On 10 October 2024 the Supreme Court delivered judgment in Urban and Recycling Ltd & RSA Insurance v Zurich Insurance plc [2024] IESC 43 with potential wide-ranging implications for Irish motor and employers' liability insurers.
In 2013 an employee ("JM") of Urban and Rural Recycling Limited ("URRL") was injured while operating the company’s recycling truck. JM was stopped at the side of a public road and while operating a lift to deposit the contents of a bin into the truck, the bin fell resulting in serious head injuries to him. JM had been the driver of the truck and he was accompanied by the principal of URRL. JM initiated a claim for damages against URRL.
URRL had two relevant insurance policies: a motor fleet policy with Zurich and an employer’s liability policy with RSA.
RSA argued that its policy contained exclusions for liability required to be covered by compulsory motor insurance under the Road Traffic Act 1961 ("the RTA"), and for liability covered under another policy of insurance.
Zurich argued that its policy contained an exclusion for bodily injury sustained to any person driving the vehicle or in charge of the vehicle for the purpose of driving.
The High Court had found that the RTA mandated that any liability arising from this claim be insured. The Court of Appeal found that the RTA did not require such cover and that the Zurich policy did not apply. It is worth noting that under Irish law, employer's liability insurance is not compulsory.
On appeal, the central question for consideration by the Supreme Court was whether the liability of URRL to JM was a liability required to be covered by compulsory motor insurance under the RTA.
Compulsory Motor Insurance
Section 56(1) of the RTA prohibits the use of a vehicle in a public place unless the user has an approved policy of insurance in respect of the user’s liability for injury caused by the negligent use of the vehicle. This is one of the provisions relied upon as implementing Ireland's obligations under European Directive 2009/103/EC ("the 2009 Directive"), which provides for compulsory insurance in respect of civil liability arising from the use of mechanically propelled vehicles.
Defining the "Use" of a Vehicle
It was accepted by both RSA and Zurich that the “use” of the vehicle for the purposes of S56(1) did encompass the operation of the bin lift while the vehicle was stationary, so there was no dispute as to whether this use related to the "function of the vehicle as a means of transport".
In any event, the Court noted that a broad meaning has been attributed to "use" by the Court of Justice of the European Union ("CJEU"). The CJEU has found that "use" includes any use consistent with the normal function of a vehicle as a means of transport (Damijan Vnuk v. Zavarovalnica Triglav Case C-162/13) and includes stationary uses, such as when a vehicle is parked (Linea Directa Aseguradora SA v Segurcaixa Sociedad Anónima de Seguros y Reaseguros Case C-100/18). The Court considered that, as the bin was being loaded for the purpose of transporting its contents, this use related to its function as a means of transport. It drew a distinction between that and uses which fall outside the operation of a vehicle as a means of transport, such as the operation of a fryer in a mobile food truck.
While it did not form part of the consideration of this case, the European Union (Motor Insurance) Regulations 2023 (which came into operation in Ireland on 23 December 2023 under Statutory Instrument 643/2023) have defined the term “use of a vehicle” in line with the CJEU judgments referenced above.
Defining the User (or Users?) of a Vehicle
There was no dispute that JM was a user of the vehicle at the time of the accident. As such, Zurich argued that this claim could not be covered by S56(1); a person cannot incur a liability to himself and therefore the user of a vehicle can be liable only to a third party.
The Court agreed that JM could not maintain an action seeking damages for injuries caused solely by his own negligence. However, as it is possible for there to be more than one simultaneous user of a vehicle, the court held that there was no basis under S56(1) to exclude all liability to JM simply because he was a user. It is within the scope of S56(1) for one user of a vehicle to recover damages sustained due to the negligence of another user.
This gives rise to the question, was URRL a user of the vehicle? The Court of Appeal held that a company could not physically operate a vehicle and therefore could not be a user. The Supreme Court disagreed and held that an employee using a vehicle in the course of their employment is, by definition, under the control of their employer and therefore an employer can be a user of the vehicle through its employee acting as its agent. The Court stated that this did not involve the employer being vicariously liable as such but rather "a straightforward issue of attribution according to the law of agency".
Considering the Exclusions
Liabilities to the driver are permitted to be excluded under the 2009 Directive and the Court considered whether such an exclusion could be applied to JM. It was common case that, while JM was using the vehicle at the time the accident occurred, he was not driving it because he had parked up and alighted from it. The Court held that the word "driver" could not include a person who was not actually driving at the time of the accident. The Court also noted that, while the Directive does allow for an exclusion for liability to the driver, such an exclusion does not form part of S56(1).
Zurich sought to rely on its exclusion such that liability for bodily injury to any person "driving the vehicle or in charge of the vehicle for the purposes of driving" was excluded, "except so far as is necessary to meet the requirements of the RTA". The Court agreed that JM was "in charge of the vehicle for the purposes of driving" when the accident occurred, but it found that the exclusion could not be relied upon as there is no basis under the compulsory motor insurance provisions to exclude such liability..
An Uncertain Outcome
The Court held that, if JM's injuries were caused by URRL’s negligent use of the vehicle, then URRL’s liability to JM is captured by the scope of S56(1) and the Zurich motor policy must respond.
However, the Court was keen to highlight that as JM's claim against URRL was settled without proceeding to trial, there was no basis upon which the Court could make a determination as to the negligence or otherwise of URRL. Hence, it is now a matter for RSA and Zurich to address the application of this judgment to the facts of the case with regard to their respective policies.
The Implications for Motor Insurers
It seems the liability of motor insurers must now extend to claims which, until now, would have been considered to fall within the scope of employers’ liability policies. The Court observed this to be "an inevitable consequence of the CJEU case law". For instance, motor insurers may now have a liability in respect of commercial drivers injured whilst loading or unloading their vehicles, or in respect of drivers of company vehicles injured due to a defect in the vehicle.
Motor insurers will have to consider matters previously alien to them and a potential may be that commercial motor insurance premiums will increase to meet increased scope for liability.
A wider consideration arises as to whether Ireland's compulsory motor insurance regime properly complies with the state's obligations under the 2009 Directive. In particular S56(1) limits compulsory motor insurance:
- to liability in negligence, whereas the obligation imposed by the 2009 Directive refers to the broader concept of "civil liability"; and
- to vehicles driven in a public place, whereas the 2009 Directive provides no such limitation. The Supreme Court was not required to consider this issue in the instant case.
The Court observed obiter that, if the RTA does not properly implement the 2009 Directive, then the effect (in light of Smith v. Meade Case C-122/17 ECLI:EU:C:2018:631) may be to expose the Irish state to the costs of compensating victims of accidents who should, more properly, be compensated by motor insurers. If the legislature sits up and takes notice of these comments, an even greater increase in exposure may be on the way for motor insurers.
Declaration
We, Jessica Copley and John Sheehy, are the original authors of this work. We have not infringed the intellectual property rights or interests of anyone in the creation of the work. We have not used generative AI tools in the creation of the work. We agree to grant the Forum of Insurance Lawyers (FOIL) an irrevocable licence to reproduce, publish and share the work in any FOIL related media providing the names of all authors are clearly attributed.
