MoJ MESO DECISION ANNULLED

R (on the application of Whitson) v Secretary of State for Justice [2014] EWHC 3044 (Admin)

On 2 October Mr Justice Davies ruled that the Lord Chancellor’s decision to abolish the entitlement of mesothelioma victims to recover their solicitors’ success fees and after the event insurance premiums from defending insurers was unlawful. 

Mesothelioma is a fatal disease which is caused by exposure to asbestos dust.  In 2011 it was responsible for 2,291 deaths in the UK, and the number of cases each year is expected to increase further.  Due to the difficulty in establishing liability, proving causation and the complications in identifying often numerous different employers and in tracing their insurers, these claims were exempted by section 48 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) from sections 44 to 46 LASPO that abolished a successful claimant’s entitlement to recover these additional liabilities from a defendant. 

Section 48(1) of LASPO provided as follows:

‘Sections 44 and 46 may not be brought into force in relation to proceedings relating to a claim for damages in respect of diffuse mesothelioma until the Lord Chancellor has (a) carried out a review of the likely effect of those sections in relation to such proceedings, and (b) published a report of the conclusions of the review.‘

Rather than undertaking the proper and fair review required by section 48, the Lord Chancellor’s decided instead dispose of this duty by bolting on a question to the 2012 consultation dealing with procedural aspects of mesothelioma claims.  It invited consultees to comment on whether the exemption should be removed but this was predicated on various other proposals being implemented, which did not eventually happen.  This issue was never addressed directly and on its own and no proper attempt was made to research the likely consequences.

Mr Whitson of the Asbestos Victims Support Groups Forum UK brought a Judicial review of the decision to remove the exemption.  It disputed the assumptions made in the Government’s impact assessment and argued that for from being cost neutral to the victims affected the Government’s reforms would leave this particularly vulnerable class of victim loosing tens of thousands of pounds in unrecoverable costs; effectively denying them their full compensatory entitlement.

The judge concluded that the Lord Chancellor had failed to carry out the proper review that section 48 required.  He concluded that ‘no reasonable Lord Chancellor faced with the duty imposed on him by section 48 of the Act would have considered that the exercise in fact carried out fulfilled that duty’.  Accordingly, the Lord Chancellor’s decision of December 2013 to abolish the mesothelioma exemption was annulled. 

The appointment of Chris Grayling as Lord Chancellor in 2012 was controversial at the time as it broke with a long established convention that the head of the legal profession should come from one of the legal professions.  Instead we now have a Ministry of Justice department controlled by career politicians, with all that implies.

The Association of British Insurers, intervening, argued that the Lord Chancellor’s decision should be upheld as ‘the Lord Chancellor would be bound to make the same decision after a review as required by Section 48’.  This revealing statement illustrates the ABI’s role as the éminence grise behind much of the Governments policy making in this area.  In July 2014 a Parliamentary Justice Committee Report also considered the appropriateness of the Lord Chancellor’s decision to remove the mesothelioma exception.  It found that the outcome of the Chancellor’s flawed review had always been a foregone conclusion.  It brought to light the fact that the ABI had already reached a secret understanding with the Government in July 2012.  The committee expressed concerns that the Government had not been transparent or open about its true agenda, either with the committee itself or with other interested parties, and that it had not been even handed in its consultation.  

Any further consultation is likely prove to be a tendentious exercise, when such powerful interest groups continue to enjoy such extensive influence and control of government policy.

Further evidence of the insurance lobby unconstitutional influence can be found in last week’s New Law Journal opinion piece: Bad Law.

KEEP POSTED ON IMMANENT REFORM

Follow this blog to stay ahead

In February 2013 I explained why our national law in this area was defective and why it does not comply with European Law in a four-part series of New Law Journal articles, On the Right Road?; part 2; part 3 and part 4.  See also my article Minor Collision, why children can be hardest hit in APIL’s PI Focus, May 2014. 

I was the first to report on the recent ruling in Delaney v Secretary of State for Transport 2014 EWHC 1785 (QB), (see also my article in the Journal of Personal Injury Law, A World Turned Upside Down) in which Mr Justice Jay held that the minister was liable for a serious breach of European law that had wrongly denied an accident victim his proper compensatory entitlement.  

I was also the first to provide comment and analysis,  in this blog, of the European Court of Justice’s landmark decision in Damijan Vnuk (Case C-162/13), Vnuk Ruling: RTA 1988 Breaches EU law.  To date this is the only analysis of this ruling.  The Vnuk decision exposes the DfT to yet further judicial scrutiny for failing to implement European law minimum standards properly.

The Department for Transport's is responsible for the national law provision for ensuring that motor accident victims' compensatory entitlement is properly safeguarded.  Unfortunately it is in a state of shambles.  

Call for reform

The minister chose to do nothing after initiating a deeply flawed and badly informed consultation on revising the Uninsured and Untraced Drivers Agreement and on being informed of the numerous defects in our national law implementation of the European Directives on motor insurance, that was back in late February 2013.  Now, 19 months on, he may have no choice in the matter.  If he fails to fulfil his constitutional duty to initiate reform, he may well find that others will do this for him.  

BAD LAW

In my latest New Law Journal article, Bad Law (3 October 2014), I argue that the reason why -

• Part VI the Road Traffic Act 1988, and 
• The European Communities Rights Against Insurers Regulations 2002 as well as 
• The Uninsured Drivers Agreement 1999 and 
• The Untraced Drivers Agreement 2003 

- all fail to fully implement European law minimum standards of protection for motor accident victims is because the Department for Transport (DfT) has become overly dependent on the insurance sector for its policy in this area.

The DfT is responsible for providing the legal framework for ensuring that motor accident victims' compensatory entitlement is guaranteed and this is achieved through compulsory third party insurance.  The DfT is also responsible for regulating this statutorily enforced and lucrative market, one that law abiding members of the public finance through their expensive premiums.  

We rely on the Government to be even handed between the conflicting interests of powerful insurers and the vulnerable victims its policy is supposed to protect.  I argue the DfT has in recent years allowed itself to be browbeaten by the well resourced and highly influential insurance lobby and as a result it has failed to act in the best interests of accident victims.  Ministers come and go but insurers enjoy a permanent influence that affords them a significant advantage in the cat and mouse game of politics.  My article, Bad Law, considers some of the evidence that indicates that there are insufficient constitutional checks and controls on the ability of motor insurers to influence government policy.  To paraphrase George Orwell, whilst we are all equal under the law, it seems that some are more equal than others.

CLICK ON THIS IMAGE TO ACCESS THE NEW LAW JOURNAL ARTICLE IN FULL 

The minister must now step up to the breach and remedy these injustices.

To access my other New Law Journal articles, click here.

BARON HILL NOMINATED FOR EC ROLE

The Prime Minister, who campaigned unsuccessfully against the election of Jean-Claude Juncker as European Commission President has nominated Jonathan Hill, Baron Hill of Oareford as the British European Commissioner with responsibility for the Financial Stability, Financial Services and Capital Markets Union.  

If Baron Hill’s appointment is confirmed, his portfolio would extend to the European Commission’s current investigation into the UK’s failure to properly implement the European Directives on motor insurance (Council Directives 72/166/EC; 84/5/EC; 90/232/EEC; 2000/26/EC; 2005/14/EC and 2009/103/EC).  Given that the European Commission has an unfettered discretion on whether to bring infringement proceedings and given the hostile political climate and the increasingly Euro-sceptic stance of the UK administration, it is possible that the European Commission may decide against pursuing an infringement action against the United Kingdom, notwithstanding the numerous defects in our national law transposition of these Directives.

For those of us arguing for wide-spread reform in this area, Baron Hill’s appointment might be viewed as a serious setback.  However it is conceivable that the Jonathan Hill might, on being properly briefed, realise that the UK national law provision is so obviously flawed in a way that unjustly confers windfalls to the motor insurance industry at the expense of the innocent victims whom the scheme is supposed to protect, that he will encourage a wide-scale review within the DfT of its defective implementation of these Directives.  

He would be wise to do so, as EU law provides other remedies that are capable of delivering the same outcome. 

There is a growing awareness amongst the road traffic accident practitioner fraternity that where a UK national law provision fails to provide the minimum standard of compensatory protection required under EU law, then it is possible to obtain redress through the courts. 

The doctrine of direct effect may now extend to injured victims wrongly refused full compensation by the Motor Insurers Bureau on the basis that were the MIB's true status examined by a properly informed court it would be held to be an emanation of state. 

Furthermore an aggrieved party can also rely on the indirect effect of a directive.  See the following exceprt from the Court of Justice in Bernhard Pfeiffer and others v Deutsches Rotes Kreuz, and others CJEU 2004 Case C-297/01 that some view as having blurred the boundary between direct and indirect effect:

111  It is the responsibility of the national courts in particular to provide the legal protection which individuals derive from the rules of Community law and to ensure that those rules are fully effective.

112  That is a fortiori the case when the national court is seised of a dispute concerning the application of domestic provisions which, as here, have been specifically enacted for the purpose of transposing a directive intended to confer rights on individuals. The national court must, in the light of the third paragraph of Article 249 EC[LINK to excerpt] , presume that the Member State, following its exercise of the discretion afforded it under that provision, had the intention of fulfilling entirely the obligations arising from the directive concerned (see Case C 334/92 Wagner Miret [1993] ECR I-6911, paragraph 20).

113  Thus, when it applies domestic law, and in particular legislative provisions specifically adopted for the purpose of implementing the requirements of a directive, the national court is bound to interpret national law, so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and consequently comply with the third paragraph of Article 249 EC (see to that effect, inter alia, the judgments cited above in Von Colson and Kamann, paragraph 26; Marleasing, paragraph 8, and Faccini Dori, paragraph 26; see also Case C 63/97 BMW [1999] ECR I 905, paragraph 22; Joined Cases C 240/98 to C 244/98 Océano Grupo Editorial and Salvat Editores [2000] ECR I-4941, paragraph 30; and Case C 408/01 Adidas-Salomon and Adidas Benelux [2003] ECR I-0000, paragraph 21).

As Mr Justice Jay’s ruling in Delaney v Secretary of State for Transport 2014 makes clear, the language of the directives is clear, unambiguous and it leaves the UK with very little discretion as to how its obligations are transposed into UK law, so that a failure to fully implement them is likely to be deemed sufficiently serious to warrant a Francovich award against the UK.

The DfT were fully briefed in February 2013 on the numerous infractions of EU law in its statutory and extra-statutory provision.  We were promised detailed proposals initially in July, then in the Autumn of last year but nothing has been heard from them since.

So it is to be hoped that if Baron Hill is appointed to this post, he will see the merit in conceding with grace what can (and will eventually) be secured independently of the Executive through the courts by a consistent interpretation of our national law.  What insurers and claimant representatives require is a clearly articulated policy that complies with EU minimum standards of compensatory protection, ideally in a codified form that is consistent with rule of law and legal certainty principles.

DAMIJAN VNUK European Court of Justice, 4 Sept 2014, Case C-162/13

For those interested, I supply links to the judgment of the Court of Justice of the European Union and to the Advocate General's opinion:

CJEU Judgment in Damijan Vnuk of 4 September 2014, case C-162/13

Click here 

Opinion of Advocate General Mengozzi, 6 February 2014

Click here 

See my earlier post commenting on the case.

VNUK RULING: ROAD TRAFFIC ACT 1988 BREACHES EU LAW

VNUK RULING: ROAD TRAFFIC ACT 1988 BREACHES EU LAW

European Court of Justice ruling in Damijan Vnuk

A recent European Court of Justice ruling has wide-ranging implications for all motorists, their insurers and above all for the compensatory entitlement of accident victims.  

Unlawful restrictions with wide implications

EU member states cannot restrict the scope of their national law provision imposing the duty to insure against third party risk from motor vehicle use, the Court ruled.  This has immediate consequences not only for motor insurers, whose long established policy has been to restrict their contractual indemnity to claims arising out of accidents that occur ‘on roads or other public places’, but also for the premium paying public and motor accident victims.  

Damijan Vnuk

Road Traffic Act 1988 is defective:   the duty to insure should extend to farmyards and private property

In Damijan Vnuk v Zavarovalnica Triglav C-162/13, a Slovenian farmworker was knocked off a ladder by a reversing tractor and trailer, whilst he was stacking bales of hay in a barn loft.  The incident occurred in a farm yard on private property. 

His claim against the driver’s motor insurers failed at first instance and when he appealed the Slovenian Supreme Court referred the case to the Court of Justice of the European Union to determine whether the duty to insure ‘the use of vehicles’ within the meaning of Article 3(1) of the First Directive on motor insurance (72/166/EEC) covered the accident circumstances.

A number of member states intervened in the proceedings, including the UK, and they argued that the compulsory insurance requirement should not apply. 

Different emphasises

In Vnuk, the Court noted the subtle variations of emphasis within the different language editions of the motor insurance directives, the different the ways in which individual member states have implemented the compulsory third party insurance requirement and the importance of a consistent approach.  It noted that ‘where there is divergence between the language versions of a European Union text, the provision in question must be interpreted by reference to the general scheme and purpose of the rules’.  

EU law policy objective of protecting victims

The Court made an important observation on policy that impacts not only how one should interpret the motor insurance directives but also on the prospects of Francovich damages being awarded where an individual has sustained loss caused by a member state’s infringement of a directive.  It stated that the objective of protecting accident victims was of equal importance to the dual aim of freeing the movement of persons and goods with a view to achieving the internal market.  Hitherto, the social aim of providing compensatory protection was widely considered to be subordinate to the wider objective of encouraging free movement within the EC.

Court of Justice ruling

As to the facts of the Vnuk case, the Court ruled that the accident circumstances were capable of falling within the scope of insurance cover required under the directives.  It referred Mr Vnuk's case back to the Slovenian courts to make the necessary factual findings.  

Vehicles

On the specific issue as to whether a reversing trailer propelled by a tractor was required to be covered by the article 3 insurance ‘use of vehicles’ requirement, it ruled that it was.  Motor vehicle use covers ‘any use of a vehicle that is consistent with the normal function of that vehicle’ [59].  Compare that with the much narrower definition within section 185 below.

When one considers the definition of ‘vehicle’ provided in what is now article 1.1 of the sixth consolidating directive on motor insurance (2009/103/EC ) in the light of this new interpretation, it suggests that many vehicles which are currently considered under our national law to be exempted from the third party insurance obligation, such as ride along mowing machines and airport tugs (on the basis that they are not intended or adapted for road use) are in fact capable of falling within the definition.  

However it should be noted that article 5.2 of the sixth directive provides a safety clause that allows member states to devise a list of vehicle types that are to be derogated from the insurance requirement but they must also be covered by the compensatory guarantee scheme under what is now article 10. The minister must now act promptly not only devise a list of motor vehicles that are to be exempted from the compulsory insurance requirement, but he will need to notify the European Commission, incept regulatory provision for these vehicles to be ‘plated’ and to ensure that the MIB Uninsured Drivers Agreement encompasses these claims. As the MIB's liability for such vehicles can be subordinated to other existing cover, where it exists (such as under a household or public liability policy) then the financial impact of this extended scope will be mitigated.

The Court also ruled that ‘the fact that a tractor, possibly with a trailer attached, may, in certain circumstances, by used as an agricultural machine has no effect on the finding that such a vehicle corresponds to the concept of 'vehicle' in Article 1(1) of the First Directive.’  The Vnuk ruling opens the way to arguments that third party cover extends to the use of a stationary tractor or other motor vehicle generating electricity or powering machinery, provided this is a ‘normal use’.  Compare that with the much narrower definition within section 185 below.

Accident locations

Although the Court’s characteristically elliptical judgment did not expressly rule that the geographic scope of the duty to insure extended to private property, such as the farm yard where Mr Vnuk was injured, this is the inescapable conclusion to be drawn from the Court’s judgment.  It appears to have subsumed considerations as to the location of the accident within a broader concept that any motor vehicle use must be covered by insurance.  This is clear from its concluding paragraph where it ruled that ‘the concept of 'use of vehicles' in that article [viz article 3] covers any use of a vehicle that is consistent with the normal function of that vehicle. That concept may therefore cover the manoeuvre of a tractor in the courtyard of a farm in order to bring the trailer attached to that tractor into a barn, as in the case in the main proceedings, which is a matter for the referring court to determine.’

Flawed UK statutory and extra statutory provision

It will be readily appreciated that sections 143 and 145 of the Road Traffic Act 1988 restrict the duty to take out third party motor insurance and the scope of cover to be provided by authorised motor insurers in the United Kingdom to the ‘use of a motor vehicle on a road or other public place’.  Section 185 restricts the definition of ‘motor vehicle’ to ‘a mechanically propelled vehicle intended or adapted for use on roads’.  These restrictions conflict with the wider scope required by the motor insurance directives.  

These same restrictions in the scope of the duty to insure also impact on the Uninsured Drivers Agreement 1999 or the Untraced Drivers Agreement 2003.  This is because these agreements inherit the same defective restrictions in geographic and technical scope that are grafted on directly from the Road Traffic Act 1988. 

Gaps in protection

Under UK law those injured by motor vehicles in private lanes and car parks, gated communities and private caravan sites are excluded from the compensatory guarantee provided under the various schemes for which the Secretary of State for Transport is responsible.  The same applies to anyone injured on a public road by a motorised vehicle not intended or adapted for road use.  

The UK’s current national law provision is not only unlawful but it is also lacks common sense.  When the life-time compensatory needs of a chronically injured victim can amount to many millions of pounds, what possible good is served by exposing these motor accident victims to these arbitrary restrictions?  One way or another, the tax payer always funds the bill.  

Remedies

It is trite law that although a European directive does not have direct effect between individuals, it is still possible to benefit from provisions that conform to the three conditions set out in Francovich as developed by Brasserie du Pecheur:

•          the rule of law infringed must be intended to confer rights on individuals;
•          the breach must be sufficiently serious, and
•          there must be a direct causal link between the breach of the obligation and the damage sustained by the injured parties

Accident victims denied compensation due to the currently flawed restrictions contained in Part VI of the Road Traffic Act 1988 or under either of the Uninsured Drivers Agreement 1999 or the Untraced Drivers Agreement 2003 have two principal means of redress.

•          The first is to cite the relevant European law  when presenting their claim and to require a Community law compliant interpretation of sections 143, 145 and 151 of the Road Traffic Act 1988 and / or the MIB Agreements.  
•          If the court considers that the contra legem rule prevents it from delivering an EU law consistent interpretation, then the victim may be entitled to Francovich damages against the Secretary of State for Transport.  However the right to compensation is not automatic: a party affected by an infringement of a directive will have to satisfy the multi-factored test expounded by Lord Clyde in  R v Secretary of State for Transport, ex parte Factortame Ltd and others [1999] 4 All ER 906.

In fairness to the Government, the Vnuk ruling will probably come as something of a nasty surprise to a number other member states.  This is likely to have a significant bearing on any Francovich claim featuring a historical breach by the UK of the geographic and technical scope of the insurance requirement under article 3.  Looking forwards, the Vnuk ruling does not seem to permit member states any appreciable discretion on the geographic scope.  Technical arguments on what constitutes a motor vehicle may well prove to be a fertile ground for litigation.

Failings at the Department for Transport

Early last year, the Secretary of State for Transport was warned (in the responses to his own consultation on the MIB Agreements) that the UK statutory and extra-statutory provision for road accident victims contained a large number of defects that breached the minimum standards of protection required under EU law.  These included a detailed explanation as to why the geographic and technical scope of the insurance obligation within the Road Traffic Act 1988 was too narrowly confined.  The minister chose to do nothing. The Vnuk ruling confirms that these warnings were correct.

The minister's inaction is unacceptable not only for those unfortunate enough to be motor accident victims but also for the motor insurers that underwrite the cost of compensating these victims.  The Minister needs to discharge his constitutional duty to implement European law and this involves articulating a clear and Community law compliant policy that will confer proper compensatory safeguards and enable insurers to revise the terms of their policies and to set appropriate reserves. 

Time’s up

Hitherto, successive holders of the office of the Secretary of State for Transport have chosen to ignore the numerous deficiencies in the compensatory schemes their department is responsible for.  After Vnuk, the incumbent minster has little choice if he is to avoid the embarrassment of an infringement action, judicial review or further Francovich rulings.  He must take decisive action: first by undertaking an EU law compliant review of the entire UK statutory and extra-statutory provision for victims of motor accidents and then by rectifying the numerous defects that such an exercise will inevitably reveal. 

His department has recently incurred a substantial liability for Francovich damages in Delaney v Secretary of State for Transport 2014 EWHC QB (currently listed for appeal in February 2015) for a blatantly unlawful exclusion of liability clause within the Uninsured Drivers Agreement. A similar outcome is in prospect as and when other defects are challenged.  The European Commission is also actively investigating the United Kingdom's defective transposition of the motor insurance directives.

Mr McLoughlin, time's up!

NEW LAW JOURNAL - news item on Damijan Vnuk

http://www.newlawjournal.co.uk/nlj/content/motor-insurance-impact-vnuk

DELANEY V SECRETARY OF STATE FOR TRANSPORT 2014

Click on the image below to access the full Modern Law Journal article from July 2014.

A WORLD TURNED UPSIDE DOWN

In a World Turned Upside Down I argue that Mr Justice Jay's ruling against the Secretary of State for Transport is merely the tip of the iceberg.  Successive ministers have allowed the Motor Insurance Bureau and the motor insurance industry generally to write into our national law provision numerous exclusions and restrictions of liability that undermine Parliaments original concept of a providing a comprehensive scheme that guarantees that victims are fully compensated.  The comprehensive guarantee is supposed to apply regardless of whether the perpetrator is insured, under insured, completely uninsured or simply unidentified.  It is even supposed to protect victims from insolvent insurers. This is why our motor insurance is so costly.

Unfortunately successive ministers have given in to the powerful insurance lobby that has managed to qualify its liabilities with an increasing number of exceptions and exclusions of liability that undermine the original concept and which also breach the minimum standards of protection required under European law. The flaws provide the mulit-billion pound insurance industry with windfalls at the expense of the innocent victims whose interests the scheme is supposed to protect.

The article also examines why the Department for Transport was unable to explain its reasons for introducing exclusions of liability in the Uninsured Drivers Agreement 1999 when it was obvious that they were unlawful and why a large bureaucracy should claim to have no documentary evidence that might cast light on its insurer biased policies. Could it be that i insurance industry lobbyists are dictating the terms of our social policy to a credulous and compliant executive?

Click on the image below to access the article in full.  Reproduced here with the permission of the Journal of Personal Injury Law and its publishers Thomson Reuters.

DfT TO APPEAL DELANEY

The Secretary of State to appeal the Delaney decision

 Hammond holding back the tide

It is official and it comes first hand from the Department for Transport: it is in denial!

In Delaney v Secretary of State for Transport [2014] EWHC 1785 (QB) the court exposed the DfT for flouting superior European Community law in its implementation the European Motor Insurance Directives. See earlier post: DfT exposed for defying EU Law.

The Uninsured Drivers Agreement 1999 is notorious for its oppressive and unjust strike out clauses and its unlawful restrictions on the Motor Insurers Bureau’s liability to compensate motor accident victims.  Although the grounds of appeal are not known, it could hardly have chosen weaker ground to contest the superior authority of the Motor Insurance Directives and the long line of Court of Justice rulings interpreting them.

The Delaney case comes at a very embarrassing time for the DfT as its entire transposition of the Motor Insurance Directives is under scrutiny from the European Commission.  The DfT has consistently maintained the line that it has fully implemented the Directives; whereas our national law provision in this area is riddled with unlawful restrictions and exclusions that serve the commercial interests of motor insurers.

The man at the Ministry responsible for this farce is Stephen Hammond MP, the Under Secretary of State for Transport.  Someone needs to explain the rule of law to him and the fact that Parliament has surrendered part of its sovereignty to the European Union on our accession.  

In the words of the great Lord Denning:

‘The Treaty [of Rome, 1957] does not touch any of the matters which concern solely England and the people in it. These are still governed by English law. They are not affected by the Treaty. But when we come to matters with a European element, the Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back, Parliament has decreed that the Treaty is henceforward to be part of our law. It is equal in force to any statute.’

H.P. Bulmer Ltd v J. Bollinger SA [1974] Ch 401 at 418

ADVANCED RTA LIABILTY TRAINING

Challenging old certainties and commonly held misconceptions, featuring recent thought provoking decisions and important legal developments, this course seeks to explain their implications for the busy practitioner. 

The day will explore:

• new thinking on contributory negligence, including cycle helmets and children

• new approach to Highways Act claims and why Bolam is now relevant

• ex turpi causa its use and misuse
• the latest credit hire decision and the likely reform
• the latest on the whiplash review and the likely reform

• consent orders and protecting vulnerable claimants

• why EU law is so important and how it impacts on practically every claim

• The Road Traffic Act 1988, The EU Rights Against Insurers Regs 2002 and the MIB

• interpreting our UK law consistently with community law - made easy!

• contrasting UK provision with community law minimum standards

• where and why the Court of Appeal has got it so wrong
• why the Delaney case has raised its head again and why this is so important

• challenging breaches of community law successfully and profitably
• update on major reform and the European Commission’s involvement

Please apply through APIL.

London:       17 June 2014

Manchester: 24 June 2014

DfT STILL CLUELESS

Department for Transport in denial

According to the Daily Telegraph coverage of Mr Justice Jay's decision in Delaney v Secretary of State [2014] EWHC 1785, see article published on 4 July 2014, the Department for Transport spokesperson said:

‘We are looking closely at the judgment and are minded to appeal. Even if the judgment were to stand, claims will be excluded from compensation where serious criminality and a close connection between the crime and the accident can be shown.’

Is this bravado or have they really learnt so little from their futile defence? 

The reason why this rather unappealing claimant succeeded in his claim against the Secretary of State for Transport is that the European Motor Insurance Directives permit only one instance where the MIB can lawfully exclude liability to compensate a victim of an uninsured driver in circumstances that require compulsory third party insurance cover.  That exception is confined by what is now article 10.2 of the Sixth Motor Insurance Directive to ‘persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured.  

It is a simple binary issue: either the case facts match this single criterion or they don’t.  If they do, then the MIB can lawfully exclude liability to compensate; if they don’t they can’t.  Is this really so difficult?

So it is irrelevant whether the injured passenger is a shop lifter travelling home after a long day’s lifting with his takings, or a drug dealer visiting his customer or even a wife beater en route to perpetrate his crime. 

The Secretary of State for Transport should understand, like it or not, that in this country the law applies equally to saints and sinners.  Outlawry no longer holds sway.  No one is above or below the law; not even a minister of state.  So will he please discharge his legal responsibility as a Minister and reform our national law provision in this area so that it complies, at the very least, with the minimum standards imposed under European Community law.

DfT EXPOSED FOR DEFYING EU LAW

Department for Transport held liable for flouting the Motor Insurance Directives

On Tuesday 3 June Mr Justice Jay awarded Fracovich damages to a passenger who was gravely injured by an uninsured driver.  In Delaney v Secretary of State for Transport [2014] EWHC 1785 (QB) the judge held that the DfT has deliberately flouted superior European Community law in its implementation the European Motor Insurance Directives.

The Delaney case: brief facts

The MIB had previously refused his claim, relying on clause 6(1)(e)(iii) of the Uninsured Drivers Agreement 1999.  That clause entitled them to exclude any liability because it was established that he knew the vehicle was being used in the course of or furtherance of a crime.  The claimant’s appeal failed in Delaney v Pickett [2011] EWCA Civ 1532.  However that decision was remarkable because no one thought to argue that this clause was inconsistent with the European Motor Insurance Directives, so the issue as to whether the exclusion was lawful was never considered. 

Matters were eventually put right in this Francovich action.  Here, our national law provision for guaranteeing the compensatory rights of motor accident victims was put under proper scrutiny and it was found badly wanting by the judge. 

Department for Transport shamed

This decision cannot be anything other than a major embarrassment to the Secretary of State for Transport. 

As recently as July 2013 the Minister was blithely asserting in a statement of intent, in the face of numerous written submissions to the contrary, that...’ These [MIB] agreements fulfil the UK’s obligations under EU motor insurance law ....’ 

The court’s findings:

• That the meaning of the relevant provisions within the European Motor Insurance Directives was clear and obvious to the point that they were ‘close to being self-evident’.
• That there was no evidence that the DfT even took legal advice.
• That the DfT had made a deliberate decision to add an exclusion of liability in clause 6 of the 1999 Agreement when it was clearly not permitted under European law.
• The judge found the DfT ‘guilty of a serious breach of Community law’, of such severity as to warrant Francovich damages.
• He rejected the DfT's plea that its infraction was somehow inadvertent or excusable. 
• As to the conflict between its policy decision and what was required under European law, the judge said: ‘the best that may be said is that the Defendant decided to run the risk, which was significant, knowing of its existence’.
• The judge repeatedly expressed his surprise at the ‘remarkable’ lack of any relevant documentary records, when ‘A provision of this sort must have been the subject-matter of detailed written discussion and deliberation within the department, and (one would have thought) a Ministerial submission. And yet we have nothing’.  As to the DfT’s failure to explain its policy position, he described this as a ‘deafening silence’.

Many other UK law provisions in this area conflict with European Law.  For example, the Minister’s statutory provision implementing article 3 of the Sixth Motor Insurance Directive civil liability insurance cover provisions within Part VI of the Road Traffic Act 1988 was held to be seriously flawed in Churchill v Wilkinson [2012] EWCA Civ 116).  In that case, the defect obliged the Court of Appeal to adopt a bizarre and unprecedented measure: it  effectively legislated an amendment to a statutory provision by adding a new ‘notional’ clause to section 151(8) of the 1988 Act as a stop gap measure.

DfT inaction and obfuscation

The facts speak for themselves:

• Discussions with the MIB and various representative groups over much need reform to both the Uninsured and Untraced Drivers Agreements had reached an impasse by late 2009.
• In February 2013 I set out the case for extensive reform of the UK statutory and extra-statutory provision in my four part series of articles published in consecutive weeks in the New Law Journal under the tile: On the Right Road?.  I warned the Minister that he faced judicial review or an infringement action if he continued to do nothing to rectify the many serious breaches of European Community law. 
• This warning was repeated by myself and others in response to his flawed consultation that quickly followed, see: Review of the MIB Agreements. 
• The Minister then ignored our calls for a dialogue.  Instead he preferred to consult with the MIB, who are most probably the true authors of the MIB Agreements.
• When I was approached by the Law Commission and asked to prepare a detailed law reform proposal for them to submit to the Lord Chancellor, which I did, their involvement was later blocked by the Minister.
• The Minister promised to publish a report setting out his detailed proposals for reforming the MIB Agreements in July 2013, that was postponed to the Autumn of 2013 and yet we have heard nothing more.

Infringement Complaint

It can hardly be very surprising then, when every attempt to persuade the Minister to discharge his legal obligations had been thwarted, that I should resort to presenting a formal infringement complaint to the European Commission.  This was filed in late August 2013.  The complaint identifies over 40 instances of potential breach of Community law in our statutory and extra statutory national law provision for victims of motor accidents.

The European Commission has decided to act on the infringement complaint.  In March 2014 it incepted the EU equivalent of our pre action protocol enquiry procedure by asking the UK Government to explain how it implements the Directives across a number of different areas; calling for a response.  

Unfortunate timing

Mr Justice Jay’s ruling could hardly have come at a worse time for the Minister, given that he has exposed the DfT for deliberately flouting the minimum standards of protection imposed under the Directives.

Implications of Delaney

This decision has profound implications for all RTA practitioners: 

Firstly, is demonstrates that our national law provision for protecting victims' compensatory entitlement cannot be taken at face value. 

Secondly, when the correct interpretive approach is applied to our statutory and extra-statutory provision in this area it is revealed as being replete with unlawful exclusions, limitations and exceptions which favour insurers at the expense of innocent victims.  This applies not just to the MIB’s duty to compensate under the Uninsured Drivers Agreement 1999 but equally to the duty to insure and the insurer’s duty to indemnify under Part VI of the Road Traffic Act 1988 (see Churchill above);to the EC Rights against Insurers Regulations 2002; as well as to both the MIB Agreements. 

Thirdly, the evidence suggests that many of these defects are the result of deliberate policy decisions that the DfT have taken but where, strangely, no documentary evidence relating to that decision survives.  As a result, all our national law provision in this area is to be treated with circumspection. 

Fourthly, the judgement ignores the unanimous Court of Appeal ruling in EUI v Bristol Alliance Partnership [2012] EWCA Civ 1267 that wrongly confines the application of an important CJEU ruling in Rafael Bernaldez Case C-129/94 to criminal cases. I say wrongly because the Bernaldez ratio has been extended by the CJEU to civil liability scenarios in a number of subsequent rulings.  Jay J applied the Bernaldez ruling as well as those of Candoline Case C-537/03 and Farrell v Whitty, Case C-356/05 to interpret the MIB Agreement.  These rulings support only a very restrictive interpretation of the exclusions of liability permitted by the Directives to those expressly provided for within the Directives.  This is confined to the provision within article 10.2 of the Sixth Directive (article 1.4 of the Second Directive), namely: against ‘persons who voluntarily entered the vehicle which caused the damage or injury when the body can prove that they knew it was uninsured.’

Fifthly, it confirms the long line of Court of Justice rulings to the effect that the only circumstances in which a compulsory third party motor insurance policy can exclude or restrict liability to indemnify a third party victim for damage is that set out in what is now article 13 of the Sixth Motor Insurance Directive (article 2.1 of the Second Directive), this is restricted to ‘persons who voluntarily entered the vehicle which caused the damage or injury, when the insurer can prove that they knew the vehicle was stolen’.  This puts in doubt the ability of an insurer to apply, ex post facto, for a court declaration to the effect that an insurance policy is void for material non disclosure or misrepresentation, even though this is expressly provided for under s152 of the 1988 Act.  Although this occurred in Delaney it was not raised as a contentious issue; perhaps it should have been. What is practically beyond any doubt is the fact that policy exclusions and restrictions not specifically listed in s148 of the 1988 Act as void against a third party (e.g. restrictions in use) are unlawful under Community law.  This goes against the recent and unanimous ruling by the Court of Appeal in EUI above, even so it is still bad law. Many other infractions exist within this field of law.

Call to action

It is our role as claimant representatives to identify and challenge unlawful restrictions to our clients’ legal entitlements.  These issues, where they exist, should be flagged up at the pre action protocol stage, and challenged in the first instance proceedings; not years later.  It has been settled law since 1984 that our national courts must apply superior Community law, see Case 14/83 Von Colson and Kamann [1984] ECR 1891, paragraph 26: this applies to District Judges and Justices of the Supreme Court alike.  Ultimately, the exercise of our clients’ legal rights under the Directives does not depend on the DfT transposing them into national law but it does depend on legal professionals spotting and contesting unlawful infringements to full and fair compensation under the rule of law.

Competency in European law is an essential requirement in RTA tort law, just as much as it is in employment law or health and safety law.   We are all European lawyers now; ignorance is no excuse. 

DfT in disarray

The DfT’s policy in this area is not just discredited by this decision, it is in tatters.  The European Commission is investigating widespread infringements in this area and so major reform is likely.  In the meantime opportunities for successful legal challenges are legion.  

JACKSON 12 MONTHS ON

I was delighted to present a talk at a Shakespeares' client event recently. I was joined by Julia Holden, A partner and insurance service specialist, and of course, who else but Professor Dominic Regan. It was a really fun day, despite the rather grim topic.

My brief was to present a claimant perspective on the civil justice reforms, which has hardly been a sublime experience for most of us, to say the least.  My talk examined the antecedents to Sir Rupert Jackson’s report and flagged up a growing concern that our government, far from wanting to extend its citizen’s access to justice, actually perceives this as a social and economic ill. 

For those remotely interested I offer this link to my slides.

MINOR COLLISION

Inadequate safeguards for minors and the mentally handicapped 

The Association of Personal Injury Lawyers have just published my exposé on the lack of proper safeguards afforded to children and mentally incapacitated victims by insurers who approach road accident victims direct as well as those who are unlucky enough to be injured by an unidentified or 'hit and run' driver. 

The Association of Personal Injury Lawyers is a fabulous organisation which campaigns for fair treatment and justice for accident victims, to help put their lives back on track.  Please support it in any way you can.

 This includes a response by a  spokesperson for the Motor Insurers Bureau. It indicates that the MIB untraced drivers scheme was given a clean bill of health in the High Court by Mr Justice Hickinbottom in Carswell v Secretary of State for Transport & the MIB [2010] EWHC 3230 (QB), and so it was.  However, I have two observations to make.  Firstly, Carswell was a case where the deceased's family were superbly represented by the redoubtable Andrew Richie QC and it had nothing whatsoever to do with injured minors or mentally handicapped victims.  My second point is that the European Commission is currently investigating a number of breaches of Community law where our national law provision fails to properly implement the minimum standards of protection imposed under the Motor Insurance Directives.  The Commission's concerns embrace both the Uninsured and Untraced Drivers Agreements.  So watch this space!

Click here to access the article, reproduced with APIL's kind permission.