A track record of delay and denial
Three years have elapsed since the Department for Transport
consulted
on the MIB agreements and was advised in no uncertain terms by a number of
respondents that its proposals and the national law provision it is responsible
for in this area was seriously flawed.
Innocent motor accident victims risk being deprived of their full
compensatory entitlement or denied it entirely because the UK’s domestic law
implementation of the minimum standards of protection required under European
law are so defective. See the
accompanying post,
Maladministration
At The Department For Transport,
for further analysis.
The Department for Transport’s narrative is that it is
acting lawfully and promptly to address any infringements of European law. The following chronology is intended to
present an accurate account of what has transpired, leaving others to draw
their own conclusions.
·
In February
2013: the New Law Journal published a series of four articles,
On the right road? in which I exposed
numerous failings in the way our national law provision for compulsory third
party motor insurance transposes the European directive (2009/103/EC) on motor
insurance (the directive). This sets the
minimum standard of compensatory protection that members states must implement
to protect motor accident victims. Its
aim is to ensure that victims who sustain property damage or injury through no
fault of their own should have their compensatory entitlement guaranteed. Unfortunately, over the years our national
law provision in this area has become excessively complicated and
inconsistent. The Road Traffic Act 1988
and other related primary and secondary legislation is peppered with loopholes
that motor insurers regularly exploit to avoid or reduce their liability to
compensate motor accident victims. These
articles called for wide-ranging reform.
They explained that a comprehensive EU law compliance review was required:
not just of the primary legislation but also of the minister’s private law
arrangements with the motor insurers he is tasked with regulating, to ensure
that victims of uninsured and untraced drivers receive comparable level of
protection to victims of fully insured drivers.
These schemes are supposed to conform to the same European law minimum
standards. They are administered by the Motor
Insurers’ Bureau (MIB) owned and operated by the motor insurance sector. The MIB is funded indirectly by every premium
paying motorist, so there is an element of consumer protection here too. The
fourth New Law Journal article concluded
by warning the Secretary of State for Transport that he could anticipate legal
action if these extensive infringements of European law were not addressed.
·
On 27
February 2013 the Department for Transport promptly announced
a
consultation on the Untraced Drivers Agreement 2003 and the Uninsured
Drivers Agreement 1999. It asserted that
the department had reviewed both agreements to ensure they are fully up to date
with European law, a claim clearly belied what followed. Neither the proposed reforms nor the
questions raised for consultation addressed the UK’s extensive nonconformity with
the European law it is are supposed to implement. So the whole process was as flawed the
announcement was misleading. A full
report was promised for the end of July 2013.
·
In early April
2013 I set up this NOTA BENE blog
as part of a public awareness campaign targeted at claimant practitioners and
representative organisations for accident victims. The legal profession was at the time
preoccupied with crisis-managing the botched implementation of one of the
largest civil justice reforms in living memory and so was largely unaware that
this consultation was taking place. The
blog flagged up important issues omitted from the consultation document. I was consulted by the Association of
Personal Injury Lawyers, the Motor Accident Solicitor’s Society, RoadPeace and
a number of law firms who joined me in calling for the minister to ensure that
the minimum standards of compensatory protection required under the relevant
European law was complied with fully.
·
By late
April 2013 various consultation responses were submitted by claimant
representatives experienced in handling claims under both MIB schemes,
including my own, all of which called for greater compliance with European law. In
my
consultation response I expanded on the issues raised in my New Law Journal
articles and I identified and explained over 40 potential breaches of European
law in our national law provision.
My
covering letter summarised my key proposals as follows:
“....In my opinion any proper
review of the MIB Agreements cannot be undertaken in isolation from their
statutory context. I explain my reasoning in my paper, where I also
advance the following key recommendations:
·
Restore the original legislative objective of the
Road Traffic Act 1930 to ensure that all victims of motor vehicle users, who
under our national law are entitled to compensation for their loss or injury,
are automatically entitled to recover compensation from the responsible
vehicle’s motor insurers, direct; wherever the accident occurs in the UK and
whatever the circumstances of the incident. A victim’s right to compensation
should be guaranteed and free from any policy term or other restriction in
liability, which are issues that should be confined to the insurer /
policyholder relationship.
·
Our national law provision should adhere to the
minimum standards of protection for victims of motor vehicle users imposed by
the Sixth Motor Insurance Directive and Community law (which incidentally
requires the full and comprehensive third party cover set out above).
·
Codify the current mix of statutory and
extra-statutory provision into one integrated body of rules (contained in
primary and subordinate legislation) for victims of uninsured and unidentified
drivers so that they provide a consistent, clearly articulated, fair and just
compensatory regime for victims of insured, insufficiently insured, uninsured
or unidentified drivers alike. The time for discarding the present
anachronistic and highly partial arrangements has long since passed.”
·
On 31
July 2013 the minister the issued a
statement
boldly asserting that the MIB agreements comply with European law. It also maked
the odd assertion that ‘
the agreements
cannot be changed unless both parties agree’, as though the minister does
not possess the executive power to fully implement European law. The statement
ignored my recommendation that he substitute the anachronistic format of the
MIB agreements with a modern codified scheme written in plain English that
ordinary members of the public can understand.
The MIB would not be able to veto a codified scheme. It is also here that we find the admission
that the February 2013 proposals were the product of three years of
negotiations with the MIB. Further
discussions were said to be necessary and the date for delivering the
consultation report was postponed to the Autumn of 2013.
·
In the summer
of 2013 the Law Commission asked me to submit a report (i) expanding on my four
New Law Journal articles and (ii) setting out my recommendations for reform in
this area. I duly submitted a
detailed
report, which I understand was forwarded to the Department for Transport. My report offered detailed proposals for
reform, including the codification of the two compensatory schemes for victims
of uninsured and untraced drivers and the imposition of standard terms for
third party cover. On the latter point,
the recent finding by HHJ Waksman
UK
Insurance Ltd v Holden & R & S Pilling trading as Phoenix Engineering
[2016] EWHC 264 (QB) that motor insurers are writing policy terms that do not
even comply with the UK statutory minimum levels of cover, suggests that the
Department for Transports failings are systemic. Unfortunately the department rejected the Law
Commission’s offer to include this topic in its next programme of law reform.
·
By the late
summer of 2013, it was clear that the minister was not interested in
widening the scope of his review. He
rejected calls to enter into a dialogue with the various claimant
representatives who had responded to his ill considered February 2013
consultation. After months of inaction,
it became clear that the powerful motor insurance lobby had effectively blocked
the calls for wider reform.
·
On 6
August 2013 I filed a
detailed
infringement complaint with the European Commission. The complaint asked the Commission to attempt
to persuade the Department for Transport to remedy the numerous infringements,
rather than enforce compliance through legal action. The minister was duly notified. The Commission has been in regular contact
with his department since that time in an effort to persuade the UK to remedy
its extensive infringements of the Directive, voluntarily. The complaint has been updated as new
infringements have come to light and these now exceed fifty separate instances
grouped under ten different headings. A
detailed schedule of European law inconsistencies is regularly updated and I am
informed that copies have been supplied to the Department for Transport in its
discussions with the Commission.
·
On 6
February 2014 I wrote to the Department for Transport to advise it that the
Untraced Drivers Agreement 2003 failed to provide adequate protection for
children and the mentally incapacitated motor accident victims. I raised this in response to a particularly
worrisome case that came to my attention.
My research revealed that the MIB regularly settled children’s injury
claims without first providing them with independent legal representation or providing
any independent safeguards to ensure that the compensation offered by the MIB
is fair and reasonable. On 12 March 2014
the Supreme Court ruled in
Dunhill v Burgin
[2014] UKSC 18 that to be valid, a minor’s or protected party’s claim had to be
approved by a court. On
17 March2014 I wrote to the Department
for Transport with a link to my New Law Journal article
An Untidy Arrangement?, drawing its attention to the
Dunhill decision.
The letter asked whether
the minister intended to review the provision for children and mentally
incapacitated claimants under both MIB Agreements and when we could expect his
consultation report. Needless to say
that the Department for Transport has not taken any action to protect these
vulnerable individuals despite acknowledging the need for additional protection
in its February 2013 consultation.
·
On 3 June
2014 Mr Justice Jay criticised the department’s long standing failure to properly
implement the European directives on motor insurance (i.e. the first three
directives that preceded the present
consolidated directive), in
Delaney v Secretary of State for Transport [2014] EWHC 1785 (QB). He ruled that the State was liable to compensate
the victim whose claim had been rejected by the MIB who relied on an unlawful exclusion
of liability clause in its agreement with the minister. He held that this particular infraction of
European law was clearly and obviously unlawful at the time it was first
introduced in 1999. The Secretary of
State for Transport’s appeal was subsequently dismissed by the Court of Appeal
in March 2015. This specific
infringement had been highlighted by me in my 2013 consultation response.
·
On 4 September
2014 the Court of Justice of the European Union posted its judgment in
Damijan Vnuk v Zavarovalnica Triglav d. d.
[2014] (Case C-162/13) which stressed that the compensatory guarantee of third
party victims is of equal importance to the Directive’s aim of liberalising the
free movement of vehicles across the European Union. It also ruled that the third party insurance
requirement that member states are responsible for implementing must extend to and
cover ‘
any use’ made of a motor
vehicle on land that is consistent with the vehicle’s normal function. This applies not just to the duty to take out
third party cover but also to the cover that motor insurers are supposed to
provide. This contrasts sharply with the
qualified and restrictive nature of the UK statutory provisions that confine
the duty to insure and the cover provided to (i) use in public places and (ii) to
vehicles intended or adapted for road use.
Furthermore, motor insurance policies routinely impose unlawful restrictions
on the use to which these vehicles are put.
These defects had been flagged up as potential infringements in my New
Law Journal articles and in my April 2013 consultation response. The implications of
Vnuk could not have been clearer.
Millions of motor policies continue to be issued that fail to conform to
these basic minimum standards. The
amendments necessary to bring the geographic and mechanical scope of the
compulsory third party motor insurance requirement provided for under the Road
Traffic Act 1988 are as obvious as they are straightforward.
·
By the
Autumn of 2014 the imperative for an urgent and wide ranging review of our
national law provision for third party motor insurance was confirmed and incontestable. The Delaney
and Vnuk cases demonstrate the high importance
of protecting motor accident victims and they vindicate the repeated calls for
reform made both in the responses to the minister’s own 2013 consultation and
afterwards. It is to be assumed that
similar representations would have been made by Law Commission and, on an
ongoing basis, by the European Commission.
The minimum standard of victim protection under this European law is
simple, clear and unequivocal. Yet the
minister allowed another year to pass by.
·
In July
2015, presumably after further private discussions with the MIB, the
department
announced
its proposed changes to the Uninsured and Untraced Drivers Agreements. The revised schemes were presented as a
fait accompli; coming into effect on 1
August 2015. This involved revisions to
the Untraced Drivers Agreement 2003 that clearly infringe the Directive on
motor insurance. Also, despite assurances
to the contrary in his 2013 proposals, no safeguards for children and protected
parties were introduced. He also
announced a new Uninsured Drivers Agreement 2015 that removed numerous
redundant procedural conditions precedent to MIB liability; as originally
proposed. However the new agreement
introduces new provisions, presumably at the behest of insurers, that had not
been raised in his 2013 consultation; worse still it adds new unlawful
exclusions of liability that clearly and obviously conflict with the protective
aim of the Directive. My New Law Journal
article
A call for (more) reform of 16 July
2015, points out these and other deficiencies.
The accompanying statement studiously ignores the European law issues
raised in response to the minister’s 2013 consultation, giving one the distinct
impression that the consultation exercise was never intended to be anything
other than window dressing.
·
On 10
July 2015 I
wrote an open letter to the Department for Transport to warn it that the
revised schemes were badly flawed as they contained serious breaches of European law
that unjustly prejudiced the legal rights of motor accident victims. Its
response
of 31 July 2015 was timed so it was transmitted precisely two and a half
hours before the changes came into effect on 1 August. The letter simply refutes the problems raised
without giving any explanation.
·
The decision to ignore consistent calls for a
wide ranging review in the face of the Delaney
and Vnuk decisions is a significant
watershed moment. Prior to this, it
might have been conceivable, if not very plausible, to have argued that these
unlawful actions and omissions were somehow inadvertent, even if not
excusable. However, from this moment
onwards, it is difficult to view the department’s inaction anything other than
a deliberate decision to refuse to act in the full knowledge that this is
unlawful. The department’s clear policy seems
to be to confer numerous unlawful concessions to the motor insurers it is
supposed to regulate at the expense of the accident victims whose interests
this multibillion pound industry is supposed to serve; all this in open defiance
of clear and unequivocal European law.
·
In
October 2015 a road safety charity issued a judicial review application against
the Secretary of State for Transport. It
challenges the minister’s decision to authorise unlawful revisions to the MIB
Agreements and his failure to undertake a comprehensive and wide-ranging review
of the UK’s compliance with the Directive. Although I have had an advisory role, I do not
have the conduct of the case and I am not able to divulge any more information
at present.
·
In recent
months the Department for Transport has indicated that it is considering
undertaking a further consultation exercise on the implications of Vnuk.
This is no answer for its failure over eighteen months to implement the
more obvious implications of Vnuk:
that require the immediate removal of the unlawful geographic and mechanical
restrictions to the scope of the third party motor insurance requirement. Neither does it provide any excuse for its
failure to remedy the numerous other unlawful provisions that were drawn to its
attention in response to its own consultation and subsequently.
For those of us who have reached the reluctant conclusion
that the 2013 consultation was a sham, the promise of further consultation is
profoundly unconvincing. The lack of
transparency and evident insurer partiality that informed the earlier process
leads one to question the good faith of those involved. Even the offer of genuine bilateral
consultation, were it to be made, is no answer to longstanding and egregious
illegality.
