Thomson Reuters and the Journal of Personal Injury Law, have kindly granted me permission to post my article 'Why the Uninsured Drivers Agreement 1999 Needs to be Scrapped' .
[2011] J.P.I.L., Issue 2 © 2011 Thomson Reuters (Professional) UK Limited
Copies of this article are available through Westlaw / Lawtel.
Part II: Why the Uninsured Drivers Agreement 1999 needs to be scrapped
An overview of the main defects
The most offensive
defects in what is now commonly perceived by most claimant practitioners to be
a notoriously unjust and unsatisfactory compensatory regime are:
·
The unjustified exclusions of liability under clause
6;
·
The requirement, imposed as a condition precedent of
any liability, that all claimants should complete the MIB’s own very detailed
claim notification form, when the form itself has recently been changed so as
to require applicants to supply unwarranted and wide ranging mandate that
provides access to highly personal and privileged information; clause 7;
·
The imposition of numerous disproportionate and
heavy handed procedural requirements imposed as conditions precedent to any
liability within clauses 7 to 12.
These run a coach and horses through the overriding objective of Article
10;
·
A bizarre penalty imposed on an innocent victim should
he or she fail to request the other driver’s insurance details or to pursue a
formal complaint to the Police, where there are in fact no insurance details to
disclose in the first place, under clause 13;
·
The assertion that any sums received by the claimant
as a result of the accident fall to be deducted from the compensation, clause
17;
The combined effect
of these deficiencies is to deter or disentitle some claimants from making any
application and to deny to many others their full proper compensatory entitlement. There is a strong case to argue that even if
these do not individually amount to the degree of impediment that would trigger
a Francovich action, taken as a whole
they fail to provide an effective implementation of the 6th EU Motor
Insurance Directive.
The
intricacies of the procedural requirements within the 1999 Agreement seem occupy
something of blind spot in many practitioners’ competence. Ideally, they should be handled by dedicated
specialists and where not, practitioners will need to appreciate how these
claims differ from a typical RTA claim; case management systems and protocols
should distinguish MIB claims as a separate category of claim. Many lawyers fall into the trap of treating
an MIB claim as though it were an ordinary RTA claim. This can often have disastrous
consequences. Even where claimants
manage to successfully sue their legal representative in negligence, the
compensation awarded for professional negligence is almost inevitably reduced
to take into account the risks of litigation; representing as they do only the lost
prospect of recovering their full entitlement.
The Uninsured
Drivers Agreement 1999 was drafted long before the inception of the Civil
Procedure Rules and prior to the pre action protocols that provide for the free
exchange of information before proceedings are commenced. However it was left to languish for a couple
of years before being nonchalantly waived through, presumably unexamined and as
drawn, by the new incumbent at the office of Secretary of State for Transport; without
any proper consultation with other stakeholders. The result produced a predictably one sided
compensation scheme that prejudices the legal entitlement of innocent victims.
Amended Notes For Guidance
Whilst the amended
Notes For Guidance do mitigate some of the more obvious procedural failings and
remove the earlier declaration that the notes for guidance do not ‘control or
influence the legal interpretation of the Agreement’, their effect is
limited. Many of the procedural strike
out clauses remain and there is uncertainty regarding their legal provenance.
They do not
constitute an amendment of the Agreement itself, as this would require the
Secretary of State’s fiat. However, the
MIB does act in good faith and it honours the Amended Notes. Presumably, were it to attempt to renege on
the softened procedural approach it would be possible to argue that the MIB is nevertheless
bound by them, or at least estopped from raising technical objections to a step
taken in accordance with these notes: on the grounds that they constitute a
waiver. It is not suggested that the MIB
do not act in compliance with these notes or otherwise other than in good
faith. Even so, this widespread
inconsistency between the Agreement and the Guidance (and indeed the case law)
is confusing to lay applicant.
An insurer’s perspective
Whilst it is easy to
criticise the Domestic Agreements regime it should be remembered that many of
the conditions precedent have been introduced in an attempt to restrict
improper claims and dubious tactics.
When the Uninsured
Drivers Agreement 1999 was being formulated the motor insurance industry was having
to cope with an unprecedented number of uninsured and untraced driver
claims. A significant proportion of
these claims were being made late in the day, probably as a result of the late
presentation of claims in response to television and radio advertisement by compensation
claims agents and referrers, giving the MIB little opportunity to trace the
drivers responsible or to investigate the accident circumstances and the claim. The Bureau also faced reluctance by some
practitioners and claimant’s to cooperate with the provision of information.
In 2006, the MIB
estimated that there were approximately 2 million uninsured drivers. The numbers have reduced since the
introduction by the MIB of its MID helpline that enables the police to confirm
whether a vehicle is insured or not.
These measures are thought to contributed to a declined in numbers to
1.5 million in 2010.
It appears that the
MIB’s Domestic Agreements reflect the Bureau’s harsh experience in dealing with
uninsured driver claims in prior in the 1990.
This may explain the extraordinary increase in the procedural conditions
precedent and the excessive bureaucratic controls imposed under the 1999 Agreement. The MIB contend that their principally
concern is with preventing fraudulent and exaggerated
claims and vetting claims; not depressing the value of legitimate claims;
Unfortunately, this
empirical approach to shoring up the MIB’s defences and revisions made to the
Uninsured Drivers Agreement 1988, implemented without proper consultation with
strategic and other interested parties, only served to exacerbate further the UK
Government’s existing failures to properly implement the First and Third EU Motor
Insurance Directives. The current
Agreement contains so many procedural conditions precedent to any liability,
unjustified exclusions of cover and knock out clauses and results in a regime
so draconian and unjust to make the 1999 Agreement completely unsalvageable.
What follows is a
critique of the most egregious failings within the Uninsured Drivers Agreement
1999, it is not intended to be a comprehensive commentary.
Specific instances considered
Unjustified exclusions of certain categories of claim
We have seen from
reviewing the EU Directives that some exceptions are clearly permitted by 6th
EU Motor Insurance Directive. The
following section will identify which exceptions within the Uninsured Drivers
Agreement 1999 fall outside those permitted by the Directive.
Subrogated claims
Under clause 6.1 (c)
the MIB seeks to exclude liability to compensate persons other than the
individual sustaining the injury or loss, whether the claim is based on a
subrogated right of action, an assignment or other right. This rather convoluted clause (and until
recently the notion that the Guarantee Fund was a fund of last resort) has been
relied on in the past to justify the MIB’s refusal to pay a number of
legitimate heads of claim: legal costs and expenses incurred by a legal
expenses insurer; legal expenses insurance premiums; success fees under a
conditional fee agreement; credit hire costs; medical expenses incurred under a
health policy or provided by an employer; sick pay claims and monies already advanced
by a motor insurer under a comprehensive motor policy. With the exception of the last category, we
have seen from Article 10 that it provides in the clearest possible terms that
the MIB should compensate:
‘at least up to the limits of the insurance
obligation for damage to property or personal injuries…’
It is interesting to
note that the issue that precipitated the dispute in McCall
v Poulton was the MIB’s
refusal to pay the claimant’s credit car hire charges. Even more significant is the fact that this
head of damages appears to have been conceded in those proceedings, eventually.
It is unfortunate
that Article 10 is less clear in the second paragraph in stating that member
states may regard compensation as ‘subsidiary or non-subsidiary to other compensation
arranged by the MIB, whether paid direct by the uninsured driver, an insurer or
social security body. What is abundantly
clear however is that nowhere, by implication or otherwise, does the Directive
permit the level of compensation received by the claimant, from whatever source
or sources, to fall below the level of a comparable claim against an insured
driver. Accordingly whenever the MIB reduce
a claimant’s net entitlement to compensation on the basis that all or part of
the claim is a subrogated claims, then this is in contravention of the EU
Directive. This could occur, where for
example, the claimant is contractually obliged to repay the cost of treatment received
under a private medical health insurance policy from any damages received or where
the claimant receives a payment under a personal health insurance policy as a
result of the accident.
Passenger’s with culpable knowledge
One further area of
controversy in clause 6 concerns the exclusion of liability to compensate a
passenger who knew or ought to have known about any one of five different facts,
these are set out in sub-clause 6.1 (e) and sub-clauses 6.2 to 6.5. Whilst there may well be sound policy reasons
for penalising irresponsible behaviour, it should be remembered that Parliament
has already addressed this issue when it passed the Law Reform (Contributory
Negligence) Act 1945.
We will begin by
examining the treatment of ‘passenger knowledge’ after reprising the relevant
provisions within Articles 10 and 13, considered above. It will be remembered that EU Directive
permits member states to exclude the payment of compensation to passengers who
voluntarily entered the vehicle which caused the damages or injury when the compensatory
body (i. e. the MIB) can prove that they knew either that it was
uninsured (Article 10) or that they knew that the vehicle was stolen (Article
13).
It
is interesting to compare the exclusions of cover within s 151 of the Road
Traffic Act 1988[1]
with and Clause 6.1 (e) of the Uninsured Drivers Agreement 1999:
Section
151 of the 1988 Act provides:
(4) In subsection (2)(b) above “excluded
liability” means a liability in respect of the death of, or bodily injury to,
or damage to the property of any person who, at the time of the use which gave
rise to the liability, was allowing himself to be carried in or upon the
vehicle and knew or had reason to believe that the vehicle had been stolen or
unlawfully taken, not being a person who—
(a)
did not know and had no reason to believe that the vehicle had
been stolen or unlawfully taken until after the commencement of his journey,
and
(b)
could not reasonably have been expected to have alighted from the
vehicle.
In this subsection the reference to a person
being carried in or upon a vehicle includes a reference to a person entering or
getting on to, or alighting from, the vehicle[2].
Clause
6.1 Uninsured Drivers Agreement 1999 provides
6.1 Clause 5 [which sets out the MIB’s obligation to compensate] does not apply in the case of an application
made in respect of a claim of any of the following descriptions (and, where
part only of a claim satisfies such a description, clause S does not apply to
that part)
(a)….
(c) a claim by, or for the benefit of, a
person ("the beneficiary") other
Than…… the person suffering death, injury or
other damage which is made either –
(i) in
respect of a cause of action or a judgment which has been assigned to the
beneficiary,or
(ii)
pursuant to a right of subrogation or contractual or other right belonging to
the beneficiary;
………..….
(e) a
claim which is made in respect of a relevant liability described in paragraph
(2) by a claimant who, at the time of the use giving rise to the relevant
liability was voluntarily allowing himself to be carried in the vehicle and,
either before the commencement of his journey in the vehicle or after such
commencement if he could reasonably be expected to have alighted from it, knew
or ought to have known that -
(i)
the vehicle had been stolen or unlawfully taken,
(ii)
the vehicle was being used without there being in force in relation to its use
such a contract of insurance as would comply with Part VI of the 1988 Act,
(iii) the vehicle was being used in the
course or furtherance of a crime, or
(iv) the vehicle was being used as a means
of escape from, or avoidance of, lawful apprehension.
6.2 The
relevant liability referred to in paragraph (1) (e) is a liability incurred by
the owner or registered keeper or a person using the vehicle in which the
claimant was being carried.
6.3 The burden of proving that the claimant knew or ought to have known of
any matter set out in paragraph (1)(e) shall be on MIB but, in the absence of
evidence to the contrary, proof by MIB of any of the following matters shall be
taken as proof of the claimant's knowledge of the matter set out in paragraph
(1)(e)(ii) -
(a) that the claimant was the owner
or registered keeper of the vehicle or had caused or permitted its use;
(b) that the claimant knew the
vehicle was being used by a person who was below the minimum age at which he
could be granted a licence authorising the driving of a vehicle of that class;
(c) that the claimant knew that the
person driving the vehicle was disqualified for holding or obtaining a driving
licence;
(d) that the claimant knew that the
user of the vehicle was neither its owner nor registered keeper nor an employee
of the owner or registered keeper nor the owner or registered keeper of any
other vehicle.
Both s 151 and
clause 6 impose constructive or deemed knowledge. However, we have seen from the House of Lords
ruling in White, that a purposive
interpretation of clause 6.1 (e) this requires actual knowledge. Extending this rationale and applying the Marleasing principle to the s 151 of the
1988 Act achieves the same result.
Section 151 should be amended in any event.
However that is not
the least of it, because it is clear that the two passenger knowledge
exclusions permitted by Articles 10 and 13 of the 6th EU Directive do
not extend to a knowledge that the vehicle was being ‘used in the course or
furtherance of a crime’, nor to a knowledge that the vehicle was ‘being used as
a means of escape from, or avoidance of, lawful apprehension’. These additional culpable knowledge
categories were not present in the 1988 version of the Uninsured Drivers
Agreement. They are not permitted by the
Directive and thus expose the state and the Bureau to a legal challenge. It is noteworthy that in Farrell, the European Court of Justice ruled that Member States are
not entitled to introduce additional restrictions to the level of compulsory
insurance cover to be accorded to passengers.
Assumption of the court’s role and prescribing
rules of evidence
Another curious
irregularity is the MIB’s attempt, at clause 6.3 to 6.5 to abrogate to itself the
right to introduce rules of evidence to establish what a claimant knew or ought
to have known. In this jurisdiction we
do not operate a dual set of civil law codes; we are all equal before the same
law and it is simply not within the MIB’s remit of authority to prescribe the
approach our civil courts should take to the evidence before it. This clause can safely be ignored.
Offsetting monies received from other sources
Another category of
excluded claim is featured in clause 17 where the MIB claims to be entitled to
deduct any compensation arising from a different source that has resulted from
the occurrence of the death, injury or loss to which the proceedings
relate. Presumably, the intention of the
MIB is to catch any accident or sickness insurance policy payment received by
the victim and to deduct its compensatory payment pro rata. However under our tort law jurisprudence the rule
against double recovery does not extend to an insurance payment where the
claimant has paid or contributed towards the premium. No such concession is made by clause 17.
Clause 17 is clearly
inconsistent Article 10 because that the MIB should provide compensation, at
least up to the limits of the insurance obligation for the damage to property
or personal injuries caused by the untraced or uninsured driver. It also runs contrary to the equivalence and
effectiveness principle propounded by Evans.
Unjustified insistence on an applicant making enquiries
Under clause13.1 of
the 1999 Agreement the MIB contends that it will incur no liability to
compensate unless the claimant has as soon as reasonably practicable -
(a) demanded the
information and, where appropriate, the particulars specified in section 154(1)
of the 1988 Act, and
(b) if the person of
whom the demand is made fails to comply with the provisions of that subsection
-
(i) made a formal complaint to a police
officer in respect of such failure, and
(ii) used all
reasonable endeavours to obtain the name and address of the registered keeper
of the vehicle or, if so required by MIB, has authorised MIB to take such steps
on his behalf.
It will be recalled
that s 154.(1) of the Road Traffic Act 1988 imposes an obligation on a person
against whom a claim is made (not the claimant) where their liability arises
out of an event that ought to be covered by a policy of insurance under section
145 of this Act must, on demand by or on
behalf of the person making the claim (i.e. the claimant) —
‘(a) state whether
or not, in respect of that liability—
(i) he was insured
by a policy having effect for the purposes of this Part of this Act or had in
force a security having effect for those purposes, or
(ii) he would have been so insured or would
have had in force such a security if the insurer or, as the case may be, the
giver of the security had not avoided or cancelled the policy or security, and
b) if he was or
would have been so insured, or had or would have had in force such a security—
(i) give such
particulars with respect to that policy or security as were specified in any
certificate of insurance or security delivered in respect of that policy or
security, as the case may be, under section 147 of this Act, or
(ii) where no such
certificate was delivered under that section, give the following particulars,
that is to say, the registration mark or other identifying particulars of the
vehicle concerned, the number or other identifying particulars of the insurance
policy issued in respect of the vehicle, the name of the insurer and the period
of the insurance cover.’
The object of s 154
is to aid a victim to identify the insurer liable to indemnify the responsible
driver under s 151 to enable the victim to recover compensation Clause 13 of
the 1999 Agreement subverts this principle to produce the very opposite effect.
Few motorists are
aware of s 154 Road Traffic Act 1988 and far fewer still have any inkling about
the not inconsiderable burden placed on them by clause 13. Where information is not provided by the
other driver at the accident scene, innocent claimants (often injured) are
obliged by clause 13 to undertake their own investigation and to attempt to
ascertain the defendant’s insurers, without any clear guidance on the extent of
these inquires or on what ‘as soon as reasonably practicable means’. Many injured motorists will be unaware that
the defendant was uninsured until several weeks after the accidents. Arguably, obtaining even part of the
information listed in s 154 (such as the name of the insurers or the policy
number) would be insufficient and thus risk breaching this condition precedent
of MIB liability.
This clause clearly
discriminates against this category of claimants, as opposed to those pursuing
claims against insured defendants, and there is a strong case to argue that this
contravenes the EU Motor Insruers Directives.
This oppressive clause is also unnecessary, with the advent of the Motor
Insurers Database.
Fortunately, in Shapoor
v Promo Designs & MIB (Romford CC) 2009 a piece of flawless common
sense has mitigated the harsh effect of clause 13. In Shapoor
the MIB had sought to reject a claim under the Uninsured Drivers Agreement
where the defendant mistakenly provided false insurance details in the
erroneous belief that he was insured and where the claimant did not report the
failure to provide this information to the police. The judge held that the MIB were attempting
to import into their agreement an obligation to report the accident where C was
uninsured or gave conflicting answers. This
was held to be contrary to EC Law as it attempted to impose an additional
burden on a claimant’s right to compensation provided under the EU Motor
Insurance Directives, one that was in conflict with the EU Directives
themselves. Furthermore, a driver who
honestly but mistakenly believes that they are insured does not commit an
offence under s 154 (2) RTA 1988, even if they are guilty of driving without
insurance under s 143.
H H J Platt
held that Clause 13.1 only applies to circumstances where the third party has
insurance; not where the third party is uninsured.
Breach of the right to privacy
Under clause 7 MIB
shall incur no liability under MIB's obligation unless an application is made
to the person specified in clause 9(1) -
(a) in such form,
(b) giving such information about the relevant proceedings and other matters relevant to this Agreement, and
(c) accompanied by such documents as MIB may reasonably
(b) giving such information about the relevant proceedings and other matters relevant to this Agreement, and
(c) accompanied by such documents as MIB may reasonably
It is necessary to
use the MIB’s application form. The
prescribed form is available from the MIB website or by phone request.
In its notes for
guidance the Bureau has adopted a more lenient stance on the completion of the
application form, provided that it is signed.
There are two
versions of this application form. The
latest version obliges an applicant to make a declaration; this is set out at
section 12. At clause 4 of this
declaration the applicant must consent to the disclosure of personal
information and the form explicitly authorises the release to the MIB of
confidential data from their employers, any government department, insurance
companies, local authorities and even their medical records. These are unjustified demands which go beyond
anything that the MIB have a right to demand.
Any applicant that
does not complete the application form is at risk of being deemed by the MIB to
have committed technical breach of clause 7, which is itself a condition
precedent of any MIB liability. The
imposition of this excessive and unwarranted level of disclosure exposes the
Government and the MIB to the accusation that it is committing a breach of
Article 8 of the Human Rights Convention, which confers the right to privacy. Any solicitor that fails to properly advised
client on this issue is at risk of professional misconduct[3].
The MIB should
instead rely on the usual pre action and post issue provisions for disclosure
within the Civil Procedural Rules, along with every other litigant in our civil
justice system.
Disproportionate insistence on disclosure
As with clause 5.1
under the UDA 1988, failure to serve the requisite notice in the form
prescribed is fatal to an MIB claim.
This is because this requirement is set as a condition precedent of any liability.
Under Clause 9 an
applicant must within 14 days after issue give the MIB and any
relevant/potential insurer “proper” notice that he has commenced proceedings,
and at the same time the applicant must supply a substantial dossier
comprising:
(a) notice in writing
that proceedings have been commenced by Claim Form, Writ, or other means,
(b) a copy of the
sealed Claim Form, Writ or other official document providing evidence of the
commencement of the proceedings (i.e. notice of issue),
(c) a copy or details
of any insurance policy providing benefits in the case of the death, bodily
injury or damage to property to which the proceedings relate where the claimant
is the insured party and the benefits are available to him,
(d) copies of all
correspondence in the possession of the claimant or (as the case may be) his
Solicitor or agent to or from the Defendant or the Defender or (as the case may
be) his Solicitor, insurers or agent which is relevant to -
(i) the death, bodily
in jury or damage for which the Defendant or Defender is alleged to be
responsible,
or
(ii) any contract of insurance which covers, or which may or has been alleged to cover, liability for such death, injury or damage the benefit of which is, or is claimed to be, available to Defendant or Defender,
or
(ii) any contract of insurance which covers, or which may or has been alleged to cover, liability for such death, injury or damage the benefit of which is, or is claimed to be, available to Defendant or Defender,
(e) subject to
paragraph (3), a copy of the Particulars of Claim whether or not indorsed on
the Claim Form, Writ or other originating process, and whether or not served
(in England and Wales) on any Defendant or (in Scotland) on any Defender, and
(f) a copy of all
other documents which are required under the appropriate rules of procedure to
be served on a Defendant or Defender with the Claim Form, Writ or other
originating process or with the Particulars of Claim, (i.e. medical report and
schedule of special damages)
(g) such other
information about the relevant proceedings as MIB may reasonably specify.
The over elaborate
nature of this ‘proper notice’ is at stark odds with the simple obligation imposed
on victims of insured drivers under s 152 of the 1988 Act: to give notice (written
or oral) ‘before or within seven days after the commencement of the proceedings’.
Clause 9 does not permit notice to be given prior to the commencement of
proceedings. It also imposes a
completely disproportionate burden on the applicant, one that arguably
constitutes an unwarranted impediment to an applicant’s right to compensation. It is conceivable that there will be
occasions when the notice provisions within clause 9 are practically impossible
or excessively difficult to comply with.
In Silverton v Goodall [1997] an MIB claim
was dismissed because the claimants served their notice (under the UDA 1988] a
few days late. The primary cause was a
delay at the local court office in posting out the issued summons. This unjust windfall resulted notwithstanding
the fact that the court held the MIB had suffered no prejudice.
Clause 9 requires
the applicant to search for and obtain copies of all insurance contracts that
may cover a relevant liability. This
would appear to extend to: private healthcare for treatment received as a
result of the accident; household; credit card policies; employers insurance;
union benefits; personal accident cover.
It also requires disclosure of all correspondence between applicant /
claimant and the defendant or insurer. No
road traffic insurer would be entitled to demand so much information. Furthermore, it ought not to be within the
power of the MIB to dictate a much heavier level of pre action disclosure to
that prescribed by the Civil Procedure Rules still less to impose such an
oppressive sanction for any non compliance.
There is a strong case to argue that rule 9, taken as a whole,
constitutes yet another instance of the 1999 Agreement failing to implement the
6th EU Motor Insurance Directive by raising unwarranted difficulties
in the path of legitimate claims.
Imposition of excessive post issue notices
Under Clauses 10
and 11 the MIB shall incur no liability to pay a penny in compensation unless
the applicant has, no later than 7 days after the occurrence of any of the
following events, given notice in writing of the date of that event to the MIB
or insure, and supplied a copy of the relevant document:
·
On the service of the proceedings, but see clause 10
·
On the filing of a defence, clause
·
Any amendment of the Particulars of Claim
·
Any addition to any schedule or other document
required to be served with the Particulars of Claim (i.e. medical report or
schedule of special damages)
·
Either when setting down of the case for trial or
where the court gives notice to the claimant of the trial date, then 7 days
from when that notice is received
Once again the Notes for Guidance relax some of the notice requirements,
where the MIB is joined as a party.
Under clause 12.1
MIB shall incur no liability unless the claimant has, after commencement of the
relevant proceedings and not less than 35 before the appropriate date, given
notice in writing of his intention to apply for or to sign judgment in the
relevant proceedings.
It is entirely right
that the MIB, like any other party in our civil justice system, should be
informed of relevant steps within the proceedings by a claimant. It is also appropriate that any party failing
to adhere to the principles set out in overriding objective in Part I of the Civil
Procedure Rules or who otherwise acts unreasonably should be subject to a costs
sanction. The Civil Procedure Rules
provide adequate safeguards and sanctions for all litigants and there is no
reason or justification to confer extra rights and privileges on the MIB. Furthermore the excessive penalties imposed
for failing to adhere to these notice provision, whether innocently made or
deliberately contrived, is wholly excessive.
There is a very strong case to argue that these clauses constitute a
breach of the UK Government’s implementation of the 6th Motor
Insurance Directive because they infringe the ‘equivalent and effective’
principle set by the European Court of Justice in Evans and because they constitute an restriction to the basic right
to recover compensation under the EU Directives.
Fit for purpose?
There can be little
doubt that the Uninsured Drivers Agreement 1999, is unfit for purpose. This Agreement along with its predecessor
needs to be revoked and substituted by a shorter, simpler, fairer agreement in
conformity with the 6th EU Motor Insurance Directive, and given
retrospective effect.
As a statement of a
claimant’s legal right to compensation, we have seen from the extracts set out
above that it is highly misleading. How then
can it be reasonable to assume that any lay claimant, pursuing an online
application for compensation, would be able decipher his or her legal
entitlement from reading the Agreement.
It is unacceptable
that any Government backed compensation scheme should require an applicant to
have to contend with the crypotographical task of devising which clause is
valid and which is not. As we have seen,
a correct understanding cannot be achieved merely be reading the Agreement
itself; not even in if undertaken in conjunction with the MIBs’ notes for
guidance (which are not comprehensive anyway).
A proper understanding can only be attained by someone that has a
working knowledge of the 6th EU Motor Insurance Directive as well as
an appreciation of the purposive approach to the judicial interpretation of the
Domestic Agreements, propounded by the House of Lords in White. To add further
impediment, the bewildering panoply of procedural conditions precedent to
liability constitute, in themselves, an unwarranted barrier to claimants’
accessing their compensatory entitlement, and has been argued by some to
constitute a breach of Article 6 of the Human Rights Convention.
Who is to
blame?
Ultimate
responsibility must rest with the Secretary of State for Transport, a Mr John
Prescott, for blithely approving this manifestly unjust anachronism back in
1999 and for the successive holders of that office under the previous
Government: all of whom have failed abysmally to protect the legitimate rights
of injured victims by not properly implementing the relevant EU Motor Insurance
Directives. The past 12 or more years
has demonstrated that is naive to rely on a private commercial contractor to
act altruistically and in the public interest without sufficient supervisory safeguards
being put in place. Any commercial
operator will wish to maximise its commercial interests and those of its
members and their shareholders.
There is little that
is objectionable in the pragmatic approach of successive Governments to employ
the private sector to deliver part of its social law policy aims. It is well recognised that the insurance
industry has in effect funded the tort law civil justice system in this country
for many decades, and by and large it has been a positive experience. However, there will always be a natural
tension between motor insurance company interests and the wider, social policy
and tort law objectives of our compensatory system. It is the duty of any competent government to
ensure that its policy aims are properly implemented and to take decisive
action when these are threatened or undermined.
No Government should rely excessively on the inventiveness of the
Judiciary to bridge the void between what is an equivalent and effective delivery
of the compensation scheme imposed under the European Directives and what
provided by this agreement. The
obscurity and lack of accountability associated with the present set up seems increasingly
out of keeping with modern times and thinking.
All this begs the
question: how is it that such a large constituency of citizens have so little
influence on the extra statutory compensatory schemes devised in their name and
for their protection and which, they also fund?
MIB’s board of
management cannot wash its hands of its responsibility either: for proposing
such a harsh and unconstitutional compensation regime in the first place and
for failing to replace it, despite numerous calls for its revision.
Whilst the MIB and
the motor insurers it represents have legitimate interests that require
protection, especially from the risk of fraudulent claims under the Untraced
Drivers Agreement 2003, this should not extend to conferring upon it rights superior
to any other litigant in our civil law system of justice. The Civil Procedure Rules and the Courts
inherent jurisdiction confer abundant powers on the courts to discourage fraudulent,
reprehensible or contumelious behaviour by claimants. The MIB should be content to rely on those,
along with other user of the civil justice system.
We should never
loose sight of what should be the overriding imperative: that an injured victim
is entitled to fair and just compensation.
Nor should we forget that the insurance premium paying public have a
right to expect fair and equal treatment under the legal system they fund
through their premiums and this should extend to providing them with their full
compensatory entitlement where they are unfortunate enough to be injured or
sustain loss through the fault of an uninsured driver.
The MIB has, under the
dynamic leadership of its current chief executive officer, demonstrated that it
is capable of acting very effectively and efficiently as an enterprise. However there is a limit to what the MIB
senior management and its staff can do to mitigate the injustices perpetrated
by the Uninsured Drivers Agreements, when they are constitutionally obliged under
Article 3 (B) (i) of the MIB Memorandum and Articles of Association to
adhere to the very Domestic Agreements that inflict them in the first place.
Each member of the
MIB’s management board shares a collective responsibly for the MIB’s failure to
fulfil the MIB’s single most important role: of providing an equivalent and
effective safety net for innocent
victims of uninsured and untraced drivers in accordance with the EU Directives. We have seen in Part I of this paper that
Article 3 A (i) of the MIB’s Memorandum of Articles imposes a constitutional
obligation on the MIB to fulfil that compensatory role, whether imposed under our national law
or through EU directives. We have seen
from Part II of this paper that the MIB board has signally failed to deliver a compensatory
safety net that is equivalent to and as effective as that which would result in
a claim against an insured defendant. The
roll call of MIB Board members, published within their 2009 Report, include
some very senior executives from within the world of motor and liability
insurance. It is inconceivable that the
Board was unaware of the defects within the Domestic Agreements. It is abundantly clear that the regime is biased
in favour of the motor insurance companies who provide the levy and it stands
to reason that this has resulted in many innocent victims being under
compensated. On the other hand, it could
be argued that far from serving the motor insurers interests, the Domestic
Agreements have the ultimate effect of reducing the cost of insurance
premiums. The casuistry of such an
argument is exposed as soon as one returns to the simple principal within the 6th
EU Motor Insurance Directive. This requires
the Member States to ensure that victims recover at least up to the level of
compensation recover from an insured driver; this is standard that successive
Government have failed to meet.
It seems implausible that the MIB
should have proposed so many exclusion and strike out clauses in the first
place and then to have so trenchantly defended them if they did not intend to exercise
them. However the fragmented nature of
the solicitors’ profession, comprising s it does over 10,000 independent
practices, makes it practically impossible for them to collectively establish
whether or not the MIB is systematically under compensating victims of
uninsured and untraced drivers. That is
a task better suited to the Government.
The Secretary of State could do
worse than require the board to account for their actions over the past
decade. He might wish to invite the MIB
to account for every wrongful deduction, limitation or exclusion of liability
made under the Uninsured and Untraced Drivers Agreements between 2009 and 2010,
for example. If this information is not
forthcoming, perhaps the services of an independent auditor could be suggested.
It is to be hoped
that the present incumbent at the office of the Secretary of State for
Transport will take expeditious action to remedy the failings of his predecessors. The current regime must be replaced by a
short, clear and above all fair compensatory mechanism. Furthermore, constitutional safeguards must
be introduced to the MIB to ensure that rights of innocent victims are never
again compromised. The case for reform
is so strong that if the Secretary of State will not act, others will, either
by bringing Francovich claims that
will revive the whole issue as to whether the MIB is an emanation of the State
or by means of Judicial Review should anything short of a complete overhaul be countenanced
when the current regime is eventually revised.
Proposed reforms
The defects in the
current compensatory regime and their causes suggest the following measures:
- Rescission of the MIB Uninsured Drivers
Agreements 1988 and 1999 (including the November 2008 Supplementary
Agreement) with immediate effect;
- The substitution of a new, much shorter,
agreement concurrently with the rescission or new legislation; that:
·
is shriven of all inconsistency with the 6th
EU Motor Insurance Directive and
·
imposes no additional procedural hurdles to those
imposed by s 152 Road Traffic Act 1988 or otherwise, and
·
sets out in unambiguous terms the right to
compensation: that is at least to the standards and extent required under the 6th
Motor Insurance Directive, and
·
is retrospective in effect so that it applies to all
relevant claims that occurred on or after 31 December 1988. (The Government is unlikely to be exposed to
a raft of Francovich claims arising
out of the 1988 Agreement since the 6 year time limit for making such claims runs
from the date when the original cause of action against the uninsured driver
occurred, Moore v Secretary of State for
Transport and the MIB [2007] EWHC 879.) , and
·
is written in plain English so that it is readily
understandable without separate interpretive notes, and
- Reform of the MIB to make it more
accountable for its conduct in administering the functions it fulfils on
behalf of the Government under the EU Motor Insurance Directives. This accountability should not be
limited to supervision by the Secretary of State on behalf of the
Government but it should extend to the public at large and major
stakeholders operating in the civil tort law compensatory regime. This could involve:
·
The inception of a stakeholders committee that meets
regularly to voice concerns and to report to the Secretary of State on the
MIB’s administration of the Domestic Agreements, and
·
The co-option to its management board of
representatives nominated by professional associations such as MASS or APIL who
have an expertise in this field.
- A clearer breakdown within the MIB’s
financial accounts and an agreement that the levy raised from its
insurance members, raised from increased premiums charged to the premium
paying public, should be hypothecated to the National Guarantee Fund.
- Improving the dialogue between the MIB
and those who represent the interests of injured victims by creating a joint
working party to devise new protocols and procedures under a reformed set
of Domestic Agreements to help identify potentially fraudulent claims, to
avoid incurring unnecessary legal costs and encouraging the early and
economic disposal of claims.
- To appoint an independent arbitrator or
commissioner to deal with any complaints in the way claims has been
handled by the MIB.
It is suggested that
the new Uninsured Driver’s Agreement include an obligation on both the
applicant and the MIB to participate in an initial mediation assessment process
or that it should otherwise encourage alternative dispute resolution, perhaps
restricted to claims that fall outside the Fast Track and Low Value Personal
Injury Claims in RTA scheme.
Nicholas Bevan
Nicholas is a director of
Enable Law Ltd. He is a highly
experienced insurance and personal injury solicitor. He is a Fellow of the Association of Personal
Injury Lawyers. He was recently senior
counsel at Bond Pearce LLP where he advised both the Insurance and Personal
Injury Departments and was responsible for firm-wide legal training. He writes for the New Law Journal, the Journal
of Personal Injury Law and the Legal and Medical Journal. He is the author of Future Loss in Practice and of Division
VIII of Butterworths Personal Injury Litigation Service. He has been a member the editorial board of several
legal publishers. Nicholas is a well recognised legal commentator,
lecturer, trainer and presenter and winner of the Personal Injury Awards 2008
‘Outstanding Achievement Award’.
Enable
Law provides a comprehensive range of services to small to medium sized legal
practices. Its directors believe in the
future of legal services delivered locally to consumers by qualified
professionals. Enable Law’s goal is to help local law firms survive and
prosper in an increasingly competitive and evolving legal services market. This is achieved through its consultancy and
training services and by outsourcing its clients’ administrative
functions. Enable Law has also been
consulted on an ambitious project to set up the first national legal services
retailer providing a full range of legal services to private clients with some 250 stores across the country.
[1]
s 151 otherwise obliges insurers to satisfy judgments against their insured for
any third party liability covered by the 1988 Act
[2] The underlining is added by the author for emphasis
[3] See rules 1 and
4 Solicitors Code of Conduct 2007
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