MOTOR INSURERS BUREAU IS LIABLE TO COVER VEHICLE BEING DRIVEN OFF ROAD: COURT OF APPEAL DECISION TODAY

In Motor Insurers’ Bureau v Lewis [2019] EWCA Civ 909 the Court of Appeal upheld the finding of Mr Justice Soole that the Motor Insurers Bureau were liable to indemnify the driver of a vehicle that was being driven “off road”.

THE CASE

The claimant suffered serious injuries when walking on private land, he was struck by an uninsured 4 x 4 vehicle.  He obtained judgment against the driver, who was debarred from defending liability.   The key question in the case was whether the MIB had any liability.  The matter was set down for a preliminary trial on the issue of the MIB’s liability to indemnify.

KEY POINTS OF THE DECISION AT FIRST INSTANCE

Mr Justice Soole found that the MIB were liable to indemnify the claimant.  This a long and complex judgment reviewing the authorities in considerable detail. They key points are:-

  • The MIB is an “emanation of the state”.
  • This differed from an earlier judgment of Flaux J, but it was held that subsequent case law led to the conclusion that the MIB was an “emanation” for the purposes of the Insurance Directives.
  • The MIB was, therefore, liable to indemnify the claimant, at least to the minimum requisite cover of EUR 1 m per victim

THE DECISION OF THE COURT OF APPEAL

The Court of Appeal upheld the finding in favour of the claimant.
    1. The UK government has failed to fulfil its obligation under Article 3 of the 2009 Directive to ensure that civil liability in respect of the use of motor vehicles on private land is the subject of a scheme of compulsory motor insurance. That the government is under that obligation in respect of the use of vehicles on private land cannot be doubted in view of the judgment of the CJEU in Vnuk and the subsequent CJEU judgments in Andrade v Proença Salvador (Case C-514/16) [2018] 4 WLR 75 at [36] and Nunez Torreiro at [28] and [30]. The government has also failed to comply with its co-extensive obligation under Article 10 to assign responsibility for meeting that liability to the compensation body contemplated by that Article, just as the Irish government had failed in Farrell v Whitty.
    2. Contrary to the arguments advanced by Mr Mercer QC, I do not consider that the UK government has retained a discretion to delegate to some other compensation body than the MIB the residual liability to compensate those injured by uninsured vehicles on private land. The argument that the government retained such a discretion where it had failed to transpose all its EU law obligations under the Directive correctly into national law was run in Byrne by reference to Francovich and Wagner Miret and rejected by me at [56] of my judgment. I concluded that the relevant discretion had been fully used in circumstances where the UK had chosen to designate the MIB as the body through which it sought to implement the Motor Insurance Directives. That conclusion was not challenged on appeal. I see no reason to reach a different conclusion in the present case.
    3. I also consider that there is force in Mr Moser QC’s submission that, unlike the Directive being considered in Francovich and Wagner Miret, Article 10 of the 2009 Directive expressly contemplates the Member State setting up a compensation “body” in the singular, not a whole series of bodies. In any event, it seems to me that the reasoning of the CJEU in Gharehveran at [39] to [44] is applicable here. In that case, by designating itself as the guarantee institution, the Member State made full use of the relevant discretion. By parity of reasoning, the UK government has made full use of any discretion by delegating the Article 10 task to the MIB. I am strengthened in that conclusion by the analysis of the Advocate General in Farrell v Whitty (No 2) particularly at [126] and by the judgment of the CJEU in Nunez Torreiro, which recognises that compliance with Article 3 is not a matter for the discretion of the Member State.
    4. Accordingly, in my judgment and contrary to the arguments advanced on behalf of the MIB, Article 3 of the 2009 Directive is unconditional and precise, so that it is capable of having direct effect. Since it is common ground that Article 3 and Article 10 are co-extensive, it must follow that Article 10 is also capable of having direct effect. I also agree with Mr Moser QC that, although the conclusion of the CJEU in [41]-[42] of Farrell v Whitty (No 2) is expressed in a somewhat abstract way, the Court was saying that these Articles were sufficiently unconditional and precise to be of direct effect.
    5. It is accepted by the MIB that in relation to the task delegated to it under Article 10 it is to be regarded as an emanation of the State, as I have already recorded at [37] above. Its contention that the task delegated to it is limited to the RTA liability stands or falls with the attempt by Mr Mercer QC to distinguish the analysis and reasoning of the CJEU in relation to the MIBI in Farrell v Whitty (No 2). I consider that that analysis and reasoning is indistinguishable.
    6. The distinction which Mr Mercer QC sought to draw between cases where there had been a breakdown of the system and cases, such as he categorised the present case, where there was no system at all, is a wholly artificial one which will not bear scrutiny. In both cases, in the words of the CJEU in [39] of Farrell v Whitty (No 2), the Member State has failed “to fulfil its obligation to ensure that civil liability in respect to the use of motor vehicles…is covered by insurance”. Mr Mercer QC sought to argue that because the CJEU then cited [31] of Csonka, this analysis was intended to be confined to cases where a system had been put in place but it had broken down. I reject that argument. [39] of Farrell v Whitty (No 2)is in broad general terms, not limited to cases where the failure of the Member State is partial as opposed to total. Furthermore, 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.
    7. Both in Farrell v Whitty (No 2) and the present case, the effect of the failure is the same: a gap in the insurance cover compulsorily required by the domestic legislation and a corresponding gap in the protection of the victims of motor accidents, which, as is clear from all the CJEU jurisprudence, is the very mischief that the Motor Insurance Directives are designed to avoid. The suggested distinction between the use of a motor vehicle on a road or other public place and the use of a motor vehicle on private land is, at least on the facts of the present case, a wholly artificial one, given that immediately before he drove his car onto the private land, Mr Tindale was driving it uninsured on the public road. The distinction is also inimical to the CJEU jurisprudence, which in my judgment does not support any part of Mr Mercer QC’s argument.
    8. On a proper analysis, Csonka cannot be regarded as a case where the Member State had failed to implement its obligations under Articles 3 and 10 of the Directive. There was simply no obligation on the State under the Motor Insurance Directives to implement a compensation scheme in respect of insurance cover formerly provided by insurers who had become insolvent. This interpretation of Csonka is borne out by the judgment of Richards LJ in Delaney v Secretary of State for Transport [2015] EWCA Civ 172[2015] 1 WLR 5177 at [33]. Nothing in the CJEU judgment has any impact on the issues for determination in the present appeal.
    9. Contrary to the submissions of Mr Mercer QC, the reference in the last sentence of [46] of the judgment of the CJEU in Juliana to “the insurance obligation” is not to the relevant national legislation but to the obligation on the Member State under Article 3 of the Directive, as is clear from the preceding sentence and from the next paragraph of the judgment, [47], which provides:
“Moreover, the interpretation set out in paragraphs 38 to 42 of the present judgment makes it possible to ensure the attainment of the objective of protecting the victims of accidents caused by motor vehicles, laid down by the directives concerning insurance against civil liability in respect of the use of vehicles, which has consistently been pursued and reinforced by the EU legislature (Rodrigues de Andrade, (Case C-514/16), [2018] 4 WLR 75, paragraphs 32 and 33 and the case-law cited). That interpretation guarantees that those victims are, in any case, compensated, either by the insurer, under a contract entered into for that purpose, or by the body referred to in Article 1(4) of the Second Directive, in the event that the obligation to insure the vehicle involved in the accident has not been satisfied or where that vehicle has not been identified.”
  1. Thus, contrary to Mr Mercer QC’s submissions, Juliana is not authority for the proposition that Article 10 does not extend to provide compensation in situations where the national legislation did not provide for compulsory motor insurance. On the contrary, the judgment of the CJEU recognises and applies the broader objective of the Motor Insurance Directives of protecting the victims of motor accidents, by requiring Member states to ensure that motor insurance is compulsory, so that the victims are compensated by the insurer or, in cases where the obligation to insure the vehicle has not been satisfied, by the compensation body to which that task has been delegated under Article 10. In my judgment, the last sentence of [46] is sufficiently widely phrased to encompass both the case where the State has not fully implemented its insurance obligation under Article 3 of the 2009 Directive (as in the present case) and the case where, although the State has implemented the obligation, the driver or owner of the vehicle has not taken out the compulsory insurance required.
  2. However, even if I were wrong about that, it is quite clear from the broad terms of [39] of the judgment of the CJEU in Farrell v Whitty (No 2) that the compensation body is intended to protect and compensate victims by remedying the failure of the Member State to fulfil its obligation under Article 3 to ensure that civil liability in respect of the use of motor vehicles is covered by insurance. As the CJEU jurisprudence makes clear, that obligation includes the use of vehicles on private land.
  3. Accordingly in my judgment, the MIB, albeit a private law body, has had conferred on it by the UK government the task under Article 10, which as [39] of Farrell v Whitty (No 2) makes clear, includes remedying the failure of the government to institute in full a compulsory insurance regime, in the present case in respect of the use of vehicles on private land. As the CJEU held in [42] of Farrell v Whitty (No 2), it is inherent in that task that it is in the public interest. Like the MIBI, the MIB possesses special powers by virtue of the provisions of the RTA which oblige all authorised motor insurers to be members of the MIB and to contribute to its funding. The short answer to Mr Mercer QC’s point that the MIB levy does not oblige insurers providing off-road cover to contribute to the levy is that any issue can be addressed by amendment to the RTA and/or the MIB Articles of Association, but, in any event, that point does not provide an arguable point of distinction between the present case and Farrell v Whitty (No 2).
  4. Accordingly, like the MIBI, the MIB is an emanation of the State against which Article 10 of the 2009 Directive can be enforced by the claimant, as it has direct effect. In my judgment, this does not have the effect of making the MIB a primary compensator as Mr Mercer QC contended. The MIB may well have rights of contribution over against the Department of Transport. Indeed, we were informed by Mr Moser QC that the MIB has issued a Contribution Notice against the Department in the present proceedings. In any event, on the basis that the MIB is an emanation of the State, it is no answer to its liability to compensate the claimant that this liability has only arisen through the fault of the UK government: see [62]-[63] of Konle v Austrian Republic (Case C-302/97) [1999] ECR I-3099.
  5. During the course of argument the question arose as to the source of the obligation which therefore rests on the MIB. In my judgment, Mr Moser QC was correct that the answer is the 2009 Directive as applied against the MIB as an emanation of the State and it is no answer to say that the source of the obligation cannot be found in national law. That simply replicates the fallacious argument of the MIB that its obligation to compensate is limited by the RTA liability.
  6. It follows that the judge’s conclusions on direct effect and emanation of the State were correct and that the appeal of the MIB must be dismissed.