Dr Nicholas Bevan

Dr Nicholas Bevan
www.nicholasbevan.com

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?

Sunday, 28 July 2019

THE MIB’s SURROGATE LIABILITY (Part 2)

The implications of Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909


Part 2 goes to press



The second article, in my two-part feature on Lewis, was published this Friday in the New Law Journal.  The first instalment explained the reasoning behind the Court of Appeal’s two confirmatory findings: (i) that the Motor Insurers’ Bureau (MIB) is an emanation of the state; (ii) that Articles 3 and 10 of the Motor Insurance Directive (2009/103) have direct effect against it. The second article sets out some of the wide-ranging and potentially disruptive ramifications of this ruling.






































The key implications of the Lewis ruling are twofold. 



First, the MIB is fixed with a vicarious form of liability to redress any gaps in the compensatory guarantee vouchsafed by the third-party motor insurance regime in the UK.  A key point that the commentaries I have read and heard all miss is that this is a general principle that has a wide and encompassing application. It is not confined to the facts of the case (e.g. claims featuring a motor accident on private land where the compulsory insurance provisions of the Road Traffic Act 1988 does not apply) but to all other instances where our national provision fails to fully implement the Directive.  The impact is major, reflecting as it does the egregious and wide-ranging infringements of EU law in the UK’s transposition of the Directive.  For example, uncompensated victims of motor accidents caused by mechanical and software defects, or unusual vehicles (neither of which scenarios are covered by the UK regime, in clear breach of EU law) can now pursue a direct action against the MIB. The EU law principle of equivalence requires that these claims are to be governed by the normal civil procedural rules that apply to conventional personal injury claims; not the disadvantageous provisions of the Uninsured Drivers Agreement 2015.  

A second (major) collateral effect of Lewis is that the MIB Agreements themselves are now subject to a curative construction that bring their non-conforming provisions into line with the minimum standard of compensatory provision mandated under EU law. All this and more is explained in my New Law Journal Article, The MIB’s surrogate state liability (Pt 2).



Why did it take so long?



It took 12 years for the erroneous first instance findings in Byrne v MIB and the Secretary of State for Transport 2007 to be challenged in the UK. In Byrne, Flaux J (now Lord Justice Flaux) was not informed of consistent line of domestic authorities, which were determinative on the issue, concerning the correct approach to take when applying the Foster criteria for deciding whether a legal entity is to be treated as though it were part of the state and thus potentially subject to the direct effect of incompletely implemented rights conferred under a directive.  That same court was also badly misinformed on the facts. The MIB and the Secretary of State for Transport withheld an abundance of highly relevant material (documents and facts) that would, in my view, have established that the extensive control exercised by the minister over the MIB’s compensatory role and the special powers it enjoyed in this capacity; confer it with a special status as an emanation of the state. 

These important issues were not pressed by the claimant at the time.  This was an entirely justifiable tactic in the circumstances of the particular case: the claimant team’s imperative was to focus its limited resources, in what had become an expensive litigation, to the key issues necessary to establishing one of two alternative successful outcomes. Its case concentrated on the near certainty that the court would find the government liable under an alternative ground based on Francovich state liability principles; where it succeeded ultimately in the Court of Appeal.  

Unfortunately, Flaux J’s erroneous finding (on the alternative ground) as to the MIB’s state liability under Foster principles proved to be a dead-weight deterrent for numerous claimants thereafter (probably numbered in their thousands).

It took a ruling from the Court of Justice of the European Union in Farrell v Whitty (no 2) in 2018 to embolden a leading firm in an otherwise predominantly lack-lustre claimant personal injury sector, to bring the long overdue challenge in Lewis.  Farrell is on all fours with the domestic authorities on state liability that were completely overlooked eleven years before in Byrne.   Its finding on special powers coincided with my long-held view that the MIB’s compensatory role, which is funded through its imposition of a levy on all UK motor insurers as a precondition to authorised status in the UK, constituted a special power, which satisfied the criteria for emanation of the state status. The implications of Farrell (no 2) were as obvious as they were ineluctable.  However, it is striking that none of probably thousands of claimants were advised to challenge Byrne's evidently flawed findings on the MIB’s proper status, until Farrell (no2).

The 12-year hiatus of unjust outcomes from Byrne to Lewis neatly illustrates the sorry plight of individual claimants in our civil justice system.  Although the Civil Procedural Rules profess to impose equality between the parties, their failure to achieve this is abject: access to Justice is anything but equal.  

This is partly due to the fact, as the Byrne case illustrates, that multi-national and state parties are free to bend the rules when it suits them, with apparent impunity. Costs sanctions imposed for unreasonable conduct is a worthwhile risk where a distorted outcome might result in a windfall of £millions.  The multi-£bn motor insurance sector plays a vital and largely beneficial role in our society. Unfortunately, its powerful lobby has distorted our national law provision for compulsory insurance by obstructing much needed reform, over many decades, and it is able to invest disproportionate sums in civil actions to achieve partial and unmerited outcomes that serve its strategic aims. Whilst successive governments are responsible for excessive court fees and the abolition of legal aid which drastically curb access to justice, the judiciary have also contributed to the problem which deters many if not most private citizens from challenging abuses of power. Rupert Jackson’s dogmatic proposals for curbing legal costs through arbitrarily derived fixed fees, Draconian procedural penalties, and though the imposition of arcane cost recovery principles (such as the proportionality principle that imposes an arbitrary cap on recoverable costs in a Procrustean fashion) has made civil litigation an unjust process where disparities in resources is routinely exploited by wealthy institutions at the expense of private litigants. 

As a solicitor of many years standing it has also been disheartening to witness the recent startling decline in the quality of the Supreme Court’s judgments in this area. I can only hope that the Cameron and Pilling rulings in February and March this year, which I appear to be alone in robustly criticising (see my New Law Journal articles and my earlier posts in this blog) are anomalies that will never be repeated. It is also equally startling to note that none of my fellow commentators and law reporters featuring these two appalling rulings recognise the blatant misstatements of fact and law within them.  

Brexit’s effect


The findings that (i) the 1988 Act fails to conform with the unrestricted geographic scope of the Directive, (ii) that the MIB is an emanation of the state and (iii) 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. Accordingly, individual claimants will be able to invoke the direct effect of these findings beyond a Brexit notwithstanding that abolition of the primacy of EU law under s5.

It remains to be seen where the courts will draw the line on the wider implications of this ruling, especially where a domestic non-conforming provision has not yet been recognised as such on Brexit. It is also by no means certain that claimant law firms will exploit these newly confirmed rights to the full extent.































Tuesday, 16 July 2019

THE MIB's SURROGATE LIABILITY


Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909


The first instalment of my two-part feature in the New Law Journal was published on 12 July. It explains how the scattergun tactics employed by the Motor Insurers’ Bureau (MIB), in its futile appeal against Soole J’s first instance decision has proved to be a costly mistake. 

The MIB has appealed Soole J’s finding that it was bound by the direct effect of Article 3 of the Motor Insurance Directive 2009/103 (the Directive) under EU law.  Article 3 prescribes the minimum standard of civil liability insurance necessary to deliver a consistent level of compensatory guarantee is conferred on third party motor accident victims throughout the EU and EEA.

In Lewis, the claimant was grievously injured when he was run down by an uninsured car in a privately-owned field, which location does not fall within the geographic scope of the Part VI of the Road Traffic Act 1988 that regulates the compulsory insurance requirement in the UK. The MIB had rejected the claimant’s application arguing that it had no liability under the Uninsured Drivers Agreement on the basis that its contractual liability under that agreement is coextensive with the statutory insurance obligation. 

The first instance decision confirmed that the UK legislation infringed the Directive on this point.  Furthermore, it held that as it was bound by the Court of Justice of the European Union’s ruling in  (Case C413/15) Farrell v Whitty and Others (no 2) [2017], the MIB’s role in discharging the state’s obligation, imposed under Article 10 of the Directive, to authorise a compensating body to meet claims by victims of uninsured vehicles, pinned it with state liability to compensate victims wrongly denied the compensatory guarantee through insurance provision due to the government’s defective implementation.

The MIB’s unsuccessful appeal has served to compound its problems. 

  • First, the Court of Appeal has upheld the first instance finding that the MIB is fixed with state liability (due to its emanation of the state status) to compensate victims affected by the government’s failure to fully implement Article 3 of the Directive (which provision met the criteria of unconditionality and sufficient precision to qualify for direct effect);
  • Second, the court went on to rule that the Article 10 also qualified for direct effect against the MIB.
In the second instalment, to be published shortly, I consider the far-reaching implication of both findings. 

  • I will explain how direct effect of Article 3 against the MIB leaves it exposed to an extraordinary range of novel extra-statutory liabilities, derived independently of its contractual obligations with the state.  It is fixed, under directly applicable EU law, to compensate victims injured or sustaining loss in a diverse range of scenarios that ought to be covered by the compulsory third party insurance requirement, but which are not, due to the UK’s longstanding infringements of the Directive. Any proper analysis reveals some surprising outcomes (unprecedented, even).
  • I will also explain how the direct effect of Article 10 of the Directive against the MIB can be used to circumvent the House of Lords ruling in White v White in 2001 which hitherto has justified, wrongly so in my view, the judiciary’s reluctance to remedy non-conforming provisions within both the Uninsured Drivers Agreement 2015 and the Untraced Drivers Agreement 2017 by subjecting their provisions to the EU law doctrine of consistent construction. Although the RoadPeace judicial review I was behind in 2015-2018 was responsible for the excision of many blatantly unjust and arbitrary exclusions of liability (on the ground that they infringed the directive), a significant number remain.  These injustices can now be challenged with facility, provided it can be established that they fall below Article 10’s minimum standards to a disproportionate extent.




Monday, 15 July 2019

LAW COMMISSION ENDORSE NEED FOR PRODUCT LIABILITY REVIEW


Automated Vehicles and Liability for Vehicle Defects


The Law Commission has published its initial response and recommendations in its three year project that reviews the legal framework necessary to accommodate the introduction on our roads of automated vehicles.

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2019/06/Summary-of-Automated-Vehicles-Analysis-of-Responses.pdf
LINK

























In my response to Question 18 of the Law Commissions’ preliminary consultation on Automated Vehicles (Law Commission Consultation Paper 240; Scottish Law Commission Discussion Paper 166) I argued the case for a wider review of the compensatory protection afforded to motor accident victims under the Road Traffic Act 1988 and the Consumer Protection Act 1978. 

I explained that the no-fault liability under the Automated & Electric Vehicles Act 2018 failed to address the very real and immediate need for suitable cover for existing and near to market automation that present the gravest threat to the public.  Only advanced forms of automation (that have yet to be developed) or current levels automation operating within highly restricted environments qualify for the protection conferred under the 2018 Act. 

In my answers to Question 7 and 18 I stress that section 145 of the Road Traffic Act 1988 only requires compulsory third-party cover to provide an indemnity against the policyholder’s personal liability.  This appears to breach the wider insurance obligation mandated under Article 3 of the Motor Insurance Directive 2009/103 (the Directive) that extends to require civil liability cover for defects in the vehicle, such as defective automation; that can result spontaneously, independently of the policyholder or user’s fault. My views on this lacunae in our national law provision have since been fully vindicated by the Court of Justice of the European Union (CJEU).  See: (Case C-100/18) Línea Directa Aseguradora, SA v Segurcaixa, Sociedad Anónima de Seguros y Reaseguros of 20 June 2019.

It appears that my concerns about to this particular infringement of the Directive, first raised by me in my consultation response to the Department for Transport’s 2013 consultation on the MIB Agreements, has been acknowledged by the Law Commission; albeit in oblique terms. 

In the Law Commission’s 19 June 2019 paper: Summary of the Analysis of Responses to the Preliminary Consultation Paper it appears to recommend that the government undertake a general review of product liability for automated vehicles.




Unfortunately, the government has reneged on its commitment, made not only in the RoadPeace judicial review in 2018 but also in its own consultation paper on Vnuk in 2016, to bring the geographic scope of compulsory motor insurance under the Road Traffic Act 1988 into line with the wider remit of the Directive.  With a hard Brexit looking increasingly likely and given the government's manifest and obdurate disregard of EU law on this issue and its long standing refusal to fully implement various other aspects the Directive -  I am not holding my breath.

New remedy

Fortunately however, victims who are injured by a  mechanical or software defect in a vehicle whose compensatory guarantee under EU law is frustrated by the responsible vehicle's insurer and / or the MIB refusing to compensate the claim on the basis that it is not a relevant liability (i.e. because the fault does not fall within section 145’s non-conforming scope) now have a new remedy.  

Claimants can now invoke the direct effect of Article 3 of the Directive in an ordinary personal injury action against the MIB, see my blogs on the Court of Appeal ruling in MIB v Lewis 2019.  See also my New Law Journal articles which predicted this outcome: On the Right Road? in 2013, Putting Wrongs to Rights 2016; State Liability; betwixt and between Brexit in 2017 etc.

This new direct right allows the claimant to cite the wording of Articles 3 and 10 of the Directive as though they were fully incorporated into our national law, word for word, and to plead this in an ordinary civil / tort law action directly against the MIB.

Tuesday, 11 June 2019

WINNING THE UNWINNABLE MOTOR CLAIM

MIB v Lewis


Lunchtime webinar on 19 June 2019 at 13.00 hrs


There has been a programme change to accommodate the ground-breaking implications of last week's Court of Appeal ruling in Motor Insurers' Bureau v Lewis 2019 EWCA Civ 909

Book now via the Association of Personal Injury Lawyers at: https://www.apil.org.uk

In a break with 73 years of jurisprudence, the Court of Appeal has fixed the UK motor insurance industry’s’ privately-owned consortium, the Motor Insurers’ Bureau, with a new autonomous legal obligation to compensate outside the parameters of the Road Traffic Act 1988. 


Serious deficiencies in the Supreme Court’s rulings in Cameron v Liverpool Victoria Assurance [2109] and Pilling v UK Insurance [2019] may be flagged up but a more detailed consideration will be covered in a separate webinar, currently under preparation.









Thursday, 6 June 2019

COURT OF APPEAL DISMISSES APPEAL BY MOTOR INSURERS' BUREAU IN LEWIS


Motor Insurers’ Bureau v Michael Lewis [2019] EWCA Civ 909


The Court of Appeal has ruled that:
  • The Motor Insurers’ Bureau (MIB) is an emanation of the state under EU law.
  • Articles 3 and 10 of the Motor Insurance Directive 2009/103/EC that prescribe the compulsory motor insurance obligation and the role of the compensating body authorised to compensate victims of unidentified and uninsured vehicles are sufficiently clear and unconditional to have direct effect against the MIB.


These findings fix the MIB with a liability to compensate motor accident victims whose compensatory entitlement ought to be guaranteed through compulsory third party motor insurance but who are not due to the UK government’s failure to properly implement the minimum standard of compensatory protection required by the Motor Insurance Directives.

The MIB faces potentially hundreds of claims by individual motor accident victims whose compensatory entitlement have been obstructed or denied due to the government’s longstanding failure to implement basic EU law requirements for motor insurance.

The MIB’s appeal against the first instance decision in Lewis v Tindale & MIB [2018] EWHC 2376 (QB) was resoundingly dismissed.  This is an unanimously endorsed ruling.  In presenting the only reasoned judgment, Lord Justice Flaux, rejected the MIB’s numerous arguments one after the other.

The Court of Appeal has ruled, in decisive terms, that not only does the MIB’s compensatory role under the Uninsured Drivers Agreement 2015 and the Untraced Drivers Agreement 2017 make it an emanation of the state in this context, but it is also pinned with liability to compensate motor accident victims who have been wrongly denied the compensatory guarantee mandated by Articles 3 and 10 of the Motor Insurance Directive 2009/103 due to the government’s  failure to properly transpose its requirements within the Road Traffic Act 1988 and under its private law agreements with the MIB.

Flaux LJ’s involvement might strike some as poetic justice for the MIB, since this ruling overturns his earlier decision in Byrne v MIB [2007] EWHC 1268 (QB) in which he had previously ruled that (i) the MIB was not an emanation of the state so that (ii) the provisions of the Motor Insurance Directives could not have direct effect against it. I have argued over several years, in my New Law Journal articles, that the Byrne judgment was wrong on these points.  First in February 2013 later in more detail in my two-part feature, Putting wrongs to rights, 27 May and 3 June 2016.  I did so again, following the Court of Justice’s ruling in Farrell v Whitty No. 2 (Case C-413/15) [2018] in State Liability: betwixt and between Brexit (Parts 1 and 2) 27 October 2017 and 3 November 2017.  I inferred from the judgment in Byrne that information relevant to the MIB’s close working relationship with the government was withheld from the court and I asserted that the learned judge was also misinformed on the proper approach to determining whether a body is an emanation of the state.  It was noticeable at the appeal hearing in Lewis that Flaux LJ was extremely well informed, which was evident from his timely and apposite interventions.

lewis v MIB; MIB v Lewis; Motor Insurers Bureau; Emanation of the state






































I will be presenting a lunchtime webinar on 19 June 2019 for the Association of Personal Injury Lawyers on the wide-reaching implications of this important ruling. 

The MIB’s exposure to liability extends far beyond the terms of its private law agreements with the Secretary of State for Transport; beyond even the governments failure to ensure that compulsory third party motor insurance extends to private land: it opens up new areas of claim previously thought to be untouched by third party motor insurance and the Road Traffic Act 1988.

I understand that the Court of Appeal have already refused the MIB leave to appeal.  However, the MIB have indicated that they intend to apply to the Supreme Court for permission to appeal, regardless. I think the MIB would be wise to think twice about that. 

If the MIB plan to pursue their empty technical argument that Articles 3 and 10 of the Motor Insurance Directive are insufficiently clear and unconditional to qualify for direct effect then that is likely to oblige the Supreme Court to refer the issue to the CJEU for a preliminary ruling under Article 267 TFEU. The autonomous nature of the EU law motor insurance obligation requires this; it is not something that lies within the Supreme Court’s discretion.  The European Commission and the CJEU are well aware of the UK’s extensive non-conformity with EU law in this area and it so may result in a crystal clear exposition of just how extensive the MIB’s liability is.

The UK remains the subject of a wide-ranging infringement complaint that has lain dormant following the 2016 Brexit referendum.  However, any Article 267 reference is likely to be expedited in the face of an impending Brexit.