Motor insurance - a maximalist approach in off-road uninsured cases

02 Oct 2018

On 7 September, we referred to the CJEU’s decision in the Portuguese motor insurance case Juliana v FdG Automovel as another example of the maximalist approach, at European level, to the protection afforded by the Motor Insurance Directive (MID) to people injured by motor vehicles.

The recent English decision Lewis v Tindale & MIB [2018] EWHC 2376 (QB) clearly shows that approach also operating closer to home. Lewis is a significant decision, and subject to any appeal, its key points are that:

(i) it extends the MIB’s compensation obligations to uninsured off-road incidents, and

(ii) it confirms that it may be pursued directly as an emanation of the state.

Background & context to Lewis

The claim arose from an accident on private land in 2013 involving an uninsured 4x4. It reached Soole J in the High Court in June 2018, by which time it was beyond dispute that the proper interpretation of the MID was that it requires Member States to put in place a regime of compulsory insurance covering any use of a motor vehicle as a means of transport, regardless of location, as long as the use was consistent with its normal function. Such is the combined effect of the leading CJEU decisions in Vnuk, Rodrigues and Torreiro.

In 2017 the UK Government formally conceded (in the RoadPeace judicial review) that the Road Traffic Act 1988 was incompatible with the MID as now understood in light of those decisions. This concession was, in effect, an admission that the UK had failed to implement the Directive properly. Claimants who cannot recover because national legislation fails to match the requirements of a Directive may pursue their Government for compensation under Francovich principles.

Mr Lewis secured judgment against Tindale, the uninsured driver. The circumstances, since the accident was not “on a road or other public place”, were not within the compulsory insurance regime of the 1988 Act. The MIB would not therefore be expected to meet that judgment under the Uninsured Drivers Agreement (UDA).

Key arguments (i): interpretation of the 1988 Act

Lewis first sought to argue that the MIB should meet the judgment under the UDA, submitting that the court was obliged, by the European case Marleasing, to interpret the scheme of the Act and the MIB agreements so as to give full effect to the MID.

Soole J easily dismissed this argument on the grounds that to do so would not so much be interpreting the provisions of the RTA as completely re-writing them. Exactly the same conclusion had been reached by Ouseley J in RoadPeace.

Key arguments (ii): direct effect and emanation of the state

Failure by a state to give full effect to European law (here, the MID) entitles a citizen to a remedy against the state (the Francovich point noted above). Therefore Lewis’s alternative argument was that the MIB was nevertheless liable to him because the MID had direct effect as between him and the state and he submitted that the MIB was, for these purposes, an emanation of the state.

A further concession by the UK Government in RoadPeace was that the MID had direct effect between an individual and the state. It hadn’t been conceded at the time that the MIB was an emanation of the state.

The MIB therefore argued in Lewis that the MID did not have direct effect as between it and an individual and, further, that it was not an emanation of the state. If it succeeded on either point it would not be liable to Lewis (whether the UK Government would have been is a different matter entirely). These were difficult arguments in the face of other case law and the concessions made in RoadPeace.

The decision (14 September 2018)

The judge rejected the MIB’s arguments and found for Lewis. His judgment may be found here.

The CJEU had, in October last year, held unequivocally in Farrell v Whitty (No2) that MIBI was an emanation of the (Irish) state. Taking note of Farrell and considering that both national bureaux functioned along very similar lines, Soole J concluded that: “in circumstances where there are no material differences between the position of the MIBI and the MIB, I see no reason to reach a different conclusion in respect of the MIB and good reason to be in accord … I can see no reason to distinguish the positon of Mrs Farrell and Mr Lewis”.

Direct effect would arise if the provision of European law was unconditional and sufficiently precise. The relevant provision was Article 3 of the MID: “Each Member State shall … 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.”

Its direct effect against the Government had been conceded in RoadPeace. It imposed a result to be achieved and not merely a framework. Soole J held it was therefore unconditional. He also found that it was sufficiently precise in that it was clear, following Vnuk, that it (Article 3) included driving vehicles on private land, ie the very circumstances of this case.

The MIB’s argument that Article 3 was not unconditional because of the lack of detail of any insurance arrangements for the use vehicles on private land in the UK (such as criminal sanctions, registration requirements, possible derogations, relevant financial limits etc) was rejected by the judge. He held that it was irrelevant that the accident in Lewis happened before Vnuk was decided because decisions of the CJEU are to be treated as declaratory, ie the interpretation reached is to be regarded as always having been clear (much in the same way as decisions at common law are regarded).

The principle of the MIB’s liability was therefore established, but not the extent. The question of whether the doctrine of equivalence meant that the unlimited liability as provided for in the RTA should govern the claim seems to have arisen at a late stage and was left unresolved. In the final paragraph of the decision the judge simply concluded that the MIB should be liable to the claimant “at least to the extent of the minimum requisite cover of EUR 1m per victim.”

What this means

Subject to any appeal (which would seem to be a highly likely course of action), the decision in Lewis classifies the MIB as an emanation of the state and treats the MID as having direct effect against it. The Bureau continues to remain liable within the terms of its agreements and the RTA 1988 for injury or property damage to claimants caused by uninsured or untraced drivers using motor vehicles on roads or other public places.

The significant and new consequence of Lewis is that the MIB now appears also to be liable, as an emanation of the state, for injury and property damage arising from Vnuk / Rodrigues / Torriero circumstances beyond the terms of the RTA but nevertheless within the scope of the MID as properly understood in the light of those cases, ie caused by any use of a vehicle intended normally to serve as a means of transport, such use being consistent with the vehicle’s normal function of the vehicle and regardless of vehicle's characteristics or the terrain on which it is used.

This new liability appears to allow claimants in Vnuk / Rodrigues / Torriero circumstances to circumvent a Francovich action against the Government and to pursue the MIB directly instead.

This new post-Lewis liability is by definition beyond the terms of the 1988 Act and, as with the CJEU’s decision in Juliana last month, the outcome of Lewis surely puts further pressure on the UK Government to address the divergence between the Act and the MID as most recently interpreted by the CJEU. That may be easier said than done, however, since doing so in any meaningful way is both technically difficult and politically highly sensitive against the backdrop of the UK leaving the EU next year and the Commission’s proposed codification of the MID (to reflect the Vnuk / Rodrigues / Torriero decisions).

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.

Related contacts


Kerris Dale

Kerris Dale

Partner, head of office and head of motor,
Cardiff


Alistair Kinley

Alistair Kinley

Director of Policy & Government Affairs,
London


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