Paul Spiteri comments on the landmark decision in Damijan Vnuk v Zavarovalnic Triglav (2014) and its potential impact on motor insurance for the UK
Circumstances
This case originates from Slovenia. On 13th August 2007, a tractor was reversing a trailer in a farmyard and struck a ladder, on which Mr Vnuk, a farm worker, was stood loading bales of hay into a loft. As a result of the collision with the ladder, Mr Vnuk fell and was injured. Vnuk sued the tractor’s motor insurers, Triglav, for his injuries but they denied liability. Triglav argued that although they insured the tractor, the cover was restricted to use on public roads and in any event the vehicle was being used as a machine and not for transport at the time of the accident.
Under Slovenian domestic law, the requirement for compulsory insurance for use of motor vehicles did not expressly refer to ‘road use’ but was understood to be confined to road traffic use. Vnuk’s claim against Triglav failed at both first instance decision and on appeal. It was held that compulsory insurance did not extend to situations where the tractor was being used as a machine or propulsion device.
Not content with this uncertainty, the Slovenian Supreme Court sought a preliminary ECJ ruling concerning the question; “Do the European directives on motor insurance require this kind of ‘use of vehicles’ to be covered by third party motor insurance?”
In determining this issue, the ECJ looked at the 6 European directives on motor insurance, specifically Article 3 of the 1st and 6th Directives, which sets out the insurance requirement; the Slovenian national law implementing the insurance requirement and Article 15, a Slovenian legislative code.
Having considered these sources and definition of a vehicle under Article 1 the ECJ made its ruling. It confirmed that the concept of ‘use of vehicles’ in article3 ‘covers any use’ of a vehicle that ‘is consistent with the normal function of that vehicle’ and ‘that concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn’
Therefore as a result of the decision in Vnuk, the scope of compulsory motor insurance extends to:
- Any motor vehicle ‘… intended for travel on land and propelled by mechanical power… ’ as per the Article 1 definition.
- Any use made of that vehicle ‘…consistent with a normal function of that vehicle…’
- In any geographic location, even on private property.No explanation was provided by the Court as to what would constitute ‘consistent with the normal function’ of the motor vehicle but, as per Vnuk, “use” would not have to involve transport and is not connected with the use that was made of the vehicle in question.
Vnuk’s application to UK law
Under UK law, Article 3(1) of the Directive is enacted in the Road Traffic Act 1988. Under Part VI of the 1988 Act, the obligation for third party cover specifically excludes use on private land, limiting compulsory insurance to “use on roads or other public places” (s.143(1)) and applies to vehicles “intended or adapted for use on roads” (s.185 (1)).
There is currently a conflict therefore between our domestic road traffic motor insurance arrangements and the Vnuk decision. However, until such time as the Road Traffic Act 1988 is amended, it would only be open for a potential claimant to take legal action against the Department for Transport for failing to adopt the directive into UK law, under Frankovitch.
However, the decision in Vnuk inevitably means that the Road Traffic Act 1988 will need to be amended to make it compatible with European law in order to:
- extend the scope of compulsory motor insurance to include the use of motor vehicles on private land;
- extend the definition of a vehicle as any ‘mechanically propelled motor vehicle intended for travel’; and
- remove any restriction on use, provided such use is ‘consistent with the normal function’ of the vehicle concerned.
In essence then, sections 143, 145, 148 and 185 of the Road Traffic Act 1988 will require amendment, as will the Uninsured Drivers Agreement 1999 and the Untraced Drivers Agreement 2003. Furthermore, many insurance policies will need to be redrafted going forward, so as not to fall foul of Vnuk in wrongly restricting the use, geographic scope and type of vehicle covered.
The impact for insurers/MIB
Despite originating in far flung Slovenia then, Vnuk could have potentially profound repercussions for UK domestic Statute, case law and the insurance industry. However, will we have a position where vehicles such as ride-on lawnmowers, Go-Karts and Forklift trucks have to be covered with compulsory third party insurance? By virtue of article 5.2 of the sixth directive it is unlikely as member states are at liberty to choose a list of vehicle types that are to be derogated from the compulsory insurance requirement. However, they must be covered by the compensatory guarantee scheme. In the UK, this means that the MIB Uninsured/Untraced Drivers Agreements would need to cover any such claims. Although this may suggest the MIB are opening themselves up to a wealth of hitherto un-anticipated claims, they would then potentially be at liberty to delegate the claim to insurers where other cover already exists, eg public liability, house insurance policies etc. This would then mitigate the effects of Vnuk somewhat.
Whatever the scope of legislative changes brought about by Vnuk, these are likely to take place during the life of the next government.