It is one that was not raised before the trial judge, for the simple reason that there the plaintiff based his case on an assertion -- later negayived by the judge -- that Mr. English's car was in effect the "local taxi". That issue stems from the terms of the proviso to s. 203 (4) of the Road Traffic Act 1960 which has already been mentioned by LORD DENNING, M.R. It is one which has been the subject of judicial pronouncement as long ago as 1937 in Wyatt v. Guildhall Insurance Co., Ltd. n(5). That case deals with the difficulty under the Road Traffic Act 1930 parallel to the one which faces the plaintiff here. It arises from the wording of the proviso, and one can only wonder why, if the plaintiff's contentions were correct, the words "in the case of a vehicle in which passengers are carried for hire or reward" were not in fact replaced by the much simpler phrase "when passengers are being carried for hire or reward.".

n(5) [1937] 1 All E.R. 792; [1937] 1 K.B. 653.

The above distinction has already been dealt with by LORD DENNING, M.R. and he has referred to the judgment in Wyatt's case n(5) of BRANSON, J. I would only venture to supplement his quotation by adding passages which appear immediately before and after the words already recited. BRANSON, J., said n(6):

n(5) [1937] 1 All E.R. 792; [1937] 1 K.B. 653.

n(6) [1937] 1 K.B. at p. 662; [1937] 1 All E.R. at p. 796.

"If it [he was referring to the relevant phrase] means what counsel for the plaintiff ways it does, one cannot see why the words 'unless they are being carried for hire or reward' whould not have come in at the end of the proviso, which would have avoided the clumsy exception at the beginning. The result of adopting that construction would be that if anyone took a passenger in a car for anything in the nature of reward, then he would immediately become liable to penalties if he did not have a policy of insurance covering that person... Two constructions may be possible, but as this is a penal statute one leans against the construction which would turn the user of the car into a criminal user."
With those passages I respectully agree.

To my mind the courts must incidentally perforce examine the words in the proviso with the eyes of the legislature of 1930, when compulsory insurance was a novel and satisfactory advance but one to be hedged with careful limits; and unfortunately not with the eyes of those who today regard the absence of compulsory insurance of passengers as an unfortunate anachronism. One must also note that the Act of 1960 has not sought to amend or clarify the relevant exceptions and proviso, despite the fact that the decision of BRANSON, J., had been for so long recognised for practical purposes as declaring settled law. In this behalf I have in mind the words of LORD PARKER, C.J., in an unreported case decided in the Criminal Division of this court on 17th June 1968, R. v. Steel n(7). That case dealt with the interpretation of certain words in the well-known authority, Whittall v. Kirby n(8), and of them LORD PARKER, C.J., said:

n(7) (17th June 1968), unreported.

n(8 [1946] 2 All E.R. 552; [1947] K.B. 194.

"Since then Parliament has re-enacted the same words with full knowledge of that decision, in 1960 and again in 1962... It is perfectly clear that in these circumstances this court, observing the intention and seeking to honour the intention of Parliament, must inevitably uphold the principle laid down..."
in the previous case. I would add that this court today took the view which has been so persuasively put forward by counsel for the plaintiff, it would induce really considerable confusion; there would be literally thousands who would find themselves to be for the time being, at any rate, making a criminal user of their cars by driving without a proper policy, and there would also be literally thousands of policies which would have to be reconsidered. Clearly the proviso must be interpreted in the way in which BRANSON, J., construed it -- to my mind correctly.

Accordingly, the conclusion to which I have, like LORD DENNING, M.R., come is one which was reached by me without hesitation but also without satisfaction; for today any decision that limits the ambit of compulsory insurance is one to be regretted. It is now the best part of 40 years since a large measure of compulsory insurance for motorists was brought into force having regard to the perils to which other road users were put by motor car drivers incapable of paying damages. That was indeed a great step forward, although even at that time there was a measure of criticism of the plight in which passengers were left. Since then the courts have seen only too often a procession of gravely injured passengers who were bereft of compensation because the drivers were too mean or too careless to take out a more comprehensive form of policy although well able to afford to pay that much extra for their pleasure or convenience. One can only hope that the instant case will stimulate attention to the everincreasing need to stop literally thousands of persons being in effect licensed tortiously to injure others by negligent driving without being able to compensate them.

I agree that this appeal should be allowed for the reasons already given.

JUDGMENTBY-3: KARMINSKI, L.J.

JUDGMENT-3:
KARMINSKI, L.J.: I have not found this case to be an easy case, but on the facts as found by the learned judge I agree that this appeal must be allowed for the reasons given by LORD DENNING, M.R. In coming to that conclusion I must add my voice to both LORD DENNING, M.R., and SACHS, L.J., in their comments on the present position of the law. As things stand, it is or may be difficult for a passenger in a car to ascertain whether or not the owner or driver is covered by a policy of insurance if they meet with an accident. Indeed, to come to any safe conclusion whether or not he is protected a wise passenger would I suppose have, first of all, to inspect the driver's or owner's policy of insurance, and it may thereafter be wise for him to consult his own solicitor. That however is a counsel of perfection unlikely to be followed. What is much more important is that in this day and age probably many thousands of people go to work daily as passengers in motor cars driven by their friends and colleagues; they may or may not make some contribution towards the cost of the expedition in general and the cost of petrol in particular. It seems to be desirable that in those circumstances they should know whether or not they are covered by insurance.

I agree that this appeal must be allowed.

DISPOSITION:
Appeal allowed. Leave to appeal to the House of Lords refused.

SOLICITORS:
R. I. Lewis & Co. (for the Motor Insurers' Bureau); R. W. Thompson (for the plaintiff).