Why the Secretary of State’s failure to implement European law is neither inadvertent nor excusable
A sham consultation
Just over three years ago the Department for Transport
posted its February
2013 consultation setting out its proposals for revising the MIB
agreements. Stephen Hammond MP was the Under
Secretary of State for Transport who unwittingly lent his name to this
ill-conceived paper. His covering letter
stressed the importance he attached to ensuring that the MIB schemes ‘are fully
up to date’ with European law.
The MIB agreements are the contractual arrangements between
the minister and a consortium owned by the UK motor insurance sector: the Motor
Insurance Bureau (MIB). They provide the
legal framework for two separate schemes for ensuring that victims of uninsured
and untraced drivers actually recover the compensation they are entitled to.
Unfortunately the consultation’s terms of reference were
highly prescriptive both in the limited nature of the proposed changes and in
the issues it raised. Whilst many of the
proposals were welcomed (indeed for the removal of a raft of unfair and
oppressive procedural strike out provisions was something that this author had
been calling since 2008), much needed reform was overlooked. Unfortunately, rather than taking the
European law minimum standards of compensatory protection for accident victims
into account, it appears to have completely ignored them. The department later admitted, in an official
announcement in
July 2013, that its proposals were the product of extensive negotiations with
the MIB over three years. It is clear
from this and from what has subsequently transpired that a deal had already
been struck with the MIB in private on the modest procedural changes that motor
insurer’s were prepared to countenance. So, for this ‘consultation’ to have
lived up to its description, it would also have needed to take into account the
views of the various special interest groups who represent the road users and motor
accident victims that these two schemes are supposed to serve; particularly
where they identified substantial illegality.
What is striking about this exercise is that the department
and the Under Secretary of State for Transport (who has since returned to backbench
obscurity) were both warned by several respondents that the consultation was poorly
conceived. They were told, in effect, that
they were asking the wrong questions. Several
well informed respondents warned that the review should not be confined to the
procedural changes contemplated. They
were advised that the department needed to undertake a root and branch review
of the entire national law provision for third party motor insurance as well
the compensatory schemes for victims of uninsured and untraced drivers: this needed
to include the primary and secondary legislation governing compulsory third
party insurance as well as both MIB agreements as they were closely
interrelated and interdependent. It was
explained that this was necessary because all this law, which the department is
responsible for overseeing, contained unlawful provisions that conflict with
the minimum standard of protection required under the relevant European law that
the UK is obliged to implement. These
were serious issues that were explained, at least by me, in exhaustive detail
with reference to the primary and secondary sources of European and UK law.
Yet the department, and officially the minister, chose to
ignore these responses. The department’s
reaction was to park the entire review process; rejecting calls for a dialogue
from the respondents. Nothing moved for
over two years. It was evident that the 2013
‘consultation’ had been an empty exercise.
Then in July 2015 his Department announced, as a done deal, its
original proposals, with a few additional measures which had every appearance
of emanating from the motor insurers who enjoy such a cosy working relationship
with his department. The one concession
to European law being the revision of an unlawful exclusion of liability
following their most recent defeat in Delaney v Secretary of State for Transport
[2015] EWCA Civ 172 but even here some of the changes seemed contrived to
deliberately mislead the unwary: in the way it reintroduces the illegal constructive
knowledge provisions associated with one of the MIB’s exclusions of liability under
the feeble guise of conformity: see ‘A call for (more) reform’.
This disingenuous behaviour undermines public confidence in the
impartiality and good faith of those involved.
There is a growing appreciation that we don’t have open and accountable governance,
let alone efficient administration, at the Department for Transport. The minister responsible for this deplorable
situation is the Rt. Hon. Patrick McLoughlin MP (the minister), who has
presided over this shambles since 2012.
The chronology of obfuscation provided in the accompanying post, Action Not Words, speaks for itself.
The scale of the problem
Innocent motor accident victims continue to be routinely
short-changed by ‘at fault’ motor insurers and the MIB, which these insurers
own and run, because the minister has chosen to ignore calls to review the
shambolic and anachronistic national law provision for compulsory third party
motor insurance. In some instances
innocent victims are left empty handed due to petty technical knock-out clauses
that serve no purpose other than to provide insurers with windfalls.
This is a highly unsatisfactory situation. It is one that successive ministers have
condoned for decades. However ignorance
that might have been pleaded in earlier years, is unsustainable in 2016. It has been made increasingly obvious,
undeniable even, that these anomalies are unlawful because they are not
permitted under European law. The Delaney and Vnuk decisions referred to above, as well as other earlier
authorities such as Churchill Insurance v Wilkinson and ors
[2012] EWCA Civ 1166, leave us in no doubt that the UK’s statutory and
extra-statutory provision is inconsistent with the European law it is supposed
to implement. In fact this problem is
systemic as our national law provision in this area is not only riddled with
illegal exceptions and restrictions but it also contains basic design flaws
that are inimical to the original legislative objective of the Road Traffic Act
1930 of protecting accident victims.
Take for example the way the relevant legislation (The Road
Traffic Act 1988; The European Communities (Rights Against Insurers)
Regulations 2002; The Third Parties Rights Against Insurers) Acts of 1930 and
2010 and The Contracts (Rights of Third Parties) Act
1999 all preserve elements of the common law third party rule that expose
accident victims to the vagaries of contractual restrictions in cover that they
as strangers to the contract have no ability to influence. This makes no sense from a social policy
perspective and it undermines the original 1930 legislative aim. Furthermore, under European law, a third
party victim’s right to compensatory guarantee is a free standing right. This is one of those situations where the
European law that our government is supposed to implement is not only clear,
unequivocal and, for the most part, sensible but also much closer to the
original policy aim that initiated compulsory third party insurance in this
country 85 years ago.
It is little short of scandalous that our government
encourages accident victims on its website
to apply to the MIB direct, in the certain knowledge that its contractual
arrangements with the MIB (and the schemes it operates) fail to confer their proper
legal entitlement to the compensatory guarantee required both by common sense
and European law.
Too little too late
Law abiding motorists and road users have endured three more
years of what might most charitably be described as institutionalised incompetence
at the hands of the complaicent technocrats at the Department for Transport. What they need right now is for the minister
to step up to his constitutional responsibilities.
The time for deliberation and consultation has long
past. The minister’s refusal to act
promptly and decisively to bring UK national law provision into line strikes
this author as Wednesbury unreasonable: in the sense that it is blatantly
defiant of both law and logic, quite apart from being morally indefensible.
If the Department for Transport is unwilling or unequal to
the task of assisting the minister in driving through this long overdue and
necessary reform, then perhaps it would be better for all concerned if the
Ministry of Justice assumed this responsibility.
