PILLING V UK INSURANCE 2019 - ANOTHER MISRULING

R & S Pilling t/a Phoenix Engineering v UK Insurance Ltd [2019] UKSC 16

This is the second time in as many months that five justices of the UK Supreme Court have misdirected themselves on European law and reached a decision based on a line of reasoning that fails to withstand close scrutiny.  

See my earlier blog on Cameron v Liverpool Victoria Insurance [2019] UKSC 6 and my New Law Journal feature from 15 March 2019.

  

The Pilling case featured a a dispute between a motor insurer and a public liability insurer as to who was liable to indemnify the owners of business premises for an extensive fire.  The conflagration was caused by an attempted DIY welding repair to an employee's privately owned car.  This set his car ablaze.  The fire then spread; gutting the employer's business premises. The key issues were:

  

• whether a repair undertaken to return a car to immediate road-use after it had failed its MOT was a 'use of a vehicle' that is required by law to be covered by compulsory third party motor insurance.

• whether UKI's motor policy that certified that it conformed with the UK law insurance requirement, and which was ambiguously worded, should be construed to confer such cover.

  

The Court of Appeal held that  the motor insurer was liable indemnify the claim but the Supreme Court disagreed; unanimously.

As to the first issue, the Supreme Court misapplied the EU law that governs how national courts should set about construing UK implementing law, in its approach to interpreting the wording of the Road Traffic Act 1988.  This Act regulates compulsory third-party motor insurance in the UK and it is supposed to fully implement EU Directive 2009/103/EC on motor insurance. The Supreme Court also failed to consider two recent and highly relevant (and binding) Court of Justice rulings on ‘use of vehicles’ or to note that there is also an ongoing reference to the Court of Justice on a similar point.

On the second issue, the rationale for the three step approach devised by the Supreme Court to policy construction is badly flawed.

The first instalment of my two part feature criticising this decision is due to be published in the New Law Journal next week. 

The Pilling ruling also has a wider significance.  It provides a useful insight into how ‘EU-derived domestic legislation’ is likely to be interpreted by our courts under the EU Withdrawal Act 2018.