In Hayward v Norwich Union (NU) last month, the Court of Appeal pondered the questions: “When is an ignition key ‘left' in a car?” and “Is robbery ‘theft'?”. Over £74,000 depended on their answers. The case involved Richard Hayward, who claimed for theft when his porsche was stolen after he had left the keys in the ignition.
In November 1997, Hayward bought a Porsche 911 Carrera. His motor policy stated under section 1, loss or damage: “If your car is lost, stolen or damaged, we may pay the amount of loss or damage.”
But it also stated under exception 5 to section 1: “Your policy does not cover loss or damage arising from theft while the keys have been left in or on the car.
General condition 5 also obliged Hayward to “take all reasonable steps to safeguard your car”. Finally, NU would not indemnify any loss caused by theft unless “one of our approved vehicle security products is fitted and armed.” The Porsche was fitted with an alarm and an automatic immobiliser.
In February 1998, Hayward stopped at a petrol station. When he went to the kiosk, he deliberately left the key in the ignition, the immobiliser control unit under the driver's seat and the doors unlocked. He was about 25 yards from the Porsche, but he could still see it. As he waited to pay, he heard the car's engine. He ran to the car but the thief inside had locked the doors. He feared being run over and stepped away from the car, which immediately drove away at high speed. It was never recovered.
NU rejected Hayward's insurance claim because it said he had breached both exclusion 5 and general condition 5 by leaving his keys in the car. Hayward sued NU for breach of contract.
At the trial, the deputy judge decided that “keys have been left” was ambiguous and meant “left unattended”. The keys had not been “left” if they were in the car but the driver was in a position to observe, and could prevent someone interfering with, the car.
The deputy judge also held that, although this was a robbery, it was still “theft” within exception 5. Finally, he held that recklessness was needed to breach general condition 5. Hayward's reliance on the immobiliser was negligent but not reckless.
The case then went to the Court of Appeal, which decided that “keys have been left” was not ambiguous. It meant that the leaver of the keys had, first, caused or allowed them to remain in the car, by choice or mistake, and second, had moved away from them.
Lord Justice Peter Gibson added that the court should not seek ambiguity when there was none. The deputy judge's interpretation of “have been left” as “left unattended” was wrong. On the ordinary use of the words, and on the facts, Hayward had left the keys in the car. The immobiliser and the fact that he could see the car while he was at the kiosk did not change anything.
The Court of Appeal took a dim view of Hayward's argument that “robbery” did not mean “theft” within exception 5. Lord Justice Gibson said: “All robbery is theft, but not all theft is robbery”. To exclude robbery would contradict the whole point of exception 5.
This decision tells us two things. First, this was a victory for plain English policy wordings. The courts will only go so far to accommodate “consumerism”. The words “have been left” were clear and unambiguous. The deputy judge was, perhaps, attempting to look after the “little man” but he was mistaken at law.
The keys were left in the ignition without any violence or threat of violence. The car was not hijacked. It was stolen with relative ease while Hayward was several yards away. Brokers and underwriters will recognise the importance of this failure to muddy the waters of plain English interpretation of policies.
The case also tells us of the limitations of reasonable precautions clauses. NU accepted that general condition 5 would only be breached if Hayward had been reckless. Hence, but for the presence of exception 5, Hayward may have recovered his £74,000.
Many motor policies have such an exception. Those insurers that do not include one should think again. For those that do have this type of exception, the Court of Appeal's decision should end brokers' recent attempts to revive old “ignition key” claims following the deputy judge's decision.