Dodson v Peter H Dodson Insurance Services (A Firm) [2001]
- Reported: [2001] 1 WLR
- Year: 2000
- Court: Court of Appeal
- Read full case: Here
FACTS:-
The Claimant obtained motor insurance from Eagle Star using his father’s broker firm (the Defendant in this action). His mother also worked in the firm. The insurers undertook to indemnify the Claimant in respect of (a) the insured vehicle and (b) the Claimant’s driving with the owner’s permission, of any motor vehicle neither owned nor held under a hire purchase agreement. However the insurers would not be liable in respect of any vehicle replacing the insured vehicle unless notification of the replacement vehicle was given within seven days of its acquisition. On the 17th April 1993 the Claimant sold his car. He asked his mother and father whether his policy of insurance would continue to provide valid cover in the event of his driving another vehicle. He was told the policy would remain valid. On the 16th May 1993, he was driving his mother’s car with her consent when he was involved in a serious accident.
His mother’s insurers, AGF refused to indemnify him, saying that his insurance lapsed when he sold his car although they did concede that they were insurers for the purposes of the Road Traffic Act 1988. They then sued the Claimant seeking to recover their outlay and he sought an indemnity from Eagle Star. He later discontinued that action against Eagle Star but sought an indemnity from his insurance brokers on the grounds that his liabilities in respect of the accident had been caused by their negligent advice to the effect that he would cover by the insurance even though he sold his vehicle. His brokers joined in Eagle Star, the insurer under CPR Part 24. On a preliminary issue, the trial judge held that the clause in question remained valid through the period of the insurance whether or not the Claimant retained the insured vehicle and the Defendant’s advice had been correct.
HELD:-
Lord Justice Mance considered the judgement of the court below. The judge at first instance had considered certain material parts of the insurance proposal form and the certificate of insurance. One clause (Clause 11(1)(b) had stated:
“….the company shall not be liable (except so far as is necessary to comply with compulsory motor insurance legislation) to make any payment under this policy in respect of any replacement or additional vehicle unless particulars of that vehicle are notified to the company within seven days of the date of acquisition.”
Mance LJ then considered the authorities. In Rogerson v Scottish Automobile and General Insurance Co. Limited (1931) 41 Lloyds Law Reports 1. In that case the insurance contract purported to cover “the use by the assured of any motor car (other than a hired car) provided that such car is at the time of the accident being used instead of “the insured car.” The House of Lords recognised the principle that in case of doubt such a policy would fall to be construed against the insurers.
In Tattersall v Drysdale [1935] 2 KB 174 the Claimant’s insurance was initially in respect of his Morris Oxford but this was changed to other cars with the endorsement of the insurers. The relevant clause in the insurance contract extended cover to the insured “whilst personally driving for private purposes any other private motor car….not belonging to the assured in respect of which no indemnity is afforded the insured by any insurance applying to such car” provided that the car thereby insured should not be in use at the same time. This wording avoided the risk that an insured might shift the insurance from car to car purchased by the insured without the insurers’ knowledge or control. The Claimant gave up his car to dealers and whilst waiting for a new car in exchange was given the use of another car. The court had said that the words of this extension clause were different from that found in the case of Rogerson. The insurance clause in this case gave the insured a privilege or further protection whilst using another car temporarily but it was the original insured car which was always the subject of the insurance. If the insured ceased to be interested in the subject matter of the insurance, the extension failed with the rest of the policy.
The third case was Boss v Kingston [1963] 1 WLR 99. The relevant clause in that case read:-
“In terms of and subject to the limitations of and for the purposes of the policy the company will also indemnify the insured while driving a motor cycle not belonging to him and not hired to him under a hire purchase agreement as tough such motor cycle as a motor cycle described in the schedule.”
Boss sold his motor cycle and two weeks later was found driving a motor cycle owned by another person, who was riding pillion and whose insurance did not cover Boss. The Divisional Court held that Boss was driving whilst uninsured. Where possession of the vehicle was parted with and no rights of user were retained, the indemnity would lapse in regard to that vehicle, and so the whole policy would lapse.
Mance LJ said that part of the difficulty in this case was the fact that Eagle Star, the insurers were not represented in this appeal. It would not be fair to conclude that they had adopted an attitude that no other reputable insurer would have adopted. Indeed their stance must have been regarded as correct by the Claimant in order for this action to be brought.
Mance LJ also referred to the case of Wilkinson v General Accident Fire and Life Assurance Corporation Ltd. [1967] 2 Lloyds Rep 182. The insured had exchanged his car several times with the knowledge and approval of his insurers but then sold the last substituted car. He was then involved in an accident at a time when he had not bought any new car and the issue was whether the renewal of his insurance was valid, even though the insurers did not know that he did not own a car. The court assumed after examining all the authorities, that “in the normal situation” the policy would be void after the sale of the last insured car.
The central issue here was whether the third party cover afforded while driving other cars depended or was conditional upon the insured continuing ownership of his car.
The proposal form for the present insurance confirmed that it was based on the insured having and wishing to insure himself in respect of his own car. That was on any view the origin and context of the policy. The proposal form also confirmed the obvious, namely that premiums for motor insurance covering third party liability varied fundamentally according to factors related to the insured car, the insured and another others who would be permitted to drive it. No attempt was made in the proposal form to elicit information about other vehicles that the insured might drive. Thus the driving of other vehicles must have been seen as ancillary. Possibly the insured might have been under a general duty of disclosure if he intended to drive a high powered sports car but that situation was not applicable here.
It was unclear how one could conclude that driving that the cover for driving other vehicles depended on retention of the insured vehicle and so of cover whilst driving that vehicle.
Clause 1(1)(a) and (b) of the insurance contract stated:-
“The company will indemnify the insured in respect of legal liability for death of or bodily injury to any person or damage to property caused by or in connection with (a) the insured vehicle (b) the driving by the insured (with the owner’s permission) or any motor car or motor cycle neither owned nor held under a hire purchase agreement by the insured….”
Mance LJ said that on the face of this clause, there was no requirement that the insured vehicle should be “out of use” or even that the use of any other vehicle must be temporary.
It might be argued that the granting under the present policy of fire and theft cover on a specified vehicle meant that the whole insurance cover should be dependent upon a continuing assumption that the insured would have retained possession of the specified car. However it seemed improbable that the scope of Clause 1(1)(b) varied according to whether the insured elected for property insurance on the car. However the present insurers were clearly concerned to have details of the specified car.
Clause 11(5) of the policy contained a provision about the maintenance of the vehicle in an efficient and roadworthy condition and the taking of all steps to safeguard it from damage and loss. This was a condition precedent to any liability of the insurer under the contract. However the obligation under clause 11(5) was not an absolute obligation to ensure that the car never became inefficient or un-roadworthy.
A requirement to maintain a car, as and when necessary postulated continued possession of the car. However it did not follow that this required the insured to retain the car or that its inclusion in the policy indicated that any indemnity cover relating to other vehicles ceased after disposal of the insured car.
There were other clauses in the policy focussing on the insured vehicle without corresponding provisions in respect of the driving of other vehicles. This suggested that the policy was focussed on the insured vehicle. For instance the policy would be suspended (after the giving of notice) if the vehicle was “laid up” and out of use.
Clause 11(1) referred to cover “for” or “in respect of” an additional or replacement vehicle and did not therefore expressly address the cover provided by clause 1(1)(b) in respect of the driving of any other vehicle not owned or hired by the insured. The only possible effect of failure to notify an additional vehicle was to leave it uncovered, whilst the cover in respect of the original insured vehicle together with the cover for driving other vehicles would remain naturally untouched.
Failure to notify an additional vehicle could have no effect on the previous cover under Clause 1(1)(a) and (b). Failure to notify a replacement vehicle meant that there was no cover for or in respect of that vehicle. On that basis, if cover under clause 1(1)(b) was naturally dependent upon retention of the specified vehicle, then it too would fail on any failure to insure a replacement vehicle.
The significant feature of Clause 11(1) was that it provided no period within which any replacement vehicle had to be acquired. There was under the motor policy no obligation to inform the insurers of any disposal of the insured vehicle.
All the policy said was that notice had to be given within seven days of any replacement. However there would be a delay between disposal and replacement. Mance LJ could not accept that a temporary gap meant that the policy must lapse. Eagle Star, the insurers must have accepted the risk of replacement not being achieved at the moment of disposal of the old car and to have agreed to have provided Clause 1(1)(b) cover on a continuous basis.
At the time of the accident on the 16th May 1993, the Claimant was looking to get another car, but he never did. Therefore he was not replacing his car within the meaning of Clause 11(1).
The presence of the replacement/additional vehicles clause constituted a very relevant distinction between the policy in this case and that considered in Boss v Kingston. Under Clause 1(1)(b) Eagle Star must be taken to have accepted that cover whilst driving other vehicles could continue after disposal of the insured car.
Mance LJ also said that the reasoning in Boss v Kingston was open to substantial doubt. Insurance wordings should be clear. If cover under an apparently independently worded indemnity clause was intended to depend upon retention or replacement of the insured car, to which the cover does not relate, or upon continuation of cover under a separately expressed indemnity clause, one would expect this to be clearly stated.
In the case of any real ambiguity, an insurance wording fell to be construed against the insurers. It was more important to reinforce the message that insured’s were entitled to clear wordings and to the benefit of any ambiguity, than to force the present particular policy wording into an artificial mould.
Therefore the appeal would be dismissed. The Claimant was covered under Clause 1 of the policy following the sale of his car, in the event of his driving, with the owner’s permission, any motor car not belonging to and not held under a hire agreement by him.
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