Cameron v Hussain, LV and MIB [2019] UKSC 6 — Normal 'service' is resumed for untraced driver cases

Executive summary

The Supreme Court has handed down an important judgment that restores the normal equilibrium in road traffic compensation claims in the UK. This equilibrium has recognised that a balance is required which allows a claimant to litigate in the courts against an insurer of an identified vehicle, even if the current whereabouts of the identified driver/user cannot be located, but requires a claim to proceed outside the court process against the Motor Insurers Bureau (‘MIB’) where the offending driver/user of the vehicle is unidentified. This equilibrium had been disturbed by the Court of Appeal decision in the case of Cameron v Hussain and LV [2018] 1 WLR 657 but the Supreme Court has now restored the previously accepted structure for compensation claims.

Background

In May 2013, the claimant was injured when her vehicle collided with a Nissan Micra, the cause for the collision being the negligence of the driver of the Micra, who made off without stopping or reporting the accident to the police. The driver was not subsequently identifiable, but the claimant argued that, since the registration number of the Micra was known and it was known to have been insured by LV, the claimant should be permitted to proceed against LV as the insurer who had taken a premium for the risks involved, rather than having to pursue a claim against MIB under the Untraced Drivers’ Agreement (UtDA).

The Court of Appeal allowed (by a 2 to 1 majority) the claimant to amend the proceedings so as to make a claim against “the person unknown driving vehicle registration number Y598 SPS (the Micra) who collided with vehicle registration number KG03 ZJZ on 26 May 2013.” It accepted that the claimant should be allowed to proceed in this way so as to secure a judgment which the insurer would have to meet under Section 151 of the Road Traffic Act 1988. There was concern that the remedy under the UtDA might be more restricted, for example by not allowing for subrogated claims and by restricting recoverable costs to a scale.

LV appealed and MIB successfully applied to intervene in the Supreme Court to support LV’s appeal. MIB was concerned that the role of the UtDA might be adversely affected and that there would be an increased risk of fraudulent claims proceeding through the courts against insurers rather than being subjected to the closer scrutiny that the non-adversarial process under the UtDA allowed for. MIB also wished to stress that the UtDA process had been subjected to and had successfully withstood considerable previous judicial scrutiny (viz in Evans v Sec of State for Transport (‘SST’) & MIB [2005] All ER 763, Carswell v SST & MIB [2010] EWHC 3230 and, more recently, in the judicial review proceedings brought by RoadPeace against the SST and MIB [2017] EWHC 2725). MIB also brought to the appeal not only practical experience as to how the UtDA process operated but also arguments which had not previously been raised in the Court of Appeal, particularly that service of proceedings should only be allowed on unidentified persons in exceptional circumstances such as in injunction cases to prevent widespread wrongdoing by persons unknown via the internet or otherwise.

The Supreme Court decision (the judgment being given by Lord Sumption with whom all the other Law Lords agreed) contains a careful review of the historical development of the court’s ability to allow claims to proceed against persons unknown and majors on the issue MIB had raised regarding the need for service on such persons only in exceptional circumstances. Exceptional circumstances certainly did not exist where there was an appropriate remedy available under the UtDA.

Lord Sumption could not understand the attack on the UtDA. He said that the type of challenge made by the claimant was usually unnecessary. He added (at para 5):

“It is cheaper and quicker to claim against MIB. But for reasons which remain unclear, in spite of her counsel’s attempt to explain them, (the claimant) has elected not to do that.”

Lord Sumption thought that the need for service was an important component of any court process.

“It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard.” (para. 17).

Substituted service by another method if that mode of service should only be permitted if it is “such as can reasonably be expected to bring the proceedings to the attention of the defendant” (para. 21). This could not be achieved where the identity of the driver was not known. This is to be contrasted with a case where the driver is identified but his current whereabouts are not known.

The Supreme Court accepted therefore that this was not the type of situation where exceptional circumstances were established. There was no credible attack put forward against the UtDA as a suitable alternative process. Service was the fundamental issue and so it was unnecessary to consider the possible increased risk of fraud.

Lord Sumption also had little time for the claimant’s argument that the 2009 Motor Insurance Directive (2009/103/EC) required Member States to ensure there was a direct right of action against the insurer of a vehicle (Art. 18). Such a right did not mean that it was not necessary first to establish liability in tort against the driver, with the insurer then being liable for a judgment. This, therefore, reverts to the primary issue as to whether a judgment can be obtained against a person unknown in these circumstances so as then to give rise to a direct right of action against the insurer. Accordingly, the EU law argument did not assist the claimant.

Conclusions and implications

The decision of the Supreme Court is to be welcomed. A number of actions had been stayed pending this judgment and these claims will now have to proceed under the UtDA rather than by way of proceedings against the relevant insurer. It remains fundamental to court proceedings that, save in exceptional circumstances (e.g. in certain injunction cases), the defendant needs to be served in a way which, at least theoretically, gives rise to a reasonable assumption that the proceedings will come to his attention by the mode of service proposed.

The rigour of the UtDA process is thereby preserved in hit and run cases where the risk of increased fraud and indeed increased legal costs by allowing such actions to proceed through the courts would have been considerable. Normal ‘service’ has been restored. 

For further information about Weightmans or to discuss any of the issues in this update, please contact David Holt, Partner on 0151 242 7921 or email david.holt@weightmans.com