Supreme Court clarifies vehicle use

Carrying out significant repairs to a vehicle on private property does not count as ‘use’ for the purposes of compulsory motor insurance, the UK Supreme Court has ruled.

Ruling on a coverage dispute between property insurer AXA and motor insurer UK Insurance (UKI), which owns Churchill, over the liability of a mechanical fitter who caused a fire, the Supreme Court found that ‘use’ of a vehicle required “an element of control, management or operation”.

The mechanic at the centre of the case, Mr Holden, used the premises of his employer, Phoenix Engineering, to carry out repairs to his own immobilised vehicle. Sparks from the welding equipment he used for the repairs started a fire that caused substantial property damage.

Phoenix’s property insurer, AXA, paid out more than £2 million to cover the fire damage, and then brought a subrogated claim against Holden, whose only cover was his motor insurance policy underwritten by UKI.

The Supreme Court had to rule on whether the fire damage arose from Holden’s ‘use’ of the vehicle that he was working on and had motor insurance cover for.

Finding that his ‘use’ didn’t meet the purposes of compulsory motor insurance, the Supreme Court held that “the causal connection is too remote … it was Mr Holden’s alleged negligence in carrying out the repairs and not the prior use of the car as a means of transport which caused the relevant damage”.

Law firm BLM said the ruling provided welcome clarity about the circumstances in which a liability may properly be described as having arisen out of the ‘use’ of a vehicle.