Dr Nicholas Bevan

Dr Nicholas Bevan
www.nicholasbevan.com

Sunday, 1 March 2020

DRAWING A LINE


This post marks an end of an important chapter in my life.

Between 2012 and 2019 I pursued a law reform campaign that successfully removed many unjust exclusions and  restrictions of motor insurer liability. 

It is an unfortunate and shameful fact that successive UK governments have been either brow beaten or outwitted by the powerful motor insurance lobby into cheating members of the public from their proper entitlement to compensation. The fact that I, as a private citizen of limited means, was able to force the government to introduce these long overdue reforms is a testament to the force and efficacy of European Law. None of this would have been possible otherwise.  The European Union, for all its faults, not only espouses the principle of equality under the law but it enforces it.

Further important reform in this area is highly unlikely due to Brexit. The public are now at the mercy of an indifferent executive and a civil justice system that has never been so inaccessible to and institutionally biased against ordinary private citizens, as now.

I list below a summary of some of these reforms as a testament to what has been lost in Brexit.


July 2015

The Motor Insurers’ Bureau (MIB) was stripped of many of its arbitrary powers to reject genuine claims under the Uninsured Drivers Agreement (UDA) 1999[1] in July 2015[2] when the new UDA 2015 was published.

These provisions had been extensively criticised by me[3] as either oppressive, unnecessary or illegal[4].  Their removal was the result of several years of campaigning.

The Reforms
The UDA 2015 addresses many deficiencies in the predecessor scheme, all of which I had exposed and criticised in my published articles, lectures and detailed consultation response[5] to the Department for Transport[6]:
1. It uses clearer language and is half the length of its predecessor
2. The new UDA removes several oppressive conditions precedent to liability and strike-out clauses that present a veritable minefield to the inexperienced practitioner’ and most particularly to lay applicants’ under the UDA 1999[7].  These enable the MIB to dismiss genuine claims for the trivial infractions of procedural rules that were unnecessary and which conferred the MIB with additional powers and discretions beyond anything conferred on ordinary individuals under the Civil Procedure Rules (CPR) governing civil claims.  This is particularly inappropriate for a compensatory scheme where the government encourages lay claimants to present their applications to the MIB direct[8], without independent legal representation:
·         Clause 8[9]: required all notices and documentation to be supplied to the MIB by fax, after this technology has long since become obsolete, or by registered or recorded delivery post (when many rural post offices have been closed), set as a condition precedent of any liability, when the CPR stipulated ordinary post;
·         Clause 9 (1): required notice within 14 days of commencement of proceedings against the uninsured defendant.  One problem with this is its fatal similarity to the wording of the standard notice requirement for insured claims set by s152(1) Road Traffic Act 1988 (RTA) set a precondition to an insurers’ statutory liability under s151(5) RTA (‘before or within 7 days after the bringing of the proceedings’) which I have first-hand knowledge of from defending MIB claims for Direct Line and AXA prior to 1999 (where a similar provision was introduced to the UDA 1988 which then applied) that many inexperienced practitioners regularly confuse and which the MIB invoke to reject claims;
·         Clause 9 (2): required such notice to be sent by fax or recorded delivery or registered post (clause 8) accompanied by an excessively extensive dossier comprising no less than seven different categories of supporting documentation.  This went far beyond any disclosure prescribed by the Pre-action Protocol or under the CPR and which included documents not necessarily relevant to the claim, such as with Clause 9.2(c) that included household or life insurance policies; along with the requirement for a sealed copy of the claim form or writ to be supplied (at a time when the courts were taking weeks to process new claims);
·         Clauses 10 to 12: required claimants to notify it of any significant development in the action, including the service of an amended pleadings within seven days of such a development occurring set as an absolute precondition of any liability and unqualified by reasonableness.  This is unnecessary as it has been long established the MIB is entitled to be joined as a party to a claim against an uninsured driver, because it is an interested party with an ultimate liability to compensate[10];
·         Clause 13: a condition precedent that required all claimants to produce evidence that they had reported to the police the defendant’s failure to provide insurance details, contrary to s154 RTA, within a reasonable time of the incident.  No definition of what was meant by reasonable is offered.  This subverts the statutory aim which is to bolster, not hinder, the prospects of a claimant recovering compensation.

3. The new UDA also removes various unlawful exclusions of liability that are to be found in the UDA 1999:
·         Clause 6.1(c): exclusion of subrogated claims (such as by credit hire companies and employers’ sick payments) in circumstances where such claims are recoverable in a normal civil action[11]
·         Clause 6.(e): exclusion of claims by passengers with actual or constructive knowledge that the vehicle is being used in furtherance of a crime (any offence, however trivial) or constructive knowledge that it is uninsured[12], etc;
·         Clause 17: which purported to entitle the MIB to deduct any compensation received from other sources.  The MIB has exploited this to deduct gratuitous payments by employers or relatives as well as life policies[13], in circumstances where such sums would be ignored under a normal assessment of damages.

Autumn 2016 / Early 2017

When the Secretary of State for Transport refused to remove two illegal clauses[14] from the UDA 2015 or to undertake a wide-ranging review of the sufficiency of the UK’s transposition of the Directive (previously requested by myself and several other respondents in 2013), I recruited RoadPeace to support a judicial review (JR) of the minister’s conduct and introduced them to Leigh Day solicitors. 

The judicial review[15] challenged the non-conformity of the RTA, The Rights Against Insurers Regulations 2002 and both MIB Agreements.  It also disputed the line taken by the Court of Appeal in two rulings[16] where it concluded that member states enjoy a legislative discretion to permit insurers to invoke contractual restrictions in cover and breaches of policy by their insured against a third-party victim[17].

December 2016

The defendant’s first concession to the RoadPeace JR was to issue a consultation paper[18] on reforming the scope of compulsory third party motor insurance.  This admitted that the exclusion of incidents on private property and the definition of ‘motor vehicles’ within the RTA do not conform with the wider scope required by the Directive.
This made it a easier to bring a public law action against the state for damages under the Francovich[19] principle.

10 January 2017

The government made further concessions, again directly in response to the grounds of complaint raised within the RoadPeace judicial review, by announcing (shortly before the hearing) several reforms to the MIB agreements.  These took effect from 1 March 2017:

Uninsured Drivers Scheme
1. The UDA 2015 was amended[20] to remove the two unlawful exclusions of liability, complained of in July 2015: one that purported to exclude any liability for uninsured property damage (clause7 UDA 2015); the other purported to exclude any claim by a victim of a terrorist incident (clause 9 UDA 2015)[21].

Untraced Drivers Scheme
The DfT also published a new Untraced Drivers Agreement (UtDA) 2017[22] to address the shortcomings and injustices in the UtDA 2003[23] that had been pleaded in the RoadPeace JR instigated in October 2015 (many of which had also been raised two and a half years before in my consultation response of April 2013):

2. These changes included the omission from the new scheme of the following provisions contained in the UtDA 2003:
·         Clause 4(3): that imposed a strict requirement, set as a condition precedent of any liability, that the incident be reported to the police within 5 days (for property damage) or 14 days (injury) on penalty of the entire claim being rejected[24].  In Ellitts & Wilson & MIB [2015] EWCA (unreported, 11 May 2015) Blair J upheld a rejection of a claim based on this clause being invoked against a ten-year-old passenger where his mother reasonably (but erroneously) believed that the responsible driver had correctly identified himself and provided his full insurance details;
·         Clause 5 (1) (g) in so far as it purported to exclude any liability for subrogated claims;
·         Clause 5(1) (f) for passenger knowledge that the vehicle was being used in furtherance of a crime or used to avoid or escape arrest[25];
·         Clause 9 that excluded any entitlement to interest until one month after receipt of a police report of the incident, in circumstances where police records, let alone reports, are not routinely made in many police authorities;
·         Clause 6, that purports to exclude subrogated claims.  See above under the July 2015 reforms to the UDA.
3. Other improvements either promised within the JR or incorporated into the UtDA 2017:
·         Improved provision to protect children and mentally incapacitated claimants by requiring all such settlements to be approved by an independent arbitrator (Clause14);
·         Improved levels of recoverable legal costs in serious injury claims (Clause 21);
·         A clearer statement that the formerly unlawful strict 3-year limitation period for bringing a claim was substituted by the normal limitation periods under the Limitation Act 1980 (Clause 3);
·         The misleading terminology employed within the UDA 2015 (clause 8 (1) & (3)) and UtDA 2017 (Clauses 8(1) & (3) by the phrase ‘knew or had reason to believe that’ to be explained as requiring actual knowledge as stipulated by the Directive for the single permitted exclusion, this to be clarified by the MIB by amending its notes for guidance[26];
·         The unclear provision concerning the MIB’s right to deduct certain sums, within both the UDA 2015 and UtDA 2017, to be clarified within the MIB’s notes for guidance[27] as being without prejudice to Parry v Cleaver. [1970] AC 1, [1969] 2 WLR 821.

4. The DfT also agreed within the JR to publish further guidance on the correct state of mind to trigger the statutory exclusion of insurer liability for guilty passenger knowledge s151(4) RTA[28].  The words ‘knew or had reason to believe’ are required to signify actual knowledge as opposed to constructive knowledge.

3 March 2017

I was the first to identify a serious problem with Clause 10 of the 10 January version of the UtDA 2017.  This stipulated that the claimant (and no other person) must complete and submit the claim form (when the claim form itself contains a disclosure mandate that, is so excessive in its extent and beyond anything that would be permitted in a civil action under the Civil Procedure Rules and which arguably constituted a breach of the HRC right to privacy).  This provision was accompanied by a requirement that only the claimant in person should respond to the MIB’s requests for information or provide statements.  This requirement had the effect of preventing claimants from benefiting from independent legal representation.
These requirements were imposed as a condition precedent to any liability.  It made no allowances for children, handicapped individuals or claimants who cannot read or speak English.
In early February I approached MASS, APIL and the Law Society as well as a number of leading law firms[29] and briefed them on how this infringed the HRC Art 6 right to a fair trial as well as the time-honoured British right to independent legal representation.  They supported me. The New Law Journal published my opinion piece[30].  This highlighted this unconstitutional restriction as an example of the sort of problem that results where an agency of a powerful industry (which is itself a consortium owned and operated by that industry) enjoys such extensive political leverage and lack of proper scrutiny that it can influence a minister, in private, to approve provisions that undermine the fairness of the scheme that he is responsible for regulating.[31].
This flash campaign resulted in the 10 January version of the UtDA 2017 being hurriedly substituted within a week of it coming into force by a revised verstion, backdated to 28 February 2017. This omitted the offending provision[32] thus entitling all claimants to be represented.

7 November 2017

On 7 November Mr Justice Ouseley handed down his judgment in RoadPeace v Secretary of State for Transport [2017] EWHC 2725 (Admin)[33]. 
The judgment identifies the following infringements of the Directive:
·         Sections 145 and 192 of the Road Traffic Act 1988 wrongly restrict mandatory third-party motor cover to vehicle use in public spaces
·         Sections 145 and 182 of the Road Traffic Act 1988 wrongly restrict the types of vehicles subject to the compulsory insurance to road vehicles
·         Section 152(2) of the Road Traffic Act 1988 wrongly permits an insurer to invoke a misrepresentation or non-disclosure to avoid its statutory liability to compensate a third party
·         Regulation 2 of the Rights Against Insurers Regulations 2002 wrongly limits the direct right of action against motor insurers to UK accidents
Unfortunately, the learned judge declined to provide a Marleasing style purposive interpretation of these provisions to cure them of their non-conformity with EU law.

But for the timely coincidence of the European Court of Justices (ECJ)’s ruling in Farrell v Whitty 2 [2017] Case (C413/15)[34] on 10 October 2017 accident victims would still have found it very difficult, if not impossible, to invoke their rights in these circumstances, as it the government shows little sign of taking any steps to remedy these infringements, particularly in the wake of Brexit.  Fortunately, this ruling now makes it highly probable that the provisions of the Motor Insurance Directives can be relied on in an ordinary personal injury action against the MIB (as though enacted word-for-word within UK legislation) because of the MIB’s close association with the state on Foster v British Gas principles of direct effect[35].

In the circumstances, these specific findings in the JR have an immediate and direct legal effect, even if the government has no intention of introducing any statutory reform in view of Brexit. 
Accordingly, victims injured by motor vehicles on private property or by unusual off-road vehicles that are not subject to compulsory insurance under the RTA or victims of mechanical defects not attributable to the vehicles’ user or owner - can now recover their civil law entitlement to damages directly from the MIB[36], in place of the absent insurer, without having to pursue a risky, expensive and lengthy public law action against the state.

The first two JR findings of non-conformity also impact on both MIB schemes, because they each purport to restrict their scope to events that are subject to compulsory third-party cover as prescribed by the RTA.  A corollary of these JR findings is that the scope of both MIB schemes is also extended in parallel by the EU law direct effect principle. 

Accordingly, the MIB is liable to meet claims where the vehicle responsible is insured but the policy is restricted to liabilities occurring on roads or other public places.

July 2019

I was the first and possibly the only legal commentator to spot the glaring flaw in the Road Traffic Act 1988 and the governments flagship legislation, the Automated and Electric Vehicles Act 2018 that was intended to ensure that  victims of accidents caused by automated vehicles would be guaranteed no fault liability compensation. This concept was predicated on their being a valid and enforceable policy of motor insurance in place. In my two-part serialised feature Driverless Vehicles: a future perfect? I warned that motor insurers most common defence ploy was to apply, after the incident giving rise to a claim, for an order under s152 Road Traffic Act 1988 that the policy was void ab initio due to a misrepresentation by a policyholder. I demonstrated, as early as 2013, that this was unlawful as it breached EC Directive 2004/103. In June 2019 ex post facto declarations under section 152(2) Road Traffic Act 1988 were effectively abolished under Regulation 6 of The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019, unless unequivocally invoked prior the incident giving rise to the claim.

Also in June, the Court of Appeal delivered a landmark ruling in which it gave judgment against the Motor Insurers Bureau in MIB v Lewis [2019] EWCA Civ 909 in a complicated comparative law case based on the MIB’s surrogate liability for the state, due to its close working relationship with the Department for Transport.  The court applied precisely the same ratio and case authorities outlined, for the first time by me, in my independent research: published in my 2016 doctoral paper as well as in my New LW Journal Articles dating back to 2015 and in particular, in ‘Putting wrongs to rights’, Parts 1 & 2, in May and June 2016.

In practical terms, this ruling fixes the MIB  with an entirely new category of liability, independently of those under (i) its contractual obligations with the Secretary of State for Transport, currently set out in the Uninsured Drivers Agreement 2015 (UDA) and the Untraced Drivers Agreement 2017 (UtDA) and (ii) its statutory obligations under the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003.
This new liability is based on directly applicable European law, which will survive as retained EU law unless and until this outcome is reversed by the Secretary of State for Transport after the Brexit implementation period. 
Under this new law the MIB is obliged to compensate motor accident victims who have been wrongly denied a compensatory guarantee through compulsory insurance due to the government’s failure to implement fully Article 3 of the Sixth Motor Insurance Directive 2009/103 (the Directive) within the provisions of Part VI of the Road Traffic Act 1988 (the 1988 Act) and the EC Rights Against Insurers Regulations 2002.



[3] See (MIB Reform) Part II: Why the Uninsured Drivers Agreement 1999 Needs to be Scrapped, JPIL 2011 issue 2; On the right road? Parts 1-4, February 2013; Consultation Response by Nicholas Bevan, 22 April 2013, to the DfT Consultation on the MIB Agreements, an infringement complaint to the European Commission in October 2013 and in a detailed paper prepared at the Law Commission’s behest in December 2013 with further ad hoc articles and case commentaries that feature these failings
[4] On the basis that they breached the EU law prohibition of exclusions and restrictions of liability, save where expressly permitted within the Motor Insurance Directives
[5] My full consultation response is available online at: http://nicholasbevan.blogspot.co.uk/2013/04/the-full-monty.html
[6] The DfT Consultation on the MIB Agreements, in 2013
[7] Which remains in force for accidents predating 1 August 2015 despite my seeking for the changes to be given retrospective effect
[9] All these clauses refer to the UDA 1999 and are excised from the new UDA
[10] Gurtner v Circuit 1968 QB 587
[11] In contravention of the equivalence principle in Evans V SST [2003] (Case C 63/01)
[12] In contravention of the equivalence principle in Evans V SST [2003] (Case C 63/01)
[13] In contravention of the equivalence principle in Evans V SST [2003] (Case C 63/01) and held to be unlawful in Delaney v SST [2015] EWCA Civ 172
[14] See the entry below under January 2017 where these provisions are removed from both schemes with effect from 1 March
[15] Issued in October 2015 and whose first instance finding is reported in RoadPeace v SST and MIB [2017] EWCH 2725 (Admin)
[16] EUI v Bristol Alliance Limited Partnership [2017] EWCA Civ 1267 and Sahin v Havard [2016] EWCA 1202
[17] Whereas in Ruiz Bernaldez [1996] Case C-129/94 the ECJ decreed:
Article 3(1) of the First Directive [which first imposed the motor insurance requirement] precludes a company insuring against civil liability in respect of the use motor vehicles from relying on statutory provisions or contractual clauses in order to refuse to compensate those victims for an accident caused by the insured vehicle.’ [para 20]
[19] Francovich,v Italian Republic and Bonifaci and others v. Italian Republic [1992] IRLR 84 (Cases C-6/90 and C-9/90)
[21] Neither of which are permitted by the Directive, see the ECJ rulings in Bernaldez 1996, Candolin 2005, and Churchill 2011. The terrorism exclusion produced anomalies due to the widely scope definition adopted from the terrorism.  The result being that the MIB would be liable for an injury caused by a fleeing bank robber or murder but not a fleeing GM arsonist.
[24]  In Ellitts & Wilson & MIB [2015] EWCA (unreported, 11 May 2015) Blair J upheld this clause being invoked against a ten-year-old passenger where his mother reasonably (but erroneously) believed that the responsible driver had correctly identified himself and provided his full insurance details.
[25] Previously conceded in a similar provision in the UDA 1999 in July 2015
[27] Supra
[28] This is outstanding
[30] Conflicts of Interest?, Nicholas Bevan, NLJ, 3 March 2017
[31] The need for better governance of the MIB is argued at some length in Reforming the Motor Insurers Bureau, Part 1 the MIB’s role, Nicholas Bevan, JPIL, 2011 Issue 1.
[32] For the MIB’s narrative explaining the change, see: https://www.mib.org.uk/media-centre/news/2017/february/mib-clarifies-who-can-submit-a-claim-untraced-drivers-agreement/      The original 10 January 2017 version has since been removed from the MIB website.
[35] See my submission in which I explain how my research and published articles anticipated this development
[36] See State Liability: betwixt and between Brexit, Nicholas Bevan, NLJ, 37 October 27 and 3 November 2017, available online at: http://nicholasbevan.blogspot.co.uk/2017/11/mib-liable-for-gaps-in-road-traffic-act.html

Friday, 28 February 2020

SUPREME COURT REFUSES PERMISSION TO APPEAL TO THE MOTOR INSURERS' BUREAU



On 13 February the Supreme Court refused the Motor Insurers' Bureau (MIB) permission to appeal against the unanimous decision of the Court of Appeal in MIB v Lewis [2019] EWCA Civ 909.

The clarity resulting from this final decision frees a number of pending actions against the Motor Insurers Bureau and the Secretary of State for Transport, to proceed; I am involved in two of these.

The Court of Appeal's ruling last year resolved a long-standing controversy concerning the MIB’s true legal status under European law principles.  Its two principal findings were: (i) the MIB is an emanation of the state and (ii) that it is bound by the direct effect of Articles 3 and 10 of the Sixth Motor Insurance Directive 2009/103 (the Directive), which prescribe the nature and extent of compulsory third-party motor insurance. I had been alone in consistently arguing for both these outcomes for a number of years.

In practical terms, this ruling fixes the MIB  with an entirely new category of liability, independently of those under (i) its contractual obligations with the Secretary of State for Transport, currently set out in the Uninsured Drivers Agreement 2015 (UDA) and the Untraced Drivers Agreement 2017 (UtDA) and (ii) its statutory obligations under the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003.

This new liability is based on directly applicable European law, which will survive as retained EU law unless and until this outcome is reversed by the Secretary of State for Transport after the Brexit implementation period.  

Under this new law the MIB is obliged to compensate motor accident victims who have been wrongly denied a compensatory guarantee through compulsory insurance due to the government’s failure to implement fully Article 3 of the Sixth Motor Insurance Directive 2009/103 (the Directive) within the provisions of Part VI of the Road Traffic Act 1988 (the 1988 Act) and the EC Rights Against Insurers Regulations 2002.

Article 3’s direct effect

The Article 3 requires every member state to ‘take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance’. In Part 1 of this feature, Article 3’s broad and inclusive scope was compared with the UK’s narrower transposition within sections 143 and 145 of the 1988 Act and found to be wanting.

This non-conformity is likely to generate the following new classes of action against the MIB:

The first and most obvious category in the light of the Lewis case facts are claims caused by uninsured vehicles on private land and inside private premises. The 1988 Act wrongly confines the scope of compulsory motor insurance to roads or other public places.

In the next category, are accidents caused by a wide range of motor vehicles that are wrongly excluded from the Directive’s compulsory insurance requirement.  Section 185’s definition of ‘motor vehicle’ is confined to vehicles that are ‘adapted or intended for road use’.  Whereas the Article 3 insurance requirement is much wider and applies to ‘any motor vehicle intended for travel on land …’.
Accordingly, the MIB is exposed to a new raft of claims for loss or injury caused by a bewilderingly wide range of off-road motorised transport, some of which were not envisioned when the Road Traffic Act was reiterated, in 1988.  These range from huge construction site dumpsters to the diminutive segways; even kinetically powered bicycles.

A third category arises out of the way section 145 of the 1988 Act only requires the personal liability of the policyholder to be covered.  In Driverless vehicles: future perfect? (Pt 2), New Law Journal, 30 November 2018 this author argued that the government’s failure to ensure that mechanical or software defects is included in nits compulsory third-party motor requirement infringed the Directive.  This is because Article 3, by contrast, is set in much broader terms with its requirement ‘that civil liability in respect of the use of vehicles … is covered by insurance’. Although this hypothesis is untested, it is consistent with a ruling by Court of Justice of the European Union (CJEU) on 20 June this year in Línea Directa Aseguradora, SA v Segurcaixa, Sociedad Anónima de Seguros y Reaseguros [2019]. Here the CJEU held that the scope of Article 3’s insurance requirement embraces a liability arising from a vehicle spontaneously bursting into flames after it had been parked inside a garage for at least 24 hours. It held that the vehicle’s parked status was an integral part of its use as a means of transport. It also ruled that to establish liability under Article 3, it was not necessary to identify the particular fault responsible for the fire or the particular function that part performed. The ruling also bears out part of this author’s criticism of the Supreme Court’s ruling in Pilling v UK Insurance Ltd [2019] UKSC 16: see Phoneix in Flames, New Law Journal,17 May 2017.

A fourth application of the direct effect of Article 3 would appear to be cases where some insurance was in place for the vehicle responsible but where the insurer has been able to rely on non-conforming provisions of UK law to evade its contractual liability (under the policy) as well as its statutory liability (under section 151(5) of the 1988 Act) due to one or other of the following: (i) the policy being declared void under s152(2) on the grounds of fraudulent misrepresentation at the policy’s inception, for example: see Colley v Shuker & ors [2019] EWHC 781 (QB) or (ii) where the policyholder has breached a policy term whose effect against a third party claim is not nullified by sections 148 or 151 of the 1988 Act, as occurred in EUI v Bristol Alliance Limited Partnership [2012] EWCA Civ 1267 and Sahin v Havard [2016] EWCA Civ 1202. Hitherto, such claims have been treated as uninsured or untraced driver claims under the UDA or the Untraced Drivers Agreement 2017 (UtDA).  This practice was endorsed recently by the Supreme Court in Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6; wrongly so in this author’s view.  These domestic authorities flout three consistent CJEU rulings to the effect that the Article 10 body (whose role the MIB discharges) has no authority to intervene if the vehicle responsible had policy was in place at the time of the incident giving rise to the claim. The MIB’s role is confined to situations where the vehicle responsible is (i) unidentified or (ii) where no policy is in place at the time of the incident, see Gábor Csonka v Magyar Állam Case C 409/11 [2013] (paragraphs 30 to 32) and Fidelidade-Companhia de Seguros SA v Caisse Suisse de Compensation (Case C-287/16) [2017]. Only one policy exclusion can be invoked against a third party and this only applies to a passenger who gets into the vehicle knowing it to have been stolen; not otherwise: see Katja Candolin (Case C-537/03) [2015].  Thanks to the Lewis appeal, the direct effect of Articles 3 and 10 allows the Supreme Court’s erroneous decision in Cameron to be challenged and, if necessary, referred to the CJEU for a preliminary ruling under Article 267 TFEU.

All these claims are based on directly effective rights conferred under the Directive. They are not UDA claims, see below.

Article 10’s direct effect

Because the MIB has been officially classified as an emanation of the state and because both Articles 3 and 10 have direct effect against it, any non-conforming provisions within both the UDA and the UtDA are now much easier to challenge, at least during the Brexit implementation period whilst the supremacy of European law subsists. 

The MIB agreements still retain restrictions and exclusions of liability that are not permitted under the Directive and these are now subject to judicial scrutiny by direct comparison with the wording of Articles 3 and 10 of the Directive.  This new remedy circumvents the problem caused by the House of Lords ruling in White v White, [2001] UKHL 9 where it that held because the MIB schemes were not legislation they were not susceptible to a Marleasing style remedial construction to bring them into line with the Directive’s objectives. Arguably the White ruling had been superseded by Pfeiffer v Deutsches Rotes Kreuz (C-297/01) [2004], which extends the courts obligation to undertake a consistent / purposive construction of any national rule or law implementing a directive.  The MIB’s emanation of state status precludes it from relying on the CJEU ruling in Smith v Meade Case C-122/17 [2018] that prevents a the Directive from having a ‘horizontal’ direct effect against a private organisation, such as an insurer. 

Potential Article 10 challenges

I list a few of the most obvious examples, these are merely indicative of a wider range of potential construction challenges of the MIB Agreements, based on the direct effect principle:

The first arises from the way the MIB breaches the equivalence principle, considered above, in cl 6 of both the UDA  and the UtDA by asserting the right to offset other sources of recovery and or under cl 6 (3) ibid for failing to present a claim against another insurer potentially liable to make a payment in respect of the same incident; when no such right exists under the normal civil liability rules that apply to insured defendants. Arguably this breaches the equivalence principle mentioned below.

A second example concerns the way the MIB has subverted the legislative intention of Article 10(3)’s permission to exclude liability for property damage in an untraced vehicle claim where there has been no ‘significant injury’ sustained in the incident giving rise to the claim.  The MIB Agreements define ‘significant injury’ in terms that amount to a ‘grievous’ or ‘serious’ injury threshold in cl 1 of the UtDA 2003 and cl 7 of the UtDA 2017. Whereas the European Commission’s explanatory memorandum made it clear this is intended as an anti-fraud measure; not a serious injury threshold. 

A third example: concerns the way cl 8(1)(b) of both the UDA and the UtDA purport to exclude liability to a passenger who at the time of the accident knew that the vehicle had been unlawfully taken and had not attempted to alight from it as soon as reasonably possible.  The only permitted exclusion in Article 10 requires actual knowledge when entering the vehicle (not later) that it has been stolen.

What sort of claim?

These newly coined direct effect actions are an admixture of conventional tort law and public law principles.  However, because the need for such actions results from the government’s failure to bring the accident circumstances within the UK’s compensatory guarantee, they should be run as ordinary personal injury claims. 

Limits of liability

In the first instance decision in Lewis it was mooted that the minimum level of compensatory award set by Article 9 of the Directive (currently EUR 1.2m) might serve as a cap on the MIB’s liability under direct effect principles.  That is not correct, due to the application of the European law principle of equivalence, see (Case C-63/01) Evans v Secretary of State for Transport [2003] . Accordingly, the 1988 Act’s property damage limit of £1.2m applies but there is no financial limit to the personal injury damages.

Brexit’s effect

The Court of Appeal’s finding that the 1988 Act fails to conform with the unrestricted geographic scope of the Directive, that the MIB is an emanation of the state and that both Articles 3 and 10 of the Directive have direct effect against it, will all endure as retained EU law under s4(1) of the EU Withdrawal Act 2018. Individual claimants will continue to be able to invoke they direct effect of these principles during the Brexit transition period (which expires on 31 December 2020) and beyond (as retained EU law), notwithstanding that abolition of the primacy of EU law under s5.

However, it should be noted that the amendments introduced in 2020 to the European Union (Withdrawal) Act 2018 confer a ministerial discretion to modify, after the implementation period,  various statutory instruments such as the EC Rights Against Insurers Regulations 2002 under s7 of the amended Act of 2018. There are also wide powers to revise retained EU law under s8 where a minister of state considers that there is a deficiency in EU law or where, in the minister's view, it is not operating effectively.  Furthermore, the amendments to s6 are arguably even more radical in the way they licence a departure from retained EU case law. It confers a constitutionally unprecedented power on ministers to prescribe by regulation a mandatory test that the courts must apply when deciding whether it is appropriate to exercise their new power under s6(4) to depart from retained EU case law.  Two obvious candidates for revision are the CJEU's rulings in Damijan Vnuk C 162/13 [2014] and Farrell v Whitty and Others (no 2) Case C413/15 [2017]. Both of these decisions exposed the UK's contumacious infringement of EU law and they were critical to both the first instance decision and appellate ruling in Lewis.  Given that the government has failed to honour its repeated assurances to bring the geographic scope of the Road Traffic Act 1988 into line with the EU law for over four years , it seems highly likely that, by one route or another, the Lewis ruling will be effectively reversed.

In the meantime, it remains to be seen where the courts will draw the line on the wider implications of this ruling, especially where a different domestic non-conforming provision is challenged (i.e. one that has not yet been recognised as such by a domestic court).  

Tuesday, 30 July 2019


The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019


Introduced to Parliament on 1 July 2019.


Section 152 Road Traffic Act 1988 to be reformed once more



Once an insured risk has materialised, a motor insurer will no longer be able to avoid its statutory liability to compensate third party victims on the grounds that the policyholder deceived them when the motor policy was taken out.  

The section 152 declaration procedure, widely employed by motor insurers to deflect claims to the relatively disadvantageous scheme managed by the Motor Insurers' Bureau under the Uninsured Drivers Agreement 2015 is effectively abolished and not before time!


Two campaign victories!
















June and July 2019 have been very satisfactory months from my perspective.  They have delivered two major reforms on issues that I was first to raise and then to campaign to reform.

 Reform 1: MIB v Lewis [2019] EWCA Civ 909



In June 2019 the Court of Appeal's ruling in MIB v Lewis confirmed something that I have been contending for, for the past twelve years.  It ruled that the Motor Insurers' Bureau is an emanation of the state and that this status fixes it with a liability to compensate motor accident victims adversely affected by the governments failure to fully implement the civil law rights conferred under the European Directive 2009/103/EC.  This has far reaching implications, some of which I allude to in this blog in my earlier postings this month [see The MIB's Surrogate Liability]. 



Reform 2: Abolition of section 152(2) Road Traffic Act 1988 declarations under Regulation 6 of The Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019



The government’s explanatory note has this to say:

'Regulation 6 amends section 152 of the Road Traffic Act 1988 (c. 52) to limit the rights of an insurer to rely on having voided an insurance policy after an accident has taken place. Regulation 7 makes an equivalent change for Northern Ireland and amends section 98A of the Road Traffic (Northern Ireland) Order 1981. Regulation 8 is a saving provision for any court declarations obtained prior to 1st November 2019.'

A long overdue reform


I believe that I was first to argue (in my Journal of Personal Injury Law commentary on Delaney v Pickett [2011] EWCA Civ 1532 in 2012 and on several occasions in the New Law Journal, subsequently,  that the ability of insurers to obtain a court declaration that exculpates  them from any responsibility to compensate victims where a policy was induced by fraud or misrepresentation under s152 Road Traffic Act 1988 - was unlawful. I explained that this statutory provision failed to conform with the autonomous compensatory guarantee vouchsafed by Directive 2009/103 and a line of consistent Court of Justice rulings to this effect dating back to Bernaldez [1996] ECR 1-1929.


Excerpt from my 2017 article Inception Deception: 'Motor insurers have relied increasingly on  152 RTA 1988 in recent years, particularly in high value claims. It is a uniformly accepted convention that once a court declaration under s 152 (2) is made, the insurer is released from any direct liability to meet a third-party claim, whether  contractually or statutorily imposed (ie under either s 151 of RTA 1988 or Reg 3 of the Rights Against Insurers Regulations 2002 (SI 2002/3061). ....This author first criticised this approach for being inconsistent with the protective purpose of the Directives in his JPIL commentary on Delaney v Pickett [2011] EWCA Civ 1532 and again in this journal on 8 February 2013 in ‘On the right road? Pt II’, (see 163 NLJ, 7547 p 130) Fidelidade has vindicated this view.'

I also raised this particular issue initially in various consultation responses to the Department of Transport.  When this was ignored, after a long campaign, I manage to persuade RoadPeace to include this issue as one of the numerous grounds where we sought judicial review in 2015.  The strength of my argument was later reinforced by the Court of Justice’s ruling in Fidelidade-Compania de Seguros SA v Caisse Suisse de Compensation  C-287/16.

It was remarkable that Mr Justice Ouseley’s judgment in in RoadPeace v Secretary of State for Transport and Motor Insurers' Bureau [2017] EWHC 2725 condoned this clear and blatant infringement of European law by misconstruing, in the most strained terms, the inescapable implications of Fidelidade, when dismissing this particular ground of the judicial review. 

Although the RoadPeace judicial review was instrumental in forcing the MIB to introduce major reforms to both compensation schemes and although it resulted in additional declarations of the UK's non-conformity with EU law, the judgment obtusely rejected our claims that this and number of other similar statutory provisions flouted EU law. The spectre of Brexit appears to have had a tangible effect. After three long years of extensive pro bono work, we were forced to leave this highly unsatisfactory decision where it lay, unchallenged.

The fact that the government has forced through this reform, presumably in the face of stiff opposition from the motor insurance lobby (who rely on section 152 avoidance declarations as a staple first line of defence, especially in serious injury claims where they face extensive liabilities) makes it abundantly clear that the government accepts that Ouseley J got this (and in my view much else) badly wrong in 2017. 

Immediate effect through direct effect


Although these regulations only come into force on 1 November 2019 (on day one of Brexit *) their effect can be invoked against the MIB with immediate and retrospective effect, following the Court of Appeal’s decision in MIB v Lewis.

[* After this article was posted, Brexit day was postponed by three months] 

Worrisome developments at APIL


As to section 152 Road Traffic Act 1988 generally, I had proposed to deliver a webinar (Winning the unwinnable claim Part 2) for the Association of Personal Injury Lawyers, explaining why Mr Justice O’Farrell’s recent decision in Colley v Shuker [2019] EWHC 781 (QB) which upheld the effect of an insurer’s revocation of its cover under section 152 of the 1988 Act was misconceived and contrary to EU law.  I also intended to cover four new Court of Justice rulings, to explain where the Supreme Court went wrong in its decision in Pilling v UK Insurance  and to explain how, after MIB v Lewis, claimants can pursue direct personal injury actions against the MIB where a policy has been revoked by invoking the same European law directly against the MIB, as though the 1988 Act fully implemented the Directive – only to have my training proposal rejected on the basis that it raised no new point of law. How bizarre!  

As a senior fellow and longstanding member of APIL, who has supported its charitable objectives in different ways over several decades,  I am becoming increasingly baffled and concerned by the internal politics that are corroding the credibility and quality of APIL’s training and accreditation schemes.

The big question

If the government is able to implement the effect of Fidelidade’s ruling from 2017, why has it not implemented the Vnuk ruling from 2014.  

The government conceded that the scope of the UK’s compulsory third party motor insurance regime failed to implement the Directive’s unrestricted scope both within the RoadPeace judicial review and in its consultation on Vnuk.  Were are now five years on from Vnuk and three years on from the governments promise to act. I suspect that the prospect of a Brexit is influencing events but what has that to do with the rule of law?