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Legal case

The scope of the liability of the Motor Insurers Bureau (MIB) as an emanation of the UK state

Further developments in the scope of compulsory motor insurance requirements, and MIB's potential liability following Vnuk.

Lewis v Tindale, MIB and the Secretary of State for Transport [2018] EWHC 2376 (QB)

The scope of the compulsory motor insurance requirements has been in a state of flux and uncertainty ever since the decision of the CJEU in Vnuk v Zavarovalnica Triglav dd (Case C-162/13) [2016] RTR 10. This and subsequent CJEU decisions have sought to clarify the precise parameters around what has to be insured, but European law clearly requires any mechanically propelled vehicle used on land anywhere (except when running on rails and unless it is a rare case of a vehicle derogated from the requirement for insurance) must be covered.

National law in the UK (viz Part VI of the Road Traffic Act 1988) is at variance with the requirements of European law post-Vnuk in that it only requires insurance for the use of vehicles on roads or other public places. Accordingly, an accident on private land would not require insurance. The Government is looking at how best to deal with the ramifications of Vnuk. In the meantime, how does a claimant injured on private land by the use of a vehicle proceed?

In Lewis v Tindale, MIB and the Secretary of State for Transport [2018] EWHC 2376 (QB), the claimant pedestrian was seriously injured by the use of a vehicle on private farmland. The defendant driver was uninsured. The claimant issued proceedings not only against the defendant but also against MIB and later joined in the Secretary of State for Transport (SoS) in case his claim against MIB failed. The claim against the SoS was stayed until it was determined if MIB was liable.

The claimant first argued that the incident arose from the use of the vehicle on a road in that the defendant, in a fit of rage, had chased the claimant, who had trespassed onto his farmland, along a road before leaving the road and colliding with the claimant in a field. The claimant relied upon a wide construction of the word ‘use’ and relied upon the decisions in Dunthorne v Bentley [1996] RTR 428 and particularly UK Insurance Ltd v Holden [2017] QB 1357. The argument was that this was part of a journey that could be traced back to the driving of the vehicle on the road.

In Holden, which is going to the Supreme Court later this year, it was held that, where a fire started whilst a vehicle was being repaired in a garage, the subsequent extensive damage had arisen out the use of the vehicle and so the insurers of the vehicle were liable to make good the damage. The necessary causation was established in that the repair work in order to put the car into a safe and good working condition so that it could be driven on the road again was a ‘use’ of the vehicle.

In Lewis, Soole J rejected the claimant’s argument. He held that the decision in Holden was largely based upon the construction of the particular insurance policy. It could not be said that the deliberate decision of the defendant to drive off the road and into a field in Lewis meant that the subsequent incident arose from the use of the vehicle on the road. The more relevant authorities were Inman v Kenny [2001] EWCA Civ 35 and Clarke v Clarke [2012] EWHC 2118 (QB) which held that the mere fact that a motorist has used a road or other public place in order to get to the private land where the accident happened was not sufficient to establish that the accident was caused by or arose out of the use of the vehicle on the road.

Secondly, the claimant argued that, by applying the well-known Marleasing principle, the 1988 Act should be read in a way that was consistent with the requirements of European law following Vnuk.

Soole J again rejected the claimant’s argument. He held that it would go against the grain of the wording of Part VI of the 1988 Act to construe the requirement for compulsory insurance cover for the use of vehicles on roads or other public places as being extended impliedly and necessarily to include private land. This would have policy ramifications. In particular, offences could be created retrospectively by persons who had not insured the private land use of vehicles. Marleasing only allowed a court to go so far in trying to construe national law provisions so as to comply with the requirements of the Consolidated Motor Insurance Directive (2009/103/EC) (‘the 2009 Directive’).

Having failed in these arguments, the claimant then submitted that the 2009 Directive gave him rights (specifically the right to be compensated) which were directly effective rights, i.e. without the need for any national law enactment to enable such rights to be enforced.

Art 3 of the 2009 Directive provides:

‘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.
The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of the measures referred to in the first paragraph.
The insurance referred to in the first paragraph shall cover compulsorily both damage to property and personal injuries.’

Art 10 provides:

‘Each Member State shall set up or authorise a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in Article 3 has not been satisfied.’

The claimant argued that it was not necessary strictly to consider the Art 10 obligation since the requirements of Art 3 were unconditional and sufficiently precise and, hence, were directly effective without the need for national law enactment. Moreover, any directly effective provision of European law could be relied upon not only against the state itself but also against an arm or ‘emanation’ of the state. It was asserted that MIB was an emanation of the UK state in this context in the same way as the MIB of Ireland was categorized by the CJEU as having the characteristics of an emanation in the case of in Farrell v Whitty, Minister for the Environment and MIBI (Case C‑413/15).

Here, Soole J agreed with the claimant. He thought there was no material difference between the positions of MIB and the MIB of Ireland. Each body, though being private organisations without direct state control, had the role delegated to it of meeting the state’s obligations under the 2009 Directive.

It was clear, certainly post-Vnuk, that the Art 3 obligation extended to use of vehicles on private land. If it was not clear prior to Vnuk, then Soole J said that ‘the declaratory theory of judicial decisions applies to the CJEU just as it does to decisions of the common law. Accordingly…, the position is to be treated as always having been clear’ (para 96).

As well as being clear, the Art 3 obligation was sufficiently precise notwithstanding that there had been subsequent CJEU decisions considering the ambit of Vnuk. Any argument would be dealt with on a case by case basis and this did not mean that the basic obligation was not sufficiently precise. In Lewis itself, the only argument was whether there was requirement to cover private land, but that had been made clear by Vnuk.

As to whether the Art 3 obligation was unconditional, Soole J relied upon the comments of the CJEU at para 39 of its judgment in Farrell that ‘…the intervention of (the Art 10 body) is designed to remedy the failure of a Member State to fulfil its obligation to ensure that civil liability in respect to the use of motor vehicles normally based in its territory is covered by insurance…’. The only question was whether the Art 10 body was liable only up to the minimum guarantee level under the Directive which, at the time of the incident in question, was one million euros. Soole J held that the Art 3 obligation had direct effect at least up to this guarantee limit. This leaves over the question of whether any such restriction to the minimum guarantee limit would breach the EU law principle of equivalence in that victims of drivers on the roads would benefit from unlimited personal injury damages in the UK.

This is an important decision that affects the remit of MIB. Accordingly, MIB has been given permission to appeal to the Court of Appeal by Soole J.

MIB argued that the Art 3 obligations were not directly effective and that it was not an emanation for the purposes of private land cases. As a private, independent body, MIB has negotiated Agreements with the Secretary of State which determine the extent of its obligations. It was not responsible for and had no control over the implementation of the 1988 Act and its compliance with EU law. In particular, the private land scenario was not one delegated to it by the government and it was perfectly possible for a state to comply with its obligations under the 2009 Directive by appointing a body (or indeed more than one) to provide compensation whilst itself retaining a liability to meet aspects not delegated to any such body. Soole J rejected this submission by holding that ‘…the effect of European law was to treat the designated compensation body as if the obligation imposed on the State had been delegated to it in full’ (para 131).

Moreover, the decision of Soole J leaves over the question of the liability or co-liability of the SoS and the role played by MIB’s contractual Agreements with the SoS where it could be held liable outside the remit of such Agreements. MIB will need to consider this if its appeal is unsuccessful but, for now, whilst the appeal is pursued, the role of MIB is yet to be definitively decided.

For further guidance on this case and its implications, contact our motor insurance lawyers.

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