Albert v Motor Insurers’ Bureau
House of Lords
Citations:  AC 301;  3 WLR 291;  2 All ER 1345;  2 Lloyd’s Rep 229;  RTR 230; (1971) 115 SJ 588;  CLY 10351.
Quick was a dock worker who regularly gave lifts to his co-workers. They had an informal understanding that the passengers would give him some amount of money (or equivalent). Quick had not insured his vehicle for passenger liability. The claimant’s husband was one of Quick’s co-workers. He was killed by Quick’s negligent driving while being given a lift. The claimant successfully sued Quick under the Fatal Accidents Act. However, Quick did not have the money to satisfy the judgment.
The claimant then sued the Motor Insurer’s Bureau for the damages which Quick could not pay. The Motor Insurer’s Bureau was required by law to pay in respect of any person who ought to have insured their vehicle against passenger liability. A person is only required to insure their vehicle against passenger liability if they drive ‘a vehicle in which passengers are carried for hire or reward’. The Motor Insurer’s Bureau argued that Quick’s arrangements with his passengers were too informal to amount to binding contracts. This meant, they argued, that he was not driving a vehicle in which passengers are carried for hire or reward.
- Does the insurance law require a legally binding contract before a vehicle can be described as carrying passengers for hire or reward?
The House of Lords held in favour of the claimant. The obligation to insure arose if the vehicle systematically carried passengers for reward for reasons beyond mere social kindness. There was no need for binding contracts so long as the arrangement amounted to business activity. Quick had used his vehicle in this manner, so he was obliged to insure. The Motor Insurer’s Bureau was therefore liable.
This Case is Authority For…
Under insurance legislation, a vehicle can be one in which passengers are carried for reward or hire even if the driver never contracts with the passengers. All that is required is habitual use for paid carriage for business-like purposes.
The judges were strongly motivated by the fact that if a binding contract was required, taxi and bus drivers could avoid the obligation to insure by agreeing with customers that there was no contract between them.
Lord Cross noted that people are more likely to intend to enter into legally binding relations, for the purposes of contract law, where the relationship is business or transactional. It is less likely where all the parties involved have a social or acquaintance relationship, even if money changes hands. However, he noted that this did not turn on the fact that people in social relationships are less likely to sue each other for broken promises.