DOES YOUR THIRD PARTY MOTOR INSURANCE ACTUALLY COVER YOUR USE?

In October 2011 three Court of Appeal judges delivered, unanimously, an important ruling that limits the potential scope of the compulsory third party insurance cover imposed under Part VI Road Traffic Act 1988.  

The judgment is available on the BAILII website: EUI Ltd v Bristol Alliance Ltd Partnership [2012] EWCA Civ 1267.  

This judgment concludes that although sections 143 and 145 of the 1988 Act require all road users to take out third party insurance that is good for any use the driver might make of the vehicle, there is no corresponding duty on the part of the insurer to supply a policy that is ‘good for any use’ for the benefit of a third party claimant. In EUI this meant that the motor insurer could legitimately exclude any liability to compensate a third party injured by its policyholders deliberate act; in this case the driver's attempted suicide.

Lord Justice Ward delivered the only reasoned judgment in EUI and given his eminence and expertise, it is with great trepidation that I venture to criticise that decision and his reasoning; yet I feel compelled to do so, not least because of the profound implications it has for thousands of victims of motor accidents

Whilst Ward LJ’s judgment reviews the conventional authorities with painstaking and meticulous care, and whilst it gives careful consideration of the European Motor Insurance Directives, it does not in my view provide the correct purposive construction of Part VI Road Traffic Act 1988: one that European law requires. 

What I find interesting is that this detailed judgment appears to overlook nothing.  It considers all the relevant articles within the Directive with scrupulous care and it also takes into account the rulings by the Court of Justice of the European Union as to the scope of the third party motor insurance cover required by article 3 of the Directive.  Indeed the judgment even acknowledges the wide impact that the general application of the holistic approach adopted in C-129/94 Ruiz Bernaldez [1996] ECR 1-1929 would have for a conventional interpretation of our UK national law provision in this area.  In Bernaldez and the line of European authorities that have followed it , the European Court of Justice has repeatedly ruled that a motor insurers’ cannot rely on its policyholder’s breach of policy to avoid its obligation to compensate a third party.  This is of course without prejudice to its contractual rights against its policyholder.  Unfortunately, the EUI judgment sought to confine the binding effect of Bernaldez to sustain a restrictive interpretation of the scope of the insurers duty in this regard. 

What the Court of Appeal’s judgment effectively boils down to is that, save where expressly constrained by the 1988 Act, insurers are free to issue third party motor insurance policies replete with restrictions and limitations as to their scope and cover.  The corollary of this is that where a victim is injured by an ostensibly insured vehicle, in circumstances where the drivers use is not covered by the policy, then the driver is de facto completely uninsured.  I am convinced that this is wrong.  

It cannot be right that motor insurers operating in this lucrative captive market should be entitled to hedge their statutory liability to compensate innocent third parties in this way, so that thousands of innocent victims are forced to go cap in hand to the Motor Insurers Bureau (MIB) and to be subjected to its much less advantageous compensatory regime.

Where a motor vehicle has some insurance in place Community law permits only one exception to the insurers’ obligation to compensate a third party.  This applies where an insurer has exercised its right to exclude liability to compensate a claimant who is not just a willing passenger in the vehicle responsible for causing the injury or loss but who also has actual knowledge that the vehicle has been stolen.  The Court of Justice has repeatedly ruled that as this is the only exception countenance by the Directive to what is a general rule (that third party civil liability should be covered by insurance) and that it is one that should be interpreted strictly.  Furthermore, it has also ruled that the implications flowing from a policyholder’s breach of contract is an  issue confined to the policyholder and insurer. It has also ruled that the MIB should only become involved as a last resort, where their is no insurance at all or where the driver cannot be identified.

The  EUI ratio also undermines the original 1930 Parliamentary concept of providing a uniform compensatory guarantee for victims.  It is clear from the preface in the Road Traffic Act 1930, reproduced below, that the Government’s overriding objective was to provide a compensatory guarantee to third party victims.  I acknowledge that later revisions and amendments to the original statutory provision have had the effect of qualifying the original concept.  However, post 1973 when the United Kingdom joined the European Community, these are unlawful save where expressly authorised by Community law.   

 

Extract from the Road Traffic Act 1930

Leave to appeal this decision to the Supreme Court was granted but, no surprises here, the claim was promptly compromised.  So we are therefore left with the unfortunate legacy of this judgment.  

Given the importance of this issue, as thousands of motor accident victims are potentially affected, I have prepared a detailed point by point critique of the EUI judgment.  This is set out in my latest article in the Journal of Personal Injury Law in issue 3 of 2013: Marking the Boundary.  This article can also be accessed through Lawtel.

These matters have been drawn to the attention of the Department for Transport, which insists that the United Kingdom has fully implemented the European Motor Insurance Directives. Readers will note from my earlier posts that this is now the subject of a European Commission complaint.

THREE WEEK TIME LAPSE TOO REMOTE FOR SECONDARY VICTIM

The Court of Appeal dismissed a nervous shock claim by a daughter of a woman who died from a pulmonary emboli.  It was accepted that this complication was directly attributable to an injury sustained at work three weeks earlier and from which she was making an apparently good recovery.  The daughter did not see the original injury but she was present at her mother's death and suffered PTSD as a result.

In Taylor v A Novo (UK) Ltd [2013] EWCA Civ 194 the Court of Appeal ruled that the three week interval between the original injury and its fatal sequelae broke the continuity necessary to establish legal proximity for a secondary victim. 

My case commentary is published in the Quarterly Bulletin of Butterworths Personal Injury Litigation Service.

PARTY HOST NOT LIABLE FOR BELLY FLOP INJURY

In Cockbill v Riley [2013] EWHC 656 (QB) Mr Justice Bean held that the parents who hosted an end of GCSE party were not liable for the catastrophic spinal injury sustained by one of their daughter’s guests. 

The guest, an exuberant 16 year old, had attempted a flying belly flop into a shallow paddling pool that had been set up in the garden for the party.  Tragically, the boy made a fatal misjudgment that caused him to land on his head.  There was no evidence to suggest that he had slipped on wet grass.  A moderate amount of drink had been supplied and up to this point, no one had attempted any dangerous stunts of this kind beforehand and neither had any of the guests been overly boisterous.

Bean J commented that allowing the use of a paddling pool at a party attended by 16-year-old friends of the occupier's children does not of itself create a foreseeable risk of significant injury or justifies a formal risk assessment.

My case commentary is published in the Quarterly Bulletin of Butterworths Personal Injury Litigation Service.

EUROPEAN DIRECTIVE SAVES STEEPLECHASE JOCKEY CLAIM

In Hide v The Steeplechase Company (Cheltenham) Ltd and others [2013] EWCA Civ 545 a professional jockey who sustained pelvic and head injuries when his horse stumbled just as it landed after jumping a hurdle in a steeplechase at Cheltenham.  He struck his head on the post of a nearby rail.  He sought compensation from the course owners and organizers.It was alleged that the rails and fencing were positioned too close to the hurdles for safety.

His claim failed at first instance but succeeded on appeal even though he could not establish either (i) that the layout design or maintenance of the course had been negligent or (ii) that there had been a breach of statutory duty - applying the ordinary and natural meaning of Regulation 4 of the Provision and Use of Work Equipment Regulations 1998.  

The Court of Appeal applied a purposive construction of the Framework Directive (89/391/EEC) and the Use of Work Equipment Directive (89/655/EEC) which effectively imposed strict liability in the way it impacted on the interpretation of our domestic regulations regardless of the fact that the hazard presented by the fencing was not reasonably foreseeable.  

This sort of claim would fail in a post s69 Enterprise and Regulatory Reform Act 2013 world (for accidents on or after 1 October 2013), as henceforth it will be necessary establish a breach of the common law duty of care [See my earlier blog: A World Turned Upside Down]. 

A more detailed commentary on this case is published in the Quarterly Bulletin of Butterworths Personal Injury Litigation Service.

ROUNDABOUTS – BIG OR SMALL – SAME RULES APPLY

View of the junction from Starks' perspective

In Starks v Chief Constable of Hertfordshire [2013] EWCA Civ 782 the claimant was hurt when his car was hit on the driver’s side by a police car as he was turning right at a road junction.  This junction would have been a conventional ‘T’ junction but for the fact that a mini-roundabout had been installed.  At first instance, the trial judge allocated liability 45/55% in the defendant’s favour. The trial judge had found that the other car, a police car, had been travelling too fast but well within the 40 mph speed limit for the stretch of road, as it approached the road junction where the accident occurred.  He ruled that Mr Starks should not have moved onto the roundabout when he could see the police car approaching from his right. 

This allocation of liability was criticised by the Court of Appeal. It was more influence by the fact that the police woman driver had attempted to drive straight across the mini white painted roundel at the junction; almost as thought it had not existed. She would have needed to slow down to 20 mph to have circumnavigated the roundel.  This would have reduced the severity of the damage and the injury.  It found the policewoman 65% to blame for the accident. 

Underhill LJ noted that Paragraph 188 of the Highway Code provides that the same rules apply to mini-roundabouts as to normal roundabouts.  In particular, the Code states that vehicles ‘MUST pass round the central markings’.  He deduced that paragraph 188 requires (i) drivers to go round not only the solid roundel but the circles around it and (ii) that driving over the markings is clearly a breach of the Code. 

So the lesson here is that however much we may regret the increasing prevalence of these 'poached egg' roundabouts, they have been installed for a purpose: as a traffic calming / road safety measure.  Although they may look insignificant, we are expected to slow down and to go around them.  We breach the highway code if  we choose to disregard them.

My detailed case commentary on Starks v Chief Constable of Hertfordshire and my analysis of the Court of Appeal’s approach to reversing first instance findings of contributory negligence is published in the Journal of Personal Injury Law which it can be accessed through Lawtel.  A shorter case commentary is published in the Quarterly Bulletin of Butterworths Personal Injury Litigation Service.

7 YEAR DELAY DID NOT DEFEAT CLAIM

In Nicholas v Ministry of Defence [2013] EWHC 2351 (QB), Judge Burrell QC exercised his discretion under s 33 Limitation Act 1933 to allow a claim on behalf of the estate of the deceased who, during her lifetime, had been crippled by the onset of asbestosis in her old age.  She knew her respiratory illness had been caused by her exposure to asbestos from her wartime work assembling gas masks. She acquired this knowledge more than four years before her death from an unrelated condition.

Key factors influencing the court's decision to disapply the statutory limitation period of three years were: (i) the MoD had conceded liability and could establish no prejudice to the cogency of the evidence from the delay, (ii) the victim had not been well enough to issue proceedings, (iii) following her death, the MoD were informed relatively promptly of the prospective claim, (iv) a moratorium had been agreed between the solicitors within a year of the victim’s death and this was in place up to the date proceedings were issued and (v) no prejudice occurred by reason of this additional delay.

My detailed case commentary on Nicholas v MoD and my review of the relevant case law and considerations is published in the Journal of Personal Injury Law in issue 3 of 2013 and it can be accessed through Lawtel.

EX TURPI CAUSA

Drug dealing

We are witnessing a spate of inappropriate  ex turpi causa defences.  Under our common law the courts have a policy that is intended to prevent a criminal from recovering compensation where the loss or injury complained of is inextricably connected with and caused by his own criminal act; its common sense really. This defence is commonly associated with the Latin maxim: ex turpi causa non oratur actio; also, more rarely with ex dolo malo non oritur actio.  In recent years ex turpi causa tends to be routinely cited by defendants whenever a claim is associated with some kind of criminalily.

The ex turpi causa policy is not about punishing miscreants.  Criminals enjoy the same civil rights as the law abiding; we abolished outlawry a while ago.  

Ex turpi causa seeks to avoid the perversity of compensating someone for the direct effects of their own crime.  So in Delaney v Pickett Pickett [2011] EWCA Civ 1532 the defence failed to prevent a passenger (who happened to be involved in drugs dealing) from suing his associate when he injured him through his negligent driving of the vehicle that was transporting their stash of marijuana to the next deal. Their criminal activity was not the cause of the accident; rather, it was the defendant’s negligent driving.  

However, in Joyce v O’Brien and Tradex 2013 EWCA Civ 546, the Court of Appeal upheld this defence against a thief who fell off the back of his uncle’s get-away van.  Joyce had been holding on to a set of ladders that he and his uncle had just stolen, whilst at the same time trying to cling on to the back the van as it sped off from the scene of the crime.  He fell off when his uncle executed a sharp turn at speed and sadly Joyce sustained grave head injuries.  The Court of Appeal rightly took the view that ex turpi causa applied here.

My detailed case commentary on Joyce v O’Brien and Tradex is published in the Journal of Personal Injury Law, where I trace the roots of this defence back to Lord Mansfield’s judgment in Holman v Johnson (1775) 1 Cowp 341.  This is one of those judgments that have withstood the test of time well as it remains just as valid today as it did in the 18^th Century.  My commentary explains the principles underscoring this policy defence, the key ingredients necessary for success as well as offering some practical tips.  The JPIL commentary can also be accessed through Lawtel. My earlier commentary on Joyce can also be accessed through Lawtel.

VALUING LOSS OF USE OF A BUS

In West Midlands Travel Ltd v Aviva Insurance UK Ltd [2013] EWCA the Court of Appeal ruled that the conventional ‘standing charge’ basis used for quantifying the loss of use of a commercial vehicle was not appropriate for fleet vehicles that can be replaced by others held in reserve.  Under the traditional 'standing charge' approach, the damages include a notional sum for various overheads notionally associated with the operation of the vehicle, including even the cost of running its staff canteen!   

West Midlands operated a large number of buses. It was unable substantiate any actual loss of profit as it always had a number of vehicles kept in reserve.  Rather than adopt the traditional kitchen sink approach, the court decided to base its award on an amount equivalent to the interest on the notional capital value of the vehicle plus an allowance for depreciation.  This reduced the loss of use claim by two thirds!

My full case commentary will be published in the Autumn edition of BPILS Quarterly Update.