Law of Compulsory Motor Vehicle, The

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CHAPTER 3 Insurance Obligation: Scope (meaning of “permit,” “cause,” “motor vehicle,” “road or other public place”)

Permit and cause use

3.1 Section 143(1)(b) of RTA 1988 states, “A person must not cause or permit any other person to use a motor vehicle on a road or other public place…” without the insurance cover required by the statute. Two different actions are in question here: (1) to permit and (2) to cause another person to use a motor vehicle. The word “consent” may be used interchangeably with “permission.”1 Giving leave and licence to somebody to use the vehicle is described as “to permit”2: A allows his friend B to use his motor car.3 3.2 Permission may be given expressly or inferred from the arrangement between the relevant parties to it. In McLeod (or Houston) v Buchanan 4 it was held that where a policy covers for business use only and if the owner permits another to use the vehicle without any restrictions, this impliedly permits all uses including for purposes not covered by any insurance.5 Buchanan is to be conferred with some other precedents in which it was held that a permission to use is not, unless more is proved, a permission to use in contravention.6 3.3 It is a matter of fact to prove if the permission includes any restrictions. This issue will be analysed in more detail below. 3.4 Both “to permit” or “to cause” require proof of mens rea in knowledge of the facts rendering the user unlawful.7 However, the two expressions differ in a number of respects. The user involves some express or positive mandate “to cause” the use of the vehicle,8 in the form of ordering or directing someone to use the vehicle.9 If A tells

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his chauffeur to bring his car round and drive A to his work, A is causing the car to be used.10 “To permit,” in this respect, is a looser and vaguer expression than “to cause.”11 3.5 Each case turns on its own facts. In Reay v Young 12 an offence was committed where a husband, who was insured, allowed his wife, who was uninsured, to drive the car, he himself being present. The wife was not driving as his servant. This is to be distinguished from a case where an employee, during the course of his employment and whilst the vehicle is on its authorised route, permits an uninsured person to drive the insured vehicle that is under his control. In Marsh v Moores 13 the insurance was taken out by the employer and provided cover “in the event of an accident caused by or through or in connexion with the vehicle against all sums which the company shall become legally liable to pay in respect of the death or bodily injury to any person or damage to property.” J was employed as a driver and he allowed P to drive the vehicle while it was proceeding on the route of its authorised journey. J was giving a lesson in driving sitting beside P and ready to operate the hand brake. No accident took place but the matter arose because the vehicle was overtaken by the police who then ascertained that P was not the holder of a driving licence. The Court held that the RTA 1930 did not require that there should be a policy of insurance in existence covering the personal liability of the driver of the vehicle if there was already a policy in respect of third party risks covering the user of the car at the material time. J was the servant of the company who was entrusted with the driving of the car on the day in question. It was an unauthorised act by J to allow P to drive, but it was within the scope of his authority of controlling the vehicle. It was left open in Reay v Young whether or not the husband was controlling the driving and so that he was the driver of the car – both husband and wife pleaded guilty in that case. In Marsh, it was held that if a third party had been injured as a result of an accident at the relevant time J would be liable, at least in part, along with P and J’s employers would, in turn, be legally responsible vicariously for the negligence of their servant acting within the scope of his authority. Such loss would have fallen within the scope of the insurance and therefore no offence of uninsured driving was committed. Similarly, in Langman v Valentine.14 the second respondent, who was sitting in the seat next to that of the driver and had his left hand on the steering wheel and right hand on the hand-brake was held to be driving the vehicle. The policy that insured the second respondent would have covered if a victim had been injured by an accident when the first respondent was taking a driving lesson in this form from the second respondent. The mere fact that the former had no policy was immaterial where the latter was driving simultaneously.

Conditional permission

3.6 If a permission is given subject to a condition, failing to fulfil it may nullify the permission. In Newbury v Davis 15 D had granted H permission to use the vehicle, subject

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to his insuring it. H however used the vehicle with no insurance in force. The Court interpreted H’s use as without D’s permission. A similar ruling is seen in Sheldon Deliveries Ltd v Willis 16 where a limited company, who could act only through its servants, had its express instructions disobeyed by an employee driver. The company had no knowledge that the employee was using the vehicle contrary to the instructions, and that knowledge of fact17 was required for conviction so there was no conviction. Director of Public Prosecutions v Fisher 18 did not refer to Sheldon but distinguished Newbury and added that considering the serious consequences that a traffic accident might cause to the third party victims, Newbury v Davis should be read with extreme caution.19 The facts of Director of Public Prosecutions v Fisher 20 were slightly different that when lending the car to L the defendant’s condition was, knowing that L was disqualified, that L could find a driver who was insured for the journey. R, who was uninsured, drove the vehicle for L who never enquired if R was insured. It was held that in order to establish a conditional permission, the defendant would have at least to have been found to have given it directly to the would-be driver. The Court’s concern was that a person who lends his car to another could then avoid liability merely by saying something to the other to the effect, “Please see to it that you are insured before using the car.”21 3.7 On the other hand, Newbury v Davies was followed once more in Pearl Assurance Plc v Kavanagh 22 where the assured K permitted H to drive her vehicle only if H arranged his own insurance cover. H, who drove the vehicle without insurance, was involved in an accident. The Court held that K’s permission, which was subject to a condition which was not fulfilled, was not a permission at all.23 Moreover, later, the Court of Appeal confirmed in Lloyd-Wolper v Moore 24 that the assured owner may protect himself by making the permission subject to the performance or fulfilment of a condition. 3.8 The facts of Fisher are clearly different from the other cases that went to the different directions to Fisher. It might be said that the owner of a vehicle may argue that he had given a conditional permission which was not fulfilled and he may defend himself in an action depending on the content and the nature of the permission. The defendant must know the fact that his vehicle is being driven by someone else, and if the defendant does not know such a fact then the offence is not committed. As again noted above, the lack of knowledge on whether the driver is insured is not a defence, but the lack of the actual driving is a defence. In Fisher it could be a clearer reason if the Court had emphasised that the defendant had known that because L was disqualified some other people would have been driving for L and hence, the Court required that the condition must have been communicated to the actual driver.

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Death of the person who gave the permission

3.9 The permission is personal to the person who has been granted it.25 Continuing permission must be assumed until shown to have been terminated.26 Unless any limitation is stated expressly, the permission does not automatically lapse on the death of the person who granted it, but the executrix can terminate the permission.27 In Kelly v Cornhill Insurance Co. Ltd 28 the policy covered “(1) any person driving the insured car on the order of or with the permission of the insured and who has not been refused any motor vehicle insurance or continuance thereof by any insurer.” The father who took out this policy died on 2 June 1959, after he gave permission to his son to drive the vehicle. While driving the car the son was involved in an accident in February 1960, causing damage to the property of third parties. Lord Dilhorne rejected to read the word “permission” in the policy as “permission which the insured was at all relevant times in a position to cancel or revoke.”29 Further, there was no reason by operation of law to regard a permission for an unlimited duration to have been either revoked or cancelled upon death of the permitter.30

The offender

3.10 Permission to use a vehicle can be given by the owner or another person, for instance a hirer of the vehicle.31 The vital question is whether the alleged offender is in a position to forbid the use of the vehicle.32 Hence, in Thompson v Lodwick 33 it was held that the defendant who agreed to supervise the driving and sat in the front passenger seat whilst the owner of the vehicle, who had the provisional driving licence, was driving it without insurance, was held not to be in a position to forbid the use of this vehicle. Moreover, in Watkins v O’Shaughnessy 34 the defendant was held not to be in a position to control and hence to permit the driver to use the vehicle once he sold it to the driver. 3.11 This matter is important also when, under an insurance policy, the persons entitled to drive included “the policyholder and any other person who was driving on the policy-holder’s order or with his permission.” When the vehicle is sold, in principle, the owner ceases to have insurable interest in it and any permission given by him before the sale cannot be extended after it.35 If the new owner uses the vehicle without insurance, he cannot argue that he was using it with the previous owner’s permission.36

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A person using the vehicle in the course of employment

3.12 If the driver is an employee who neither knew nor had reason to believe that there was not in force in relation to the vehicle such a policy of insurance or security as is mentioned in the RTA 1988 s 143(1), the employee may not be charged for the criminal offence under the RTA 1988 s 143(2). The relevant conditions to be satisfied are that the vehicle must be used by an employee in the course of his employment and the vehicle must not belong to the employee and was not in his possession under a contract of hiring or of loan. These conditions are listed under the RTA 1988 s 143(3) and are cumulative.37 Hence, a taxi driver who hired a vehicle from M Taxi Rental was found guilty under s 143(2) although being uninsured was not his failure. He was uninsured because M had failed to notify the insurer of this particular driver’s name to be noted on the policy.38 The Court found no difficulty in finding the breach as he had hired the taxi and was acting as an independent contractor.

The meaning of “permit” under RTA section 151(8)

3.13 The scope of the RTA 1988 s 151 is discussed in . Briefly, the insurer is under the obligation to indemnify the victim of a traffic accident even though the driver does not fall within the insurance cover. The law treats the insurance contract, with regards to the third party’s claim, as if provided cover for the driver in question. Under section 151(8) the RTA 1988 provides that the insurer has a right of recourse, after indemnifying the third party victim’s loss, against the driver or any person who is insured under the policy and caused or permitted the use of the vehicle which gave rise to the liability.39 3.14 The word “permitted” in s 151(8)(b) is to be interpreted the same way as the word “permits” in s 143(1)(b).40 In Lloyd-Wolper v Moore 41 before taking out the motor vehicle insurance the father expressly misrepresented a number of matters which induced the insurer to enter into the contract. His son involved in an accident and having indemnified the third party victim, the insurer, under section 151(8), returned to the insured father. Two of the matters misrepresented by the father were that his son was 17 and he had driving licence, whereas he was 16 at the relevant time and was not eligible for the licence at that age. If the son had been insured, there would have been no recourse claim under section 151(8) of the RTA 1988. However, the son was uninsured and the father committed the offence under section 143.

Extension clauses – permitted users for the scheduled vehicle

3.15 It had been common for motor policies to extend the policy cover beyond the assured by express clauses.42 For instance in Tattersall v Drysdale 43 the relevant clause

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provided “the insurance shall extend to indemnify any person who is driving on the assured’s order or with his permission in respect of any legal liability as aforesaid.” 3.16 However, enforceability of such clauses had been challenged by the two then applicable principles of English law: (1) the traditional doctrine of privity of contract and (2) it was questioned whether the insurable interest requirement under the Life Assurance Act 177444 applied to motor policies with respect to such extension clauses.45 3.17 These problems were illustrated well in Vandepitte v Preferred Accident Insurance Corporation of New York.46 The insurance that was taken out by R covered third party risks, and that the indemnity should be available to any person operating the car with the permission of the assured. R’s daughter J was involved in an accident when she was driving the car with her father’s permission. The insurers rejected the victim’s claim and the Privy Council decided for the insurers, having adopted a strict interpretation of the traditional doctrine of privity that was applicable at the time,47 Lord Wright held that the mere generality of the language was not in itself sufficient to find a contract between J and the insurers. Moreover, R had no authority from J to insure on her behalf and at no time did she purport to adopt or ratify any insurance even if made on her behalf. Furthermore there was no consideration proceeding from J. Finally, Lord Wright found no evidence that R had any intention to create a beneficial interest for J under the contract as a trustee,48 either specifically or as member of a described class. The outcome was that R was the contracting party in law, but he had no insurable interest in J’s personal liability. 3.18 A similar issue came before Roche J in Williams v Baltic Insurance Association of London.49 B was driving her brother’s car with his consent. B’s brother had effected insurance by which the insurers agreed to indemnity him against damage to, or loss of, his motor car, and (by clause 2) “against all sums for which the insured (or any licensed personal friend or relative of the insured while driving the car with the insured’s general knowledge and consent) shall become legally liable in compensation for… accidental bodily injury caused to any person.” 3.19 The policy was held to have plainly covered B only. The problem with regards to a claim by B with respect to an accident caused by B’s sister arose out of the Life Assurance Act 1774: the assured had no interest in his sister’s liability and therefore cannot recover; that B, who might be said to be interested, could not recover, because

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her name was not inserted in the policy. Roche J held that50 this was an insurance on the motor car, being on a policy on goods it fell outside the scope of the 1774 Act.51 B’s sister was interested as the driver of the motor car in respect of the motor car itself. By an analogy, a person is interested in a marine adventure who (inter alia) may incur liability in respect thereof. B effected the insurance and he was insured, but it was an insurance for himself and the other persons mentioned in clause 2. Nevertheless, in Vandepitte the Court said it was not clear whether Roche J in Williams treated the driver of the car as directly insured or as a cestui que trust. As found in Vandepitte, the policy in Williams was of “honour policy” under which an insurer would provide an indemnification for business reputation. 3.20 The RTA 1930 s 36(4)52 provided

Notwithstanding anything in any enactment, a person issuing a policy of insurance under this section shall be liable to indemnify the persons or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of those persons or classes of persons.

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