The implications of the Vnuk case

The implications of the Vnuk ruling — the recent ECJ case which means that cars driven solely on private property may need to be insured in future and all motor insurance policies amended

In the recent case of Damijan Vnuk v Zavarovalnica Trigalev (C-162/13) the Court of Justice of the European Union ("CJEU"), in a matter referred to it by the Slovenian Supreme Court, considered the meaning of Article 3(1) of the First Directive on Motor Insurance (72/166/EEC).

The pertinent facts were that Mr Vnuk, a farmworker, was knocked off a ladder in a farmyard by a trailer attached to a tractor, which was reversing across the yard. Mr Vnuk sought damages against the defendant insurer of the tractor.

The Slovenian courts ruled against Mr Vnuk. The reasoning was that a compulsory insurance policy under Slovenian law for a motor vehicle covered the use of the tractor as a means of transport but not damage caused when a tractor was used as a machine or propulsion device.

The referral from the Slovenian Supreme Court was for the CJEU to determine whether the circumstances of the accident fell within the duty to insure 'the use of vehicles' within the meaning of Article 3(1).

The CJEU determined that the duty to insure did extend to the accident circumstances in this case. It found that the wording 'use of vehicles' in Article 3(1) covers any use of a vehicle that is consistent with 'the normal function' of that vehicle. The judgment made no specific reference to the duty to insure extending to private property (such as the farmyard in which Mr Vnuk was working) but it seems an inevitable conclusion that the court's view was that it did. In addition, the ruling could lead to a stream of cases dealing with how you determine "the normal function" of a vehicle and indeed how far the definition of 'vehicle' extends.

This leaves us with interesting questions in terms of the equivalent legislation in the UK.

The equivalent duty in the UK is under the Road Traffic Act 1988 ("RTA 1988"). The duty to insure under Part VI of the RTA 1988 only extends to use of a motor vehicle on a road or other public place. A motor vehicle is defined by section 185 as "a mechanically propelled vehicle intended or adapted for use on a road' (not 'or other public place'). Not only does the duty not extend to use of a vehicle on private property, the definition of a 'motor vehicle' seems narrower than the 'normal function' test. The relevant Directive is now the consolidated 6th Motor Insurance Directive 2009 (2009/102/EC) which repeats the definitions from the First Directive. The definition of 'motor vehicle' is wide covering any vehicle used on land save for where it runs on rails.

The government faces potential Francovich damages claims from claimants who are deprived of damages because, for example, the accident happened on private land or the vehicle in question was not 'intended or adapted for use on roads'. Insurers can rely on the wording of the RTA 1988, as can MIB, unless the court was able to use the Marleasing principle to read additional wording into the Act as it did in Churchill v Wilkinson in connection with Section 151(8). This seems unlikely given the clear words used — Marleasing simply requires the court to try to construe domestic law in a way that gives effect to the intention behind European Directives, but it will only be able to strain the wording so far.

The government is likely, therefore, to amend the Act. This would have wide-reaching ramifications for insurers in terms of the type of vehicles to be compulsorily insured (and perhaps registered as such on the MID) and the need for RTA cover in non-indemnity situations (i.e. accidents occurring on private land).

Also, the police would have to take an interest in such incidents/vehicles and hence any changes will be more complicated by having to factor their role in. One option, due to the likely low incidence of this type of claim, might be for MIB to cover such cases, but the ramifications would need to be thought through carefully.

Certainly, a number of previously uninsured vehicles will now potentially be in the frame including, for example, forklift trucks, Segways, invalid carriages, sit-on lawnmowers and many others. The ABI is looking at this issue and a consultation paper seeking views as to the implications of and answers to Vnuk is likely to be issued shortly by the DfT.