THE MIB's SURROGATE LIABILITY

Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909

The first instalment of my two-part feature in the New Law Journal was published on 12 July. It explains how the scattergun tactics employed by the Motor Insurers’ Bureau (MIB), in its futile appeal against Soole J’s first instance decision has proved to be a costly mistake. 

The MIB has appealed Soole J’s finding that it was bound by the direct effect of Article 3 of the Motor Insurance Directive 2009/103 (the Directive) under EU law.  Article 3 prescribes the minimum standard of civil liability insurance necessary to deliver a consistent level of compensatory guarantee is conferred on third party motor accident victims throughout the EU and EEA.

In Lewis, the claimant was grievously injured when he was run down by an uninsured car in a privately-owned field, which location does not fall within the geographic scope of the Part VI of the Road Traffic Act 1988 that regulates the compulsory insurance requirement in the UK. The MIB had rejected the claimant’s application arguing that it had no liability under the Uninsured Drivers Agreement on the basis that its contractual liability under that agreement is coextensive with the statutory insurance obligation. 

The first instance decision confirmed that the UK legislation infringed the Directive on this point.  Furthermore, it held that as it was bound by the Court of Justice of the European Union’s ruling in  (Case C‑413/15) Farrell v Whitty and Others (no 2) [2017], the MIB’s role in discharging the state’s obligation, imposed under Article 10 of the Directive, to authorise a compensating body to meet claims by victims of uninsured vehicles, pinned it with state liability to compensate victims wrongly denied the compensatory guarantee through insurance provision due to the government’s defective implementation.

The MIB’s unsuccessful appeal has served to compound its problems. 

• First, the Court of Appeal has upheld the first instance finding that the MIB is fixed with state liability (due to its emanation of the state status) to compensate victims affected by the government’s failure to fully implement Article 3 of the Directive (which provision met the criteria of unconditionality and sufficient precision to qualify for direct effect);

• Second, the court went on to rule that the Article 10 also qualified for direct effect against the MIB.

In the second instalment, to be published shortly, I consider the far-reaching implication of both findings. 

• I will explain how direct effect of Article 3 against the MIB leaves it exposed to an extraordinary range of novel extra-statutory liabilities, derived independently of its contractual obligations with the state.  It is fixed, under directly applicable EU law, to compensate victims injured or sustaining loss in a diverse range of scenarios that ought to be covered by the compulsory third party insurance requirement, but which are not, due to the UK’s longstanding infringements of the Directive. Any proper analysis reveals some surprising outcomes (unprecedented, even).

• I will also explain how the direct effect of Article 10 of the Directive against the MIB can be used to circumvent the House of Lords ruling in White v White in 2001 which hitherto has justified, wrongly so in my view, the judiciary’s reluctance to remedy non-conforming provisions within both the Uninsured Drivers Agreement 2015 and the Untraced Drivers Agreement 2017 by subjecting their provisions to the EU law doctrine of consistent construction. Although the RoadPeace judicial review I was behind in 2015-2018 was responsible for the excision of many blatantly unjust and arbitrary exclusions of liability (on the ground that they infringed the directive), a significant number remain.  These injustices can now be challenged with facility, provided it can be established that they fall below Article 10’s minimum standards to a disproportionate extent.