Dr Nicholas Bevan

Dr Nicholas Bevan

Friday, 4 April 2014


Flawed proposals

In February 2013 the Parliamentary Under Secretary of State for Transport, Stephen Hammond MP, proposed that the Untraced Drivers Agreement 2003 between the Department for Transport and the Motor Insurers Bureau (MIB) should be revised to require the approval by an independent arbitrator of any settlement made behalf of a child or mentally incapacitated applicant. 

So far, so good but this recommendation does not go nearly far enough. This is partly because the Minister's proposal only applies where a child or mentally incapacitated applicant has no independent legal advice or representation and party due to the absence of any uniform provision for independent legal advice and representation. 

I hope to demonstrate in this article why the appointment of an arbitrator at the conclusion of the MIB’s investigation does not provide an effective guarantee that the claim will be investigated properly or fairly.  Furthermore, that if a claim is investigated inappropriately or otherwise prepared badly, this risks compromising the arbitrator’s ability to reach a fair and just decision.

Why every child and the mentally incapacitated hit and run victim needs independent legal representation from the outset

It is worth reflecting on what legal capacity actually involves before we explore the dangers faced by those who lack it.  One of the leading authorities on this topic is Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889.  In that case, Kennedy LJ cited with approval a passage from the judgment of Boreham J in White v Fell 1987 unreported, in which he outlined the essential characteristics that enable a person of sound mind and full capacity able to pursue a claim unaided:   

"To have that capacity she requires first the insight and understanding of the fact that she has a problem in respect of which she needs advice . . . Secondly, having identified the problem, it will be necessary for her to seek an appropriate adviser and to instruct him with sufficient clarity to enable him to understand the problem and to advise her appropriately . . . Finally she needs sufficient mental capacity to understand and to make decisions based upon, or otherwise give effect to, such advice as she may receive."

Applying the simplest logic, by way of contradistinction to this definition, a child or mentally incapacitated victim is someone that does not possess these characteristics and so is particularly vulnerable to exploitation in anything other than the most benign of environments.

This same vulnerability also puts the MIB in a correspondingly advantageous position - in a compensatory regime that is already heavily weighted in the MIB’s favour.  This produces a disproportionate inequality of arms between the vulnerable victim and the well resourced and very experienced MIB claims managers that handle these claims.  It also assumes almost impossibly high standards of judicious impartiality and self restraint on the MIB’s behalf.  It should be remembered that the MIB claims managers, will in all probability have cut their teeth in the cut and thrust of contentious litigation on behalf of the insurance sector..

It is precisely to prevent this kind of disadvantage that the Civil Procedure Rules insist on the triple safeguards set out in my earlier post: Fairer Treatment for the Vulnerable.

The Department for Transport admits that it does not supervise or regulate the way the MIB investigates or manages the thousands of untraced driver claims it receives every year.  This is a genuine cause for concern as the MIB, whose board of directors is comprised exclusively of motor insurance grandees, appears to have a glaring conflict of interest: between securing just settlements at full value for the applicants and in suppressing the cost of those same settlements.

No safeguards

At present, there are no suitable safeguards to protect children and mentally handicapped victims of hit and run drivers from receiving unfair treatment at the hands of the Motor Insurers Bureau under the Untraced Drivers Agreement 2003.

We are now more than one year on from when the Minister first conceded the need for reform and he has failed to deliver any reform at all.

Better reform 

The Minister should insist that an independent arbitrator, experienced in handling and quantifying personal injury claims, is appointed to approve every settlement or compromise on behalf of children and the mentally handicapped under the Untraced Driver Scheme. 

The Minister should also insist:
  • That these individuals have independent legal advice and representation from the outset of the claim and sufficient funding to ensure that their interests are adequately protected in the more complicated claims.

  • That in all but the simplest of cases, the arbitrator (under the proposed settlement approval scheme) should insist on a written opinion from the victim's barrister or solicitor which should consider: (a) the adequacy of the evidence obtained by the MIB; (b) the suitability of the proposed compromise or settlement, as well as (c) any other relevant matters such as the form the proposed award should take (e.g. lump sum / periodical payments order). 

Catch 22

Without these basic additional safeguards, which incidentally are deemed to be an absolute necessity in every civil action involving children and protected parties, how can those who by definition lack the requisite capacity be expected to recognise an unfair compromise or settlement offer for what it is; when to make a challenge or objection to the way the MIB have prepared or investigated the claim or otherwise to spot evidential bias that is such a common feature in the expert evidence procured on behalf of defendant insurers and the MIB alike?. 

Purblind justice

Another weakness in the Ministers’ proposal is that without independent representation that tests and vets the MIB’s evidence, an arbitrator will not know whether the evidence before him is tainted with partiality or whether it is just misleading.  If he only has the MIB’s unchallenged, and possibly misleading perspective to inform him, his findings are likely to be tainted by that bias. 

Worst of both worlds

The present Untraced Drivers Scheme is something of a chimera.  It possesses elements of a continental style inquisitional regime (in the way that the MIB investigates the claim, makes an initial determination on issues of liability / entitlement as well as assessing the value of the award itself) and the common law adversarial way of investigating a claim (in the tactics adopted by the MIB through its selection of sympathetic experts and in its timing of the disclosure of evidence etc). 

The present regime exposes victims to the worst aspects of both worlds.  

In most cases the arbitrator will have little choice other than to adopt the MIB’s appointed expert's slant on the case, unless the victim is lucky enough to afford to be represented and to instruct an independent expert.

A cautionary tale

The reader’s attention is drawn to Moore v Secretary of State for Transport & MIB [2007] EWHC 879 (QB) which demonstrates the folly of entrusting a quasi judicial role to insurance claims operatives who are unlikely to have had any formal legal professional / judicial training.  In this case a genuinely injured victim of a hit and run incident was secretly subjected to video surveillance on a number of occasions.  The MIB then selected some of these videos, but not all of them, and sent them to its chosen medical consultant to ask him to alter his original opinion.  He was persuaded to beef up his original report that had expressed, in mild terms, his impression that the applicant might be exaggerating some of his symptoms.  This was now described as being ‘a significant degree of exaggeration’

The MIB later persuaded the consultant to revise the report once more, to remove any reference to the surveillance evidence he had seen; why?.  The final version of this report was then falsified to back date it to give the reader the misleading impression that it predated these events; again, why?.  It is abundantly clear that the independence and objectivity of this particular consultant was compromised.  The report was clearly misleading on important particulars.  A consultant that colludes in the doctoring his report in this way seems just as likely to be susceptible to partiality in the opinions he expresses.  Alternative explanations for the victim’s behaviour under surveillance, such as naturally occurring variations in the severity of his symptoms or perhaps some genuine psychological overlay, may well have provided equally plausible and innocent explanations that supported his full claim.  

The victim complained that he was informed of these matters far too late in the day to respond to them effectively.  The late discovery of these facts prevented him from countering the MIB consultant’s amended views with his own expert evidence.  Clearly the fact that the MIB’s expert now opined that the victim was, in effect, a malingerer had a major impact on his credibility and on the potential value of his claim: reducing its stated value by several hundred thousand pounds.

Not long ago, this type of cloak and dagger tactic was nothing out of the ordinary for the normal cut and thrust of a contested civil claim but in recent years the courts have imposed rigorous sanctions on those who attempt ambuscades of this kind.  Unfortunately, neither the Civil Procedure Rules nor the court’s writ extend to the Untraced Drivers Scheme.  Behaviour that might be tolerable where both parties are legally represented and where the court has benefit of hearing both sides of the case, is completely unacceptable when perpetrated by a quasi judicial / inquisitional body.

I am reasonably confident that the MIB’s machinations in this case were inadvertent and not part of a deliberate ploy to  cheat the applicant of his full compensatory entitlement.  Anyway, there is no way of telling whether its deception, and that may be too strong a word for it, would have made a material difference to the amount of the final award.  However what is clear is that the MIB, unlike ordinary liability insurers who are governed by the Civil Procedure Rules, enjoys a very wide latitude in the way it operates: how it goes about its investigations, whom it selects as experts, how it instructs those experts and in the timing of its disclosure; all effectively unregulated.  Can this be right?

The absence of any day to day supervision or accountability in the way the MIB investigate and value their claims is something that victims and their representatives need to be on their guard against.  

Greater protection accountability and supervision 

Common sense suggests that these particularly vulnerable victims need to be protected not just from themselves or the incompetence of their lawyers but also from the MIB itself.  The safeguards deemed necessary under the Civil Procedure Rules are even more necessary under the Untraced Drivers Scheme. 

The MIB should be recognised for what it is: an inadequately supervised private company set up and managed by the insurance industry and appointed by the Minister to act as an unregulated outsourced inquisitional agent, assessor, with an inherent conflicting interest as the notional compensating insurer. 

I wonder whether anyone at the DfT has heard about the division of powers principle?

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