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Author:  JD [ Thu Jun 01, 2006 8:25 am ]
Post subject:  Insurance
Insurance can sometimes be a nightmare if you have an accident and that accident turns out to be less than straightforward. Here is comment on personal injury law, which particularly highlights a case I posted on TDO some time ago of Keeley v Pashen.

One observation is the nature of the vehicle at the time of an accident or offence? For instance in the Keeley case the vehicle in question was a private hire vehicle which had insurance for hire and reward but it was found that when the vehicle was not carrying passengers it was driving under the added insurance contract clause of personal pleasure.

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J.P.I. Law 2005, 1, C10-13

Journal of Personal Injury Law

2005

Case Comment

PERSONAL INJURY - ROAD TRAFFIC ACCIDENTS - MOTOR INSURANCE

Case: Keeley v Pashen [2004] EWCA Civ 1491; [2005] 1 W.L.R. 1226 (CA (Civ Div))

Legislation: Road Traffic Act 1988 s.151

Subject: INSURANCE. Other related subjects: Personal injury

Insured event; Motor insurance; Personal injury claims; Policy wordings; Private hire vehicles; Third party insurance

Abstract: Comments on the Court of Appeal decision in Keeley v Pashen on whether a mini cab driver who had used his own car for the last fare paying job of the night was using it "for hire or reward" or for "social, domestic and pleasure purposes" after his customers had left the car and he struck one of them, causing his death, and consequently, whether the successful claimant in a personal injury action arising from the incident was entitled to enforce the judgment against the driver's insurers.

Terrence Keeley and three other men were picked up by a mini cab driven by Edward George Pashen. This was Pashen's last job of the night. According to Pashen the men had been drunk and had assaulted him. His evidence was that he had asked them to leave the car and after they had done so, he drove the car at them to frighten them. Terrence Keeley sustained fatal injuries.

Keeley's widow obtained judgment against Pashen for damages for psychiatric injury arising from her husband's death and sought to enforce it against Wren Motor Syndicate 1202 at Lloyds as Pashen's insurers. Pashen was using his own car as a mini cab when he picked up the men. At a preliminary issue trial the judge held that Pashen's insurance policy, which permitted use only for "social, domestic and pleasure purposes", did not cover him for the incident as he was not using the car for those purposes when he drove it at the men.

The judge also held that Pashen was not using the car "for hire or reward", which was an excluded use under the policy, at the time of the accident because that use stopped for the night when the men got out of the car. The widow and the insurers both appealed.

The Court of Appeal held that the judge was correct to hold that Pashen was not driving his car for hire or reward at the crucial time as his last fare-paying passengers of the day had left the car. However, it held that the judge was wrong to hold that Pashen was not driving his car for "social, domestic and pleasure purposes" at the time of the incident.

Their view was that after he dropped the men off, the essential character of his journey was to drive his car home, which was undoubtedly a purpose covered by the policy. Driving the car at the men to frighten them was an incidental episode and not a separate journey of a different character. Even if Pashen himself could not recover under the policy, they held that the widow was not disqualified as an innocent third party from enforcing her statutory rights under s.151 of the 1988 Act. They pointed out that under the 1988 Act, Parliament intended innocent third parties to be able to recover direct from the driver's insurers and, although a motor insurer could impose express limitations on the third party cover it provided, the courts should not be astute to interpret any such limitations benevolently in the insurer's favour.

The widow's appeal succeeded.

Commentary: Mr Pashen was a mini-cab driver. He had been working for Sapphire Cars, a mini-cab firm in Penge, for about three months prior to the night of Mr Keeley's death. He used his own car, a Honda Accord. On the day in question he had been working since about 2pm, and his last job of the night involved picking up Mr Keeley and three other men at the premises of Sapphire Cars. He drove them to Oakfield Road, where one of the four wished to alight.

The men were drunk, and because they were messing about inside the car, Mr Pashen stopped the car and asked them to stop behaving like this. An altercation followed during which he maintained that he was attacked. There was evidence that he called Sapphire Cars on his car radio to the effect that he was being attacked. He sustained injuries to his head.
At all events the four men then left the mini-cab, and Mr Pashen drove north to the junction of Oakfield Road and High Street Penge.

The men continued on foot towards this junction--Mr Pashen maintained that they were running--and Mr Pashen then decided to reverse back up Oldfield Road. When he had passed the men he stopped and drove his car at them. It was at this stage of the events of that night that Mr Keeley sustained his fatal injuries. About 16 seconds elapsed between the time when the passengers got out of the car and the time when Mr Keeley was knocked down. Mr Pashen then drove away, stopping outside the mini-cab office for a word with the controller on his way home.

In due course he stood trial at the Central Criminal Court on a murder charge. He pleaded guilty to manslaughter, and this plea was accepted on the basis that because his car was proceeding at less than 15mph he did not intend to cause really serious harm. The sentencing judge accepted that he was driving in a state of panic and had merely intended to frighten the men.

Mr Pashen's insurance policy covered him for third party, fire and theft and had express limitations of use for social, domestic and pleasure purposes
The judge held that Mr Pashen was not using the vehicle for social, domestic and pleasure purposes when he reversed it back down Oakfield Road and drove it at the four men. The claimant appealed against that finding. The second defendants cross-appealed against the judge's further finding that Mr Pashen was not using the car for hire or reward at the time of the accident because that use had stopped for the night when the four men got out of the car.

The Motor Insurers' Bureau (MIB) is not involved in these proceedings. No notice of this claim was given to it in the seven days following the issue of theclaim on February 18, 2002, contrary to a condition in the current MIBagreement. The precise issues canvassed in the two leading cases of Hardy v MIB [FN5] and Gardner v Moore [FN6] did not therefore arise, although the Lord Chancellor's speech in the latter case was of value in identifying the purposes behind the statutory arrangements for compulsory third party cover.

Brooke L.J. in giving the leading judgment reflected upon the fact that the insurance policy was issued against the background of this statutory scheme for compulsory insurance of motor vehicles against third party risks, which is now to be found in Pt VI of the 1988 Act. The provisions of that statute that are of most relevance in the present case are ss.143, 145, 147 and 151. The Court of Appeal set each of these sections out in the judgment. It was then pointed out by Brooke L.J. that s.147 (1) refers to a certificate of insurance in a prescribed form, and the Motor Vehicles (Third Party Risks) Regulations 1972 prescribe the contents.

They must be as in Form A (which appears in the Schedule to the Regulations), and Form A identifies six matters which have to appear on the face of the certificate, namely:

(i) Registration mark of vehicle
(ii) Name of policy holder
(iii) Effective date of the commencement of insurance.
(iv) Date of expiry of insurance
(v) Persons or classes of persons entitled to drive
(vi) Limitations as to use. (Emphasis added)

Brooke L.J. pointed out that it was never suggested that the psychiatric illness from which the claimant suffered did not constitute "bodily injury" within the meaning of Pt VI of the 1988 Act. On the face of it, therefore, the claimant having obtained judgment against Mr Pashen should be entitled to enforce her judgment against his insurers unless they could show that this liability is not covered by the terms of his policy.

The insurers in this case argued that it was not so covered for two reasons:

(i) At the material time Mr Pashen was using his car for hire or reward, and such use was expressly excepted by the terms of the policy;
(ii) At the material time he was not using his car for social, domestic or pleasure purposes but for the quite different purpose of trying to frighten Mr Keeley and his friends.

Brooke L.J. referred to the fact that the point had been considered in Seddon v Binions [FN7] in which Roskill L.J. (at pp.384-386) indicated that where a phrase such as "social, domestic or pleasure purposes" was used in a policy there will be cases that fall on one side or the other and that each decision will depend upon the facts of the particular case. Brooke L.J. approved of the guidance of Roskil L.J. where he indicated that the solution to the problem was found by asking the question, "What was the essential character of the journey in which the particular accident occurred?"

Roskill L.J. also said:

"It may well be that there will be cases, as there have been in the past, where the essential character ... of a particular journey was of a particular kind-- and that that essential character will not be altered in the crucial respects merely because, incidental to that journey, something happens in the way of giving a lift to a friend as an act of courtesy or, to borrow Mr Justice du Parcq's expression [in Passmore v Vulcan Boiler & General Insurance Co Ltd (1936) 54 L.I.L.R. 92], charity." Brooke L.J. held that if one applied this test, then the answer in this case appeared to be fairly straightforward. Mr Pashen kept his car at home. He drove it from home at the beginning of his day's shift as a mini-cab driver; he then drove it for hire or reward while he was conveying passengers in it for that purpose; and he drove it back home at the end of his shift. Even though he spoke to the controller at the mini-cab office on his way home, he did not go out of his way for that purpose and there was no evidence to the effect that somehow or other the period during which he used his car for hire or reward began and ended at the mini-cab office.

On this analysis, the defendant's cross-appeal failed. It was held that the judge was correct to hold that Mr Pashen was not driving his car for hire or reward at the critical time because his last fare-paying passengers of the day had left the car further up Oakfield Road.

However, the court also held that the judge was wrong to hold that Mr Pashen was not driving his car for "social, domestic and pleasure purposes". After he dropped the four men, the essential character of the journey on which he then set out was to drive his car home, and this was undoubtedly a purpose covered by his policy.

It is of course true that he unwisely deviated by reversing down Oakfield Road and driving towards the men in order to frighten them, but the Court of Appeal concluded that to classify this incidental episode (as the judge did) as a quite separate journey was to fall into the trap which Roskill and Megaw L.JJ., with their immense knowledge of insurance law, expressly warned against in Seddon.

Although it may be that Mr Pashen himself could not have recovered under the policy through the operation of the rule in Beresford v Royal Insurance Co Ltd, [FN8] this consideration did not disqualify the claimant, an innocent third party, from enforcing her statutory rights under s.151 of the 1988 Act (see Gardner v Moore, [FN9] applying Hardy v Motor Insurers' Bureau [FN10]).

FN5. [1964] 2 Q.B. 745.

FN6. [1984] A.C. 548.

FN7. [1978] 1 Lloyd's Rep. 381.

FN8. [1938] A.C. 586, 588.

FN9. [1984] A.C. 548, 559.

FN10. [1964] 2 Q.B. 745, 760-761.
JPIL 2005, 1, C10-13
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