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Legal case

Lewis v Tindale, MIB and another — MIB liability for claims outside the scope of the Uninsured and Untraced Drivers Agreements

The Court of Appeal in Lewis v Tindale has upheld the previous decision of Soole J which held that MIB was liable to compensate the victim of an…

The Court of Appeal in Lewis v Tindale, MIB and another (case B3/20182411, judgment handed down on 5th June 2019) has upheld the previous decision of Soole J ([2018] EWHC 2376) which held that MIB was liable to compensate the victim of an accident arising on private land even though this was outside the scope of the Uninsured Drivers Agreement.

For many years, MIB has negotiated its remit with the government by way of various Uninsured Drivers Agreements (‘UDAs’) and Untraced Drivers Agreements (‘UtDAs’). These private contractual Agreements have been concluded at arm's length throughout.

The current Agreements, namely the 2015 UDA and the 2017 UtDA, as were their predecessor Agreements, were founded upon MIB being liable for cases where the compulsory insurance requirements of Part VI of the Road Traffic Act 1988 (‘the 1988 Act’) had not been satisfied. Those requirements included that insurance was compulsory for incidents arising from the use of motor vehicles on roads or other public places. This did not extend to vehicular use where it occurred on private land which could not be said to constitute a public place.

In Lewis, however, the court has held that MIB was liable for private land cases because, following the CJEU decision in Vnuk (2014), it could not be doubted that the 2009 Motor Insurance Directive (2009/103/EC) required insurance cover to be in place for the use of vehicles on private land. Where the insurance requirement was not met, the guarantee body, which Art 10 of the 2009 Directive required each Member State to establish (‘the Art 10 body’), was liable to meet the claim.

Art 3 of the 2009 Directive required each Member State to “take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory (was) covered by insurance”.

The Court of Appeal held that Art 3 and Art 10 created directly effective rights which could be enforced against MIB, the UK’s Art 10 body, as it was an emanation of the state.

The conclusion of the court was that, in designating MIB as the Art 10 body, the government had used its discretion in full and MIB was, accordingly, under an obligation to meet the full ambit of the compulsory insurance requirements (as interpreted under EU law, e.g. Vnuk) regardless of whether or not the appointed body had contractually agreed with the government a rather narrower remit. The intention was to protect innocent victims in a clear way. This protection was not overridden by the fact that there was no requirement for insurers who provided only off-road vehicular use cover to be members of MIB and so such insurers did not have to contribute to the levy to meet any uninsured loss claims arising from private land use.

Commentary and analysis

At para 74, Flaux LJ, giving the judgment of the court, said that any issue arising could be “addressed by amendment to the RTA and/or the MIB Articles of Association”, but of course, any such changes will not be retrospective and so, as it stands, there will remain a potentially large bill for the Members of MIB, i.e. the motor insurers who provide cover for road/public place use. This additional cost will inevitably filter through to premium-paying motorists.  

There is an important principle at play here. A private body, namely MIB, has been landed with potentially significant exposure to claims which it had never contracted to be liable for. It is surprising that EU law is said to require that only one body has to deal with all possible aspects of the guarantee fund role under Art 10. If the primary objective is to protect third party victims, why should it ultimately matter if there is more than one such body from which the claimant can seek compensation (provided the scope of each body’s remit is clear) or indeed if the government itself retains some of the compensatory role for itself? MIB’s argument that it was only an emanation for the purposes delegated to it, not beyond this, and that there must be some limit to what a private body agrees in respect of its role, was rejected by the court but remains an important consideration.

As a result, MIB is seeking permission for leave to appeal from the Supreme Court, leave having, as expected, been refused by the Court of Appeal. At the same time, MIB is seeking an indemnity/contribution from the government because it was the government’s failure to comply with the requirements of EU law by way of the original enactment of the 1988 Act or any amendment thereto which has brought about MIB’s extended liability.

At para 68, Flaux LJ said:

“The fact that the UK government has failed to legislate for compulsory insurance in respect of the use of motor vehicles on private land and then specifically to delegate to the MIB the residual liability where the relevant vehicle is uninsured can legitimately be described as a breakdown in the system put in place by the government.”

At para 75, he added:

“The MIB may well have rights of contribution over against the Department of Transport.”

MIB will doubtless rely upon the content of the contractual terms agreed, namely the UDAs and UtDAs. It will maintain that, if it is liable as an emanation, then so too is the government itself and, in that event, given that MIB had no control over the passing of the 1988 Act (or any amendment thereto), the government should provide MIB with an indemnity rather than merely a contribution. Finally and if necessary, consideration would have to be given to the government’s liability for Francovich damages. The ultimate outcome may not be known for some time.

If you have any questions or would like to know more about our update, please get in touch with your usual Weightmans contact, or David Holt (Partner).

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