AN INCONVENIENT TRUTH

The inconvenient truth is that the UK’s national law provision for compulsory third party motor insurance is unfit for purpose.  Unfortunately neither the Minister for Transport nor the judiciary seem to be prepared or able to tackle the extensive injustices caused by decades of bungled legislation and ministerial incompetance.

Drawing a line on reform

My five-year campaign to persuade the government to initiate legislative reform to bring the compensatory guarantee for third party victims provided by motor insurance into line with the minimum standard required under EU law will probably never be fully realised.  This is principally due to the intervention of Brexit, as this campaign was based on drawing a comparison with European law. 

Even so, the campaign has been partially successful.  In July 2015 and again in March 2017 the Minister for Transport removed many unlawful and arbitrary provisions from the Motor Insurers’ Bureau’s twin schemes for compensating victims of uninsured and untraced drivers.  [See footnote 1]

The Motor Insurance Bureau (MIB) is a consortium owned and operated by every authorised motor insurer in the UK.  It has conflicted interests: as it is both an agency and representative body of the insurance industry whilst at the same time discharging an important public service role devolved on it by the Department for Transport that requires it to funding and operate both compensation schemes.  Between them, these reforms have stripped the MIB of many of its unjust and arbitrary powers and represents the most significant MIB reform for decades.

Most of the reforms to the MIB agreements were exacted in the teeth of opposition from the motor insurance industry and the government and most were only conceded in response to RoadPeace’s long running juridical review. [see footnote 2]

RoadPeace’s judicial review was the first time that the UK’s entire national law provision in this area was subjected to close scrutiny.  This exposed the government’s longstanding and systemic failure to bring the compensatory protection for motor accident victims into line with the unqualified and more generous scope mandated under European law. 

Reform in this area was obstructed over several decades by the combined weight of a highly influential motor insurance industry and a series of ineffectual ministers in the Department for Transport.  The unnecessarily complex and arbitrary nature of the UK statutory and ex-statutory provision in this area has provided insurers with fertile ground in which to cynically exploit loopholes on legal defects in the legislation: thereby frustrating the Parliamentary objective of ensuring that accident victims are fully compensated.

Self help

Fortunately, individuals unjustly denied their compensatory guarantee are able to invoke this EU law, in their own right, in ordinary civil actions; at least whist the primacy of EU law prevails. 

The primacy of EU law and the EU law remedies for those affected by the UK’s blatant and long-standing breaches of EU law prevail, at least until March 2019 and possibly beyond that in some different form.  The problem here being that many professional advisors and member of the judiciary are not comfortable with tackling the comparative law issues these challenges involve. [see footnote 3]

Institutional indifference

The long overdue reforms to both MIB compensation schemes were won in the face of trenchant opposition.  They were only made possible by first exposing the UK’s defective implementation of the EC Directive (2009/103/EC) on motor insurance (which imposes a higher standard of compensatory protection) and then by invoking the primacy of European law principle against the state.  RoadPeace’s judicial review (considered below and in previous blogs) brought this widespread institutionalised illegality to light. 

Unfortunately, the judicial review has only been partially successful.  Whilst major statutory infringements have also been identified, the court refused to order the government to remove this illegality.  The judge contented himself with making a number of declarations of non-conformity.  He seemed to find nothing amiss in either of the MIB agreements, notwithstanding the extensive reforms initiated in response to the judicial review and the rank injustice of some of their provisions.  [See footnote 4]  Nowwhere in the lengthy judgment is Brexit mentioned but its effect is pervasive. 

The outcome of this judicial review was highjacked by political events: Brexit supervened.  The judiciary are understandably reluctant to force the executive to introduce major statutory reform to bring the UK implementation of EU law into line, on the brink of the UK’s departure from the EU.

Reflections on the judicial review

The aim of this blog is to explain what happened in the RoadPeace judicial review, whose inception predated the Brexit referendum, and which forced the government to reform its extra-statutory provision in the form of the MIB agreements.

 

In a later blog I will outline the EU law (self-help) remedies available to victims affected by the UK’s infringement of EU law.  These do not depend on the government’s caprice.  I refer to the following remedies that private individual can invoke in ordinary civil actions:

1. the doctrine of EU law consistent construction of UK law (to bring the defective UK law into line with the EU law it is supposed to implement) applying the principles developed in the Marleasing and Pfeiffer rulings;
2. the direct vertical and potentially horizontal effect of some of the Directive’s provisions against certain institutions (that allow individuals to rely on the wording of a directive in an action as though it they were enacted in UK legislation) and,
3. as a last resort only, an action for damages against the government for its failure to implement a directive under Francovich principles. 

The point here being that although the timing of the public law action by RoadPeace was too late to compel the government to introduce legislation to bring its laws into line with EU law on the eve of Brexit, other cogent private law remedies are available. 

RoadPeace v Secretary of State for Transport [2017] EWHC 2725 (Admin)

In October 2015 RoadPeace, a road accident victim support charity, applied to judicially review the Secretary of State for Transport’s decision to ignore its calls for the removal of two unlawful exclusions of liability from the two extra statutory compensation schemes for victims of uninsured and unidentified motor vehicles.  The exclusion clauses were not permitted under European law.

Legal action was made necessary because the minister and the Motor Insurers Bureau (MIB) both refused, publicly and point-blank, to excise this illegality. 

The remit of RoadPeace’s judicial review was expanded to embrace the systemic non-conformity that riddles the UK’s implementation of EC Directive (2009/103/EC) on Motor Insurance (the Directive); the latter of which being more comprehensive in the scope and extent of the protection conferred on victims.  Here again, the minister had been warned of this extensive illegality not just by RoadPeace but also by several other well informed representative bodies - and in response to the minister’s own consultation on the MIB of February 2013.  Notwithstanding this, the minister refused even to discuss the need for reform, exposing the consultation for the empty sham it was.

RoadPeace’s motivation

RoadPeace’s decision to challenge the combined weight of the state and the influential motor insurance industry was a courageous one.  RoadPeace is a small charity with modest resources.  It was established in 1992 out of concern for the plight of road crash victims and the inadequacy of the national law provision and support to help them rehabilitate.  It provides emotional support and advocacy for road accident victims and it aims to help them navigate the justice system.  Civil compensation is essential if innocent victims are to recover. 

RoadPeace’s primary concern was that the national law provision had grown so complex that it was highly unlikely that a reasonably intelligent and well-informed individual would be able to ascertain their proper legal entitlement from the extensive statutory provisions, extra-statutory schemes and seemingly contradictory case law. 

Conflicting outcomes in cases such as the House of Lords ruling in Gardner v Moore and others [1984] 1 All ER 1100 and EUI v Bristol Alliance Limited Partnership [2012] EWCA Civ 1267showed that even the senior appellate courts could not adopt a consistent approach to interpreting these provisions; what hope then for an ordinary private individual? 

This highly unsatisfactory state of affairs conflicts both with our common law rule of law principle as well as the Directive that it is supposed to fully implement.

Parliament’s legislative aim subverted

The obligation to take out third party motor cover was first imposed by section 35 of the Road Traffic Act 1930.  This wording survives in its amended form in section 134 Road Traffic Act 1988.  In the words of Gloster LJ in Cameron v Hussain [2017] EWCA Civ 366:

• ‘[41] I start my analysis the basic proposition that the policy of the regime imposed by Part VI of the 1988 Act makes clear that, where a policy of insurance is in place in respect of a vehicle, the insurer must, where it has received statutory notice (under section 152 of the 1988 Act) of the issue of third party proceedings, generally meet liabilities to a third party victim irrespective of whether the policy covers the driver/tortfeasor, and irrespective of the identity of the tortfeasor.
•  [42].     That policy is wholly consistent with common sense. If an insurer agrees to effect an insurance policy in respect of a specific vehicle and receives a premium in respect of accept-ing that risk, then prima facie, at least, and subject to any right to avoid the policy, the insurer, having received the economic benefit, should bear the economic risk as to the following matters: the existence or non-existence of the insured or named drivers; the fact that such persons may allow uninsured persons to drive the vehicle; and the fact that, because the vehicle is on the road, it may be driven unlawfully by persons without the consent of the insured.’

This protective purpose is borne out by the measures Parliament took in 1934.  When it first imposed this insurance obligation on road users in 1930, it did not initially concern itself by prescribing the scope or extent of that cover.  It appears to have assumed that motor insurers could be trusted to act in good faith and issue suitable policies.  It very soon became apparent that the insurance industry could not be trusted to deliver Parliament’s social policy objective of guaranteeing the compensatory entitlement of motor accident victims.  They routinely issued policies that were hedged with so many caveats, restrictions and exclusions as to make them worthless in numerous instances.  As this undermined the legislative aim and so it was necessary to legislate again, in 1934, to curb the ability of insurers to evade their liability to compensate accident victims. 

Unfortunately, the 1934 reform was bungled.  Instead of imposing a general prohibition on a motor insurer’s ability to invoke any contractual provision as a defence against to a valid third party claim, the prohibition was restricted to a number of specific instances (now set out in section 148 Road Traffic Act 1988). 

Motor insurers have continued to exploit the loopholes this provided by citing numerous alternative contractual restrictions and exclusions that allow them to shirk their moral responsibility to honour the spirit of this profitable oligopolistic market for compulsory third party cover that a state enforced scheme confers. 

A long line of ministers have apparently been deceived into believing that the loopholes and anomalies that infest this shambolic regime (and thus undermine the legislative purpose of 1988 Act) are somehow necessary to protect the legitimate business interests of motor insurers.  French insurers manage well enough, charging comparable premiums for an equivalent degree of coverage and yet they are unable to invoke restrictions in cover against a genuine third-party claimant.

Concessions made within the judicial review

RoadPeace’s pre action protocol letter listed over eighty potential infringements of the Directive spanning the UK national law implementation of the Directive.  These were inevitably confined to a handful of grounds within the action.

Such was the strength of RoadPeace’s case that the minister was forced to concede a number of grounds.  For example:

• In December 2016 he publicly admitted that the geographic scope of the insurance requirement and the definition of motor vehicle were both too narrowly defined in the Road Traffic Act 1988 (as well as in both MIB compensation schemes that relied on the statutory definitions for their own scope) so that they failed to comply with the Directive.  Another consultation exercise was initiated by the minsiter, ostensibly into the options for implementing the European Court of Justice’s ruling in Damijan Vnuk (Case C-162/13). It should be noted that this illegality had been spelt out to the minister in April 2013 by myself and supported by RoadPeace and a number of other representative bodies back in April 2013 (over three years before) and again following the Vnuk ruling in September 2014 (over two years before) but in both cases nothing was done. 
• In January 2017, the minister announced extensive reforms to the MIB compensation schemes.  These included the removal of the two illegal clauses in both schemes that RoadPeace had warned him about in July 2015 and prior to bringing the judicial review, as well as a number of curbs on the MIB’s arbitrary powers under the Untraced Drivers Agreement 2003

By the time the judicial review was heard by Mr Justice Ouseley in mid-February 2017, the challenge was confined a handful of grounds.  The learned judge reserved judgment, observing that the judicial review raised important issues and that doing nothing was not an option.

Status Quo defended

On 7 November the learned judge delivered his long delayed judgment in RoadPeace v Secretary of State for Transport [2017] EWHC 2725 (Admin). 

The judgment identifies the following infringements of the Directive:

• Sections 145 and 192 of the Road Traffic Act 1988 wrongly restrict mandatory third-party motor cover to vehicle use in public spaces
• Sections 145 and 182 of the Road Traffic Act 1988 wrongly restrict the types of vehicles subject to the compulsory insurance to road vehicles
• Section 152(2) of the Road Traffic Act 1988 wrongly permits an insurer to invoke a misrepresentation or non-disclosure to avoid its statutory liability to compensate a third party
• Regulation 2 of the Rights Against Insurers Regulations 2002 wrongly limits the direct right of action against motor insurers to UK accidents

The first three findings had been conceded prior to the hearing.  Unfortunately, the judge declined to attempt a Marleasing / Pfeiffer style EU law consistent construction of these statutory provisions, which could have been achieved readily as the EU law is crystal clear and simple on these points.  All that was required was the excision of the unlawful restrictions in the scope of the compulsory third party motor insurance requirement - by deleting the offending words: such as ‘road or other public place’.

When, on 13 December 2017, the learned judge finally came to deliver his official declaration of non-conformity he excluded any reference to section 152(2) Road Traffic Act 1988 despite the non-conformity having been conceded by the minister (following the Court of Justice’s recent ruling on a similar Portuguese provision in Fidelidade (Case C-287/16)).  Although section 152(2) Road Traffic Act 1988 cited initially as one of the eighty potential infringements, that ground was not pursued in the judicial review. 

The judge refused RoadPeace’s request that he impose a strict time-limit for compliance on the state, notwithstanding its long track record of obfuscation and delay.

The 7 November judgment dismisses the remaining grounds, chief of which was the complaint that the Road Traffic Act 1988 wrongly permits insurers to invoke contractual restrictions in and exclusions of liability against third party victims.  This ground was founded on clear and unequivocal rulings by the Court of Justice that hold that such practices are prohibited: because they are inimitable to the protective purpose mandated by the Directive.  This requires an autonomous compensatory guarantee to be provided within the insurance policy. [See footnote 4]

Muddled reasoning

The learned judge’s reasoning for dismissing the claimant’s challenge that disputed the well-established perception that the UK retains a legislative discretion to permit insurers to water down the cover provided under this scheme, seems particularly perverse.

Mr Justice Ouseley acknowledged that the Court of Justice had decreed, in Bernaldez [1996] Case C-129/94, that the UK had no discretion to permit exclusions of liability, save where expressly permitted by the Directive itself.  The judgment even cites this key passage from that ruling:

• ‘20.  Article 3(1) of the First Directive [which first imposed the motor insurance requirement] precludes a company insuring against civil liability in respect of the use motor vehicles from relying on statutory provisions or contractual clauses in order to refuse to compensate those victims for an accident caused by the insured vehicle.’  [words in parenthesis added]
• It will readily be perceived that this prohibition applies not only to contractual provisions, such as social and domestic use restrictions and unauthorised use exclusions but also to statutory exclusions of liability, such as is found in section 151(4) Road Traffic Act where a passenger knew or ought to have known the vehicle they were riding in had been unlawfully taken.'

The learned judge’s response was to opine:

• ‘It would be remarkable if, without spelling it out in so many words, the [Court of Justice] had decided as far back as Bernaldez, the language of which, in its usual way, it repeats in subsequent cases, that any use which could be made of a motor vehicle required compulsory insurance.’ [words in parenthesis added]

But that is precisely what the Court of Justice did say in Bernaldez in 1999 and repeatedly thereafter.  It is hard to see how paragraph 20 in Bernaldez could possibly bear the restricted interpretation the learned judge gave it.

The judge’s remarks also ignore the fact that Recital 15 of the Directive confirms the Court of Justice’s interpretation by stipulating that contractual disputes should be confined between the contracting parties.  They also miss a very obvious point:  that the by repeating this statement of principle in every judgment on this point, the Court of Justice clearly intends it to be applied uniformly as a point of principle of general application.  This view (that the prohibition is intended to be a rule of general application, is also confirmed by the way the court circumscribed the role of the MIB (in its role as compensator of victims of uninsured vehicles under Article 10 of the Directive) where it is described as a ‘last resort’ reserved for incidents where the vehicle responsible has no policy at all or is unidentified. See Conska (Case C – 409/11) which is explicit on this point. 

The autonomous nature of the insurance requirement and the MIB’s restricted role are two sides of the same coin. 

Appeal

RoadPeace have applied for leave to appeal the judge’s finding on the legislative discretion point.  It has also sought this important EU law issue to be referred to the Court of Justice for a preliminary ruling.  Whether it has the funds to pursue such an appeal remains to be seen.

Where does this leave us?

The learned judge’s refusal to order the government to remedy the longstanding illegality in our national law provision and his rejection of an important ground (relating to the UK’s legislative discretion) dooms thousands of motor accident victims and millions of consumers to further legal uncertainty and in particular it denies accident victims the autonomous compensatory guarantee through motor insurance mandated under European law.  This amounts an appeasement of institutionalised illegality.  Brexit and the obvious unwillingness of the government to stand up to the insurance industry are clearly factors here. 

However, for as long as the UK remains a full member of the European Union and possibly also during a transitionary period, the treaty bound principle of primacy of EU law prevails.  This means that three EU law remedies will continue to apply during this period to all causes of action occurring within this period.

The European law standard

The European law is simple and clear and consistently applied.  It requires the insurance obligation set out in Article 3 of the Directive that the third party cover should be fit for purpose to be fully effective. 

The scope of third party cover must extend to any use of the motor vehicle on land, regardless of whether it is on a road or off; regardless of whether it is on private property or not.

The basic rule on the extent and quality of contractual cover provided under Article 3 is that once a policy has been issued, it should be good to meet any third party claim up to the minimum amounts specified by Article 9 of the Directive. 

The autonomous nature of this compensatory guarantee is prescribed as an absolute requirement, in its application to third party claimants.  The guarantee is not one that can be whittled away by contractual or statutory provisions. 

This third-party guarantee is without prejudice to any contractual rights that the insurer may have against its assured.  However, the Court of Justice ruled in Churchill (Case C-442/10) in 2011 that the Directive’s protective purpose is so important that in the rare instance where the assured is also an injured passenger, the insurer’s contractual rights should be subordinated to the legislative protective aim.  The claimants status as victim overrides that of contracting party.  According in such circumstances, the assured entitlement as victim is not to be excluded automatically and only in exception circumstances and to a degree that is propitiate to the assured’s responsibility for their own harm.

There is only one contractual exclusion permitted against a third party, this applies to a passenger whom the insurer can prove was foolish enough to get into the vehicle in which he or she is injured, knowing that it has been stolen.  This is expressly set out in Article 13 of the Directive.

The qualified and contingent nature of third party cover permitted under UK law is clearly inimical, at a fundamental level, with the absolute and autonomous guarantee mandated by the Directive.

Justice tempered by convenience

It is clear that several recent UK judgments, including EUI v Bristol Alliance in 2012, Delany v Secretary of State for Transport and the MIB in 2014 as well as Sahin v Havard and the RoadPeace judgments in 2017 are all based on the long-held assumption that the UK retains the necessary legislative discretion to lumber its citizenry with this second-rate level of third party cover.  It doesn’t, for the reasons explained above and elsewhere in more detail. 

One is tempted to infer that the courts are reluctant to cause disruption to the government’s legislative programme by requiring it to implement the root and branch overhaul of its idiosyncratic and often anomalous provision in this years.  It is necessary for domestic and EU Treaty purposes.  This is because the law on third party motor cover is the confusing product of over eight decades of piecemeal legislative and executive provision: provision that often reflects political compromises made by ministers that undermine the original Parliamentary aim (one that is on all fours with the European law protective purpose). 

However, the rule of law should not expose citizens to unclear, unjust and often unintelligible laws whose very complication baffles learned jurists and enables a powerful corporations to play the system at the expense of private individuals at their most vulnerable.  The rule of law requires an individual’s legal entitlements and duties to be set out in clear and easily assessible form.  It should not be qualified by the administrative convenience and conceit of an insouciant executive or by a judicial reluctance not to rock the boat on Brexit.

EU law remedies

The focus of my legal training on motor insurance in 2018 will be to explain how easy it is to undertake a comparative law analysis of the UK’s statutory and extra-statutory implementation of the EU law governing this area and to explain and demonstrate how to set about invoking the three EU law remedies.

 

Whilst the UK is subject to the primacy of EU law, motor accident victims will able to enforce their proper legal entitlement, provided they receive competent legal advice.  Thereafter, there it seems likely that these rights will be subordinated to the commercial interests of the motor insurance lobby and the caprice of ineffective ministers and civil servants.

Footnotes

1. Link to my blog on the UDA 2015.  http://nicholasbevan.blogspot.co.uk/2015/07/the-uninsured-drivers-agreement-2015.html;  link to my lecture slides on the UDA 2015 https://drive.google.com/file/d/1X9Df9kpU59WTYdks9BWKXS81rRH8ni0-/view?usp=sharing

2. Link to my blog on the UtDA 2017 https://nicholasbevan.blogspot.co.uk/2018/01/the-untraced-drivers-agreement-2017.html

Link to my lecture slides on the UtDA 2017  https://drive.google.com/file/d/1k25sPbWDlYMA9WcixB3wx3coJbNeEeYQ/view?usp=sharing

3.  Link to UK and EU motor cover compared https://nicholasbevan.blogspot.co.uk/2017/10/uk-and-eu-motor-cover-compared.html

4. Link to my analysis of the RoadPeace judgment  https://www.blogger.com/blogger.g?blogID=2649783362311988948#editor/target=post;postID=6438014282184345353;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=2;src=postname

4. Link to my blog and NLJ article: Defending the Indefensible https://nicholasbevan.blogspot.co.uk/2017/12/defending-indefensible.html

Ministerial obfuscation

For a timeline of the Department for Transport's inaction: see Action Not Words from 2016.  Since when the DfT issued its consultation on implementing the Court of Justice's ruling in Vnuk from September 2014 (which the DfT published in December 2016) but no further action has been taken.

LEWINGTON V MIB 2017

Lewington v Motor Insurers’ Bureau [2017] EWHC 2848 (Comm)

High Court rules that an off-road dumper truck requires compulsory third party motor cover.

Case Commentary

The facts

On 23 February 2012 Ms Lewington was severely injured in a road accident.  She had been following her uncle’s car along a dark and unlit stretch of the A120 dual carriageway at 10.45 pm when he suddenly swerved to avoid two large dumper trucks that were moving relatively slowly in the road ahead.  Although she was also able avoid hitting them, she lost control of her car causing it to leave the road. 

The drivers of both Bell B30D articulated dumpers ran off and were never traced.  It later transpired that the trucks had been stolen from a quarry.

The MIB’s rejection

When the claimant applied for compensation from the Motor Insurers’ Bureau (MIB) for her compensatory entitlement under the Untraced Drivers Agreement 2003 (UtDA), her claim was rejected.  The MIB asserted that because the accident was caused by an off-road vehicle it fell outside the scope of this scheme. 

The MIB relied on clause 4 (1) UtDA that restricts the scheme to incidents ‘giving rise to liability of a kind which is required to be covered by a policy of insurance or a security under Part VI of the 1988 Act’.  This reference is to the Road Traffic Act 1988 (hereafter RTA).  This is a sensible provision, since the MIB agreements are designed to dovetail with the compensatory guarantee for victims of uninsured and untraced drivers with the statutory insurance guarantee, which is delivered through the compulsory insurance requirement.

The flaw in the MIB’s case was its assertion that the dumper truck did not fall within the scope of the RTA.  The RTA does not impose a uniform requirement that every motor vehicle should be covered by compulsory third party insurance; only motor vehicles intended or adapted for road use.  The MIB argued that the dumper truck was not intended or adapted for road use.

Superficially at least, the MIB seemed to make a good point.  The Bell B30D articulated dumper truck was nearly 3 meters high and 2.5 meters wide. It had a top speed of 30 mph.  Whilst it was equipped with front lights, it had no rear lights.  Furthermore, it’s owners had not equipped, registered or licenced it for road use.

The claimant appealed the MIB’s rejection of her claim.  Under the UtDA an appeal lies to an arbitrator selected from a panel of arbitrators approved by the Lord Chancellor. 

The arbitral appeal

Richard Methuen QC found that the accident had been caused by the negligence of the unidentified driver of the dumper truck which Ms. Lewington swerved to avoid.  This preliminary finding of primary liability against the driver was not challenged at the arbitration hearing. 

However, on 26 September 2016, the arbitrator upheld the MIB’s rejection.  He accepted the MIB’s contention that the dumper truck did not fall within the RTA definition and so did not need to be insured.  That led to the inevitable conclusion that clause 4 (1) UtDA was not satisfied: namely the accident did not constitute a liability that required to be met by the MIB under the terms of the UtDA.

The arbitrator reached this conclusion, despite making the following findings:

1. This model of dumper truck was capable of road use;
2. Unusual vehicles and engineering plant of this kind are capable of being registered and taxed for road use and that ‘It may have been possible to render the [road] use of the Bell lawful’;
3. An even wider model of the Bell articulated dump truck had been registered for road use and insured for road use at China Clay quarries in Cornwall.

A Bell B30D articulated dumper truck

He ruled that, ‘A reasonable person would not have contemplated the use of the earth mover on a road unless that use had been unlawful’.  This was an invalid test.

When confronted by the EU law standard of compensatory guarantee that the RTA and the UtDA are both supposed to give full effect to, the arbitrator accepted that the RTA was required to be construed in a way that is consistent with the legislative objective of Articles 1 and 3 of the EC Motor Insurance Directive 2009/103/EC (the Directive), whenever possible.  

The Directive prescribes the scope and extent of the compulsory civil liability motor insurance requirement that every member state is required to implement into their domestic law (Articles 1 and 3) as well as the MIB’s role as the compensating body for victims of uninsured or unidentified vehicles (Article 10).  Article 1 requires member states to ensure that the Article 3 insurance requirement applies to ‘any motor vehicle intended for travel on land and propelled by mechanical power,…’ 

The dumper truck clearly met that criteria as it does not feature a road use restriction.  However, the arbitrator opined: ‘I can see no way in which I can interpret section 185 so as to make it compatible with Article 1’. 

Appeal to the High Court

The claimant was nevertheless successful in her appeal before the High Court.

Although judgment dedicates a considerable amount of space to an analysis to the Directive, in my view this was unnecessary given, the facts of this case.  The reason being that a raft of well-established common law authorities provided a complete answer, that led to an outcome that was also consistent with the EU law insurance requirement.  Even so, it was entirely proper for the Mr Richie QC to refer to the minimum standard of compensatory guarantee prescribed under EU law, particularly as this featured so prominently in the arbitrator’s confused reasoning.  However, this does not detract from the fact that EU law was coincidental, not central, to the outcome of this appeal. 

It was common ground that the appeal turned on a single issue: what is the proper interpretation of section 185(1)(c) of the Road Traffic Act 1988 (RTA)? 

The domestic law

Section 185 RTA prescribes the type of vehicle that is subject to this insurance requirement imposed by s143 RTA (that prescribes the statutory duty to insure) and specified by s145 RTA (the scope and extent of third party cover).  It defines a motor vehicle, amongst other things as: ‘…a mechanically propelled vehicle intended or adapted for use on roads’.

The central question in this appeal was whether the arbitrator’s finding that a Bell B30D dumper truck did not conform with s185’s RTA definition was correct. 

Unfortunately, the arbitrator distracted himself with irrelevant issues, such as whether the dumper truck’s use off-road was compatible with s185, when no one disputed the fact that the accident had taken place on a road. 

Most if not all of the leading UK authorities interpreting and applying s185 RTA arises out of criminal prosecutions.  These decisions are made independently of the Directive and correctly so.  This is because the Directive does not seek to regulate criminal or civil liability.  It is concerned only with ensuring that civil liability resulting from motor vehicle use is covered by insurance.  Accordingly, in a prosecution, even where the charges postdate the UK’s accession to the European Community in 1973, the provisions of the Directive and its predecessors are irrelevant.

As if to make the point, the common law key authority is Burns v Currell [1963] 2 All ER 297, which predates even the first motor insurance directive.  The judgment was delivered by Lord Parker (with Ashworth and Winn JJ concurring).  At paragraph 300E he formulates the objective criteria for determining whether a vehicle falls within the statutory definition (of an identically worded predecessor, section 253 (1) of the Road Traffic Act, 1960):

‘I prefer to make the test whether a reasonable person looking at the vehicle would say that one of its users would be a road user.  In deciding that issue, the reasonable man would not, as I conceive, have to envisage what some man losing his senses would do with a vehicle, nor an isolated user or a user in an emergency.  The real question is: Is some general use on the roads contemplated as one of the users?’  [emphasis added]

There is also an extensive body of common law that offers a gloss on this dictum.  In Chief Constable of North Yorkshire Police v Saddington [2001] RTR 227 it was held that a Go-Ped electric scooter satisfied the Burns test and in DPP v King [2008] EWHC 447 (Admin) a City Mantis collapsible electric scooter was also held to be a ‘motor vehicle’ within the meaning of s185 RTA because one of its foreseeable subsidiary uses could be road use.  In both cases, the manufacturers of these diminutive conveyances had both specified that they were unsuited to road use and, again in both cases, the court had accepted that their use on a road would have been unlawful.

One need only refer back to the arbitrator’s three factual findings to reach the inevitable conclusion that the Bell B30D articulated dumper truck satisfied the requisite criteria.  This appeal succeeded through the simple expedient of applying the correct, long established, common law test in Burns; nothing more. 

European law

Mr Justice Bryan’s observation that such a finding is consistent with the Directive’s civil liability insurance requirement is also true.  One need only consider the ECJ ruling in Damijan Vnuk [2014] (C/162/13) featuring a farm tractor being used as a piece of agricultural machinery when reversing a trailer inside a barn on private property, to see the holistic scope intended by this EU legislation.   However, the decision in Lewington does not provide a complete answer for every off-road vehicle, still less a determination, on what precisely what is meant by the definition of ‘vehicle’ in Article 1 of the Directive.  It is also just as clear that the common law test is not wide enough to bridge the implementation gap in every case. 

It is incontestable that Article 1 of the Directive has a wider scope than s185 RTA that is confined to vehicles intended or adapted for road use.  Article 1 stipulates what vehicles are subject to the Article 3 insurance requirement and it defines it thus: ‘'vehicle' means any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled.’  Although Article 5.2 allows member states to derogate certain categories of vehicle from the Article 3 insurance requirement, I can confirm that my Freedom of Information request to the Department for Transport has revealed that UK has never invoked this power.    

The judge did not rule that all off-road mechanically propelled vehicles fall within s185’s definition.  The judge confined his ruling to the facts before him. 

Burns v Currell featured a four-wheeled go-kart, powered by an engine and equipped with a silencer and brakes but not much else.  Their Lordships, applying Lord Parker’s test held that the go-kart in question did not met the statutory criteria.  Accordingly, it is probable that in a different scenario, perhaps one featuring an even larger quarry truck, one that is obviously unsuited to road use, that it would not satisfy the Burns test either.  What then?  This is when the EU law principle of consistent construction comes into play. 

EU law consistent construction

The judge’ offers a helpful obiter discussion on the doctrine of purposive construction of national laws that are intended to give effect to a directive [at paragraphs 55 to 57]. 

He asserts in robust terms that s185 is capable of being construed in a manner that is compatible with the Directive.  However, his use of the term ‘Marleasing principles’ sets a rather quaint tone, as the EU principles have moved on a long way since Marleasing [1990] (Case C-106-89).  The modern ECJ authority on what is now termed as ‘EU law consistent construction’ is Bernhard Pfeiffer and others v Deutsches Rotes Kreuz, and others ECJ [2004] C-297/01.

Pfeiffer is to Marleasing what a Bell B30D dumper truck is to a Toyota Hilux pickup truck: they have the same function, only one of them does it on a far more impressive scale.  

Pfeiffer extends this EU law consistent construction principle to the all national rules and laws.  Furthermore, it imposes on national courts a legal presumption that the domestic law or rule is intended to fully implement the EU directive it is supposed to transpose.  This has important implications for the UtDA and the Uninsured Drivers Agreements.  If the government to seek to argue that these private law agreements between the Secretary of State for Transport and the MIB are not justiciable rules intended to confer civil rights on individuals then it would risk an infringement action by the European Commission.  This is because the EU legal certainty principle insists that every directives must be properly implemented in this way to ensure that the rights intended to be conferred are accessible and intelligible.  Accordingly, the House of Lords ruling in White v White & MIB [2001] UKHL 9 (to the effect that because the MIB schemes are private law agreements they are not subject to a Marleasing style construction) is overruled by Pfeiffer. 

It is important to re-emphasise, however, that it was not necessary to undertake a Marleasing / Pfeiffer style construction of section 185 (or of the UtDA, for that matter) as the vehicle in question fell within the statutory definition.

Direct effect of Articles 1,3 and 10 of the Directive

Although EU law was not determinative in Lewington, it is worth noting that in other cases, where the claim falls foul of an implementation defect, that our courts cannot always be relied on to give effect to the Directives’ protective objective through consistent construction, to cure the problem.  A recent first instance judgment in UK Insurance v Pilling [2016] EWHC 264 (QB) attests to this. 

In UK Insurance a car had burst into flames inside a building whilst undergoing repairs.  HHJ Waksman QC made an obiter comment to the effect that the geographic scope of s145 RTA (which restricts third party cover to accidents on roads or other public places) was incapable of being cured though a purposive interpretation to conform with the Directive that allowed no such restriction.  He opined this would go against the grain of Parliament’s legislative intention.  In my view he was wrong to say so.

Even so, it is important that practitioners should be are aware of an alternative (if as yet, untested) route to redress for motor accident victims involved in accidents that ought to be covered by compulsory third party cover under the Directive but which (wrongly) fall outside the remit of compulsory insurance in the UK.

On 10 October 2017, the ECJ ruled in Farrell v Whitty (no 2) [2017] (Case C-413/15)) that the MIB of Ireland (which was instituted and managed on an almost identical basis to the MIB in the UK) was subject to the direct effect of Article 10 MID and it gave further guidance that strongly indicates that the MIB is also bound by the EU law principle of direct effect (applying Foster v British Gas) because of its important role as the UK’s authorised compensating body under Article 10 of the Directive. 

If the MIB is indeed subject to the direct effect of the Directive, as I believe, then then victims injured by an uninsured vehicle of a type that does not conform with the Burns v Currell test, and where the court has failed or refused to cure the infringement by construing s185 RTA consistently with Article 1 of the Directive, can now invoke the actual wording of the Directive against the MIB as though it were enacted in UK legislation: word for word.  Unfortunately, all EU law remedies may well have a short shelf-life, due to Brexit – but that’s a topic for another day.

Reflections on Lewington

The Lewington appeal exposes some very poor judgment: by the MIB, in rejecting a genuine claim that clearly and obviously satisfied a long established common law test.  It also suggest a partisan and possibly even opportunistic approach to determing cases, out of keeping with the quasi-judicial role it has assumed under the UtDA.  

The initial arbitral finding does not reflect particularly well on the arbitrator either.  It seems fairly clear, from the extensive references made to the arbitrator’s decision in Bryan J’s judgment, that the arbitrator not only had a poor command of the issues but he either misapplied or was ignorant of a line of well-established common law authorities, that were decisive.  The learned judge devotes 13 paragraphs to the arbitrator’s errors.  

DEFENDING THE INDEFENSIBLE

New Law Journal feature

https://www.newlawjournal.co.uk/content/defending-indefensible

Update on the RoadPeace judicial review

The process of RoadPeace v Secretary of State for Transport [2017] EWHC 2725 was the most far reaching challenge of the United Kingdom's implementation on the motor insurance directives (currently the Sixth EC Motor Insurance Directive 2009/103/EC) since the first such directive was introduced in 1972.

During its two year progress, the defendant has been forced to admit that  its statutory provision and private law arrangements with the motor insurance industry fail to meet the minimum standard of compensatory protection for motor accident victims.

Extensive changes have been made to the MIB agreements that govern the compensation scheme for victims of uninsured and unidentified vehicles. Furthermore, the government has openly admitted that the Road Traffic Act 1988 and the EC Rights Against Insurers Regulations 2002 which prescribe the duty to insure and confer direct rights of action against motor insurers are too narrowly scoped.

See my earlier post: EU and UK Motor Cover Compared.

It is regrettable, reprehensible even, that the government has failed to amend its defective legislation notwithstanding having been alerted to the urgent need to do so in its own February 2013 consultation and following the landmark European Court of Justice ruling in Damijan Vnuk (Case C-162/13)  over 3 years ago.

In my latest New Law Journal article, published this week, I explain why Mr Justice Ouseley's judgment in  RoadPeace is a disappointment - despite the judicial review process having resulted in the most significant reappraisal and reform to motor insurance for decades.

Declarations awaited

Declaratory orders are expected imminently.

It is to be hoped that when the learned judge delivers the declarations of non-conformity that he has agreed to, he will impose a strict time limit on the government to clarify the law by amending its legislation. Otherwise, motor accident victims who are encouraged to approach insurers and the Motor Insurers' Bureau direct will be unaware of their proper entitlement.

Continuing Lack of Legal Certainty

The rule of law depends on legal certainty to ensure that statutory provisions and compensatory schemes can be understood by a reasonably intelligent layperson.  A recent spate of ill informed judicial decisions demonstrates that not even the Court of Appeal can be relied on to decipher the true legal entitlement of individuals under EU law to a compensatory guarantee through insurance.  I refer in particular to Ward LJ's judgment in EUI v Bristol Alliance Limited Partnership [2012] EWCA and Longmore LJ's judgment in Sahin v Havard [2016] EWCA Civ 1202 and my earlier articles and posts that explain why both are per incuriam.

In my next post (on Lewington v Motor Insurance Bureau [2017] EWHC 2848 (Comm) ) I will explain how this motor insurers consortium, which has been invested with extensive quasi-judicial and inquisitional powers, continues to invoke these non-conforming statutory provisions to evade compensating genuine third party motor accident victims.

ANALYSIS OF THE ROADPEACE JUDGMENT

RoadPeace v Secretary of State for Transport and the Motor Insurers’ Bureau (intervening) EWHC 2725 (Admin) (07 November 2017)

On 7 November Mr Justice Ouseley finally delivered his long-awaited judgment in RoadPeace’s wide-ranging legal challenge of the way the Department for Transport (DfT) regulates compulsory third party motor insurance. 

In October 2015 RoadPeace brought a judicial review of the minister’s longstanding failure to bring the compensatory protection of motor accident victims into line with the minimum standard mandated by six European directives on motor insurance, culminating in the consolidating Motor Insurance Directive 2009/103/EC of 16 September 2009 (the Directive).  It was compelled to bring this public law action after the minister ignored its repeated calls for action.

The irony here is that the protective purpose of the first European motor insurance directive of 1972 was inspired in large measure by the same social policy objectives that induced the UK Parliament to impose compulsory insurance, over eighty-six years ago, under the Road Traffic Act 1930.

Key points

RoadPeace’s courageous decision to challenge not only the government but also a highly influential and multi-billion pound industry has exposed the government’s failure to review its transposition of the Directive over many years.

The High Court ruling confirms the United Kingdom’s statutory provision for compulsory third party motor insurance falls below the basic EU law standard that it is supposed to implement.  

Unfortunately, the judgment fails to get to grips with the European law that governs this standard.  This in turn has led to the court failing to confront a major cause of the present disparity between the UK national law provision and the EU regulatory requirements it is supposed to implement. 

Primary findings of non-conformity

The following specific infringements were identified:

• Sections 145 and 192 of the Road Traffic Act 1988 wrongly restrict mandatory third-party motor cover to vehicle use in public spaces
• Sections 145 and 182 of the Road Traffic Act 1988 wrongly restrict the types of vehicles subject to the compulsory insurance to road vehicles
• Section 152(2) of the Road Traffic Act 1988 wrongly permits an insurer to invoke a misrepresentation or non-disclosure to avoid its statutory liability to compensate a third party
• Regulation 2 of the Rights Against Insurers Regulations wrongly limits the direct right of action against motor insurers to UK accidents

Collateral illegality

Correlative of the first two findings listed above is the fact that both of the Motor Insurers’ Bureau (MIB)’s schemes for compensating victims of uninsured and untraced drivers are also tainted by the same illegality. 

This is because each of these extra-statutory compensation schemes are restricted to incidents that are subject to the compulsory insurance imposed by section 145 Road Traffic Act 1988.  Accordingly, they inherit the same statutory non-conformity with the Directive, in the way their scope:

• ·       unlawfully excludes liability for incidents on land that is not accessible to the public
• ·       unlawfully exclude liability for a wide range of exotic off-road vehicles

The MIB’s compensatory role is set out in four separate private law agreements with the Secretary of State for Transport: two consecutive regimes for the two schemes.  These are the Uninsured Drivers Agreement (UDA) 1999 and, for claims postdating 1 August, the UDA 2015 and the Untraced Drivers Agreement (UtDA) 2003 and, for claims postdating 1 March 2017, the UtDA 2017.

Restricted declaratory findings

The judge has agreed to make declarations of non-compatibility on the first three primary findings listed above, on terms yet to be agreed.  However, he has made no such commitment concerning the remaining primary and collateral grounds; notwithstanding their evident non-conformity with EU law.  

Grounds dismissed

The judicial review also featured several additional grounds.  These were sensibly grouped under two broad headings that reflect two distinct issues that go to the adequacy of the UK’s implementation of the Directive:

The first issue: Does the UK have sufficient legislative discretion to allow motor insurers to restrict or exclude their liability to third party claimants, beyond the single instance expressly sanctioned by the Directive?

The second issue: Do the MIB agreements provide an adequate level of compensatory guarantee?

In both instances, the claimant’s contentions are dismissed.  Unfortunately, the judgment is badly deficient in the way it misconstrues well established European law authorities and principles that led the judge into error.

I have agreed to provide a detailed critique of this judgment in the Journal of Personal Injury Law. In the meantime, I offer following observations.

Where the judge erred

1. On the UK’s legislative discretion

Part VI of the Road Traffic Act 1988, defines the scope and extent of compulsory third party insurance in the UK.  It is a curious mishmash of different initiatives and amendments that have accrued over the past 86 years through the simple expedient of bolting on new clauses to the original 1930 legislation, ‘without any apparent belief in the mind of the legislature that the scion was incompatible with the stock’ (per Lord Hailsham LC in Gardner v Moore and others [1984] 1 All ER 1100).  Unfortunately, this has produced a chimera whose legislative intention and meaning is often difficult to discern.

The UK authorities

There appear to be two schools of opinion on the thorny issue as to whether, and if so to what extent, can motor insurers ring-fence their statutory liability to compensate third-party claimants within their policy terms.  Ostensibly, the answer is to be arrived at by construing Part VI of the Road Traffic Act 1988, which prescribes the scope and extent of third party motor insurance in the UK. 

The introduction of compulsory motor cover in 1930 created what is now a multi-billion-pound captive market exclusively reserved to an oligopoly of companies whom the DfT has authorised to operate in this jurisdiction. There has always been a clear and obvious social policy objective behind Parliament’s decision to compel third party cover. It is a simple one: ‘[it] is designed to protect the innocent third party from the inability to pay of a driver who incurs liability by causing him death or personal injuries’ again per Lord Hailsham, in Gardner.

One group of authorities, represented by the judgments of Denning MR and Diplock LJ’s in Hardy v MIB [1964] 2 All ER 742, Hailsham LC’s judgment in Gardner and most recently Glouster LJ’s and Lloyd Jones LJ’s judgments in Cameron v Hussain [2017] EWCA Civ 366, attempts a holistic approach: one that meets the Parliamentary aim of insuring that motor policies are fit for their intended purpose of guaranteeing the compensatory entitlement of accident victims.

Another group of authorities, exemplified by Ward LJ in EUI v Bristol Alliance Limited Partnership [2012] EWCA Civ 1267 and most recently in Sahin v Havard [2016] EWCA Civ 1202 preserve to a considerable degree the contractual autonomy of motor insurers to exclude or restrict their liability to third parties, save to the limited extent expressly precluded by sections 148 and 151 of the Road Traffic Act 1988.  This approach reflects the long standing practice that is almost universally accepted in the UK which allows insurers to limit the scope of third party cover (e.g. to social and domestic use or to a maximum mileage) and to exclude liability (e.g. for deliberate damage or road rage) and to treat use made in contravention of a policy restriction as being completely uninsured, unless the term's effect is one of the handful of exclusions expressly nullified by sections 148 and 151.  Such claims are routinely assigned as MIB claims under the less advantageous terms of the Uninsured Drivers Agreements.

I have consistently argued that the first school of UK authorities is consistent with the comprehensive and absolute nature of the compensatory guarantee mandated under EU law by the Directive.  I am firmly of the view that the two unanimous Court of Appeal rulings that represent the second, qualified compensatory guarantee, are both bad law.  I have consistently contended here and elsewhere that they were arrived at per incuriam because they fail to apply a consistent line of European Court of Justice (ECJ) rulings on this very point. 

The EU law

The schism in judicial thinking in the UK would present the ablest first instance judge with a tricky dilemma, were it not for two decisive factors.  First, the EU law principle of primacy of EU law over national laws intended to implement EU law and secondly, the unequivocal and absolute nature of the insurance requirement prescribed by Article 3 of the Directive.

Article 3 stipulates, inter alia that:

‘Each Member State shall, subject to Article 5, take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance.’

ECJ rulings

The ECJ has ruled, time and again, that the twin legislative aim of liberalising the free movement of people and vehicles within the EU and of protecting accident victims means that:

‘Article 3(1) of the First Directive precludes a company insuring against civil liability in respect of the use motor vehicles from relying on statutory provisions or contractual clauses in order to refuse to compensate those victims for an accident caused by the insured vehicle.’

This ruling represents a clear statement of EU law to the effect that the insurance guarantee must be an autonomous one.  It is also clearly and obviously one of general application and this is borne out by the way it has been applied.

The rule was first propounded over twenty years ago in Bernaldez [1996] Case C-129/94 and applied to preclude a contractual exclusion of liability to indemnify an intoxicated driver.  It has been applied repeatedly by the ECJ in various contexts ever since, such as: in Candolin [2005] Case C-537/03 against a statutory exclusion of liability to a passenger whose fault was amounted to a significant contributing factor in their loss or injury; in Farrell no. 1 [2006] Case 356/05 to preclude a statutory provision allowing an insurer to restrict the scope of third party cover to parts of a vehicle equipped with seating; in Churchill [2011] Case C442/10 to preclude the automatic disentitlement of a passenger victim who is also the a policyholder that knowingly permitted an unauthorised person to drive his vehicle, and most recently in Fidelidade-Compania [2017] Case C-287/16 to a statutory provision that purported to entitle an insurer to avoid liability to compensate a third party on the basis that the policy was void ab initio due to the policyholder deceiving the insurer at the inception of the policy.  In each of these scenarios, the same passage was recited and applied. 

Furthermore, the ECJ ruling in Vnuk [2014] Case C-162/16 offers an obverse illustratio of the same principle, this time set in negative terms concerning:  ‘the objective of protection pursued by the First to Third Directives [which are now consolidated in ‘the Directive’], the view cannot be taken that the European Union legislature wished to exclude from the protection granted by those directives injured parties to an accident caused by a vehicle in the course of its use, if that use is consistent with the normal function of that vehicle.’ In that case, even the use of tractor on private property, inside a barn, and as a piece of agricultural machinery, was subject to Article 3’s insurance requirement.

The Directive allows for only one instance where an insurer can rely on a contractual provision to exclude liability to a third-party claimant.  This is restricted to a passenger silly enough to get into a vehicle that he or she knows has been stolen.  This is set out in Article 13 of the Directive.  Furthermore, the ECJ has repeatedly ruled this exception, forming a derogation from the autonomous entitlement principle, must be construed strictly.

This reasoning is bolstered by what is now recital 15 of the Directive (but which was introduced in the Second Motor Insurance Directive 84/5EEC).  This explains that it is in the interest of victims that the effects of certain exclusion clauses should be limited to the relationship between the insurer and the person responsible for the accident.

EU law cover that is fit for purpose

Accordingly, the inescapable result of this consistent teleological approach to interpreting the scope and extent of the insurance requirement mandated by Article 3 is as follows:

• Every motor policy, once issued, consists of a free-standing guarantee to non-contracting third parties to satisfy their compensatory entitlement up to the minimum amounts set by the Directive and subject only to the single permitted passenger exclusion.  
• This guarantee is inviolate. Whist the policyholder may face a contractual liability to the insurer for any misuse or other breach of policy, the third party’s entitlement is unaffected by any contractual limitation or exclusion not expressly provided for within the Directive.

Ouseley J’s error

The learned judge was confronted in this judicial review with a UK regulatory regime, that allows motor insurers to routinely impose numerous conditions to and qualifications in cover on their policyholders and to invoke these against innocent third party claimants.  His reaction to these time-honoured practices was to attempt to reconcile the irreconcilable.

The judgment attempts this feat by conceiving an idiosyncratic approach to interpreting EU law.  However, it is one that has no basis in EU law.  In doing so, Ouseley J adopts the unfortunate line taken by Ward LJ, when confronted by the same long established non-conformity with the Directive that arose in EUI v Bristol Alliance. 

Ouseley J ruled that the ECJ’s statement of principle concerning the autonomous nature of the guarantee (considered above in various different contexts), is not intended to have a general application beyond the specific facts of the cases where it has been applied in the past. This cautious, precedent led, approach appears to conflate elements of stare decisis under our common law with the ECJ’s teleological approach to interpretation of EU law.

These ECJ rulings give no hint that the protective and autonomous guarantee principles espoused in these authorities are confined in this fact-specific manner; in fact their application in a wide range of situations demonstrate a diametrically opposite intention.

The sticking point seems to be Ouseley J’s empathy with the incredulity previously expressed by Ward J in EUI v Bristol Alliance: that if this principle were to have a wide and general application (as indeed it obviously should), ‘then the way the Road Traffic Act combined with the MIB scheme has always operated is not compliant with the Directives.’  That is precisely the point made by this judicial review.

The only gloss given to Ouseley J’s eccentric and misinformed approach is to justify the outcome by a priori reasoning: ‘It would be remarkable if, without spelling it out in so many words, the CJEU had decided as far back as Bernaldez, the  language of which, in its usual way, it  repeats in subsequent cases, that any use which could be made of a motor vehicle required compulsory insurance .’

As it happens, the the autonomous guarantee principle is nt aberrant construction dreamt up by an overzealous ECJ. As Advocate General Mengozi’s opinion in Csonka [2013] Case C-409/11 explains, the holistic and autonomous nature of the insurance requirement was clearly intended by the European Council and Parliament and it was part of a concerted attempt to plug the gaps in compensatory protection left by the First Motor Insurance Directive of 1972.  This can be deduced from the way it abandoned the first draft of the Second Motor Insurance Directive that expressly reserved the right of insurers to exclude or restrict their liability to third party claimants within their policy terms and by the insertion of what is now Recital 15 (mentioned above).  These and other factors led both the Advocate General to opine and the ECJ to rule first, that the Article 10 compensating body is a last resort and second, that its role is confined to two scenarios only: (i) where the vehicle responsible is unidentified and (ii) where no policy exists at all.

The ECJ’s judgments, in Csonka and Churchill before that, leave little room for any doubt.  The compensatory protection is required at the anterior stage of insurance mandated by Article 3 and is not to be deflected as a mutualised liability of the Article 10 compensating body, which in the UK is the MIB.

The European law requirement is both clear and fair

Properly construed, (that is to say interpreted correctly to give a meaning that is consistent with the EU law it is supposed to implement ,Marleasing-style), Section 151 of the Road Traffic Act 1988 ought to require every authorised motor insurer to satisfy any outstanding judgment in respect of an incident that is required to be covered by motor insurance under Article 3 of the Directive, regardless of whatever terms have been agreed between the contracting parties.  This amounts to an autonomous regulatory guarantee; not a quasi-contractual entitlement. 

This construction is consistent with the UK Parliament’s legislative intention, as Lloyd Jones LJ makes clear in the following extract from Cameron v Hussain [2017] EWCA Civ 366.  At paragraph 88 he says: ‘The intention of Parliament in enacting section 151 [which imposes a statutory duty on motor insurers to satisfy judgments against their assured] was that a motor insurer should compensate any parties injured by a vehicle it insures, even if the insurer has no contractual liability to indemnify the driver of the insured vehicle under the policy. The insurer is given a remedy against the tortfeasor under section 151(8) but the risk as to whether that will be effective is clearly intended to be borne by the insurer…’ [explanation added in parenthesis]

Therefore I believe that Ouseley J’s ruling on this important issue is not only per incuriam (on account of its misapplication of well-established EU law principles and authorities) but it is also perverse in the way it undermines Parliament’s legislative aim of protecting motor accident victims.

2 Specific issues with the MIB Agreements

During the course of this long running judicial review, in which RoadPeace granted the DfT generous stays to allow them to consider their position and to remedy the infringements, the government made a number of important concessions, some of which were implemented within the MIB agreements.

For example, despite the DfT and MIB declaring publicly in July 2015 that they had no intention of amending the Uninsured Drivers Agreement 2015, this is precisely what they were forced to do after RoadPeace brought the judicial review.  The UDA was amended by a supplementary agreement that removed two unlawful exclusions of liability along with a constructive knowledge provision because they all offended the equivalence of the compensatory protection mandated by Article 10 of the Directive.

Further concessions where made and revisions introduced under the new Untraced Drivers Agreement 2017, again introduced in response to specific grounds raised in the judicial review. 

These remaining issues largely concerned sufficiency of these concessions and to the fact that the revisions were not given any retrospective effect.  Ouseley J found against the claimant on all these points for reasons that are far from satisfactory.  These will be covered in a separate blog and in more detail within the Journal of Personal Injury Law.

Suffice it here to say that the learned judge concluded that the following provisions did not breach the EU law requirement:

• The ‘significant injury’ threshold requirement for property damage under the UtDA 2017
• The lack the triple protective measures for children and mentally incapacitated claimants   along the lines prescribed by Dunhill v Bergin [2014] UKSC 18 under the UtDA
• The lack of retrospectivity of the police reporting requirements, set as a condition precedent of any liability under the UtDA 2003

These are issues that will need to be fully argued in individual cases.

An inconvenient truth

RoadPeace’s judicial review has revealed that our national law provision in this area is so badly flawed that we cannot take its provisions at face value.

The judge’s findings of non-conformity, in so far as they go, confirm what has been obvious for several years.  Extensive tracts of the Road Traffic Act 1988, the Direct Rights Against Insurers Regulations 2002 and the MIB compensation schemes as well as the Secretary of State’s regulation of the motor insurance industry are all seriously deficient.  Innocent victims are being failed by this institutionalised illegality.

Ministerial neglect

The DfT was given explicit warnings in April 2013 from various sources that our national law provision for compulsory third party motor insurance failed to conform with the Directive.  These warnings were made by a number of informed respondents to its own February 2013 consultation on the MIB Agreements. The minister chose to ignore that advice; necessitating this judicial review.

ROADPEACE JUDICIAL REVIEW

RoadPeace v Secretary of State for Transport and the MIB  EWHC 2725 (Admin) 

UK laws on motor insurance breach European Law

On 7 November Mr Justice Ouseley delivered his long awaited judgment in Court 19 of the Royal Courts of Justice in London in this unprecedentedly wide-ranging judicial review of the government's regulation of compulsory third party motor insurance.

The judicial review was brought by road safety charity RoadPeace after the Secretary of State for Transport ignored its repeated calls for the Road Traffic Act 1988, The Rights Against Insurers Regulations 2002 and his private law agreements with the Motor Insurers' Bureau to be brought into line with the minimum standard of compensatory protection required under the European Motor Insurance Directive 2009/103/EC. 

The government has been forced to concede several of the grounds cited in the judicial review prior to the hearing in February 2017 and changes have been made to the MIB Agreements that govern the compensatory guarantee scheme for victims of hit and run drivers and uninsured drivers.  

The judgment confirms that the UK implementation is defective in several respects.  However, the learned judge did not agree with RoadPeace's concerns that the government's concessions did not go far enough.  Neither did the learned judge accept RoadPeace's contention that the time honoured practice, that enables motor insurers to invoke against accident victims numerous contractual exclusions qualifications and restrictions in liability to evade their statutory liability, conflicts both with Parliament's social policy objective underscoring compulsory insurance and, more to the point, with EU law.

The full transcript of this judgment can be accessed on the BAILII website here: http://www.bailii.org/ew/cases/EWHC/Admin/2017/2725.html

I have been involved in this public law action from the outset. I believe that the judge has misconstrued the EU law motor insurance requirement imposed under European Motor Insurance Directive 2009/103/EC.  

I will post a more detailed blog explaining my views shortly.

MIB LIABLE FOR GAPS IN THE ROAD TRAFFIC ACT 1988

In Part 2 of my New Law Journal double-feature, published this week, I explain why the European Court of Justice's ruling in Farrell v Whitty 2 (Case C-413/15) is a judgment day for the Motor Insurers' Bureau.

Temporary free to view link 17 -25 November: https://drive.google.com/file/d/193ARTi9xu09ldfJz8dpnwNqHaXq9HOsn/view?usp=sharing

New Law Journal subscribers can access my article online from this link: https://www.newlawjournal.co.uk/content/state-liability-betwixt-between-brexit-pt-2

NEW DRIVERLESS VEHCILES BILL

Automated and Electric Vehicles Bill 2017

The government has reintroduced its proposals to legislate to extend compulsory motor insurance cover the use of automated vehicle technology. These are set out in Part 1 of the Automated and Electric Vehicles Bill which passed its second reading in the House on 23 October 2017.  

The House of Commons Public Bill Committee has invited comments on its provisions here: https://www.parliament.uk/business/news/2017/october/have-your-say-on-the-automated-and-electric-vehicles-bill/   

Short consultation deadline

There is very little time given in which to respond.  Any submission must be received in good time before 16 November 2017.

To access the Bill, click here: https://services.parliament.uk/bills/2017-19/automatedandelectricvehicles.html        

   

Readers can access the House of Commons Briefing Paper (CBP 8118, 20 October 2017) from the link provided at the bottom of the page here: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8118#fullreport

Initial observations

This Bill replicates some of the proposals in the Vehicle Technology and Aviation Bill that lapsed with the last government.  But there are some differences.

Lack of candour

The Briefing is less than candid in its failure to acknowledge that Article 3 of the European Motor Insurance Directive 2009/103/EC already requires member states to ensure that any civil liability resulting from the use of motor vehicles is covered, this includes technical and mechanical defects that are not attributable to the owner, keeper or user’s fault.  Whereas section 145 of the Road Traffic Act 1988 wrongly restricts the scope of compulsory insurance to cover the personal liability of the vehicle user; which isn’t the same. A consistent line of European Court of Justice rulings culminating in Damijan Vnuk (Case C-162/13) in 2014 makes this abundantly clear.

Following Farrell 2, see blog, anyone injured or suffering property damage caused not by driver or user error but by a product defect can now sue the Motor Insurer’s Bureau direct, relying on the actual wording of the aforementioned directive.  

Causation

An important feature of the government’s proposals is to impose what is in effect a strict form of liability on the insurer of the responsible vehicle for any injury or loss caused by that vehicle when used in an automated driving mode.  

The key passage here is Clause 2 (1) (a) of the Bill.

‘2. (1) Where

(a)        an accident is caused by an automated vehicle when driving itself,

…..’

The weasel word that concerns me is ‘caused’.  This is a term has a very special significance for tort lawyers and it has resulted in an extensive corpus of case law.

My concern is that to trigger the insurer’s statutory liability under these provisions, a child pedestrian or cyclist, a passenger or other innocent victim seems likely to be required to establish on the balance of probability that the incident was caused or contributed to by the automated vehicle’s systems being in operation.  In an ideal world this would be readily established by the on-board computer systems. How easy it will be in practice to access this data or interpret it is an unknown.  However there is also an ambiguity in the language used that appears to allow an insurer to argue that the loss or injury was not caused by the automated system. 

Access to the civil justice is far from equal.  With no public funding of claims, exorbitant court fees and nugatory recoverable fees for most claims and no spare revenues for law firms to risk pro bono work, difficult legal challenges are out of reach for all but the wealthy.  Added to this, an ordinary private citizen faces a practically insurmountable inequality of arms if required to contest a highly technical issue with a well-resourced manufacturer or insurer.  The last thing we need is any lack of legal certainty.

Suggestions

My strong preference would be for the Bill to be amended to provide in clearer and unequivocal terms that the insurer will be under an absolute liability to compensate whenever an accident results involving a motor vehicle that is set in automated mode.  This can still be subject to any other causes that the insurer can establish, such as the driver error of a third party. 

I suspect that absolute liability (in the absence of any relevant contributing cause that the insurer can pursue separately) is the Parliamentary intention anyway.  However, insurers have a long and successful track record of exploiting any ambiguity in individual claims to avoid their liability and exposure to risk in the wider context of the motor insurance market; as is entirely proper.

The Government has a moral duty to ensure that the public are not exposed to unnecessary danger by the introduction of automated technology.  If automated vehicle systems are to be fit for purpose then they must be safe.  It is logical therefore to impose absolute liability, in the clearest of terms, for any injury or other loss resulting from the deployment of automated vehicle systems.

Further thought also needs to be given to the standard of care expected of a user when monitoring a vehicle that has been deployed in an automated or driverless mode. Common sense indicates that the same level of alertness cannot be expected.  

It seems highly probable that manufacturers and insurers will seek to limit their exposure to claims by specifying detailed provisions and requirements (perhaps unrealistic ones) that most users will never read, still less apply.  We must learn the lessons from the naive manner in which compulsory third party motor insurance was introduced in 1930, where insurers issued policies that were so extensively hedged by exclusions and restrictions in cover as to defeat the Parliamentary social policy objective. Further legislation was necessary and even that was fatally compromised, resulting in the immensely complex and in places contradictory case law, well illustrated by Ward LJ's judgment in EUI v Bristol Alliance Limited Partnership in 2012.  These problems are the subject of a wide ranging judicial review by road safety charity RoadPeace.

This is also a consumer issue that needs to be properly regulated. Unfortunately, the Department for Transport’s record in this regard is lamentable.  Every year, millions of motor policies are issued with numerous restrictions in scope and limitations of liability that are unlawful as under EU law only one exclusion is permitted.  The DfT is responsible for regulating every UK motor insurer and has known about these failings for many years but done nothing. In particular, it was warned of this systemic illegality by several law firms practicing in this field in response to its own consultation on the MIB agreements in the spring of 2013.